Chen v. Los Angeles Truck Centers, LLC ( 2019 )

Filed 11/22/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
HAIRU CHEN et al., B265304
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BC469935)
v.
LOS ANGELES TRUCK
CENTERS, LLC,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County. J. Stephen Czuleger and Holly E. Kendig,
Judges. Affirmed.
Law Offices of Martin N. Buchanan, Martin Buchanan;
Girardi & Keese and David R. Lira for Plaintiffs and Appellants.
Shook, Hardy & Bacon, M. Kevin Underhill, Frank
Rothrock and Janet L. Hickson for Defendant and Respondent.
*********
SUMMARY
This case is before us on remand from the Supreme Court.
Plaintiffs, Chinese nationals, brought a tort action after a
fatal tour bus accident in Arizona. They sued defendants from
Indiana and California. After a settlement and dismissal of the
California tour bus operator and the California driver, the
remaining defendants were the Indiana manufacturer of the bus
and the California distributor that purchased the bus and sold it
to the tour operator. The operative complaint included causes of
action for wrongful death, negligence and strict products liability.
It was undisputed the driver was at fault for the accident.
Plaintiffs’ main theories were that the Indiana defendant
negligently designed and manufactured the bus and the
California defendant chose to order the bus without seatbelts,
which would have prevented the deaths and minimized the
injuries in the rollover crash.
Defendants sought a determination that Indiana law
applied. Indiana products liability law is less favorable to
plaintiffs than is California law. The trial court, applying
California’s governmental interest test to determine the choice of
law, concluded that Indiana law governed the case.
After that ruling, the Indiana manufacturer settled with
plaintiffs, and the California distributor was the sole remaining
defendant. Plaintiffs filed a motion in limine seeking application
of California law. A newly assigned trial judge denied the
motion, and the trial proceeded under Indiana products liability
law to a 10-2 defense verdict. Plaintiffs appealed, and we
reversed the judgment. We concluded the trial court should have
reconsidered the choice-of-law ruling after the Indiana defendant
2
settled with plaintiffs; California law governed; and the error was
prejudicial.
The Supreme Court reversed our decision, finding the trial
court was not required to reconsider the choice of law after the
Indiana defendant settled out. The court concluded the trial
court may revisit a choice-of-law decision, and there may be cases
in which the trial court is obligated to reconsider the decision, but
this was not one of them. The court remanded the case to us for
further proceedings consistent with its opinion. (Chen v. Los
Angeles Truck Centers, LLC (2019) 7 Cal.5th 862 (Chen),
reversing Chen v. L.A. Truck Centers, LLC (2017) 7 Cal.App.5th
757.)
On remand, plaintiffs ask us to find the trial court’s initial
decision to apply Indiana law was wrong. Neither this court nor
the Supreme Court had addressed the propriety of that ruling.
Plaintiffs argue (and our earlier opinion stated) that California
has a strong interest in imposing its products liability law on a
California defendant that allegedly imported a defective product
for sale in California. They further argue that Indiana had no
interest in having its products liability law applied to its resident
manufacturer.
We have reconsidered our earlier analysis of California’s
interest in applying its products liability law in a case where
there are no California plaintiffs and no one sustained injuries in
California. We now find that under those circumstances,
California’s interest in applying its law is hypothetical, since no
actual harm occurred in California giving rise to an interest to
deter conduct or compensate victims. Plaintiffs’ assertion that
Indiana had “no interest” in having its products liability law
applied is mistaken, as is demonstrated by Indiana’s high court
3
precedents. Because Indiana had a real interest in applying its
law, and California’s interest was only hypothetical, there was no
true conflict. Even if there were a true conflict, we would be
required to conclude, under the governmental interest test, that
Indiana law applies because its interest would be more impaired
if its policy were subordinated to the policy of California.
Therefore, the trial court correctly applied Indiana products
liability law.
Accordingly, we affirm the judgment.
FACTS
The facts underlying the lawsuit and the procedural
background have been described both by the Supreme Court and
in our earlier decision. (See Chen, supra, 7 Cal.5th at pp. 864-
866; 7 Cal.App.5th at pp. 760-766.) A brief summary here will
suffice.
