Court Opinion

ID: 4418842
Source: CourtListenerOpinion
Date Created: 2019-07-22 17:02:05.490698+00
Date Added: 2024-06-11T12:33:05.179809
License: Public Domain

IN THE SUPREME COURT OF
               CALIFORNIA

                  HAIRU CHEN et al.,
                Plaintiffs and Appellants,
                             v.
          LOS ANGELES TRUCK CENTERS, LLC,
               Defendant and Respondent.

                           S240245

           Second Appellate District, Division Eight
                          B265304

             Los Angeles County Superior Court
                         BC469935

                        July 22, 2019

Justice Chin authored the opinion of the Court, in which Chief
Justice Cantil-Sakauye and Justices Corrigan, Liu, Cuéllar,
Kruger, and Groban concurred.
      CHEN v. LOS ANGELES TRUCK CENTERS, LLC
                             S240245

                Opinion of the Court by Chin, J.

      In this tort action arising out of a fatal tour bus accident
in Arizona, the parties initially included plaintiffs from China
and defendants from both Indiana and California. Asked to
decide which jurisdiction’s law applied to the case, the trial court
conducted the governmental interest test (see Reich v. Purcell
(1967) 67 Cal.2d 551 (Reich)) and concluded that Indiana law
governed. Before trial, however, the plaintiffs accepted a
settlement offer from the Indiana manufacturer of the tour bus
and dismissed that defendant from the case. We granted review
to determine if the trial court should have reconsidered the
previous choice of law ruling after that Indiana defendant was
no longer a party.
      For reasons that follow, we conclude that the trial court
was not required to reconsider the prior choice of law ruling
based on the party’s settlement. Because the trial court did not
err by declining to reconsider the ruling, we reverse the Court of
Appeal’s judgment.
          FACTUAL AND PROCEDURAL BACKGROUND
      The underlying action concerns a rollover bus accident on
October 17, 2010 in Meadview, Arizona. The bus passengers
were ten Chinese tourists and their tour guide who were
traveling from Las Vegas, Nevada for a day trip to the Grand
Canyon in Arizona. The driver of the bus, Zhi Lu, a California
resident, worked for TBE International, Inc. (TBE), a California

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           CHEN v. LOS ANGELES TRUCK CENTERS, LLC
                   Opinion of the Court by Chin, J.

tour company that owned and operated the 16-seat tour bus. Lu
drove the bus from Los Angeles, California and picked up the
Chinese tourists at their Las Vegas hotel.
      While en route to the Grand Canyon, Lu drove the bus
around a curve at a high rate of speed and lost control. The bus
rolled over twice. The driver and tour guide were in the front
seats, which were equipped with three-point seatbelts (lap and
shoulder restraints). Neither suffered any serious injury in the
accident. None of the passenger seats, however, were equipped
with seatbelts of any kind. Two passengers were killed. One
female passenger was impaled in the door mechanism; a male
passenger was ejected from the bus and fatally fractured his
skull. Six other passengers were ejected from the bus and
suffered injuries. The remaining two passengers, who were not
ejected, sustained injuries as well.
      In September 2011, the eight passengers and survivors of
the two passengers who were killed (plaintiffs) filed an action in
Los Angeles County Superior Court against two California-
based defendants, the tour bus company TBE, and the
distributor who sold the tour bus to TBE, Los Angeles Truck
Centers, LLC dba Buswest (Buswest), a California corporation
with multiple locations nationwide. Plaintiffs also sued the bus
manufacturer, Forest River, Inc. (Forest River), an Indiana
corporation that designed, manufactured, and modified the tour
bus, and Starcraft, a division of Forest River. Because the
parties have referred to the buses as “Starcraft buses,” we refer
to the manufacturer of the buses as Starcraft. Unless otherwise
noted, references to Starcraft necessarily include Forest River.
      In their operative second amended complaint, plaintiffs
alleged causes of action for wrongful death, negligence, strict

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           CHEN v. LOS ANGELES TRUCK CENTERS, LLC
                   Opinion of the Court by Chin, J.

