Petition for Writ of Certiorari — Hertz Corp., The v. Cates (No. 06-54)

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06-54. JUL 10 2006

OFFICE OF THE CLERK

Supreme s.

. Prams Cout, US

No. 06-

IN THE

Supreme Court of the United States

THE HERTZ CORPORATION,

Petitioner,

PRISCILLA CATES, individually and as guardian

of the person of BOBBY RAY CATES,

an incapacitated person,

Respondent.

—s

On PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FirtH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

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an a otc mene

BiAZENA PsuRNY*

WESSON H. TRIBBLE

3050 Post Oak Boulevard

Suite 1350

Houston, TX 77056

(713) 622-0444

* Counsel of Record Attorneys for Petitioner

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COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

QUESTIONS PRESENTED

This diversity action involves a conflict of laws

question as to whether The Hertz Corporation’s (“Hertz” or

“petitioner”) liability for the negligence of its lessee, Matthew

Creamer (“Creamer”), is governed by Texas or Florida law.

The Fifth Circuit resolved the conflict of laws issue in favor

of Florida law. The Fifth Circuit affirmed Priscilla Cates’

(“Cates” or “respondent’”’) judgment against Creamer, vacated

the summary judgment for Hertz granted on grounds that

Texas had the most significant relationship to the parties and

occurrence, and remanded to the district court for

determination of Hertz’s liability under Florida law for the

judgment entered against Creamer under Texas law.

The claim was brought by Priscilla Cates, a Texas

resident, against Matthew Creamer and Lamae Creamer,

Florida residents, and Hertz, a Delaware corporation with a

principle place of business in New Jersey, in the United States

District Court, for the Northern District of Texas, Wichita

Falls Division. The claim arises out of an automobile accident

that occurred in Texas. The injury and the conduct causing

injury, including Cates’ contributory negligence, occurred in

Texas. Cates asserted the application of Florida law to

determine Hertz’s liability for Cates’ judgment against

Creamer notwithstanding that (a) Cates had no prior contact

with Florida; (b) Cates brought the action in Texas forum;

governed by Texas law; and (d) Cates did not present a legal

authority on the application of the doctrine of depecage to

personal injury actions arising out of automobile accidents

involving parties of multiple states. In holding that Florida

law determines Hertz’s liability for Cates’ judgment against

Creamer, entered under Texas law, the Fifth Circuit’s decision

does not comport with the Full Faith and Credit Clause of

the United States Constitution, and conflicts with the United

States Supreme Court’s decision in Allstate Ins. Co. v. Hague,

449 U.S. 302 (1981) and Sun Oil Co. v. Wortman, 486 U.S.

717 (1988). Additionally, the Fifth Circuit’s analysis of the

conflict of law principles directly conflicts with the Third

Circuit.

Three questions are presented:

1. Does the Full Faith and Credit Clause require the

forum state, Texas, to supplement its laws by Florida’s

judicial doctrine of dangerous instrumentality if to do so

would contravene the policy of the law of Texas, when such

policy is reflected in the statutes and decisions of its courts?

2. Were the contacts with the forum state, Texas, in light

of Allstate Ins. Co. v. Hague, 449 U.S. 302 (1981),

insignificant and attenuated, such that the application of

Texas law was arbitrary or fundamentally unfair to require a

reversal?

3. Was the application of Florida’s dangerous

instrumentality doctrine to afford redress for economic

damages to the Texas plaintiff, when such damages are arising

out of the defendant’s inability to meet a judgment entered

under Texas law, constitutionally permissible when Florida

had only “minimal” interest in the adjudication of the

vicarious liability issue?

iii

LIST OF PARTIES

The parties below are listed in the caption. The original

proceeding was brought against Lamae Creamer and Matthew

Creamer as co-defendants. The claims against Lamae

Creamer were dismissed with prejudice. Co-defendant

Matthew Creamer is not a party to this action.

CORPORATE DISCLOSURE STATEMENT

The Hertz Corporation is a Delaware corporation with a

principle place of business in New Jersey. From 1994 to 2005,

Hertz was a wholly owned subsidiary of Ford Motor

Company, a wholly owned subsidiary of Ford Holdings, Inc.

On December 21, 2005, Hertz Global Holdings, Inc. acquired

all of Hertz’s common stock from Ford Holdings, Inc.