Plaintiffs are passengers, or survivors of passengers, who
were injured or killed in a rollover accident in Arizona. They
were travelling from Las Vegas to the Grand Canyon for a day
trip. The driver had driven the bus from Los Angeles to Las
Vegas to pick them up for their Grand Canyon tour. The driver
was at fault.
The driver and tour guide had lap and shoulder restraints
and were virtually uninjured, but the passengers had no
seatbelts. Two passengers died and the rest were injured.
Plaintiffs’ theory of the case was that passenger seatbelts would
have prevented the deaths and greatly lessened the injuries
suffered.
4
The bus was manufactured in Indiana by an entity known
as Starcraft.1 Starcraft sold its buses nationally, through a
network of dealers. Defendant L.A. Truck Centers, LLC, doing
business as Buswest, was Starcraft’s exclusive dealer in
California, and has its principal place of business in California.
When Buswest ordered the bus, it could have purchased
non-retractable passenger lap belts for the bus for $12 each. It
also could have ordered retractable passenger lap and shoulder
belts for $45 each. Buswest ordered the bus without passenger
seat belts, Starcraft manufactured the bus as ordered, and
Buswest picked it up in Indiana and had it driven to California.
Two years later, Buswest sold the bus to a California tour
company. Buswest and the tour company arranged for delivery of
the bus in Las Vegas, so that the tour company could obtain
license plates enabling the bus to be used interstate.
After plaintiffs filed suit, the tour company and driver
settled with plaintiffs for $5 million. A year later, Starcraft and
Buswest filed a motion to apply the substantive law of Indiana to
the case. After that motion was granted, Starcraft settled out for
$3.5 million. As indicated above, the case went to trial under
Indiana products liability law, with Buswest as the only
defendant.
As the Supreme Court explained, Indiana law “imported a
negligence standard in the definition of a defective product.
[Citations.] Plaintiffs focused on Buswest’s decision to order the
1 There were two Indiana defendants: Forest River, Inc., the
Indiana corporation that designed, manufactured, and modified
the tour bus, and Starcraft, a division of Forest River. The
parties refer to “Starcraft buses,” so we refer to the Indiana
manufacturer as Starcraft.
5
bus without the $12 lapbelts. 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
lapbelts in this bus; the industry standard at the time was
to not include seatbelts; and lapbelts could cause serious injuries
to passengers in frontal collisions, which were more common than
rollover accidents.” (Chen, supra, 7 Cal.5th at p. 866.) The jury
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.” (Ibid.)
Judgment was entered for Buswest, and the ensuing appeal
was resolved as we described at the outset. On remand from the
Supreme Court, the sole issue is whether the trial court’s initial
choice of Indiana law – made at the behest of defendants
Starcraft (the Indiana manufacturer) and Buswest (the
California distributor) – was correct.
DISCUSSION
We review the trial court’s choice-of-law ruling de novo.
(Brown v. Grimes (2011) 192 Cal.App.4th 265, 274.)
1. The Governing Principles
The Supreme Court, in Chen and other cases, has described
how a California court determines which jurisdiction’s law will
govern in choice-of-law cases. The trial court must apply the
governmental interest test, “requiring an analysis of the
respective interests of the states involved.” (Hurtado v. Superior
Court (1974) 11 Cal.3d 574, 579 (Hurtado).) The California
Supreme Court adopted the governmental interest test in Reich
v. Purcell (1967) 67 Cal.2d 551, and in so doing, the court
renounced the former rule that the law of the place of the wrong
applied in tort actions regardless of the issues before the court.
6
The objective of the governmental interest test “is ‘to
determine the law that most appropriately applies to the issue
involved.’ ” (Hurtado, supra, 11 Cal.3d at pp. 579-580, quoting
Reich v. Purcell, supra, 67 Cal.2d at p. 555.) Here, the issue, as
Chen observes, was the plaintiffs’ products liability claim. (Chen,
supra, 7 Cal.5th at pp. 866, 869.)