products liability, loss of consortium, and negligent infliction of
emotional distress. That the driver, Lu, was at fault for the
accident was not in dispute. The main theories of plaintiffs’
action were that Starcraft negligently designed and
manufactured the bus and that Buswest chose to order the bus
without seatbelts, which would have prevented the deaths and,
at the very least, would have minimized the injuries of the
passengers in the rollover crash.
       In December 2012, TBE and Lu settled with plaintiffs for
$5 million, in exchange for a full release of all claims against
them. One year later, after the governing two-year statute of
limitations had already run (Code Civ. Proc., § 335.1),
defendants Starcraft and Buswest (collectively, defendants)
filed a “Joint Notice of Motion and Motion Regarding Choice of
Law on Behalf of Defendants” to determine the choice of law. In
that motion, defendants alleged that plaintiffs’ claims
“potentially implicate” four different jurisdictions, i.e., Indiana,
Arizona, China, and California. Defendants maintained that
under the governmental interest test to determine the choice of
law (see Reich, supra, 67 Cal.2d 551), Indiana law applied. After
considering the parties’ extensive briefing, the trial judge (Judge
Kendig)1 granted defendants’ motion and concluded that
Indiana law governed the case. Plaintiffs filed a writ of mandate
challenging the trial court’s ruling on the choice of law, which

1
     Although it is generally not customary to identify trial
judges by name in opinions, we have done so here when
necessary to distinguish between Judge Kendig and Judge
Czuleger, who was reassigned to the matter, and their
respective rulings. (See In re Marriage of Fajota (2014) 230
Cal.App.4th 1487, 1491, fn. 2.)

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           CHEN v. LOS ANGELES TRUCK CENTERS, LLC
                   Opinion of the Court by Chin, J.

the Court of Appeal denied based on plaintiffs’ failure to show
entitlement to extraordinary relief.
       In August 2014, the same month the trial was originally
set to begin, plaintiffs settled with Starcraft for $3.25 million,
and, over Buswest’s opposition, Judge Kendig granted
Starcraft’s motion for good faith settlement (Code Civ. Proc., §
877.6). After the settlement left California-based Buswest as
the sole defendant, Buswest filed a motion for summary
judgment under Indiana law, which the trial court denied. The
trial court also denied plaintiffs’ request that it reconsider its
choice of law ruling. The original trial date of August 18, 2014
was vacated, and the trial date was continued.
      In November 2014, plaintiffs filed a “Motion in Limine No.
4 to Apply California Law,” alleging that “[f]or choice-of-law
purposes, plaintiffs’ settlement with the Indiana defendants has
completely transformed the relevant legal landscape.” On
February 20, 2015, six weeks before trial was set to begin, a
newly assigned trial judge (Judge Czuleger) denied the motion
on procedural grounds, specifically declining to reconsider
Judge Kendig’s choice of law ruling. Judge Czuleger opined that
he would deny on the merits as well, noting that plaintiffs’
motion did not present “any new or different facts justifying a
reconsideration.” On a final note, Judge Czuleger added that a
choice of law determination “should not change at the last hour
before trial because of settlement of certain parties. The parties
have prepared for trial based on a definitive ruling by the
previous judge. The parties should be able to rely on that ruling
in their trial preparation. The happenstance of a change in
parties should not affect the law to be applied here.”

