WEBVTT 1 00:00:02.439 --> 00:00:06.919 Welcome to SCO Discust, a project of the Federalist Society for Law and Public 2 00:00:06.960 --> 00:00:11.800 Policy Studies. Our contributors joined us from around the country to bring you expert 3 00:00:11.800 --> 00:00:16.679 commentary on US Supreme Court cases as they are argued and the decisions are issued. 4 00:00:16.960 --> 00:00:21.559 The Federalist Society takes no position on particular legal or public policy issues. 5 00:00:21.800 --> 00:00:29.399 All expressions are those of the speaker. Hello, and welcome to SCO Discust. 6 00:00:29.640 --> 00:00:33.320 I'm your host, Kyle hamerniz On, behalf of the Faculty division of 7 00:00:33.399 --> 00:00:39.159 the Federalist Society. We are here today to discuss Great Lakes Insurance se versus 8 00:00:39.240 --> 00:00:43.799 Raiders Retreat Realty Co LLC, in which the Supreme Court issued a nine to 9 00:00:43.880 --> 00:00:48.880 zero decision on February twenty first, twenty twenty four. It is my honor 10 00:00:48.960 --> 00:00:55.119 to introduce our guests today, Professor Andrew Hesseck. Professor Hesseck is the Judge 11 00:00:55.240 --> 00:01:00.960 John J. Parker Distinguished Professor of Law and Associate Dean for Strategy Planning at 12 00:01:00.960 --> 00:01:06.400 the University of North Carolina School of Law. His teaching and research interests include 13 00:01:06.439 --> 00:01:11.719 federal courts, administrative law, remedies, and criminal sentencing. And with that, 14 00:01:11.840 --> 00:01:15.239 I like to turn things over to our guest to discuss the overview of 15 00:01:15.280 --> 00:01:19.239 the case and the court's decision. Well, thank you for having me on. 16 00:01:19.920 --> 00:01:25.719 So the Great Lakes case, it started out as what seemed like a 17 00:01:25.760 --> 00:01:34.799 basic contract dispute case. The case involved a maritime insurance contract. Raiders wanted 18 00:01:34.840 --> 00:01:40.840 to get insurance for its voted entered into a contract with Great Lakes for insurance, 19 00:01:41.879 --> 00:01:47.719 and the contract had a standard choice of law clause, said New York 20 00:01:48.200 --> 00:01:52.319 law would apply to claims arising under the contract or related to the contract. 21 00:01:53.319 --> 00:02:02.959 So subsequently there were events that led raiders to want to possibly make insurance claims. 22 00:02:06.079 --> 00:02:10.680 But Great Lakes it said that the insurance claims the insurance policy was void 23 00:02:10.879 --> 00:02:17.840 because raiders hadn't complied with the terms of it by not doing fire checks and 24 00:02:17.879 --> 00:02:23.080 providing information to Great Lakes. Okay, so, so far, very basic 25 00:02:23.599 --> 00:02:30.759 insurance claim. Great Lakes file suit in Pennsylvania in federal court. That's consistent 26 00:02:30.800 --> 00:02:37.360 with the form selection clause in the contract. And so because it's in Pennsylvania, 27 00:02:37.719 --> 00:02:42.599 Pennsylvania law presumptively applies. But there is the choice of law provision in 28 00:02:42.639 --> 00:02:45.439 the contract, so Pennsylvania law would say, hey follow New York law. 29 00:02:45.479 --> 00:02:53.000 For the contract raiders file some counterclaims under Pennsylvania law. Now these counterclaims under 30 00:02:53.039 --> 00:03:00.000 Pennsylvania law, they are not available under New York law. Right says, 31 00:03:00.719 --> 00:03:06.000 yes, I know that the choice of law clause would say, apply New 32 00:03:06.039 --> 00:03:09.000 York law, which would preclude my claims under Pennslvania law. But we're in 33 00:03:09.039 --> 00:03:15.159 Pennsylvania. Pennsylvania law presumptively applies, and we think that under Pennsylvania has a 34 00:03:15.199 --> 00:03:22.759 special rule that says that if applying a different are applying a choice of block 35 00:03:22.759 --> 00:03:28.639 claw sorry, precludes a Pennsylvania claim. Basically, Pennsylvania law will trump. 36 00:03:28.719 --> 00:03:30.639 You're not going to enforce the choice of law clause in that context because it's 37 00:03:30.639 --> 00:03:35.400 against Pennsylvania's public policy. Right, that's the important part. It's against Pennsylvania's 38 00:03:35.400 --> 00:03:43.159 public policy. Now Great Lakes responds, well, this is a maritime insurance 39 00:03:43.199 --> 00:03:51.520 contract, and so Pennsylvania law should not dictate whether the choice of law clause 40 00:03:51.560 --> 00:03:58.240 applies. Instead, federal law should dictate whether the choice of law clause applies. 