“As the forum state, California will apply its own law
‘unless a party litigant timely invokes the law of a foreign state.’ ”
(Chen, supra, 7 Cal.5th at p. 867.) In that event, the party
invoking a foreign state’s law – here, Indiana law – “must
demonstrate that the [foreign state’s] rule of decision will further
the interest of the foreign state and therefore that it is an
appropriate one for the forum to apply to the case before it.”
(Hurtado, supra, 11 Cal.3d at p. 581.)
The governmental interest test is applied using 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.” ’ ” (Chen, supra,
7 Cal.5th at pp. 867-868.)
7
2. Application of the Governmental Interest Test
to the Products Liability Issue
a. The first step: different rules of law
The law on products liability is different in Indiana and
California. As Chen states, Indiana products liability law
imports a negligence standard into the definition of a defective
product. (Chen, supra, 7 Cal.5th at p. 866.) California does not.
(See Barker v. Lull Engineering Co. (1978) 20 Cal.3d 413, 434
[“[T]he fact that the manufacturer took reasonable precautions in
an attempt to design a safe product or otherwise acted as a
reasonably prudent manufacturer would have under the
circumstances, while perhaps absolving the manufacturer of
liability under a negligence theory, will not preclude the
imposition of liability under strict liability principles if, upon
hindsight, the trier of fact concludes that the product’s design is
unsafe to consumers, users, or bystanders.”].)
b. The second step: is there a true conflict?
As the Supreme Court directs, we next examine each
jurisdiction’s interest “in the application of its own law under the
circumstances of the particular case” (Chen, supra, 7 Cal.5th at
pp. 867-868), to determine whether a true conflict exists.
“Although the two potentially concerned states have different
laws, there is still no problem in choosing the applicable rule of
law where only one of the states has an interest in having its law
applied.” (Hurtado, supra, 11 Cal.3d at p. 580.) The state’s
interest must be real rather than hypothetical, as explained in
Bernhard v. Harrah’s Club (1976) 16 Cal.3d 313, 318-320
(Bernhard) (discussing the proper resolution of a true conflicts
case).
8
Bernhard tells us that “when under the governmental
interest approach a preliminary analysis reveals an apparent
conflict of interest upon the forum’s assertion of its own rule of
decision, the forum should reexamine its policy to determine if a
more restrained interpretation of it is more appropriate. ‘[To]
assert a conflict between the interests of the forum and the
foreign state is a serious matter; the mere fact that a suggested
broad conception of a local interest will create conflict with that
of a foreign state is a sound reason why the conception should be
reexamined, with a view to a more moderate and restrained
interpretation both of the policy and of the circumstances in
which it must be applied to effectuate the forum’s legitimate
purpose.’ . . . This process of reexamination requires
identification of a ‘real interest as opposed to a hypothetical
interest’ on the part of the forum.” (Bernhard, supra, 16 Cal.3d
at p. 320.) The point is to identify “a true conflict of the
governmental interests involved as applied to the parties under
the particular circumstances of the case.” (Ibid., italics added.)
When we consider “the particular circumstances of the
case” (Bernhard, supra, 16 Cal.3d at p. 320), we find there is no
true conflict—that is, Indiana’s interest is real and California’s
interest, as applied to the parties here, is hypothetical.
Indiana’s rule of decision on defective products, which is
more business-friendly than the California rule, furthers
Indiana’s interest in providing an attractive environment for its
manufacturers by protecting them from excessive liability or
damage awards. Indiana’s rule of decision effectively limits
liability “for commercial activity conducted within the state in
order to provide what the state perceives is fair treatment to, and
an appropriate incentive for, business enterprises.” (McCann v.
9
Foster Wheeler LLC (2010) 48 Cal.4th 68, 91 [applying Oklahoma
law] (McCann).)
In McCann, the Supreme Court applied Oklahoma’s more
business-friendly statute of repose in a mesothelioma case
brought by a California resident who was exposed to asbestos in
Oklahoma decades earlier when he resided in Oklahoma. The
court found Oklahoma had “a legitimate interest in attracting
out-of-state companies to do business within the state, both to
obtain tax and other revenue that such businesses may generate
for the state, and to advance the opportunity of state residents to
obtain employment and the products and services offered by out-
of-state companies.” (McCann, supra, 48 Cal.4th at pp. 91-92.)