TABLE OF CONTENTS |

CRIES LI PRROEII EDD oo ccc cccdesecvecues

Se Ge PRE, pov bn ed av sa ree ebe eset

CORPORATE DISCLOSURE STATEMENT .

pe Bes Py |. ee era enorme er kn

TABLE OF APPENDICES ................... :

STATEMENT OF JURISDICTION .............

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED .................

PEPE METS SIE CUE ps ced coe tenwwsicnnas

REASONS FOR GRANTING THE PETITION

I. REVIEW IS NECESSARY TO CONFIRM

THAT THE APPLICATION OF TEXAS’

SUBSTANTIVE LAW IN THIS CASE WAS

CONSTITUTIONALLY PERMISSIBLE ...

Contents

Page

A. The Texas Supreme Court Has Never

Adopted Or Interpreted Restatement

(Second) of Conflicts of Laws § 174. The

Fifth Circuit Erroneously Applied § 174

In Its Choice-Of-Law Analysis. ....... 10

B. The Fifth Circuit Erred in Not Including

In Its Choice-Of-Law Analysis Texas

Public Policy Reflected In The Texas

Supreme Court’s Decision Invalidating

Vicarious Liability in Bailments ...... 12

C. The Fifth Circuit Erred in Not

Considering In Its Choice-Of-Law

Analysis Texas Public Policy Underlying

Its Proportional Responsibility Laws .. 14

D. The Fifth Circuit Erred in Not

Classifying The Issues As Substantive

Of Procedural For Conflict-of-Law

SE sc awe eek oe eae eaes 15

E. The Fifth Circuit Decision Creates A

Conflict As To Whether The Application

Of The Forum State’s Substantive Law

Can Be Invalidated When The Forum

State’s Contacts With The Litigation Is

Not Transient In Nature ............. 16

EE Gee cc sakes e ca pu ee eee ESS 19

TABLE OF CITED AUTHORITIES

Page

Cases:

Allstate Ins. Co. v. Hague,

ras PU RUE i dene aweaseedkueccsans ii, 9, 10

Baker v. General Motors Corp.,

rye gtk Sexes). : Geen serene ics ie atenecace 9

Bartley v. Budget Rent-A-Car Corp.,

919 S.W.2d 747

(Tex. App. -- Amarillo 1996, no writ) .......... 7,14

Bertrand v. Mutual Motor Co.,

38 S.W.2d 417

(Tex.Civ.App.— Eastland 1931, writref'd) ... 12, 13

Budget Rent-A-Car System, Inc. v. Chappell,

407 F.34 166 Gd Cir. 2005) «occ ci ccc cess 16, 18

Cates ex rel. Cates v. Creamer,

No. CIV.A.7:60CV0121-R, 2001 WL 1196058

ck Oy Ae. eR ery le er ear ]

Cates v. Creamer,

No. 7:00-CV-121-R, 2001WL 1338396

Cy PU 27, EEE Sots oct cwbaue ears |

Cates v. Creamer,

BOE re ae Ce Ge Be oc ckctnceskevauns ]

vii

Cited Authorities

Page

Cox v. Thee Evergreen Church,

SER eB ogee Rs er em 13

Duncan vy. Cessna Aircraft Co.,

665 S.W.2d 414 (Tex. 1984) ............. 10, 11, 15

Franchise Tax Bd. of California v. Hyatt,

Bk ts ee er rer er 9

Garcia v. Plaza Oldsmobile Ltd.,

EE Poe BU GP Ge BOO) ovis caccevenweseues 16,18

Gutierrez v. Collins,

~ ee wo Rete Aol 7, ) 9,10, 11

Henry Schein, Inc. v. Stromboe,

102 S.W.3d 675 (Tex. 2002) ......... era wa eowts 11

In re Chanel Financial, Inc.,

102 B.R. 549 (Bkrtcy. N.D. Tex. 1988) ........ 16

Lee v. Delta Air Lines, Inc.,

797 F. Supp. 1362 (N.D. Tex. 1992),

aff'd 32 F.3d 566 (Sth Cir. 1994) ............. 11

Morris v. LTV Corp.,

Tao Pe eae Coen Gk. 1064) i. cece cccwss 15, 16

Pacific Employers Ins. Co.