                                  4
           CHEN v. LOS ANGELES TRUCK CENTERS, LLC
                   Opinion of the Court by Chin, J.

      After the jury was sworn in on April 9, 2015, the trial
proceeded under Indiana products liability law, which imported
a negligence standard in the definition of a defective product.
(See Ind. Code § 34-20-2-1 [seller may be liable if “user or
consumer is in the class of persons that the seller should
reasonably foresee as being subject to the harm caused by the
defective condition” (italics added)]; id., § 34-20-2-2 [plaintiff
“must establish that the manufacturer or seller failed to exercise
reasonable care under the circumstances in designing the
product” (italics added)].) Plaintiffs focused on Buswest’s
decision to order the bus without the $12 lap belts. In its
defense, Buswest contended its decision not to include seatbelts
constituted an exercise of reasonable care because the federal
National Highway Transportation Safety Administration
standards did not require lap belts in this bus; the industry
standard at the time was to not include seatbelts; and lap belts
could cause serious injuries to passengers in frontal collisions,
which were more common than rollover accidents.
     In a vote of 10 to two, the jury rendered a defense verdict
on April 27, 2015. It concluded that while Buswest was a
manufacturer or seller of the bus under Indiana law, the bus
was not in a “defective condition” at the time of the accident.
Judgment was entered in favor of Buswest, and plaintiffs
appealed.
      The Court of Appeal reversed. First characterizing each
side’s motion to determine the choice of law as a motion in
limine, the Court of Appeal concluded that the trial court
“should have fully reconsidered” the initial choice of law ruling
because “once Starcraft had been dismissed from the case, any
interest Indiana had in applying its law to Starcraft was no

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           CHEN v. LOS ANGELES TRUCK CENTERS, LLC
                   Opinion of the Court by Chin, J.

longer at issue.” It did not, however, consider the correctness of
the trial court’s initial choice of law ruling.
      The Court of Appeal rejected Buswest’s contention that
under Reich, supra, 67 Cal.2d 551, the choice of law is fixed at
the time of the accident. Rather, the court reasoned, “[t]he
relevant interests cannot be accurately determined until the
defendants, and the theories of liability alleged against them,
are known—things that are only known for certain as the case
gets closer to trial.”   The Court of Appeal applied the
governmental interest test and determined that California law
governed. Finding the error prejudicial, the court reversed the
judgment and remanded for a new trial governed by California
products liability law.
     We granted review.
                           DISCUSSION
      “Perhaps no legal subject has caused more consternation
and confusion among the bench and bar than choice of law.”
(Smith, Choice of Law in the United States (1987) 38 Hastings
L.J. 1041 (Smith); see Bernhard v. Harrah’s Club (1976) 16
Cal.3d 313, 321 [“endless variety of choice of law problems”].)
“Unfortunately, the complexity of a legal concept is often
directly proportional to its practical importance. Choice of law
is no exception. The choice of law decision may determine the
success or failure of a lawsuit, the amount of damages
recoverable, or the legality of a defense raised.” (Smith, supra,
38 Hastings L.J. at p. 1042.)
      In California, “general choice-of-law rules have been
formulated by courts through judicial decisions rendered under
the common law, rather than by the legislature through
statutory enactments.” (McCann v. Foster Wheeler LLC (2010)

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           CHEN v. LOS ANGELES TRUCK CENTERS, LLC
                   Opinion of the Court by Chin, J.

48 Cal.4th 68, 83 (McCann) [collecting cases].) As the forum
state, California will apply its own law “unless a party litigant
timely invokes the law of a foreign state.” (Hurtado v. Superior
Court (1974) 11 Cal.3d 574, 581; see Reich, supra, 67 Cal.2d at
p. 553.)
        To determine which jurisdiction’s law will govern, a trial
court applies the governmental interest test, which sets out a
three-step inquiry: “First, the court determines whether the
relevant law of each of the potentially affected jurisdictions with
regard to the particular issue in question is the same or
different. Second, if there is a difference, the court examines
each jurisdiction’s interest in the application of its own law
under the circumstances of the particular case to determine
whether a true conflict exists. Third, if the court finds that there
is a true conflict, it carefully evaluates and compares the nature
and strength of the interest of each jurisdiction in the
application of its own law ‘to determine which state’s interest
would be more impaired if its policy were subordinated to the
policy of the other state’ [citation], and then ultimately applies
‘the law of the state whose interest would be the more impaired
if its law were not applied.’ ” (Kearney v. Salomon Smith Barney,
Inc. (2006) 39 Cal.4th 95, 107-108 (Kearney) [applying court’s
“seminal” decision in Reich]; see Offshore Rental Co. v.
Continental Oil Co. (1978) 22 Cal.3d 157.)
      In this case, the correctness of Judge Kendig’s initial
choice of law ruling is not at issue. The Court of Appeal
expressly declined to address the propriety of that ruling, and
we do so as well. The question is limited to whether the trial
court should have reconsidered its initial ruling after a
defendant settled out of the case. In other words, was there any