41 00:03:58.960 --> 00:04:01.960 And at that point that's where the case flips from being a normal contracts 42 00:04:01.960 --> 00:04:09.080 case to an extremely complicated issue that led to the Supreme Court's intervention. The 43 00:04:09.280 --> 00:04:15.120 question was basically, does federal law control that choice of law provision, that 44 00:04:15.199 --> 00:04:17.120 is to say, the enforcement of the choice of law provision? And if 45 00:04:17.160 --> 00:04:21.399 so, if federal law does apply, what would be the content of that 46 00:04:21.439 --> 00:04:29.000 federal law? Right? So we actually have three really complicated issues for federal 47 00:04:29.000 --> 00:04:32.199 courts. The first is under erie, is it say, federal issue or 48 00:04:32.199 --> 00:04:35.800 a state issue? Right? Should federal law control or should state law control? 49 00:04:36.680 --> 00:04:42.279 The second is admiralty right, this is just an admiralty area. And 50 00:04:42.319 --> 00:04:45.600 then the third is okay, if federal law controls, what should be the 51 00:04:45.639 --> 00:04:47.360 content of federal common law? So we have eerie, federal common law, 52 00:04:47.360 --> 00:04:53.720 and admiralty very complicate. So you know, when you look at the opinion, 53 00:04:53.759 --> 00:04:59.120 how does how does Kavanaugh address each of these issues when when he's bringing 54 00:04:59.160 --> 00:05:05.040 the well, when when he's writing in the opinion right. So, so 55 00:05:05.120 --> 00:05:12.120 it goes to the Supreme Court and Great Lakes ends up winning. So the 56 00:05:12.160 --> 00:05:17.639 Supreme Court takes the position that federal law controls not Pennsylvania law, and federal 57 00:05:17.759 --> 00:05:21.399 law is not going to follow Pennsylvania law. That was an option. It's 58 00:05:21.439 --> 00:05:26.519 going to be that federal law has its own separate sort of content that applies 59 00:05:26.600 --> 00:05:30.319 uniformly across the country. So Kevinaugh, who wrote the opinion for the court, 60 00:05:30.480 --> 00:05:36.759 addresses all three issues. The first was sort of eerie question, does 61 00:05:36.800 --> 00:05:43.120 federal law apply or does? Is this a state law issue? And and 62 00:05:43.240 --> 00:05:47.839 choice of law is probably a substantive issue to which to which state law would 63 00:05:47.879 --> 00:05:54.560 apply. I guess we know that from Claxon and and Kevinall says no, 64 00:05:54.920 --> 00:06:00.720 you know, in the context of admiralty law, the federal law law applies 65 00:06:00.759 --> 00:06:05.480 admiralty is one of the exceptions to eerie right, because the Constitution says, 66 00:06:06.720 --> 00:06:11.439 or it has been read, let's say to uh to say that there shall 67 00:06:11.519 --> 00:06:17.079 be federal law controlling admiralty and that includes federal common law. Okay, it's 68 00:06:17.120 --> 00:06:23.079 been extended to cover maritime insurance contracts. Not the most obvious conclusion in the 69 00:06:23.079 --> 00:06:26.839 world, but it has been extended in that way that was in prior opinions 70 00:06:26.839 --> 00:06:30.879 that that wasn't questioned in this case. Okay, So that's the first question. 71 00:06:30.959 --> 00:06:35.120 First two questions essentially like we're in admiralty and and federal law is going 72 00:06:35.160 --> 00:06:41.680 to control. Now the big question is what will be the content of that 73 00:06:41.720 --> 00:06:45.360 federal law. And this is where it gets really interesting, actually, because 74 00:06:45.959 --> 00:06:51.439 normally the Supreme Court is the one who who makes up federal law, right 75 00:06:51.480 --> 00:06:55.480 when they're when they're going to create federal common law. That's in court fashion 76 00:06:55.560 --> 00:07:00.360 said, that's not quite what happened here. So the Court says, look, 77 00:07:00.959 --> 00:07:05.199 if there's a set federal rule, we will follow that federal rule. 78 00:07:05.720 --> 00:07:10.399 And if there's not a set federal rule, then we have to decide should 79 00:07:10.399 --> 00:07:13.480 we make a federal rule or should we follow state law? Should we adopt 80 00:07:13.480 --> 00:07:16.319 state law as our federal rule. And the Court said that there is a 81 00:07:16.319 --> 00:07:21.639 set federal rule in this context, and they said, the set federal rule 82 00:07:21.800 --> 00:07:27.720 is that a choice of law clause applies and presumptively unless there's a really good 83 00:07:27.920 --> 00:07:30.000 federal public policy for it not to apply. Depends on being a public policy. 