v. Industrial Accident Comm'n,

A eS ee Ea ee re 9

vili

Cited Authorities

Page

Rollins Leasing Corp. v. Barkley,

S31 5. WZ Gs Cs Be ce cei cece cece. 6, 11, 13

Schneider v. Esperanza Transmission Co., “i

TGA SW. 26 Sie CE, BPE ceive vcccccccccs 7

Southern Cotton Oil Co. v. Anderson,

BR eg | 6

Sun Oil Co. v. Wortman,

Pg es er ii, 9

Susco Car Rental System v. Leonard,

112 So. 832 (Fla. 1959) ..... ee 6

Constitutions and Statutes:

U.S. Const., Art. IV, § 1 (Full Faith & Credit Clause)

66 é kya be Eek ek c'e we eecee 2,8

ye Bia Rew Be l

Tex. Civ. Prac. & Rem. Cope. ANN.

BSR LR 14

Cited Authorities

Page

Restatement and Secondary Authorities:

RESTATEMENT (SECOND) OF ConFLicts OF LAws

8 Ir Pai a pn PRON: passim

RESTATEMENT (SECOND) OF CONFLICTS OF LAWS

ROUTER su hee see dvs acoder eateeured passim

RESTATEMENT (SECOND) OF CONFLICTS OF Laws

Bef. 2: ) Bt peepee ener she sm ee ane passim

Texas Rules of Form, School of

Law Publications, Inc. (2003) ............... 13

John T. Montford & Will G. Barber,

1987 Texas Tort Reform,

25 Hous. L. Rev. 59, 80-101 (1988) ........... 14

TABLE OF APPENDICES

Appendix A — Opinion Of The United States Court

Of Appeals For The Fifth Circuit Dated And Filed

eS euekae ors

Appendix B — Memorandum Opinion And Order

Of The United States District Court For The

Northern District Of Texas, Wichita Falls

Division, Signed August 6, 2001 And Filed August

EE a Fas eke ARR ae ee

Appendix C — Memorandum Opinion And Order

Of The United States District Court For The

Northern District Of Texas, Wichita Falls

Division, Dated And Filed October 17, 2001 ....

Appendix D — Order Of The United States Court

Of Appeals For The Fifth Circuit Denying The

Petition For Rehearing And The Petition For

Rehearing En Banc Dated And Filed April 11,

» ERE Ae RE tare EO eee Fh oe rane

38a

OPINION BELOW

The initial opinion of the United States Court of Appeals

for the Fifth Circuit is reported at Cates v. Creamer, 431

F.3d 456 (5" Cir. 2005). The Fifth Circuit affirmed in part,

vacated in part, and remanded the April 4, 2003 amended

judgment of the United States District Court for the Northern

District of Texas, Wichita Falls Division (not reported in

F. Supp. 2d). The amended judgment incorporates the August

/, 2001 Court’s Memorandum and Order published at Cates

ex rel. Cates v. Creamer, 2001 WL 1196058 (not reported in

F. Supp. 2d), and affirmed on October 17, 2001 in Cates v.

Creamer published 2001 WL 1338396 (not reported in

F. Supp. 2d). See Appendices A - D.

The Fifth Circuit’s Opinion was rendered on November

28, 2005. The Petition for Pane] Rehearing and the Petition

for Rehearing En Banc were denied on April 11, 2006.

See Appendix D.

STATEMENT OF JURISDICTION

This Court’s jurisdiction is invoked under 28 U.S.C.

§ 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

U.S.C.A. Constitution of the United States, Article IV,

Section 1:

Full Faith and Credit Clause.

Full Faith and Credit shall be given in each State

to the public Acts, Records, and judicial

Proceedings of every other State. And the

Congress may by general Laws prescribe the

Manner in which such Acts, Records and

Proceedings shall be proved, and the Effect

thereof.

Restatement (Second) of Conflict of Laws, Section 6 (1971):

Choice-Of-Law Principles

(1) Acourt, subject to constitutional restrictions,

will follow a statutory directive of its own state

on choice of law.

(2) When there is no such directive, the factors

relevant to the choice of the applicable rule of law

include:

(a) the needs of the interstate and

international systems,

(b) the relevant policies of the forum,

states and the relative interests of those

states in the determination of the particular

issue,

(d) the protection of justified expecta-

tions,

(e) the basic policies underlying the

particular field of law,

(f) certainty, predictability and uniformity

of result, and

(g) ease in the determination and

application of the law to be applied.

Restatement (Second) of Conflict of Laws, Section 145

(1971):

The General Principle.

