HAIRU CHEN et al.,
S240245
IN THE SUPREME COURT OF CALIFORNIA
July 22, 2019
Second Appellate District, Division Eight B265304; Los Angeles County Superior Court BC469935
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
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 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 their operative second amended complaint, plaintiffs alleged causes of action for wrongful death, negligence, strict 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 (
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 (
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.”
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
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
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) 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
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 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
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 (
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, 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
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 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.” (
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.
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