84 00:07:30.000 --> 00:07:35.480 Wouldn't matter, it would be federal public policy. And what's so interesting 85 00:07:35.680 --> 00:07:42.720 is the Court said that the federal rule had largely been established by the lower 86 00:07:42.759 --> 00:07:46.399 court's decisions, by decisions of the courts of appeals. There are a few 87 00:07:46.399 --> 00:07:51.560 Supreme Court opinions that sort of hinted that choice of law clauses should be applied, 88 00:07:51.759 --> 00:07:55.319 but it was really the federal courts of appeals that the Court pointed to. 89 00:07:55.600 --> 00:07:59.439 So there's a context where it's really interesting that Supreme Court pointed to lower 90 00:07:59.480 --> 00:08:05.079 court decisis as strong evidence of establishing the federal rule, and then their decisions 91 00:08:05.120 --> 00:08:11.680 fashion the federal rule that then dictated what the content of federal law would be. 92 00:08:13.040 --> 00:08:18.399 The Court also acknowledged upfront that there's lots of complicated questions about how precisely 93 00:08:20.399 --> 00:08:24.720 eerie and federal common law interact with each other. And they said that they 94 00:08:24.720 --> 00:08:28.399 have this quote that's great. It says that basically it's one of the most 95 00:08:28.399 --> 00:08:31.399 complex areas in all law, and they're just they're going to avoid it, 96 00:08:31.960 --> 00:08:35.559 right, And they say, like here that the answer is easy, We're 97 00:08:35.559 --> 00:08:41.440 just going to follow the federal rule as established. Great. And then obviously 98 00:08:41.360 --> 00:08:48.759 Justice Thomas wrote a concurring opinion, right, and he basically is almost warning, 99 00:08:48.039 --> 00:08:54.480 you know, litigants and courts about the Wilburn boat case. Can you 100 00:08:54.480 --> 00:08:58.440 go a little bit more into that, you know, kind of explaining what 101 00:08:58.480 --> 00:09:03.440 that case is about and then also maybe how it applies in future litigation. 102 00:09:03.279 --> 00:09:07.320 Yeah. Sure, So Wilburn Boate is this case out of the nineteen fifties 103 00:09:07.840 --> 00:09:16.039 that was sort of an anomaly. Let's say under admiralty law involving maritime insurance 104 00:09:16.080 --> 00:09:22.279 contracts. So in Wilburn vote, there was a claim for a warranty under 105 00:09:22.000 --> 00:09:28.360 I think it was under a contract, and the and the Supreme Court said 106 00:09:28.639 --> 00:09:39.039 there was no set federal rule about warranties and therefore state law would control the 107 00:09:39.840 --> 00:09:50.159 warranty claims under those maritime contracts. Now, the problem with that is is 108 00:09:50.240 --> 00:09:52.559 the court has said, look, you know, maritime contracts, they're part 109 00:09:52.600 --> 00:09:58.840 of admiralty animalty controls. So federal law should control across the board and so 110 00:10:01.440 --> 00:10:05.440 and so it should never be that there's sort of like sometimes federal law and 111 00:10:05.480 --> 00:10:09.440 sometimes state law. As a matter of just how the eerie analysis shapes out, 112 00:10:09.480 --> 00:10:13.000 it should all be federal law. It's just like what would the content 113 00:10:13.080 --> 00:10:16.759 of that federal law be. And I think Justice Thomas is really getting at 114 00:10:16.919 --> 00:10:20.960 is that wilverm Boat is anomalist for saying that state law plays a role here. 115 00:10:20.080 --> 00:10:26.120 It just doesn't. Right, This is all federal law. And now 116 00:10:26.159 --> 00:10:28.200 there are ways of reconciling it. You can say, like go, in 117 00:10:28.240 --> 00:10:31.120 some context federal law should follow state law, but it would be a matter 118 00:10:31.159 --> 00:10:35.120 of federal law right, and the way Well Wilburn is written is much more 119 00:10:35.240 --> 00:10:39.320 like, well, state law is controlling here, and it's just it is 120 00:10:39.879 --> 00:10:43.879 confusing. And then I guess if we're just you know, looking out into 121 00:10:43.000 --> 00:10:48.720 the into the future, what I mean, how does this shape the landscape 122 00:10:48.879 --> 00:10:54.600 of admiralty law and that sort of thing as we look forward into Obviously there's 123 00:10:54.600 --> 00:11:00.360 going to be future litigation from obviously different parties. You know, it's it's 124 00:11:00.399 --> 00:11:03.799 inevitable that that it comes up in these cases are then use as precedent. 