(1) The rights and liabilities of the parties with

respect to an issue in tort are determined by the local

law of the state which, with respect to that issue,

has the most significant relationship to the

occurrence and the parties under the principles stated

in § 6.

(2) Contacts to be taken into account in applying

the principles of § 6 to determine the law applicable

to an issue include:

(a) the place where the injury occurred,

(b) the place where the conduct causing

the injury occurred,

place of incorporation and place of

business of the parties, and

(d) the place where the relationship, if

any, between the parties is centered.

These contacts are to be evaluated according to their

relative importance with respect to the particular

issue.

Restatement (Second) of Conflict of Laws, Section 174

(1971):

Vicarious Liability.

The law selected by application of the rule of § 145

determines whether.one-person is liable for the tort

of another person.

The relevant comments to provisions of Restatement (Second)

of Conflict of Laws § 174 are set out in Appendix E.

STATEMENT OF FACTS

On June 29, 1998, Florida residents Lamae Creamer and

Matthew Creamer rented a van from Hertz in Florida to drive

to Texas for a family reunion. The Hertz agent verified that

Lamae Creamer had a valid Florida driver’s license. Matthew

_ Creamer also had a valid Florida driver’s license. Ms.

Creamer signed a rental agreement that created a bailment.

The agreement did not contain a choice-of-law provision.

The Creamers began driving at around noon on June 29.

Creamer drove the first eight hours of the trip, at which time

Ms. Creamer began to drive. She drove through the night

into Texas while Creamer slept in the van. When he woke

up, he saw that the van was parked on the side of the road

and Ms. Creamer was asleep. He moved to the driver’s seat

and resumed driving. He went momentarily to sleep while

driving and hit Bobby Cates’ car, which was parked or stalled

on the road. Cates was apparently standing in front of the

opened front passenger door and sustained severe injuries in

the collision. Cates was intoxicated and his driver’s license

had been suspended due to a DWI. As a result of the injuries,

Cates is incapacitated and resides at a long-term care facility.

Matthew and Lamae Creamer are Florida residents. Cates

is a Texas resident. Hertz is a Delaware corporation with its

principal place of business in New Jersey, with authority to

conduct business in Texas.

STATEMENT OF THE CASE

This diversity action involves a conflict of laws question

as to whether Texas or Florida’s law determines Hertz’s

liability for negligence of its lessee, Matthew Creamer.

Florida applies strict vicarious liability to automobile

owners by its judicially created doctrine of dangerous

instrumentality.’ The Texas Supreme Court rejected vicarious

liability in bailments.*? Respondent Cates asserts that under

the Texas’ choice-of-law rules the court must focus the

analysis on the particular issue in dispute rather than on the

case as a whole. The disputed issue here is whether Hertz is

liable for Cates’ judgment against Creamer entered under

Texas law. Cates asserts that Florida has the “most significant

relationship” to the particular issue of Hertz’s vicarious

liability for Creamer’s negligence.

Cates filed her Complaint against the Creamers and Hertz

in the Northern District of Texas, Wichita Falls Division on

June 29, 2000. Cates asserted claims against Matthew

Creamer and Lamae Creamer for negligence,. predicated on

Texas law, and against Hertz under Florida’s dangerous

1. Southern Cotton Oil Co. v. Anderson, 86 So. 629, 631-34

(Fla. 1920). Under this doctrine, an owner/lessor of a vehicle is

vicariously liable for damages caused by the negligent operation of

the vehicle by the person to whom it has been entrusted. Susco Car

Rentai System v. Leonard, 112 So. 832, 835 (Fla. 1959).

2. Rollins Leasing Corp. v. Barkley, 531 S.W.2d 603 (Tex.

1976).

instrumentality doctrine or, alternatively, under Texas’

neg/igent entrustment laws.* |

Hertz moved for summary judgment on the basis that

Texas had “the most significant relationship” to the parties

and occurrence, and Florida had no policy interest in

determination of the issues. On August 7, 2001, the district

court granted summary judgment in favor of Hertz on the

issue of negligent entrustment and dismissed Cates’ claims

against Hertz.

Cates’ action against the Creamers proceeded to trial or

July 9, 2002. Hertz did not participate at trial. The jury founa

the Creamers not negligent. On November 8, 2002, the

District Court signed an order granting a new trial.