The McCann court cited prior choice-of-law opinions that
recognized foreign states’ rules against excessive damage awards
protected valid and legitimate interests that may justify
application of the foreign state’s law when there is a true conflict
with California law. (See, e.g., Castro v. Budget Rent-A-Car
System, Inc. (2007) 154 Cal.App.4th 1162, 1181 [Alabama law
applied to suit brought by California resident injured in an
automobile accident in Alabama; Alabama, whose law limited the
potential liability of a vehicle owner for the negligence of a
permissive user, has an interest “in not having vehicle owners
and drivers in its jurisdiction subjected to different liabilities
based on the fortuity of which state a plaintiff happens to be a
resident”]; cf. Reich v. Purcell, supra, 67 Cal.2d at p. 556
[Missouri’s limitation on damages operates to avoid the
imposition of excessive financial burdens on defendants, but
Missouri has no interest in applying that rule to travelers from
states (California and Ohio) having no similar limitation];
Hurtado, supra, 11 Cal.3d at p. 581 [Mexico’s limitation of
10
damages did not conflict with California because Mexico has no
interest in applying that rule where no defendant resides in
Mexico and its rule would deny full recovery to its residents].)
In short, it is clear that Indiana has a legitimate interest in
the application of its products liability law to its resident
defendant (Starcraft) and those who do business with Starcraft.
On the other hand, when we examine California’s interest
in applying its more expansive products liability law, we find an
interest that is more hypothetical than real, when “applied to the
parties under the particular circumstances of the case.”
(Bernhard, supra, 16 Cal.3d at p. 320.)
Plaintiffs in this case are not California residents and were
not injured in California. California has a theoretical interest in
the application of its strict products liability rules because
Buswest, a California defendant, placed an allegedly defective
product into the stream of commerce, importing it and selling it
to a California tour operator. The policy behind imposing strict
products liability “ ‘is to insure that the costs of injuries resulting
from defective products are borne by the manufacturers that put
such products on the market rather than by the injured persons
who are powerless to protect themselves.’ ” (Barrett v. Superior
Court (1990) 222 Cal.App.3d 1176, 1186.) But the underlying
basis for the policy is the protection of California residents and
other persons within its territorial jurisdiction from injury.
California’s interest in imposing that policy becomes hypothetical
when the injured persons are not California residents and were
not injured in California.
Consequently, we conclude there is no true conflict in this
case. And even if there were, when we apply the comparative
11
impairment analysis (the third step of the governmental interest
test, post), the result is the same: Indiana law applies.
Before we apply the comparative impairment rule to this
case, we address plaintiffs’ contention that Indiana has “no
genuine interest” in applying its products liability law to this
case. Plaintiffs contend Indiana courts would not apply Indiana
products liability law to this case, and so a California court
should not do so either. The basis for this argument is the claim
that Indiana still follows the law that the place of the wrong
determines the choice of law in tort actions (the lex loci rule), so
Indiana would apply Arizona law because the rollover happened
there. We think it is a dubious proposition that an Indiana court
would apply Arizona law to a case involving an Indiana
defendant and no Arizona parties, where neither plaintiffs nor
defendants seek the application of Arizona law. More to the
point, plaintiffs are mistaken in their understanding of Indiana
law.
In their initial briefing, plaintiffs cited no California
authority, only federal decisions and decisions from other states,
for the proposition that a court may consider whether the other
state would apply its own law. In their supplemental brief,
plaintiffs cite Robert McMullan & Son, Inc. v. United States
Fidelity & Guaranty Co. (1980) 103 Cal.App.3d 198 (McMullan).
McMullan is an insurance breach of contract case where the
court decided no conflict existed in the first place. (Id. at pp. 202-
204.) We do not see how McMullan advances plaintiffs’ case.2
2 McMullan involved whether the plaintiff could recover
attorney fees after it successfully sued its insurer for wrongful
withdrawal from the defense of an action brought against the
plaintiff in Florida. (McMullan, supra, 103 Cal.App.3d at p. 200.)