125 00:11:05.039 --> 00:11:09.080 Are what do you see as being the real ramification of a decision like this? 126 00:11:11.159 --> 00:11:18.279 Yeah, so I think two things. So theoretically is that federal law 127 00:11:18.320 --> 00:11:22.240 is going to just play more and more of an important role in animalty law. 128 00:11:22.240 --> 00:11:24.879 It already had, but now it's going to play even more. Because 129 00:11:24.919 --> 00:11:28.919 there was wilbrim Boat out there which suggested state law sometimes played a role, 130 00:11:28.960 --> 00:11:33.000 it was confusing. This helped clean it up. But the way that it 131 00:11:33.039 --> 00:11:37.559 cleaned it up is basically to say, federal law is always going to control 132 00:11:37.639 --> 00:11:41.960 and so you know, to the extent we're going to have any state law, 133 00:11:41.000 --> 00:11:45.320 it's only going to be because the federal courts have decided to incorporate it, 134 00:11:45.399 --> 00:11:52.720 not because they are bound by state law. And what's interesting about that 135 00:11:52.919 --> 00:11:58.519 is actually it goes It shows that admiralty law is really one of those small 136 00:11:58.559 --> 00:12:03.120 bubbles. It sort of goes in the opposite direction from the general trend of 137 00:12:03.159 --> 00:12:07.879 the court towards not making federal common law. Right. This is very opposite 138 00:12:07.919 --> 00:12:13.519 the more recent Vivince cases like a Bassi, in that the court says like, 139 00:12:13.600 --> 00:12:16.559 this is a this is a realm where we get to make all sorts 140 00:12:16.559 --> 00:12:22.399 of law. And that's that's actually been the case. Let's say since since 141 00:12:22.440 --> 00:12:26.159 post Erie, right, I mean after Erie, they said anualty is one 142 00:12:26.159 --> 00:12:28.720 of those areas where there can be federal common law, and they are. 143 00:12:30.000 --> 00:12:33.879 They are capitalizing on it right now, and they are really making it more 144 00:12:33.919 --> 00:12:41.120 practically. I think what happens is, you know, almost there must how 145 00:12:41.120 --> 00:12:48.879 do I say this. I'm sure that most people engaged in maritime commerce are 146 00:12:48.919 --> 00:12:54.759 engaged are entering into contracts that have choice of law provisions, and now they 147 00:12:54.799 --> 00:12:58.000 have a little bit more clarity about how those choice of law provisions are going 148 00:12:58.039 --> 00:13:03.639 to be enforced. And so I don't know that in the end it's going 149 00:13:03.679 --> 00:13:09.120 to affect things too much. It might reduce the cost of business. Because 150 00:13:09.559 --> 00:13:13.399 the contracts are a little clearer and they know exactly which law is going to 151 00:13:13.440 --> 00:13:16.279 apply. It's going to be the law that they have specified. They don't 152 00:13:16.279 --> 00:13:22.960 have to worry about like the idiosyncrasies of Pennsylvania or Delaware or Florida. They 153 00:13:22.000 --> 00:13:24.679 know that if we pick New York, it's going to be New York unless 154 00:13:24.720 --> 00:13:30.039 there's some really strong reason why it's not going to be New York. Great. 155 00:13:30.840 --> 00:13:31.840 Thank you so much for joining us. Andy. Do you have any 156 00:13:33.080 --> 00:13:37.960 concluding thoughts points that you want to want to make or do you think that 157 00:13:37.960 --> 00:13:41.440 that settles it? I think that settles it. I think that settles it. 158 00:13:41.480 --> 00:13:48.679 I do think that there's some areas of the law where where the Court 159 00:13:48.679 --> 00:13:52.120 has done a really good job of the last like twenty or thirty years, 160 00:13:52.120 --> 00:13:56.720 cleaning up areas that were so complicated, like complete preemption or Rooker Feldman, 161 00:13:56.240 --> 00:14:00.600 and where there were just decisions going in different directions it was hard to figure 162 00:14:00.600 --> 00:14:03.639 out what was going on. This isn't quite to that level, but it's 163 00:14:03.639 --> 00:14:07.080 definitely pushing in that direction, saying because Wilburn vote was one of those decisions 164 00:14:07.120 --> 00:14:09.639 that you're like, how do you sort of make this all work? And 165 00:14:09.679 --> 00:14:13.639 they have said you make it work by sort of ignoring Wilburn vote, and 166 00:14:15.600 --> 00:14:20.840 so you know it, regardless of what one thinks of like the precise outcome, 167 00:14:20.039 --> 00:14:24.200 I think that part of it is good. Well, Andndy, thank 168 00:14:24.240 --> 00:14:31.039 you so much for joining us. Sure, thank you, Thank you for 169 00:14:31.120 --> 00:14:35.120 listening to this episode of SCO Discast. 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