Court Opinion

ID: 9467970
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:00:51.363892+00
Date Added: 2024-06-11T17:40:36.880029
License: Public Domain

ARNOLD, Circuit Judge,
concurring in part and dissenting in part.
I agree that the judgment for breach of contract should be affirmed. But because I believe that application of the Missouri service-letter statute to this case would not deprive Schlitz of property without due process of law, I respectfully dissent from Part II of the Court’s opinion.
In Allstate Ins. Co. v. Hague, 101 S.Ct. 633 (1981), a motorcycle driven by a resident of Wisconsin was struck from behind by an automobile driven by another resident of Wisconsin. The accident occurred in Wisconsin. Ralph Hague, also a resident of Wisconsin and a passenger on the motorcycle, was killed. Hague’s widow sued Allstate on a contract of insurance which had been delivered in Wisconsin. The Supreme Court held that the application of Minnesota law to the question of how to construe the insurance policy did not deprive Allstate of property without due process of law.1 Hague had worked in Minnesota for 15 years before the accident, and commuted each day to his job in that State (though the accident did not occur while Hague was commuting to work). Allstate was at all times present and doing business in Minnesota (as, indeed, it was in Wisconsin). After the accident, but before bringing suit, Mrs. Hague moved to Minnesota. Four justices*5852 took the view that these three contacts with Minnesota were sufficiently significant to allow the Minnesota courts to apply their own law without violating the federal Constitution. Mr. Justice Stevens, concurring in the judgment,3 thought that “the plaintiff’s post-accident move to Minnesota and the decedent’s Minnesota employment”4 were at best irrelevant. He voted to uphold the application of Minnesota law against the due-process challenge, however, because in his view that outcome did “not frustrate the reasonable expectations of the contracting parties,” 5 nor cause “unfair surprise to a litigant.” 6
Under the criteria either of the plurality opinion or the concurring opinion of Stevens, J., the relationship between Missouri and this case seems to me no more tenuous than the relationship between Minnesota and Mrs. Hague’s case. In both cases there was a post-occurrence move of the plaintiff to the forum State. In neither case is it claimed that the move was for the purpose of securing either a particular forum or a particular rule of law. In both cases the corporate defendant did business in the forum State at all relevant times. It is true that Schlitz has done no manufacturing or processing in Missouri since 1978, but it has continuously had distributors and sales and marketing employees in Missouri. There can be no doubt that Schlitz is amenable to suit in Missouri, and it has never claimed to the contrary, not in the Circuit Court of Jackson County, Missouri, where this action was brought by McCluney, not in the District Court, to which Schlitz removed the case, and not in this Court.7 And the employment relationship between McCluney and Missouri is much more relevant for choice-of-law purposes than the employment relationship between Hague and Minnesota. Hague’s accident has nothing to do with his employment, and neither did his insurance policy. By contrast, the Missouri service-letter statute, as construed by the Supreme Court of Missouri, became part of McCluney’s contract when he was employed by Schlitz in Missouri in 1956. See Cheek v. Prudential Life Ins. Co., 192 S.W. 387, 393 (Mo.1916), aff’d after trial, 259 U.S. 530, 42 S.Ct. 516, 66 L.Ed. 1044 (1922).
The Court’s conclusion that Missouri is without power to apply its statute to this case hinges on the theory that McCluney’s original employment contract, under which he worked in Missouri for 14 years, from 1956 to 1970, was “discharged,” ante, p. 583, when he moved to North Carolina to manage the Winston-Salem plant. With all deference, this argument seems to me rather artificial, the kind of thing lawyers and scholars think up after the fact, rather than a consideration actually present in the minds of the parties when McCluney decided to accept Schlitz’s offers of promotion. At least some aspects of the employment relationship typically survive an employee’s transfer from one city to another by a nation-wide corporate employer. In this case, for example, McCluney’s right to severance pay, which the Court upholds, although based on his rate of pay in his last position, the vice-presidency in Wisconsin, was also based on his almost 20 years of service with the company, most of which took place in Missouri. Probably neither *586Schlitz ñor McCluney had any conscious intention with respect to the continued applicability of the Missouri service-letter statute when McCluney moved to North Carolina. I cannot see how any expectation of Schlitz would be disappointed by holding that the statute continued to be a part of the employment agreement. The statute in terms applies “[wjhenever any employee of any corporation doing business in this state shall be discharged or voluntarily quit ...,” Mo.Ann.Stat. § 290.140 (1975) (emphasis supplied). Schlitz was doing business in Missouri both when it hired McCluney, and when it fired him. It would be fanciful to contend that Schlitz somehow changed its position, with respect to potential future service-letter liability, when McCluney moved out of Missouri. The most telling fact of all, so far as fairness to Schlitz is concerned, is that it responded almost at once, and without a murmur, to McCluney’s request for a service letter under Missouri law. Apparently the claim that Missouri law applied was no surprise to Schlitz at that point. It was not until the company was sued, consulted counsel, and began casting about for defenses, that Schlitz asserted that application of Missouri law was so unexpected as to be fundamentally unfair.8
The Court discusses two cases in which the Supreme Court has invalidated a state’s choice of law. Both are crucially different from this ease. In Home Ins. Co. v. Dick, 281 U.S. 397, 84 S.Ct. 1197, 12 L.Ed.2d 229 (1930), the parties had expressly contracted for the application of Mexican law, but Texas courts had attempted to apply Texas law. And in John Hancock Ins. Co. v. Yates, 299 U.S. 178, 182, 57 S.Ct. 129, 131, 81 L.Ed. 106 (1936), the only contact with the forum was the plaintiff’s post-occurrence change of residence, and the Court struck down the application of Georgia law to an insurance policy which .it construed to incorporate New York law as “a term of the contract . . . . ” Here, on the contrary, Schlitz’s and McCluney’s original agreement included the Missouri statute, and no later agreement expressly modified that arrangement. Schlitz could have bargained with McCluney for an express choice-of-law clause to extinguish any potential service-letter liability. The lack of such an express choice-of-law agreement has been referred to by the Supreme Court as a factor supporting a forum state’s choice of its own law. Clay v. Sun Ins. Office, Ltd., 377 U.S. 179, 182, 84 S.Ct. 1197, 1198, 12 L.Ed.2d 229 (1964). I cannot help feeling that this Court’s decision harks back to a day when the federal courts were too ready to enshrine their own notions of proper conflicts rules in the Due Process Clause of the Fourteenth Amendment. It may be significant that the Court cites no case (and I know of none in the Supreme Court) more recent than 1936 striking down a state’s choice of law under the federal Constitution.
In sum, I would affirm the District Court’s decision that the Missouri service-letter statute may validly be applied, and the judgment on Count II of the complaint, but only to the extent that it awarded nominal damages of $1.00. I cannot bring myself to approve the award of $400,000.00 in punitive damages on these facts. The service letter, though false, was not defamatory, nor was it published by Schlitz to anyone except the plaintiff himself. McCluney’s actual damages are covered by the judgment on Count I. The award of punitive damages is so large that it seems to have been the product rather of anger than of properly righteous indignation. Thus, although I differ from the Court’s *587legal analysis, I agree with all but one dollar of the result.