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           CHEN v. LOS ANGELES TRUCK CENTERS, LLC
                    Opinion of the Court by Chin, J.

legal or factual basis that compelled the trial court to revisit the
choice of law ruling?
       Although we have found no case in this or any other
jurisdiction specifically addressing whether a choice of law
ruling should be revisited under these circumstances, defendant
Buswest maintains that Reich is instructive and precludes any
consideration of the parties’ subsequent settlement. Reich
cautioned that “if the choice of law were made to turn on events
happening after the accident, forum shopping would be
encouraged.” (Reich, supra, 67 Cal.2d at p. 555, italics added.)
Plaintiffs, however, counter that Reich was referring to the
underlying facts of the accident itself and not what plaintiffs
refer to as “litigation facts,” that is, events that occur during the
litigation like a party’s dismissal from the case. Unlike facts
underlying the accident itself, litigation facts like the requisite
parties and potential claims are not yet known, and therefore
cannot be fixed at the time of the accident.
      We agree with plaintiffs that Reich focused not on
identifying the pertinent parties in the action, but on the parties’
true domicile as it related to the measure of damages. (Reich,
supra, 67 Cal.2d at pp. 555-556.) Plaintiffs’ argument, however,
goes further than simply distinguishing Reich. They suggest
that the trial court was required to revisit the prior ruling that
Indiana law governed after the only Indiana defendant settled
out of the case.
      In support of their position, plaintiffs focus on the Court of
Appeal’s decision, which likened a motion to determine the
choice of law to a motion in limine. (See State Farm Mutual
Automobile Ins. Co. v. Superior Court (2004) 121 Cal.App.4th
490, 502 [motion is “the equivalent of an in limine motion that

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           CHEN v. LOS ANGELES TRUCK CENTERS, LLC
                    Opinion of the Court by Chin, J.

seeks to resolve a conflict of laws or choice of law issue”].)
Emphasizing that Judge Kendig’s choice of law ruling was only
tentative, plaintiffs argue their settlement with Starcraft
fundamentally changed the “calculus” of the governmental
interests, requiring a new determination on the choice of law.
While we do not opine on whether courts may reconsider choice
of law rulings, and if so, under what circumstances, we conclude
that the trial court was not required to do so here.
       In applying the governmental interest test, Judge Kendig
provided an extended analysis of the interests at stake. At the
time she ruled that Indiana law governed the case, the operative
two-year statute of limitations (Code Civ. Proc., § 335.1) on
plaintiffs’ claims had already run. Plaintiffs had also settled
with the bus driver and tour bus company a year earlier. (See
ante, at p. 3.) As the case headed towards trial, plaintiffs focused
on their strict products liability claim, i.e., that the tour bus was
defective without seatbelts and that the manufacturer, who
designed and manufactured the bus, along with the distributor,
who ordered the bus without seatbelts, were liable. Plaintiffs
did not contend that interested or indispensable parties to the
litigation were not yet joined, or that the January 2014 choice of
law ruling was otherwise premature.
       Rather, plaintiffs’ unwavering criticism throughout this
case has been that Judge Kendig failed to give proper weight to
California’s interest when she first ruled that Indiana law
governed. After Starcraft’s exit, it is certainly understandable
(if not predictable) that the issue of California’s interest would
again come to the fore. However, plaintiffs fail to persuade us
that their decision to accept Starcraft’s settlement offer, in and
of itself, required the trial court to revisit its ruling. After
plaintiffs sued both Starcraft and Buswest as joint tortfeasors,

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           CHEN v. LOS ANGELES TRUCK CENTERS, LLC
                   Opinion of the Court by Chin, J.

