Hairu Chen v. L. A. Truck Ctrs., LLC

• Decision Date: 22 November 2019
• Docket Number: B265304
• Court: California Court of Appeals Court of Appeals
• Parties: Hairu CHEN et al., Plaintiffs and Appellants, v. LOS ANGELES TRUCK CENTERS, LLC, Defendant and Respondent.

42 Cal.App.5th 488

255 Cal.Rptr.3d 559

Hairu CHEN et al., Plaintiffs and Appellants,

v.LOS ANGELES TRUCK CENTERS, LLC, Defendant and Respondent.

B265304

Court of Appeal, Second District, Division 8, California.

Filed November 22, 2019

Law Offices of Martin N. Buchanan, Martin Buchanan ; Girardi & Keese and David R. Lira, Los Angeles, for Plaintiffs and Appellants.

Shook, Hardy & Bacon, M. Kevin Underhill, Frank Rothrock and Janet L. Hickson, Irvine, for Defendant and Respondent.

GRIMES, Acting P. J.

SUMMARY

This case is before us on remand from the Supreme Court.

Plaintiffs, Chinese nationals, brought a tort action after a fatal tour bus accident in Arizona. They sued defendants from Indiana and California. After a settlement and dismissal of the California tour bus operator and the California driver, the remaining defendants were the Indiana manufacturer of the bus and the California distributor that purchased the bus and sold it to the tour operator. The operative complaint included causes of action for wrongful death, negligence and strict products liability. It was undisputed the driver was at fault for the accident. Plaintiffs’ main theories were that the Indiana defendant negligently designed and manufactured the bus and the California defendant chose to order the bus without seatbelts, which would have prevented the deaths and minimized the injuries in the rollover crash.

Defendants sought a determination that Indiana law applied. Indiana products liability law is less favorable to plaintiffs than is California law. The trial court, applying California’s governmental interest test to determine the choice of law, concluded that Indiana law governed the case.

After that ruling, the Indiana manufacturer settled with plaintiffs, and the California distributor was the sole remaining defendant. Plaintiffs filed a motion in limine seeking application of California law. A newly assigned trial judge denied the motion, and the trial proceeded under Indiana products liability law to a 10-2 defense verdict. Plaintiffs appealed, and we reversed the judgment. We concluded the trial court should have reconsidered the choice-of-law ruling after the Indiana defendant settled with plaintiffs; California law governed; and the error was prejudicial.

The Supreme Court reversed our decision, finding the trial court was not required to reconsider the choice of law after the Indiana defendant settled out. The court concluded the trial court may revisit a choice-of-law decision, and there may be cases in which the trial court is obligated to reconsider the decision, but this was not one of them. The court remanded the case to us for further proceedings consistent with its opinion. ( Chen v. Los Angeles Truck Centers, LLC (2019) 7 Cal.5th 862, 249 Cal.Rptr.3d 594, 444 P.3d 727 ( Chen ), reversing Chen v. L.A. Truck Centers, LLC (2017) 7 Cal.App.5th 757, 213 Cal.Rptr.3d 142.)

On remand, plaintiffs ask us to find the trial court’s initial decision to apply Indiana law was wrong. Neither this court nor the Supreme Court had addressed the propriety of that ruling. Plaintiffs argue (and our earlier opinion stated) that California has a strong interest in imposing its products liability law on a California defendant that allegedly imported a defective product for sale in California. They further argue that Indiana had no interest in having its products liability law applied to its resident manufacturer.

We have reconsidered our earlier analysis of California’s interest in applying its products liability law in a case where there are no California plaintiffs and no one sustained injuries in California. We now find that under those circumstances, California’s interest in applying its law is hypothetical, since no actual harm occurred in California giving rise to an interest to deter conduct or compensate victims. Plaintiffs’ assertion that Indiana had "no interest" in having its products liability law applied is mistaken, as is demonstrated by Indiana’s high court precedents. Because Indiana had a real interest in applying its law, and California’s interest was only hypothetical, there was no true conflict. Even if there were a true conflict, we would be required to conclude, under the governmental interest test, that Indiana law applies because its interest would be more impaired if its policy were subordinated to the policy of California. Therefore, the trial court correctly applied Indiana products liability law.

Accordingly, we affirm the judgment.

FACTS

The facts underlying the lawsuit and the procedural background have been described both by the Supreme Court and in our earlier decision. (See Chen, supra, 7 Cal.5th at pp. 864-866, 249 Cal.Rptr.3d 594, 444 P.3d 727 ; 7 Cal.App.5th at pp. 760-766, 213 Cal.Rptr.3d 142.) A brief summary here will suffice.

Plaintiffs are passengers, or survivors of passengers, who were injured or killed in a rollover accident in Arizona. They were travelling from Las Vegas to the Grand Canyon for a day trip. The driver had driven the bus from Los Angeles to Las Vegas to pick them up for their Grand Canyon tour. The driver was at fault.