Cates’ action against the Creamers proceeded to a second

trial, again without Hertz, on February 3, 2003. Cates’

negligence was submitted to the jury under the Texas

comparative negligence statute. The second jury found

Creamer seventy percent negligent and Cates thirty percent

negligent. The jury assessed actual damages of $3,080,000.

An amended judgmen: was signed on April 4, 2003, awarding

Cates $2,156,000 in actual damages from Creamer plus

3. The elements constituting negligent entrustment are:

“(1) entrustment of a vehicle by the owner; (2) to an unlicensed,

incompetent, or reckless driver; (3) that the owner knew or should

have known to be unlicensed, (4) that the driver wus negligent on

the occasion in question and (5) that the driver’s negligence

proximately caused the accident.” Schneid:r v. Esperanza

Transmission Co., 744 S8.W.2d 595, 596 (Tex. °° Proof of a valid

driver’s license is prima facie evidence of 4 _ ver’s competency.

Bartley v. Budget Rent-A-Car Corp., 919 S.W.2d /47, 752 (Tex. App.

— Amarillo 1996, no writ).

prejudgment interest of $851,782.47. All claims against

Lamae Creamer were dismissed with prejudice. The

Amended Judgment also dismissed all claims against Hertz

in accordance with the District Court’s Memorandum

Opinion aad Order previously entered on August 7, 2001.

Cates filed her Notice of Appeal on April 18, 2003. The

Fifth Circuit’s decision was entered on November 28, 2005.

Petitioner timely filed its Petition for Rehearing Before Panel

on December 12, 2005. On December 12, 2005, petitioner

and cross-appellant filed their Appellee’s and Cross-

Appellant’s Joint Motion For Leave to File Out Of Time

Petition for Rehearing En Banc (the “Motion”). The Fifth

Circuit granted the Motion on February 2, 2006. Petitioner

timely filed its Petition for Rehearing En Banc on February

2, 2006. On April 11, 2006, the Fifth Circuit denied the

Petition for Rehearing Before Panel and the Petition for

Rehearing En Banc.

REASONS FOR GRANTING THE PETITION

Whether the strict vicarious liability of automobile

owners created by Florida’s doctrine of dangerous

instrumentality is contrary to Texas public policy, when such

policy is reflected in the statutes and decisions of its courts,

and whether the Full Faith and Credit Clause, U.S. Const.,

Art. IV, § 1, requires Texas to give full faith and credit to the

dangerous instrumentality doctrine of Florida to replace its

doctrine of negligent entrustment, are important questions

which require resolution, and on which this Court’s review

is warranted.

This Court has previously ruled that the full faith and

credit obligation “is exacting” with respect to a final

judgment rendered by a court with adjudicatory authority over

the subject matter and persons governed by the judgment,

Baker v. General Motors Corp., 522 U.S. 222, 223 (1998),

but is less demanding with respect to choice of laws.

Franchise Tax Bd. of California v. Hyatt, 538 U.S. 488

(2003). The Clause does not compel a State to substitute the

statutes of other States for its own statutes dealing with a

subject matter concerning which it is competent to legislate.

Id. at 489; citing Sun Oil Co. v. Wortman, 486 U.S.-717, 722

(1988); Pacific Employers Ins. Co. v Industrial Accident

Comm'n, 306 U.S. 493, 501(1939). In Allstate Ins. Co.

v. Hague, 449 U.S. 302 (1981), this Court held that for a

State’s substantive law to be selected in a constitutionally

permissible manner, the State must have “a significant contact

or significant aggregation of contacts, creating state interests,

such that choice of its law is neither arbitrary nor

fundamentally unfair.” Jd. at 313.

The Fifth Circuit erred in not considering in its conflict-

of-laws analysis the constitutional limitations set forth in

§ 6 of the Restatement (Second) of Conflict of Laws and

adopted by the Supreme Court of Texas in Gutierrez v.

Collins, 583 S.W.2d 312 (Tex. 1979), for tort choice of law

issues. The Fifth Circuit concluded that the interest analysis

of § 6, which implicates the constitutional inquiry, provided

“little impact” on its decision.‘

The Fifth Circuit erred in not analyzing the basic policies

underlying Texas’ proportional liability laws.° The Fifth

Circuit recognized that Florida’s interest in having its law

4. Opinion, p. 18a.

5. Opinion, p. 18a, Fn. 8.

applied to the vicarious liability issue was only “minimal,” ®

but it failed to state a public policy or constitutional grounds

for invalidating a Texas U.S. District Court’s decision to

apply Texas law to a case over which it had proper

jurisdiction.

