7 Cal. 5th 862
Cal.2019Background
- A rollover tour-bus accident in Arizona (2010) injured and killed passengers from China; driver (California resident) admitted fault. The bus had no passenger seatbelts; two passengers died.
- Plaintiffs sued California distributor Buswest and California tour company TBE, and Indiana manufacturer Starcraft (Forest River). Causes included wrongful death, negligence, and strict products liability.
- The trial court applied California’s governmental interest test and, after briefing, ruled that Indiana law governed the case. Plaintiffs initially sought extraordinary relief but the Court of Appeal denied it.
- Plaintiffs settled with the California driver/TBE (2012) and later settled with the Indiana manufacturer Starcraft (2014); Starcraft was dismissed after a good-faith settlement finding.
- After Starcraft’s dismissal, plaintiffs asked the trial court to reconsider and apply California law; the court declined to revisit Judge Kendig’s earlier choice-of-law ruling and tried the case under Indiana law, resulting in a defense verdict for Buswest.
- The Court of Appeal reversed, holding the court should have reassessed choice of law after the Indiana defendant settled; the California Supreme Court granted review and reversed the Court of Appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a trial court must revisit a prior choice-of-law ruling after an out-of-state defendant settles | Settlement with the Indiana manufacturer transformed the parties and interests, so the court was required to reassess and apply California law | Reich and finality principles counsel that choice-of-law should not turn on post-accident litigation events; courts may rely on an earlier ruling for orderly trial management | Trial court was not required to revisit its earlier choice-of-law ruling based solely on the manufacturer’s settlement; exceptionality required to compel reconsideration was not shown |
| Whether Reich precludes any post-accident changes in choice-of-law analysis | Reich only bars making choice-of-law depend on post-accident factual developments; litigation events differ and may be considered | Reich supports stability and avoids forum-shopping by fixing choice-of-law early; practical trial management favors finality | Court rejected plaintiffs’ broad reading of Reich; Reich did not compel reopening the issue here but does not categorically bar any reconsideration |
| Whether plaintiffs’ good-faith settlement created unfairness justifying reconsideration | Settlement eliminated the Indiana interest in applying its law to the remaining defendant, so fairness requires reanalysis | Plaintiffs voluntarily settled with knowledge of consequences; good-faith settlement does not automatically require relitigation of choice-of-law | Plaintiffs’ voluntary settlement did not by itself create exceptional circumstances requiring reconsideration |
| Whether trial management and reliance interests weigh against reopening choice-of-law rulings late in litigation | Reliance on an existing ruling is outweighed by substantive correctness after parties change | Finality and the need for orderly case management mean reconsideration should be exceptional | The Court emphasized trial management and finality; reopening should be rare and plaintiffs failed to show necessity here |
Key Cases Cited
- Reich v. Purcell, 67 Cal.2d 551 (1967) (articulates California’s governmental interest test and cautions against making choice-of-law turn on events after the accident)
- Kearney v. Salomon Smith Barney, 39 Cal.4th 95 (2006) (explains the three-step governmental interest test and application guidance)
- McCann v. Foster Wheeler LLC, 48 Cal.4th 68 (2010) (discusses common-law development of California choice-of-law rules and their application)
- Offshore Rental Co. v. Continental Oil Co., 22 Cal.3d 157 (1978) (supports the governmental interest approach)
- Beech Aircraft Corp. v. Superior Court, 61 Cal.App.3d 501 (1976) (explains that after choice-of-law is determined, factfinders must apply that law to resolve liability)