Qu'est-ce que le dépeçage?

Chen v. L.A. Truck Cntrs., No. B265304 (D2d8 Jan. 18, 2017)

Some tourists were killed or injured in a tour bus crash on the way to the Grand Canyon. Plaintiffs sued the Bus Driver, the Tour Company, the Dealer that sold the bus to the Tour Company, and the Manufacturer that built the bus. There’s not much dispute that Driver was at fault for speeding and swerving off the road and that a substantial factor in Plaintiffs’ injuries (including two deaths) was that the bus didn’t have passenger seat belts. 
 
Plaintiffs are Chinese nationals. Manufacturer is from Indiana, where the bus was assembled. Dealer, Tour Company, and Driver are from California. But the bus was delivered to the Tour Company in Nevada. And the accident occurred in Arizona. Which all sets up a bar-exam-quality choice-of-law problem.

Tour Company and Driver settled out of the case early. A year in to the case, the remaining defendants—Manufacturer and Dealer—sought to have Indiana law apply. Plaintiffs argued for California law, which everyone agrees is more plaintiff-friendly. The Court agreed with the defendants, finding that Indiana had the greater interest in protecting its homegrown manufacturers, particularly since Plaintiffs were not California residents. Plaintiffs, however, sought to have that decision revisited once Manufacturer settled out, reasoning that Indiana's interest couldn’t prevail once no Indiana defendant remained. The trial court declined to do so.

At trial, Plaintiffs argued that a partial cause of their injuries was Dealer’s decision not to spend twelve bucks a pop to have passenger seat belts installed. (N.B., Driver, who did have a seat belt, walked away pretty much unscathed.) Relying on jury instructions based on Indiana law, the jury rendered a spit 10-2 verdict for Dealer. Plaintiffs appealed.

As a threshold issue, the Court of Appeal tangles with Dealer’s claim that Plaintiffs’ renewed request to re-address the choice law after dismissal of the Indiana-based Manufacturer was an improper motion for reconsideration. Plaintiffs certainly asked the court to re-consider the issue, as the term is literally understood. But under the relevant case law, choice of law motions are treated as form of motion in limine, even if filed and decided well before trial. Because a ruling on a motion in limine is always provisional and subject to re-visitation at trial, the reconsideration rules in Code of Civil Procedure § 1008 just don’t apply. So the court couldn’t duck the question by relying on § 1008.

On the merits, California applies a three-step governmental interest test for choice of laws. First, do the laws actually differ in some meaningful way? Second, do the interests between the two states’ whose laws are at issue collide? And third, if they do, which state’s interests would be more impaired by the application of the other’s laws? Also, key here is that California conflicts law applies a principle called dépeçage, which is a French—the word means “cutting”—way to say that choice-of-law rules apply separately an issue-by-issue basis. They are not decided on case-wide or even party-wide basis. So the key question needs to focus on what law should be applied to determine the elements of a products liability claim between Dealer and Plaintiffs, which is what went to trial.

First, it’s pretty clear that there’s a material difference between the Indiana and California law of strict products liability. California law takes the doctrine literally. If there is a design defect (based on certain tests), and causation is proved, liability is truly strict, without a determination of fault by the defendant. Indiana law, on the other hand, asks whether a defect resulted from Defendant being unreasonable in the product's design, which injects a negligence-like question of fault into the mix.

Moving on to the interests, the Court notes that due to the dépeçage doctrine, the court needs to look at each state's interests in applying its products liability law, not its law in general. Many of the interests on the California side of the ledger look to plaintiff compensation, which isn’t at play when Plaintiffs are not California residents. But other key interests look to the risk-allocation and social-cost-sharing functions of the strict liability doctrine. These interests do implicate defendants who, like Dealer, are resident here or who release products into California commerce. 

On the other hand, Indiana’s interests in applying a more business-friendly rule are in protecting its in-state manufacturers (resident or otherwise) from fault-free liability. But while this interest might apply to Manufacturer, it does not apply to Dealer, who, after all, didn’t make anything in Indiana. There’s no reason that Indiana’s manufacturing-protection policy should apply to buyers of Indiana-made goods, like Dealer, even if those buyers intend to re-sell them elsewhere. So particularly given that the Indiana Manufacturer had been dismissed prior to trial, Indiana didn’t have a significant interest in the application of its law to disputed issues in the case.

The court pauses to note that California does not have an “interest in simply in limiting the damages California defendants must pay.” While there is some language in prior cases that suggest so much, those cases were specifically dealing with the application of damages-capping laws. Their rationale cannot be generalized to any tort cases, particularly in products liability, where California’s policy clearly favors plaintiff-compensation over defendant-shielding.

Under the circumstances, then, there is no “true conflict,” so the court doesn’t need to reach the third step of the analysis. And even if there were, given the above analysis, California's interest would assuredly be greater.

So California law should have applied, at least once the Indiana defendant was dismissed. Given this result, court needs not reach the question of whether the trial court’s original choice of law analysis was correct. And the error was certainly prejudicial, given the difference. Especially considering the already split-decision, there was adequate evidence in the record that, had California law applied, the jury could well have resolved the case in favor of Plaintiffs.

Reversed.