. The Court also held that there was no violation of the Full Faith and Credit Clause, U.S. Const., Art. IV, § 1. Schlitz has not made a full-faith-and-credit argument in this case.

. Mr. Justice Brennan, joined by three other Members of the Court, announced the Court’s judgment and delivered the plurality opinion.

. 101 S.Ct. at 644.

. Id. at 649-50.

. Id. at 649.

. Id. at 648.

. Though the concepts of judicial jurisdiction (amenability to suit) and legislative jurisdiction (choice of law) are distinct, they are admittedly closely related. See the Court’s discussion of the two concepts, ante, slip op. at 5-6. Some observations in the Hague plurality opinion apply here: “Here, of course, jurisdiction in the Minnesota courts is unquestioned, a factor not without significance in assessing the constitutionality of Minnesota’s choice of its own substantive law.” Allstate Ins. Co. v. Hague, supra, 101 S.Ct. at 642 n.23. “By virtue of its presence, Allstate can hardly claim unfamiliarity with the laws of the host jurisdiction and surprise that the state courts might apply forum law to litigation in which the company is involved.” Id. at 642-43.

. I have concentrated on the question of unfairness to. Schlitz because the Court does not appear to contend that there would be any real encroachment on Wisconsin’s interests in applying Missouri law here. Wisconsin has no service-letter statute, but it does prohibit a combination of employers from acting to deny employment to persons seeking it, Wis.Stat. Ann. § 134.02 (West 1974). Wisconsin is thus no more hospitable to blacklisting (the evil against which the service-letter statute is directed) than Missouri is. It simply chooses a different method to attack the problem. By contrast, in Hague Minnesota and Wisconsin had directly opposite rules of decisional law on the insurance question at issue, and still the application of Minnesota law was upheld.