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Pacific Employers Ins. Co. v. Industrial Acc. Comm’n

    Brief Fact Summary

    The claimant was a Massachusetts employee of a Massachusetts employer who was injured while on the job in California.  He filed a claim for benefits under the California Workmen’s Compensation Act.

    Synopsis of Rule of Law
    The full faith and credit doctrine may not be invoked where the strong public policy of the forum state would find as obnoxious the enforcement of another state’s statutes.

    Facts
    While in California on company business, a Massachusetts employee of a Massachusetts employer was injured while on the job.  He filed a claim for benefits under the California Workmen’s Compensation Act and was granted the benefits provided by the California Act.  The Industrial Accident Commission of California (Plaintiff) directed that the claimant’s benefits be paid by the employer’s insurance carrier, Pacific Employers Insurance Co. (Defendant).  The company argued that benefits should be awarded on the basis of benefits provided by the Massachusetts workmen’s compensation laws, since the contract of employment was entered into in Massachusetts.  The Massachusetts statutes setting forth the jurisdiction over compensable injuries stated that the employee waived his rights to recover under the laws of another state unless he specifically gave written notice of an election not to waive.  The claimant gave no such notice.  The applicable California statute provided that California would have exclusive jurisdiction over accidents occurring within the state.  Both statutes gave the respective states jurisdiction over injuries outside the state where the contract of hire was entered into within the state.  Pacific Employers (Defendant) argued that the Full Faith and Credit Clause required California to recognize the provisions of the Massachusetts Act.

    Issue
    Does the Full Faith and Credit Clause require a forum state to enforce the laws of another state despite a strong public policy in the forum state to control accidents within its borders?

    Held
    (Stone, J.)  No.  The Massachusetts statutes vesting jurisdiction in that state over accidents occurring within that state under a contract of hire entered into in Massachusetts is certainly constitutional.  The same is true for similar California provisions.  Each state could voluntarily opt to enforce the statutes of the other in appropriate circumstances.  Each state has a valid interest in providing for the welfare of its own employees injured within the state and may provide for the compensation of employees temporarily out of the state.  However, to force California to enforce the Massachusetts provisions would be to deny to California the right to give effect to the strong public policy of that state rightfully translated into law.  The employee was injured in California, his benefits are payable there, and any medical bills or other attendant expenses will be incurred there.  To enforce full faith and credit would be to deny to California the right to apply its own remedy and it would be administratively difficult, if not impossible, to provide the claimant his remedies provided by Massachusetts.  This would leave the claimant without a viable remedy for his injuries.  The Full Faith and Credit Clause does not empower one state to legislate for another or to project its own laws across state lines where, to do so, would offend the public policy of the other state.  Affirmed.

    Discussion
    This case is an example of the development of choice of law rules in rejection of the vested rights doctrine.  While expressed in a full faith and credit context, the real issue in this case was choice of law and due process.  Generally, the Supreme Court has followed the policy of enforcing full faith and credit only in situations where the state having jurisdiction over the parties has asserted its law.  This case represents a choice of laws analysis based on the most significant contact theory.  Under this theory, the court looks at the conduct of the parties and the location where that conduct took place.  The court then determines which activities are relevant to the issues of the lawsuit and where those relevant activities took place.  The state where the most number of significant or relevant contacts were made concerning the transaction is considered to have the most appropriate law to apply.  This approach might appear to be somewhat mechanical, but it becomes rather discretionary in operation.  The process is not scientific to determine which activities are significant.  Plus, the court may decide that one significant contact is more relevant that another.  In this case, the place of contracting for the employment was a significant contact with Massachusetts.  However, the California court found that the place of contracting had little relevance and, therefore, gave that contact little weight in its decision.  Critics of this approach have pointed to this as a defect in the application of the significant contact approach.  They argue that while the contact analysis may be a more realistic approach to choice of laws than the vested right doctrine was, the wide discretion given to the court leads to results where there is a loss of uniformity and predictability.


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