Monday, April 3, 2017
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State High Court to Weigh Choice of Law in Suit Over Arizona Tour Bus Rollover
By a MetNews Staff Writer
The California Supreme Court has agreed to resolve a dispute as to what law to apply to a suit involving an Arizona bus rollover in which two Chinese tourists were killed and eight injured.
The justices, at their weekly conference in San Francisco Wednesday, unanimously granted review in Chen v. L.A. Truck Centers, Inc., B265304. The case presents the issue of whether a new choice-of-law analysis is required when a party whose presence affected the prior analysis is dismissed from the case.
This district’s Div. Eight, in a Jan. 18 opinion by Justice Laurence Rubin, answered that question in the affirmative, holding that the trial judge erred in applying Indiana, rather than California, law, particularly after the sole Indiana defendant settled.
That panel reversed a judgment in favor of L.A. Truck Centers, Inc., doing business as Buswest. That company is the exclusive California dealer for Starcraft, the Indiana company that built the bus.
The bus—which was traveling from Las Vegas to the Grand Canyon—drifted off the road and turned over twice in Mohave County, in northern Arizona. The driver was Zhi Lu, a California resident who had driven the bus from Los Angeles to Las Vegas prior to the start of the tour.
The families of the deceased, and the surviving passengers, sued Buswest, Starcraft, Lu, and Lu’s employer, TBE International, Inc.
The plaintiffs alleged, and the defendants did not dispute, that the bus turned over because Lu took a curve at a speed well in excess of the limit. The plaintiffs also alleged that the deaths would have been prevented, and the injuries of the survivors much less severe, if the bus had seat belts for passengers.
They presented evidence that the driver and tour guide, who were not seriously injured, were wearing seat belts, and that belts for the passengers could have been purchased for either $12 or $45 each, depending on type. The sales manager for Buswest testified that the company never ordered seatbelts for passengers, except when the purchaser of the bus was in the healthcare industry.
TBE and Lu settled with the plaintiffs for $5 million in December 2012. A year later, Starcraft and Buswest moved to have Indiana’s substantive law applied to the case, arguing that under California choice-of-law rules, Indiana had a greater interest than any other jurisdiction in having its law applied.
The defendants argued that Indiana had a strong interest in regulating manufacturing in the state, and in protecting the economic interests of its residents. The defendants noted, and the plaintiffs agreed, that Indiana law is more favorable to defendants in products liability and wrongful death cases than that of California, in terms of what constitutes a defective product, how liability is apportioned among multiple tortfeasors, and what damages are recoverable for wrongful death.
The plaintiffs responded that California had superior interests, in deterring sale of defective vehicles by dealers here, protecting its residents from future harm, and compensating injured customers of California touring companies.
Los Angeles Superior Court Judge Holly Kendig granted the motion, reasoning that because no party resided in California, and the accident didn’t occur here, the only state with a relevant interest was Indiana. She also said that applying Indiana law would protect both defendants.
After that ruling, Starcraft agreed to pay $3.25 million in settlement, leaving Buswest as the sole defendant. The plaintiffs then moved to have the choice-of-law ruling reconsidered, since there was no longer an Indiana-based defendant.
Buswest opposed the motion, arguing that the prerequisites for reconsideration did not exist, and that Indiana’s interest in protecting local business extended to Buswest, as Starcraft’s customer.
Judge Stephen Czuleger, who had taken over the case in the interim, denied the motion on both procedural and substantive grounds. The case then went to trial, with the defendant arguing that it was reasonable to sell the bus without seat belts, given that there is no statute or rule mandating that belts be provided, the industry standard does not require belts, and belts could injure passengers in frontal collisions, which are more common than rollovers.
Jurors found by special verdict that the bus was not in a “defective condition” at the time of the rollover, and judgment was entered for the defendant.
Rubin, however, in his opinion for the Court of Appeal, said California law should have been applied, because “California has an interest in applying its laws, while Indiana does not.”
California’s interest, he elaborated, is not in protecting resident defendants from paying damages in all circumstances, because the state has not chosen to advance any such interest by its substantive law. “California’s interests are in insuring manufacturers are liable for the harm they cause, providing an economic incentive for improved product safety, inducing the reallocation of resources toward safer products, and spreading the risk of harmful products,” he said.
Indiana, on the other hand, should not be permitted “to permanently attach to any product manufactured in the state its restrictive views of products liability, regardless of resale,” he said.
The error was prejudicial, he went on to say, because plaintiffs likely would have prevailed on a risk-benefit theory under California law.
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