12
In any event, plaintiffs misunderstand Indiana law. As one
case plaintiffs cite from Montana points out, by the end of 1998,
“only 11 states still adhered to the lex loci rule, and their
continued adherence is questionable.” (Phillips v. GMC
(Mont. 2000) 995 P.2d 1002, 1007, citing Symeonides, Choice of
Law in the American Courts in 1998: Twelfth Annual Survey
(1999) 47 Am. J. Comparative Law 327, 331.) Indiana is not one
of those 11 states. (Symeonides, at p. 330.)
Plaintiffs omit to tell us that Indiana “liberalize[d] [its]
approach” in 1987, so that “in tort cases Indiana choice-of-law
analysis now involves multiple inquiries.” (Simon v. United
States (Ind. 2004) 805 N.E.2d 798, 804 (Simon), citing Hubbard
Manufacturing Co., Inc. v. Greeson (Ind. 1987) 515 N.E.2d 1071(Hubbard).)
In Simon, the Indiana Supreme Court explained that the
lex loci rule “may be overcome if the court is persuaded that ‘the
place of the tort “bears little connection” to this legal action.’ ”
The plaintiff was a California corporation, and the insurance
contracts were purchased, issued and delivered in California.
California law did not authorize recovery of attorney fees (id. at
p. 202), and Florida law was the same as California law (id. at
p. 203). Maryland (the state of the insurer’s residence and where
the decision to breach occurred) had no statutory law on the
subject, although in some cases, Maryland residents who sued
insurance companies in Maryland for breach of policies issued in
Maryland had recovered fees. (Id. at p. 203.) The McMullan
court then added that Maryland law was clear on a “further
point” that, under Maryland contract law, the place of contracting
(which was California) determines the validity and effect of the
provisions in the policy. (Id. at pp. 203-204.) None of the
analysis in McMullan is instructive here.
13
(Simon, supra, 805 N.E.2d at p. 805, quoting Hubbard, supra,
515 N.E.2d at p. 1074.) “If the location of the tort is insignificant
to the action, the court should consider other contacts that may
be more relevant . . . . All contacts ‘should be evaluated according
to their relative importance to the particular issues being
litigated.’ ” (Ibid.)
In Hubbard, the Indiana Supreme Court ruled that Indiana
law applied to a wrongful death suit where an Indiana resident
was killed in Illinois while working on a lift used to repair street
lights. The decedent’s wife sued the Indiana company that
manufactured the lift. The accident happened in Illinois, the
coroner’s inquest occurred in Illinois, and Illinois paid workers
compensation benefits to the decedent’s heirs, but the court found
none of those facts related to the wrongful death action. “The
plaintiff’s two theories of recovery relate to the manufacture of
the lift in Indiana. Both parties are from Indiana; plaintiff
Elizabeth Greeson is a resident of Indiana and defendant
Hubbard is an Indiana corporation with its principal place of
business in Indiana. The relationship between the deceased and
Hubbard centered in Indiana. The deceased frequently visited
[the] defendant’s plant in Indiana to discuss the repair and
maintenance of the lift. Indiana law applies.” (Hubbard, supra,
515 N.E.2d at p. 1074.)
In short, Indiana’s high court precedents demonstrate that
plaintiffs are mistaken in the notion that Indiana had “no
genuine interest” in applying its products liability law to this
case. Plaintiffs protest this conclusion, citing several cases for
the proposition that in products liability cases, courts in the years
since Hubbard have applied the law of the place where the
product caused harm, rather than the law of Indiana where the
14
product was designed or manufactured. The cited cases are all
easily distinguishable from the facts in this case, where the place
of the tort (Arizona) bears little connection to the products
liability claims at issue.