The driver and tour guide had lap and shoulder restraints and were virtually uninjured, but the passengers had no seatbelts. Two passengers died and the rest were injured. Plaintiffs’ theory of the case was that passenger seatbelts would have prevented the deaths and greatly lessened the injuries suffered.

The bus was manufactured in Indiana by an entity known as Starcraft.¹ Starcraft sold its buses nationally, through a network of dealers. Defendant L.A. Truck Centers, LLC, doing business as Buswest, was Starcraft’s exclusive dealer in California, and has its principal place of business in California.

When Buswest ordered the bus, it could have purchased non-retractable passenger lap belts for the bus for $12 each. It also could have ordered retractable passenger lap and shoulder belts for $45 each. Buswest ordered the bus without passenger seat belts, Starcraft manufactured the bus as ordered, and Buswest picked it up in Indiana and had it driven to California. Two years later, Buswest sold the bus to a California tour company. Buswest and the tour company arranged for delivery of the bus in Las Vegas, so that the tour company could obtain license plates enabling the bus to be used interstate.

After plaintiffs filed suit, the tour company and driver settled with plaintiffs for $5 million. A year later, Starcraft and Buswest filed a motion to apply the substantive law of Indiana to the case. After that motion was granted, Starcraft settled out for $3.5 million. As indicated above, the case went to trial under Indiana products liability law, with Buswest as the only defendant.

As the Supreme Court explained, Indiana law "imported a negligence standard in the definition of a defective product. [Citations.] Plaintiffs focused on Buswest’s decision to order the bus without the $12 lapbelts. In its defense, Buswest contended its decision not to include seatbelts constituted an exercise of reasonable care because the federal National Highway Transportation Safety Administration standards did not require lapbelts in this bus; the industry standard at the time was to not include seatbelts; and lapbelts could cause serious injuries to passengers in frontal collisions, which were more common than rollover accidents." ( Chen, supra, 7 Cal.5th at p. 866, 249 Cal.Rptr.3d 594, 444 P.3d 727.) The jury concluded that "while Buswest was a manufacturer or seller of the bus under Indiana law, the bus was not in a ‘defective condition’ at the time of the accident." ( Ibid. )

Judgment was entered for Buswest, and the ensuing appeal was resolved as we described at the outset. On remand from the Supreme Court, the sole issue is whether the trial court’s initial choice of Indiana law – made at the behest of defendants Starcraft (the Indiana manufacturer) and Buswest (the California distributor) – was correct.

DISCUSSION

We review the trial court’s choice-of-law ruling de novo. ( Brown v. Grimes (2011) 192 Cal.App.4th 265, 274, 120 Cal.Rptr.3d 893.)

1. The Governing Principles

The Supreme Court, in Chen and other cases, has described how a California court determines which jurisdiction’s law will govern in choice-of-law cases. The trial court must apply the governmental interest test, "requiring an analysis of the respective interests of the states involved." ( Hurtado v. Superior Court (1974) 11 Cal.3d 574, 579, 114 Cal.Rptr. 106, 522 P.2d 666 ( Hurtado ).) The California Supreme Court adopted the governmental interest test in Reich v. Purcell (1967) 67 Cal.2d 551, 63 Cal.Rptr. 31, 432 P.2d 727, and in so doing, the court renounced the former rule that the law of the place of the wrong applied in tort actions regardless of the issues before the court.

The objective of the governmental interest test "is ‘to determine the law that most appropriately applies to the issue involved.’ " ( Hurtado, supra, 11 Cal.3d at pp. 579-580, 114 Cal.Rptr. 106, 522 P.2d 666, quoting Reich v. Purcell , supra , 67 Cal.2d at p. 555, 63 Cal.Rptr. 31, 432 P.2d 727.) Here, the issue, as Chen observes, was the plaintiffs’ products liability claim. ( Chen, supra, 7 Cal.5th at pp. 866, 869, 249 Cal.Rptr.3d 594, 444 P.3d 727.)

"As the forum state, California will apply its own law ‘unless a party litigant timely invokes the law of a foreign state.’ " ( Chen, supra, 7 Cal.5th at p. 867, 249 Cal.Rptr.3d 594, 444 P.3d 727.) In that event, the party invoking a foreign state’s law – here, Indiana law – "must demonstrate that the [foreign state’s] rule of decision will further the interest of the foreign state and therefore that it is an appropriate one for the forum to apply to the case before it." ( Hurtado, supra, 11 Cal.3d at p. 581, 114 Cal.Rptr. 106, 522 P.2d 666.)

The governmental interest test is applied using a three-step inquiry. " ‘First, the court determines whether the relevant law of each of the potentially affected...