Brief Fact Summary
California’s provision bringing under its workers’ compensation law employment contracts executed in the state was challenged as violating the Full Faith and Credit Clause when applied to an extraterritorial accident suffered by a nonresident alien, Palma (Plaintiff).
Synopsis of Rule of Law
A forum state may give effect to its own state’s law over that of the place of accident if the extraterritorial law violates the public policy of the forum state.
Palma (Plaintiff) was a nonresident alien who contracted with Alaska Packers Association (Defendant), an Alaska organization, to work in Alaska.Â The contract was made in San Francisco and stated that the parties stipulated to be bound by the workers’ compensation law of Alaska.Â While working in Alaska, the Plaintiff was injured there.Â After completing the contract and returning to California, he applied for workers’ compensation in California.Â As California law brought within the ambit of workers’ compensation all employment agreements made in California, the California Industrial Accident Commission (Plaintiff), ruling that Alaska’s law could not be asserted as a defense to Plaintiff’s claim, awarded him compensation.Â The Association (Defendant) appealed, arguing that Alaska law should have been applied under the Full Faith and Credit Clause.Â The California Supreme Court affirmed, and the U.S. Supreme Court granted review.
May a forum state give effect to its own state’s law over that of the place of accident if the extraterritorial law violates the public policy of the forum state?
(Stone, J.)Â Yes.Â A forum state may give effect to its own state’s law over that of the place of accident if the extraterritorial law violates the public policy of the forum state.Â Taken literally, the Full Faith and Credit Clause would require a state, under all circumstances, to always give effect to a foreign law that competed with a local law.Â This would lead to the absurd result of each state always giving effect to a law other than its own, i.e., the law of the place of the injury would only be enforced in a foreign jurisdiction.Â The Clause cannot be construed to have this effect.Â Instead, the proper analysis is to look at the competing laws, and to consider whether the extraterritorial law embodies a policy of the enacting state strong enough to override the presumption that a forum state’s court may enforce the laws of that state.Â Surely, when enforcing the law of another state would violate public policy of the forum state, the Clause does not require the forum law to be enforced.Â In this case, California’s stated policy is to see a broad application of its workers’ compensation law, and not to apply California law would violate this policy.Â No rational basis was offered for denying the California courts the right to apply their own state’s laws.Â Affirmed.
The Court also rejected the argument that application of California law in this case would be a violation of due process, concluding that the California law, as applied, did not lack a rational basis or involve any arbitrary or unreasonable exercise of state power.Â This case presaged the â€œcenter of gravityâ€ test for conflicts law, which in recent times has supplanted the lex loci delicti law as the approach most generally accepted to resolve tort case conflicts.Â The approach pushed for by the Alaska Packers Association (Defendant) would have amounted to a constitutionalization of the lex loci rule, which the Court was not inclined to do.