In consequence, the Fifth Circuit’s decision does not

comport with the constitutional choice-of-law test enunciated

by this Court in the holding in Hague, and this Court’s review

is warranted.

I. REVIEW IS NECESSARY TO CONFIRM THAT

THE APPLICATION OF TEXAS’ SUBSTANTIVE

LAW IN THIS CASE WAS CONSTITUTIONALLY

PERMISSIBLE

A. The Texas Supreme Court Has Never Adopted Or

Interpreted Restatement (Second) of Conflicts of

Laws § 174. The Fifth Circuit Erroneously

Applied § 174 In Its Choice-Of-Law Analysis.

Texas has adopted the “most significant relationship”

test for tort choice-of-law issues in Gutierrez v. Collins, 583

S.W.2d 312, 318 (Tex. 1979). The Court in Gutierrez

specifically adopted §§ 6 and 145 of the Restatement

(Second) of Conflicts for “all conflicts cases sounding in

tort.” Jd. at 318. In Duncan v. Cessna Aircraft Co., the Court

reiterated that it adopted the “most significant relationship

6. Opinion, p. 18a.

7. The Court explained that “this methodology offers a rational

yet flexible approach to conflicts problems,” ... “offers the courts

some guidelines without being too vague or too restrictive, ... and

“includes ‘most of the substance’ of all the modern theories.” /d.

test set forth in §§ 6 and 145 of the Restatements (Second)

of Conflict of Laws.” 665 S.W.2d 414, 421 (Tex. 1984).

In Henry Schein, Inc. v. Stromboe, the Texas Supreme Court

stated again that § 6 and § 145 apply in “all future tort cases”

and indicated that the analysis under § 6 and § 145, in a tort

case involving a Texas resident, is likely to result in the

application of Texas law. 102 S.W.3d 675 (Tex. 2002).

Additionally, Texas courts of appeal have noted that the

“most significant relationship” test that Texas follows is

“embodied” or “enunciated” in §§ 6 and 145 of the

Restatement (Second) of Conflicts. As well, Texas district

courts have noted that the Texas Supreme Court has not

adopted all sections of the Restatements for all choice-of-

law issues. See Lee v. Delta Air Lines, Inc., 797 F. Supp.

1362, 1367 (N.D. Tex. 1992), aff’d, 32 F.3d 566 (5" Cir.

1994).®

Further, the Texas Supreme Court rejected vicarious

liability in bailments in Rollins Leasing Corp. v. Barkley,

$31 S.W.2d 603, 605 (Tex. 1976). In consequence, the Texas

courts have never adopted or interpreted § 174 for use in

choice of law decisions. Section 174 directly addresses

vicarious liability and instructs that “[t]he law selected by

application of the rule of § 145 determines whether one

person is liable for the tort of another person.” Restatement

(Second) of Conflicts of Laws § 174.

8. The Court in Lee stated that ‘[t]he most significant

relationship methodology was adopted by the Texas Supreme Court

for tort choice-of-law issues in Gutierrez v. Collins, 583 S.W.2d 312,

318 (Tex. 1979), and for all other choice-of-law issues, with limited

exceptions, in Duncan v. Cessna Aircraft Co., 665 $.W.2d 414, 421

(Tex. 1984).” [emphasis added]

Section 145 instructs that “(t]he rights and liabilities of

the parties with respect to an issue in tort are determined by

the local law of the state which, with respect to that issue,

has the most significant relationship to the occurrence and

the parties under the principles stated in § 6.” Restatement

(Second) of Conflicts of Laws § 145.

The Fifth Circuit erroneously rests its choice-of-law

analysis and decision on the comments contained in § 174,

and fails to include the principles stated in § 6, which

implicate the constitutional limitations. (See Appendix E.)

B. The Fifth Circuit Erred in Not Including In Its

Choice-Of-Law Analysis Texas Public Policy

Reflected In The Texas Supreme Court’s Decision

Invalidating Vicarious Liability in Bailments

The Fifth Circuit erred in not examining the public policy

behind the vicarious liability laws of each state, Texas and

Florida, reflected in the decisions of the states’ courts. The

Fifth Circuit recognized that Florida’s dangerous

instrumentality doctrine may not have an extraterritorial

reach, stating that “no Florida precedent exist” to resolve

the question “whether the Florida law of vicarious liability

may be applied to benefit non-Florida residents in a situation

~ such as the case at hand.”’®

Texas courts have repeatedly rejected vicarious liability

in bailments if there is no agency or control relationship. In

Bertrand v. Mutual Motor Co., 38 S.W.2d 417, 418 (Tex.