plaintiffs later chose whether and when to settle with the
Indiana-based manufacturer. That is not to say we consider the
settlement (which Judge Kendig found was made in good faith),
along with plaintiffs’ subsequent dismissal of Starcraft, to be
part of a strategy to revisit the choice of law issue. Rather, we
simply observe that because plaintiffs were fully aware of the
settlement, they are hard-pressed to argue any unfairness due
to any consequence arising from the settlement. (See Denton v.
City and County of San Francisco (2017) 16 Cal.App.5th 779,
793-794 [good cause for continuing summary judgment hearing
where settlement was unexpectedly set aside days before
hearing].)
      Further, practical concerns underlying a court’s
management of a trial militate against revisiting the choice of
law ruling under these circumstances. As discussed earlier (see
ante, at p. 7), the governmental interest test is far from a
mechanical or rote application of various factors. (See Kearney,
supra, 39 Cal.4th at pp. 107-108, 110 [recognizing “distinct state
interests that may underlie separate aspects of the issue”];
McCann, supra, 48 Cal.4th at p. 97 [explaining difficulty of
balancing conflicting interests of individual states that “ ‘ “are
empowered to mold their policies as they wish” ’ ”].)
      Moreover, a trial court’s ruling on the governing law is
often just the start to substantively resolving the case. After the
court determines the choice of law, factfinders must then “try
the facts necessary to determine liability in accordance with
such choice.” (Beech Aircraft Corp. v. Superior Court (1976) 61
Cal.App.3d 501, 517 [wrongful death action].) The importance
of deciding the choice of law first, moreover, is manifest in class
actions. (See Washington Mutual Bank, FA v. Superior Court
(2001) 24 Cal.4th 906, 915 [“choice-of-law determination is of

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           CHEN v. LOS ANGELES TRUCK CENTERS, LLC
                   Opinion of the Court by Chin, J.

central importance” to class certification issues].) A “trial court
cannot reach an informed decision on predominance and
manageability without first determining whether class claims
will require adjudication under the laws of other jurisdictions
and then evaluating the resulting complexity where those laws
must be applied.” (Id. at p. 927.)
      In short, given the importance of determining the choice
of law early on in a case — to enable trial courts to manage
proceedings in an orderly and efficient fashion — we conclude
that circumstances in which trial courts are required to revisit
a choice of law determination, if any, should be the exception
and not the rule. On that note, we underscore that we do not
reach the question whether trial courts may revisit a prior
choice of law ruling. Nor do we opine that there are no
circumstances under which the trial court would be obligated to
reconsider the choice of law. We hold only that, in this case,
plaintiffs fail to demonstrate that their decision to accept a
settlement offer from one defendant constitutes such an
exceptional circumstance.
                          CONCLUSION
      Based on the foregoing, we reverse the Court of Appeal’s
judgment and remand for further proceedings consistent with
this opinion.
                                                      CHIN, J.
We Concur:

CANTIL-SAKAUYE, C. J.
CORRIGAN, J.
LIU, J.
CUÉLLAR, J.
KRUGER, J.
GROBAN, J.

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See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Chen v. L.A. Truck Centers, LLC
__________________________________________________________________________________

Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 7 Cal.App.5th 757
Rehearing Granted

__________________________________________________________________________________

Opinion No. S240245
Date Filed: July 22, 2019
__________________________________________________________________________________

Court: Superior
County: Los Angeles
Judge: J. Stephen Czuleger and Holly E. Kendig

__________________________________________________________________________________

Counsel:

Law Offices of Martin N. Buchanan, Martin N. Buchanan; Girardi & Keese and David R. Lira for Plaintiffs
and Appellants.

Shook, Hardy & Bacon, Frank C. Rothrock, Douglas W. Robinson, Janet L. Hickson and Kevin Underhill
for Defendant and Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):

Martin N. Buchanan
Law Offices of Martin N. Buchanan
655 West Broadway, Suite 1700
San Diego, CA 92101
(619) 238-2426

Kevin Underhill
Shook, Hardy & Bacon
5 Park Plaza, Suite 1600
Irvine, CA 92614-2546
(949) 475-1500