For example, in Alli v. Eli Lilly & Co. (Ind.Ct.App. 2006)
854 N.E.2d 372 (Alli), the court applied Indiana choice-of-law
analysis to conclude that the substantive law of Michigan applied
to a products liability and wrongful death action against the
manufacturer of the antidepressant Prozac. (Id. at p. 375.) In
Alli, the defendant’s corporate headquarters was in Indiana, but
defendant was a global company selling its products worldwide
and registered to do business in Michigan. Michigan was the
state where the decedent lived and worked; he was treated for
depression and received all his medical treatment in Michigan;
the medication was provided to the decedent’s Michigan doctor by
the defendant’s Michigan-based sales representatives; and the
decedent took the Prozac in Michigan and committed suicide
there. (Id. at pp. 375, 379.) When the court, following the
directions of Simon and Hubbard, examined whether the place of
the tort “bears little connection” to the legal action, it found to the
contrary that the place of the tort was significant. (Alli, at
pp. 376, 379.) That being so, no further analysis was necessary.
(Ibid.) We fail to see how this case assists plaintiffs here, where
the location of the tort is insignificant.3
3 The two federal cases plaintiffs cite are equally, or more,
inapt. In Klein v. DePuy, Inc. (7th Cir. 2007) 506 F.3d 553, the
court found North Carolina’s statute of repose applied rather
than Indiana’s longer statute of repose. The case involved an
allegedly defective hip prosthesis, manufactured by the Indiana
defendant, that was used in hip replacement surgery in North
15
Plaintiffs also cite Rexroad v. Greenwood Motor Lines, Inc.
(Ind.Ct.App. 2015) 36 N.E.3d 1181, which states that “Simon
indicates . . . that automobile accidents were generally not
intended to fall under this exception” to the presumption that the
lex loci rule applies. (Id. at p. 1184.) The key is the word
“generally.” As Simon points out, the reason the lex loci
presumption exists is “because in a ‘large number of cases, the
place of the tort will be significant and the place with the most
contacts.’ ” (Simon, supra, 805 N.E.2d at p. 805.) This is not
such a case. None of the cases plaintiffs cite changes anything
about the proper application of Simon and Hubbard.
Carolina. (Id. at pp. 554, 555.) The court rejected the claim “that
North Carolina bears little significance to the legal action,”
pointing out that the plaintiff resided, consulted with doctors,
and decided to undergo surgery in North Carolina, and received
his prosthesis, diagnosis, revision surgery, and all of his medical
care there. (Id. at p. 556.) Indeed, the court concluded that “[w]e
would be hard-pressed to conclude anything but that the location
of the injury is significant to this action.” (Ibid.) The other case,
In re Bridgestone/Firestone, Inc., Tires Products Liability
Litigation (7th Cir. 2002) 288 F.3d 1012, has no apparent
relevance. Based on choice-of-law concerns, it reversed a district
court’s order certifying two nationwide class actions. (Id. at
p. 1021.) Plaintiffs merely quote a sentence describing Indiana
as a lex loci state that applies the law of the place where the
harm occurred in all but exceptional cases, citing Hubbard. (Id.
at p. 1016.) But Hubbard itself explicitly states that “[a] court
should be allowed to evaluate other factors when the place of the
tort is an insignificant contact.” (Hubbard, supra, 515 N.E.2d at
p. 1073.)
16
c. The third step: comparative impairment
As we have said, we find no true conflict in this case. But
even assuming a true conflict, the result does not change.
McCann instructs that in cases where there is a true
conflict, a court must then evaluate and compare the nature and
strength of each state’s interest to determine which would be
more impaired if its policy were subordinated to that of the other
state. (McCann, supra, 48 Cal.4th at pp. 96-97.)
McCann cautions: “[I]t is important to keep in mind that
‘[t]he court does not “ ‘weigh’ the conflicting governmental
interests in the sense of determining which conflicting law
manifested the ‘better’ or the ‘worthier’ social policy on the
specific issue.” ’ ” (McCann, supra, 48 Cal.4th at p. 97.) The
process involves determining the appropriate limitations on the
reach of state policies, as distinguished from evaluating the
wisdom of those policies. (Ibid.) The court summarizes:
“Accordingly, our task is not to determine whether the [Indiana]
rule or the California rule is the better or worthier rule, but
rather to decide—in light of the legal question at issue and the
relevant state interests at stake—which jurisdiction should be
allocated the predominating lawmaking power under the
circumstances of the present case.” (Ibid.)
