Opinion
C.A. No. 07C-06-105-JRJ.
Submitted: December 14, 2009.
Decided: March 31, 2010.
Upon Defendants Yokohama Corporation of North America and Yokohama Tire Corporation's Choice of Law Motion: GRANTED IN PART, DENIED IN PART.
Richard Zappa, Esquire and Timothy E. Lengkeek, Esquire, Young, Conaway, Stargatt, Taylor, LLP, 1000 West Street, 17th Floor, P.O. Box 391, Wilmington, DE 19899, and Julian C. Gomez, Esquire, The Gomez Law Firm, PLLC, P.O. Box 2004, McAllen, Texas, 78504, Attorneys for Plaintiffs.
C. Scott Reese, Esquire, Cooch and Taylor, P.A., Brandywine Building, 1000 West Street, 10th Floor, P.O. Box 1680, Wilmington, DE, 19899, and Martin M. Adler, Esquire, Strongin, Rothman Abrams, LLP, 5 Hanover Square, 4th Floor, New York, New York, 10004, Attorneys for Defendants.
OPINION
I. INTRODUCTION
Before the Court is Yokohama Corporation of North America (hereinafter "YCNA") and Yokohama Tire Corporation's (hereinafter "YTC") Choice of Law Motion (hereinafter "Defendants' Motion"). Defendants' Motion is filed pursuant to Superior Court Civil Rule 44.1.
YCNA and YTC are hereinafter collectively referred to as "Defendants."
Superior Court Civil Rule 44.1 provides: A party who intends to raise an issue concerning the law of a foreign country shall give notice in the party's pleadings or other reasonable written notice. The Court, in determining foreign law, may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Delaware Rules of Evidence. The Court's determination shall be treated as a ruling on a question of law.
Defendants argue that the substantive law of Mexico should apply to all of Plaintiffs' claims. In the alternative, they argue that California law should apply to all of Plaintiffs' claims. If the Court rejects these arguments, Defendants argue that Virginia law should apply to Plaintiffs' claims of defective design and manufacture, California law should apply to Plaintiffs' marketing defect claims, and Mexican law should apply to Plaintiffs' damages claims.
Defendants argue specifically that the law of the Mexican State of Michoacán should apply.
For the reasons that follow, Defendants' Choice of Law Motion is GRANTED IN PART and DENIED IN PART.
II. BACKGROUND
The Parties
Plaintiffs are residents of Mexico, a state within the Republic of Mexico. YCNA is a Delaware corporation with its principal place of business in California. YTC is incorporated in California with its principal place of business in California.The Accident
This suit stems from a motor vehicle accident that occurred on June 8, 2005 in the Mexican State of Michoacán. Nelson Flores Hernandez (hereinafter "Decedent"), was driving his 1998 Ford Explorer. Marcelino Valdez was his passenger. Plaintiffs claim the right rear tire of the Explorer suffered a sudden catastrophic tread separation which caused the Explorer to lose control and roll over. Decedent suffered fatal injuries.Plaintiffs filed suit on June 7, 2007 alleging, inter alia: (1) strict liability; (2) breach of warranty; and (3) that Defendants negligently designed, tested, manufactured, and marketed an unsafe tire.
See D.I. 1.
Id. at 3-6.
Id. at 6-8.
Id. at 8-10.
The Product
The tire is identified as a Yokohama Prodigy Radial A/T, DOT CCD6USH1902 (hereinafter "the Tire"). It is undisputed that the Tire was designed and manufactured in Virginia and tested in Ohio. No other information about the Tire is known by the parties.
D.I. 1, at 3.
D.I. 88, at 3; D.I. 90, at 2.
See Oral Argument Tr., December 14, 2009, p. 33-34 (hereinafter "Tr., p. __.").
III. DISCUSSION
Delaware Courts apply the "most significant relationship" test of the Restatement (Second) of Conflict of Laws in order to determine choice of law. The significant relationship test is a flexible one and "requires each case to be decided on its own facts." "Pursuant to Section 145 of the Second Restatement, the local law of the state which `has the most significant relationship to the occurrence and the parties under the principles stated in § 6 [of the Restatement]' will govern the rights of litigants in a tort suit."Section 145 lists contacts which should be considered when determining the law applicable to an issue. These contacts include:
(1) the place where the injury occurred,
(2) the place where the conduct causing the injury occurred,
(3) the domicil, residence, nationality, place of incorporation and place of business of the parties, and
(4) the place where the relationship, if any, between the parties is centered.
