Case BriefCivil Procedure, BauerState Law in Federal Courts, State Horizontal Choice of Law rules2/7/15Identity of CaseKlaxon Co. v. Stentor Electric Manufacturing Co. 313 U.S. 487 (1941)Page 904 of the casebookSummary of Facts/Procedural HistoryKlaxon made a contract with Stentor to “use its best efforts” to manufacture and sell a product of Klaxon’s. Stentor was a NY corporation, but they reincorporated to Delaware prior to Delaware just prior to court proceedings. Klaxon sues for failure of contract in federal district court in Delaware. The contractwas executed and to be performed in NY. Delaware-based federal court during trial proceedings applies apenalty interest from a statute in NY, based on the fact that this was essentially a NY controversy. They justified it by stating that this was a substantive and not procedural issue, and the substantive law of the case where the injury occurred should be supplied. No such law existed in Delaware. Interest penalty was overturned. Statement of the IssueWhen the laws are in conflict, which laws must the district courts follow? HoldingThe laws which the state they live in says they should (states can pass laws which decide what happens in case of controversy in laws in federal courts in their states).ReasoningUniformity within a state cannot allow a federal district court to decide which laws apply, even if they have a reason that appears to be a good one. States can decide to adopt the laws of a state in which the controversy occurred (many do) or not (about the same, not good policy to hold your citizens to the lawsof another state). Evaluation Is this any different from the choice of law problems presented in Black & White? The company relocated itself to get more favorable laws, breach of contract pending.
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