We conclude the trial court properly allocated the
predominating lawmaking power to Indiana, under the
circumstances that existed when the question was presented to
the court. To recap those circumstances: There were only two
defendants, the Indiana corporation that designed, manufactured
and sold the bus in Indiana; and the California distributor that
bought the bus in Indiana, brought it into California and sold it
to the tour company that used it in California, Arizona and
17
Nevada. When those defendants moved for application of
Indiana law, the California tour company and driver had been
dismissed from the case, so any interest California may have had
in applying its law to those defendants was not at issue, and the
trial court correctly did not consider those interests. There were
no California plaintiffs, and no injuries occurred in California.
The action, as the trial court observed, was “premised on the
main allegation that the bus was defective because it was not
properly designed for handling and stability, crashworthiness,
and lacked seatbelts and air curtains.”
Under these circumstances, Indiana’s interest in providing
a business-friendly environment that protects its resident
manufacturers from excessive financial burdens is more
compelling than California’s interest in applying its products
liability law. We reach this conclusion based on the specific
circumstances of this case, and recognizing that we may not
consider which state’s products liability rules manifest the
worthier or wiser social policy. (McCann, supra, 48 Cal.4th at
p. 97.)
Indiana’s policy protects its manufacturers by importing a
reasonableness standard into its products liability law. The
application of California law to this case would clearly impair
that policy by exposing an Indiana corporation and a distributor
of its products to the risk of significantly expanded liability
without evidence the manufacturer was negligent in designing
and manufacturing its allegedly defective product.
By contrast, the application of California law would not
protect California residents or anyone who was injured in
California. As Hurtado tells us, a state’s interest in providing
compensation to survivors in a wrongful death case “extend[s]
18
only to local decedents and local beneficiaries.” (Hurtado, supra,
11 Cal.3d at p. 584.) None of the plaintiffs was local to
California; they were Chinese nationals touring from Las Vegas
to the Grand Canyon.
California’s interest in ensuring that manufacturers bear
the financial burden of defective products is also primarily local
in character, to protect California residents and persons who are
injured in California from having to bear the financial costs of
injuries caused by defective products. The fact that California’s
products liability law is more liberal than Indiana’s does not
permit us to find Indiana law should be subordinated to
California law in this case, where the manufacturer’s and
distributor’s conduct caused no injuries in California or to
California residents. (See McCann, supra, 48 Cal.4th at p. 99
[“Certainly, if the law of this state is not applied here, California
will not be able to extend its liberal statute of limitations for
asbestos-related injuries or illnesses to some potential plaintiffs
whose exposure to asbestos occurred wholly outside of California.
Nonetheless, our past choice-of-law decisions teach that
California’s interest in applying its laws providing a remedy to,
or facilitating recovery by, a potential plaintiff in a case in which
the defendant’s allegedly tortious conduct occurred in another
state is less than its interest when the defendant’s conduct
occurred in California.”].) Similarly, California’s interest in
applying its strict products liability law is less when the allegedly
tortious conduct of one of the two defendants occurred elsewhere
and where there are no California residents to protect.
Of course, a tragic tour bus accident of the sort that
occurred here might well have occurred on a California road, and
California residents might have been in that tour bus. If either of
those circumstances had occurred, our analysis would be
19
different. But, “[w]e must seek . . . to identify the ‘ “real interest
as opposed to a hypothetical interest” ’ [citation] in enforcing
forum law.” (Cable v. Sahara Tahoe Corp. (1979) 93 Cal.App.3d
384, 394.) To apply California law in these circumstances would
be to extend the reach of California’s protection against defective
products to foreign nationals injured in another jurisdiction. The
reach of California’s lawmaking power in respect of its products
liability policy is appropriately confined to the protection of
California residents and persons injured within California’s
borders.
Because there is no true conflict, and because in any event
the interests of Indiana would be more impaired if its policy were
subordinated to that of California, the trial court’s conclusion
that Indiana law should apply was correct.
DISPOSITION
The judgment is affirmed. Defendant shall recover its costs
on appeal.
GRIMES, Acting P. J.
WE CONCUR:
STRATTON, J.
WILEY, J.
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