Restatement (Second) of Conflict of Laws § 145(2) (1971).
Each of the aforementioned contacts must be weighed in light of § 6 of the Restatement (Second) Conflict of Laws, which requires consideration of the following:
Restatement (Second) of Conflict of Laws § 6(2) (1971).
(1) the needs of the interstate and international systems,
(2) the relevant policies of the forum,
(3) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
(4) the protection of justified expectations,
(5) the basic policies underlying the particular field of law,
(6) certainty, predictability and uniformity of result, and
(7) ease in the determination and application of the law to be applied.
Travelers, 594 A.2d at 47.
Section 146 of the Restatement (Second) Conflict of Laws directs the Court to apply the law of the state where the injury occurred in an action for a personal injury unless "some other state has a more significant relationship under the principles stated in § 6 to the occurrence and the parties, in which event the local law of the other state will be applied." A place of injury does not play an important role in the selection of the applicable law "when the place of injury can be said to be fortuitous or when for other reasons it bears little relation to the occurrence and the parties with respect to the particular issue."
Restatement (Second) of Conflict of Laws § 146 (1971).
Rasmussen v. Uniroyal Goodrich Tire Co., 1995 WL 945556, at *2 (Del. Super. Aug. 18, 1995).
Id. (quoting Restatement (Second) of Conflict of Laws § 145, cmt. e).
Place of Injury
The place of injury in this case is fortuitous. The motor vehicle accident occurred in the Mexican State of Michoacán. However, neither of the parties has significant ties with that state. Neither Plaintiffs nor Defendants are residents of Michoacán. Because Michoacán has no connection to the claim other than the fact that it was the location of the accident, it is considered fortuitous and, thus, accorded less weight than the other factors.
Plaintiffs are all residents of the State of Mexico. YCNA is a Delaware corporation with its principal place of business in California. YTC is incorporated in California with its principal place of business in California.
Place Where Conduct that Caused the Injury Occurred
The wrongful conduct alleged by Plaintiffs in their lawsuit occurred within the United States. Although there are many facts unknown about the Tire, it is undisputed that it was designed and manufactured in Virginia, and tested in Ohio.
See Tr., p. 33-34.
Domicil, Residence, Nationality, Place of Incorporation and Place of Business of the Parties
As noted above, at all relevant times Plaintiffs were residents of the State of Mexico. YTC is incorporated in California and YCNA is incorporated in Delaware. Both YTC and YNCA have principal places of business in California.
Defendants argue that California has the most significant contacts over any other United States jurisdiction because it is where YTC is incorporated and where YTC and YNCA have principal places of business. However, the most significant relationship test does not allow a court to simply add up all of the contacts as listed in Section 145 and § 6 and apply the law of the state with the most contacts. The Court must weigh and consider the significance of each of the contacts.
Defendants argue this in the alternative in the event the Court does not find Mexican law to apply.
Defendants further suggest that California is where the tire was marketed because California is the location of Yokohama's marketing headquarters.
Rasmussen, 1995 WL 945556, at *2.
The Place where the Relationship Between the Parties is Centered
The relationship between the parties in this case is centered in the State of Virginia, the place where the Tire was designed and manufactured. Although the State of California has several contacts, and quantitatively more contacts perhaps than Virginia, Section 145 has a qualitative element. "[Section 145] clearly states that the `contacts are to be evaluated according to their relative importance with respect to the particular issue.'"
As previously noted, California is YTC's place of incorporation and both YTC and YCNA's principal place of business is in California.
Travelers, 594 A.2d at 48 (quoting Restatement (Second) of Conflict of Laws § 145 (1971)).
Because much is unknown about the Tire, the choice of law determination is a bit more challenging in this case. First, it is not known when or where the Tire was placed into the stream of commerce. It is also not known how the Tire arrived in Mexico or when or how Decedent obtained the Tire. Finally, and perhaps most importantly, it is not known where the Tire was marketed. "Modern choice of law considerations suggest that the jurisdiction where a product is marketed has a greater interest than a jurisdiction where a product is manufactured, developed, or tested."
The lack of information on the Tire is not due to a lack of discovery in this case but rather is because there were a set of tires produced with the same DOT codes, and no individual number for the Tire which would allow the Tire to be tracked. See Tr., p. 26.
