The opinion of the court was delivered by: DAVID N. HURD
United States Magistrate Judge
MEMORANDUM-DECISION and ORDER
The defendant, George W. Goodhue, has moved for an order directing that the law of Canada govern with respect to the amount of non-pecuniary damages recoverable by the plaintiff. Canada imposes a $ 240,000 limit for recovery by a plaintiff for non-pecuniary harm. Stein v. Corporation of the Township of Sandwich West, June 30, 1993, 89-SC-0339, Ont. Gen. Div. Plaintiff, Billy E. Cook, opposes this motion, arguing that either the law of Texas or the law of New York should be applied in this case. Neither New York nor Texas has a limitation on recovery for non-pecuniary damages.
The facts as they apply to this motion are undisputed. On August 15, 1990, plaintiff and defendant were involved in an automobile accident in Malone, New York. Plaintiff was and is domiciled in the state of Texas. He was traveling from Canada to Texas in a truck registered in Texas. Defendant, a resident of Ontario, Canada, was traveling from Ontario, through New York, to Nova Scotia. The accident gave rise to the pending action.
This court has jurisdiction based on diversity of citizenship. A federal court must apply the substantive law of the state in which the court sits in cases of diversity. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 82 L. Ed. 1188, 58 S. Ct. 817 (1937). This doctrine also applies to choice of law questions. AroChem Int'l v. Buirkle, 968 F.2d 266, 269-70 (2d Cir. 1992). Therefore, this motion must be decided based on New York's choice of law rules.
New York applies what has come to be known as the "Neumeier Rule" for resolving conflict of law questions in cases where the choice of law issue arises between loss-allocating tort rules. This rule was formulated to apply to guest-passenger statutes in the case of Neumeier v. Kuehner, 31 N.Y.2d 121, 335 N.Y.S.2d 64, 286 N.E.2d 454 (1972), and later expanded to cover all loss-allocating tort rules in Schultz v. Boy Scouts of America, 65 N.Y.2d 189, 491 N.Y.S.2d 90, 480 N.E.2d 679 (1985). The Court in Neumeier presented three choice of law rules, each addressing a different conflict of law scenario. The first rule ("Rule 1") is to be applied when both the plaintiff and the defendant are domiciled in the same state. Neumeier, at 128. The second rule ("Rule 2") applies in cases where either the defendant's conduct occurred in the state of his domicile, or the plaintiff was injured in the state of his domicile. Id. If neither Rule 1 or Rule 2 applies, the court is to refer to the third Neumeier rule ("Rule 3").
Rule 3 is basically a return to the traditional rule of "lex loci delicti," or that the law of the place of the injury is the law to be applied. Id. However, if it can be shown that applying a law other than that of the place of the injury will advance the purposes of the substantive laws in question, that other law will be applied unless it "impair[s] the smooth working of the multistate system or produc[es] great uncertainty for litigants." Id. The special circumstances necessary to meet this exception to the "lex loci delicti," rule are determined on a case by case basis.
This case involves a plaintiff from Texas and a defendant from Canada. Therefore, there is no common domicile between the parties, and thus Rule 1 is inapplicable. Defendant's conduct relative to this case did not occur in Canada, nor did plaintiff's injury occur within the state of Texas. Therefore, Rule 2 is also inapplicable to this case. Since neither of the first two rules apply, we must look to Rule 3.
The accident occurred in New York, and under Rule 3, New York law should be applied in this case as the "lex loci delicti," unless defendant can show that applying Canadian law instead of New York law in this case will advance the purposes of the substantive laws in question. Defendant has failed to so demonstrate.
In order for defendant to overcome the application of New York law as the "lex loci delicti," he must demonstrate that applying Canadian law would not only advance the interests of Canada, but would also advance the interests of the relevant substantive laws of both Texas and New York. Defendant's error is in asserting that Neumeier stands for the proposition that the law of the place of the injury will not be applied if it is shown that application of Canadian or Texas law will advance the relevant substantive law purposes of either jurisdiction. This is not so. The exception to Rule 3 simply states that applying the law of a state other than that of the place of the injury will advance the relevant substantive law purposes. This means the purposes of all of the substantive laws relevant to the conflict, not just the laws of the state whose laws are to be applied. There is no "either" in the rule. Otherwise, it would be very easy for a party to demonstrate that the application of a particular state's law will advance the purposes of that law. This is self-evident. Unfortunately for the defendant, ...