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March 2010

McCann v. Foster Wheeler LLC: Choice of Law Win for the Defense

Gordon & Rees Attorneys' Amicus Briefing Contributes to a Major Choice-of-Law Win for Defendants

The California Supreme Court has found that Oklahoma's statute of repose, not California's asbestos statute of limitations, governs where the plaintiff was exposed to asbestos in Oklahoma while an Oklahoma resident, years before he moved to California and more years still before his diagnosis of mesothelioma.  (McCann v. Foster Wheeler LLC (Feb. 18, 2010) 2010 WL 547274.)

This decision should prove very helpful in other cases brought in California but alleging exposure outside California and in general to defendants doing business (presently or historically or both) in other states.  Two linchpins to the decision:

A.   Business-friendly laws are presumed to protect out-of-state as well as in-state businesses.

B.   California's interest in punishing conduct that occurs outside California is less than the interest of the state in which the conduct occurs.

Gordon & Rees attorneys James Scadden, Don Willenburg and Steve Corcoran originally won this issue at the trial court.  The case went to other counsel on appeal, and the court of appeal reversed.  Don Willenburg and Mike Pietrykowski filed an amicus brief on behalf of two clients that foreshadowed key parts of the Supreme Court's reversal of the court of appeal.  For example, the amicus brief argued:

"The Court of Appeal wrongly reasoned that Oklahoma had no interest in applying its law in this case, because the defendant was located outside Oklahoma: the defendant was, to use a phrase, 'just doing business' there.  The Court of Appeal thus held that states do not have an interest in encouraging business and investment from other states, or regulating that business.  This is simply untrue.  States are competing for business all the time.  There is no reason to believe that state laws to protect interests from suit - like statute of repose - are intended to, or properly, benefit only those defendants permanently located in-state.  We live in a federal society, not a provincial or parochial one.  'Just doing business' is something state governments want out-of-staters to do, and for that matter that the interstate commerce clause protects.  'Just doing business' might well be enough to subject a party to jurisdiction in that state; it should be enough to be at least a consideration in determining whether the laws of that state apply to the conduct of the business done in that state." 

The California Supreme Court agreed with Gordon & Rees's amicus position.

"When a state adopts a rule of law limiting 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, we believe that the state ordinarily has an interest in having that policy of limited liability applied to out-of-state companies that conduct business in the state, as well as to businesses incorporated or headquartered within the state.  A state has 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 ... [a] state's interest in having that law applied to the activities of out of state companies within the jurisdiction is equal to its interest in the application of the law to comparable activities engaged in by local businesses situated within the jurisdiction."  (Slip op. 27.)

Michael J. Pietrykowski
James G. Scadden
Don Willenburg



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