After designed and manufactured, the subject tire was tested in Ohio. There is no evidence as to where the tire entered the stream of commerce.
Rasmussen, 1995 WL 945556, at *2.
If the Court rejects the application of Mexican law, Defendants argue in the alternative that California is "the place where all corporate decisions pertaining to the subject tires marketing, advertising, instructions, labeling, warnings, warranties, distribution, and sales are made[,]" and thus, California law should apply to marketing claims. While Defendants' "marketing headquarters" may very well be located in California, "the jurisdiction where a product is marketed" is to be considered, not the location of a company's marketing headquarters or the state in which marketing decisions take place. Plaintiffs argue that Virginia law should apply to the warranty, marketing and consumer claims because Virginia is the place where the Tire was designed, manufactured, and placed into the stream of commerce. In making this argument, Plaintiffs offer no support for their assertion that the Tire was placed in the stream of commerce in Virginia. Here, there is no way to ascertain where the Tire was marketed or where it was placed into the stream of commerce.
See Defs.' Reply Br., D.I. 93, at 10. Defendants do not directly address warranty and consumer claims.
D.I. 90, at 10.
Plaintiffs merely cite to the Complaint in support of this premise. Plaintiffs also cite to Defendants' brief at "DCOL at 3" which does not state that the Tire was placed into the stream of commerce in Virginia.
It is also known that Yokohama does not sell tires in the Country of Mexico. See Tr., p. 25.
Based on what is known about the Tire, the Court concludes the state where the relationship between the parties is centered is Virginia. Virginia is where the Tire came into existence, where it was both designed and made.
Factors — Section 6 Restatement (Second) Conflict of Laws
After weighing each of the aforementioned contacts in light of the factors set forth in § 6 of the Restatement, the Court finds that Virginia law shall apply to all claims and damages in this case.
Defendants argue that damages should be decoupled from the underlying claims, that the Court must undergo an independent choice of law analysis regarding damages, and that Mexican law should apply to damages. Having considered the issue of damages, the Court finds that Virginia has the most significant relationship to that issue as well because Plaintiffs claim that the design and manufacturing of the Tire caused Plaintiffs' damages — conduct that occurred in Virginia.
The laws of Mexico severely limit the amount of damages a plaintiff can recover in a wrongful death action and do not provide for a survival cause of action. The purpose of those laws would seem to be to protect resident defendants from being accountable for large monetary damages associated with such actions. Because Defendants in this case are from the United States, neither the Country of Mexico nor any Mexican State has a strong policy interest in the application of its laws. Here, the State of Virginia has a stronger interest because, presumably, it would want to protect the public from any wrongful and/or harmful conduct allegedly caused by product designers and/or product manufacturers which conduct business within the state.
See Defs.' Ex. 1; Cervantes, 2010 WL 431788, at *3.
Id.
In addition, although the accident occurred in Michoacán, "a foreign plaintiff has come to the U.S. . . . in order to hold defendants accountable for alleged wrongful conduct which occurred solely in the U.S." "It therefore does not offend fundamental fairness to allow for the suit to proceed under United States law." Furthermore, it seems fair to hold Defendants to the laws of the country in which they are incorporated and the country in which they conduct extensive business, rather than have Defendants comply with the laws of a foreign country.
Cervantes, 2010 WL 431788, at *3.
Id.
Although the States of Delaware and California may have some interest in the application of their respective laws, these interests are not as significant as those of Virginia. As discussed supra, Defendants are incorporated in Delaware and California and have principal places of business in California. But today, it is common for businesses to incorporate in one state, have a principal place of business in another, and conduct business both nationally or internationally. All contacts must be considered and weighed in terms of significance to the issues of the particular case. And Defendants should reasonably expect to be held accountable under the laws of a state in which they conduct business.
Finally, application of Virginia law will foster certainty, predictability, uniformity and ease in determination in this case. The application of Mexican law could be more costly and complicated for both the parties and the Court.
Cervantes, 2010 WL 431788, at *4.
IV. CONCLUSION
Based on the foregoing, because Virginia has the most significant relationship to the occurrence and parties in this case, Virginia law shall apply to the Plaintiffs' claims and damages.Cervantes, 2010 WL 431788, at *4. IT IS SO ORDERED.