Allstate Insurance v. Hague
449 U.S. 302, 66 L. Ed. 2d 521, 1981 U.S. LEXIS 52 (1981)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
For a state's choice of its own substantive law to be constitutionally permissible, that state must have a significant contact or a significant aggregation of contacts with the parties and the occurrence, creating state interests, such that applying its law is neither arbitrary nor fundamentally unfair.
Facts:
- Ralph Hague, a resident of Hager City, Wisconsin, was employed in Red Wing, Minnesota, and commuted there daily for 15 years.
- Hague held an automobile insurance policy from Allstate Insurance Co., which was delivered in Wisconsin and covered three vehicles garaged in Wisconsin.
- The policy provided for $15,000 in uninsured motorist coverage for each vehicle, and a separate premium was paid for each.
- Hague was killed in a motorcycle accident in Pierce County, Wisconsin, which is adjacent to Red Wing, Minnesota.
- The operators of both the motorcycle and the other vehicle involved in the accident were Wisconsin residents.
- After the accident, Hague's widow, Lavinia Hague, moved to Red Wing, Minnesota.
- At all relevant times, Allstate Insurance Co. was licensed to do business and actively conducted business in Minnesota.
Procedural Posture:
- Lavinia Hague, as the appointed personal representative of her late husband's estate, filed an action in a Minnesota District Court (trial court) against Allstate Insurance Co.
- Hague sought a declaratory judgment that she could 'stack' the three separate uninsured motorist coverages for a total of $45,000, as permitted by Minnesota law.
- The Minnesota District Court granted summary judgment in favor of Hague, applying Minnesota's law allowing stacking.
- Allstate, the defendant, appealed the decision to the Minnesota Supreme Court (the state's highest court).
- The Minnesota Supreme Court, sitting en banc, affirmed the trial court's decision.
- The United States Supreme Court granted Allstate's petition for a writ of certiorari.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a state's application of its own substantive law to an insurance dispute violate the Due Process and Full Faith and Credit Clauses when the insurance policy was delivered in another state, the accident occurred in that other state, and all parties were residents of that other state at the time of the accident?
Opinions:
Majority - Justice Brennan
No. For a state’s substantive law to be selected in a constitutionally permissible manner, the state must have a significant contact or a significant aggregation of contacts, creating state interests, such that the choice of its law is neither arbitrary nor fundamentally unfair. Here, Minnesota has a significant aggregation of three contacts. First, the decedent was a member of Minnesota’s workforce for 15 years, giving the state an interest in his welfare and the compensation provided to his estate. Second, Allstate is present and does business in Minnesota, so it cannot claim unfair surprise that Minnesota law might apply to litigation in which it is involved. Third, the respondent became a bona fide Minnesota resident before filing suit and was appointed personal representative of the estate there, giving Minnesota an interest in her full compensation. In the aggregate, these contacts are sufficient to sustain the Minnesota Supreme Court's choice of law.
Concurring - Justice Stevens
No. The Due Process and Full Faith and Credit Clauses protect different interests and should be analyzed separately. The Full Faith and Credit Clause is not violated because applying Minnesota law poses no threat to Wisconsin's sovereignty, especially since the parties could anticipate that the law of a state other than Wisconsin might govern a claim under the nationwide policy. The Due Process Clause is not violated because applying Minnesota's stacking rule is not fundamentally unfair and does not frustrate the justifiable expectations of the parties; Allstate did business in Minnesota, the policy had nationwide coverage, and stacking was the majority rule in the country, so Allstate could not have been unfairly surprised by the application of Minnesota's law.
Dissenting - Justice Powell
Yes. While the correct standard is whether significant contacts exist, the contacts Minnesota has with this litigation are trivial and irrelevant to furthering any legitimate state policy. The respondent's post-accident change of residence is constitutionally irrelevant and invites forum shopping. The fact that Allstate does business in Minnesota is too general a contact to create an interest in a specific contract executed in Wisconsin with Wisconsin residents. Finally, the decedent's employment in Minnesota is not significant here because the issue is insurance compensation, which is unrelated to Minnesota's employment policies, and the fatal accident was not work-related. The application of Minnesota law is therefore arbitrary and unconstitutional.
Analysis:
This case significantly relaxed the constitutional limitations on a state's choice of law, moving away from rigid territorial rules (like place of contract or place of injury) toward a more flexible 'significant aggregation of contacts' analysis. The decision empowers a forum state to apply its own law even when another state has seemingly stronger connections to the dispute, provided the forum can identify a collection of contacts that creates a legitimate state interest. This increased flexibility creates more opportunities for forum shopping and introduces uncertainty for litigants, as it can be difficult to predict which state's law will govern a multi-state dispute.
Unlock the full brief for Allstate Insurance v. Hague