Will Louisiana honor this contract's choice-of-law clause, or apply its own most-seriously-impaired-policy conflicts test instead?
Louisiana will generally honor the parties' choice, but its codified conflicts-of-laws methodology is NOT a simple rule that the law the parties chose always governs. It is built around a most-seriously-impaired-policy analysis, with party autonomy layered on top as the general residual rule. Civil Code art. 3537 states the baseline test for conventional obligations: "Except as otherwise provided in this Title, an issue of conventional obligations is governed by the law of the state whose policies would be most seriously impaired if its law were not applied to that issue," determined by weighing "the pertinent contacts of each state to the parties and the transaction," "the nature, type, and purpose of the contract," and enumerated policy factors including "facilitating the orderly planning of transactions" and "protecting one party from undue imposition by the other." Article 3540 then supplies party autonomy for everything the more specific Title does not otherwise resolve: "All other issues of conventional obligations are governed by the law expressly chosen or clearly relied upon by the parties, except to the extent that law contravenes the public policy of the state whose law would otherwise be applicable under Article 3537." A Louisiana Court of Appeal confirmed how this operates in practice in O'Bannon v. Moriah Techs., Inc.: "it is well established that where the parties stipulate the state law governing the contract, Louisiana conflict of laws principles require that the stipulation be given effect, unless there is statutory or *405 jurisprudential law to the contrary or strong public policy considerations justifying the refusal to honor the contract as written." It then did exactly that, and the result is worth knowing because the stipulation cost the Louisiana claimants their Louisiana remedy: the policy named Texas workers'-compensation law, so "we find that Texas law should be applied in determining whether the policy provided coverage", and "O'Bannon and Moriah are not entitled to receive benefits under the LWCA."
The trap
Article 3540's party-autonomy rule is textually subordinate to, and conditioned by, art. 3537's public-policy override. The chosen law is displaced "to the extent that law contravenes the public policy of the state whose law would otherwise be applicable under Article 3537," which means a reviewer cannot stop at noting that the contract has a choice-of-law clause without asking what Louisiana's own most-seriously-impaired-policy analysis would otherwise pick, and whether the chosen law conflicts with THAT state's public policy. Employment contracts are a hard statutory override, not merely a public-policy factor to weigh: R.S. 23:921(A)(2) independently VOIDS a choice-of-law clause in an employee's contract of employment unless the employee later, after the dispute arose, expressly ratifies it: a choice-of-law clause that would otherwise be honored under arts. 3537/3540 can still be struck down by this separate, employment-specific statute. And O'Bannon's own formulation is conditional, not absolute: the stipulation is given effect unless there is statutory or "jurisprudential law to the contrary or strong public policy considerations justifying the refusal to honor the contract as written": the party-autonomy default has real, litigated exceptions, and the case does not purport to catalog all of them.
6 authorities
- statuteLa. Civ. Code art. 3537enactment date not established
The words that state the rule
Except as otherwise provided in this Title, an issue of conventional obligations is governed by the law of the state whose policies would be most seriously impaired if its law were not applied to that issue.
- statuteLa. Civ. Code art. 3540enactment date not established
The words that state the rule
All other issues of conventional obligations are governed by the law expressly chosen or clearly relied upon by the parties, except to the extent that law contravenes the public policy of the state whose law would otherwise be applicable under Article 3537.
The words that state the rule
Furthermore, as noted in our prior opinion, it is well established that where the parties stipulate the state law governing the contract, Louisiana conflict of laws principles require that the stipulation be given effect, unless there is statutory or *405 jurisprudential law to the contrary or strong public policy considerations justifying the refusal to honor the contract as written.
- statuteLa. Civ. Code art. 3537enactment date not established
The words that state the rule
That state is determined by evaluating the strength and pertinence of the relevant policies of the involved states in the light of: (1) the pertinent contacts of each state to the parties and the transaction, including the place of negotiation, formation, and performance of the contract, the location of the object of the contract, and the place of domicile, habitual residence, or business of the parties; (2) the nature, type, and purpose of the contract; and (3) the policies referred to in Article 3515, as well as the policies of facilitating the orderly planning of transactions, of promoting multistate commercial intercourse, and of protecting one party from undue imposition by the other.
- statuteLa. R.S. 23:921enactment date not established
The words that state the rule
The provisions of every employment contract or agreement, or provisions thereof, by which any foreign or domestic employer or any other person or entity includes a choice of forum clause or choice of law clause in an employee's contract of employment or collective bargaining agreement, or attempts to enforce either a choice of forum clause or choice of law clause in any civil or administrative action involving an employee, shall be null and void except where the choice of forum clause or choice of law clause is expressly, knowingly, and voluntarily agreed to and ratified by the employee after the occurrence of the incident which is the subject of the civil or administrative action.
The words that state the rule
As discussed above, at Item 3.A. of the Information Page, the parties stipulated that the policy applies to the workers' compensation law of Texas. Furthermore, the policy's limited reimbursement endorsement expressly limited reimbursements to Texas and set forth the venue for any lawsuits involving reimbursements as Travis County, Texas. In light of the stipulations made by the parties in the policy, we find that Texas law should be applied in determining whether the policy provided coverage to O'Bannon and Moriah. Our review of the record reveals that neither Louisiana nor any other state was listed under Item 3.A. or under 3.C. of the Information Page, which expressly provides that the policy applies to the workers' compensation law of the State of Texas. Based on the clear and unambiguous terms of the policy, O'Bannon and Moriah are not entitled to receive benefits under the LWCA.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.