Civ. App.— Eastland 1931, writ ref'd), the Texas Supreme

Court approved the rule that the bailor of an automobile,

9. Opinion, p. 18a.

who had no control over its operation by the bailee, was not

liable to a third party for injuries arising from the bailee’s

negligence.'®

In Rollins, the Texas Supreme Court, approving the rule

in Bertrand and strongly criticizing the doctrine of “imputed

contributory negligence,” rejected vicarious liability in

bailment relationships. 531 S.W.2d 605. In so doing, the

Court stated: “This test recognizes that in the absence of some

type of control relationship, there is no more reason in logic

to automatically impute contributory negligence than there -

is to so impute primary negligence.” /d.

In Cox v. Thee Evergreen Church, 836 S.W.2d 167 (Tex.

1992), the Texas Supreme Court reiterated the holding in

Rollins, stating: “When we decided Rollins in 1975, we were

the last jurisdiction to abandon the outdated bailment/agency

analogy and with it went the doctrine of imputed contributory

negligence between a bailor and a bailee.” Jd. at 177.

The Fifth Circuit’s error in not conducting the analysis

of Texas public policy, enunciated in the Texas Supreme

Court’s decisions, warrants this Court’s review.

10. “Writ refused” [writ ref’d] indicates that the “judgement

of the court of civil appeals is correct. Such cases have equal

precedential value with the Texas Supreme Court’s own opinions.”

Texas Rules of Form, School of Law Publications, Inc., Austin, 2003.

C. The Fifth Circuit Erred in Not Considering In

Its Choice-Of-Law Analysis Texas Public Policy

Underlying Its Proportional Responsibility Laws

Respondent’s judgment against Creamer, for which she

seeks to hold Petitioner liable, was rendered under Texas’

proportional responsibility laws.'' The legislative history of

the Texas Tort Reform, and the public policy underlying the

enactment, is reflected in Bartley v. Budget Rent-A-Car

Corp., 919 S.W.2d 747, 754 (Tex. App.— Amarillo 1996, no

writ), a case factually identical to the case at bar, on which

Petitioner relied for its analysis and reasoning.

The Court in Bartley, quoting Montford & Barber in

1987 Texas Tort Reform, stated the public policy underlying

the proportional responsibility as follows:

The major purposes-of the legislation were to

make the Texas civil justice system fairer, more

predictable by favorably affecting the affordability

and availability of liability insurance, and thus,

by making the system fairer and more predictable,

to promote economic development and growth in

Texas.

Id. at 756; Montford & Barber, supra, at 69-70.

The Fifth Circuit found Bartley unhelpful to its analysis

because it did not address § 174." Texas courts have not

adopted or interpreted § 174. Because the Fifth Circuit did

not include Bartley in its choice-of-law analysis, the Fifth

ll. Tex. Civ. Prac. & Rem. Code. Ann. §§ 33.001, ef seq.

12. Opinion, p. 18a, Fn. 8.

Circuit concluded, erroneously, that Texas had only a

“minimal interest” in having its laws apply to the vicarious

liability issue and invalidated the Texas U.S. District Court’s

application of Texas law to the controversy before the court.

D. The Fifth Circuit Erred in Not Classifying The

Issues As Substantive Or Procedural For Conflict

of Law Purposes

The general conflict-of-laws rule in Texas is that

“questions of substantive law are controlled by the laws of

the state where the cause of action arose, but. . . matters of

remedy and of procedure are governed by the laws of the

state where the action is sought to be maintained.” Morris v.

LTV Corp., 725 F.2d 1024 (Sth Cir. 1984). Since the Fifth

Circuit statement in Morris, the Texas Supreme Court

abandoned the /ex /oci rules for substantive issues in favor

of the Restatement (Second) of Conflict of Laws’ most

significant relationship approach. Duncan, 665 S.W.2d at

421. The Texas choice of law rule for substantive issues now

provides:

[I]n all choice of law cases, except those contract

cases in which the parties have agreed to a valid

choice of law clause, the law of the state with the

most significant relationship to the particular

substantive issue will be applied to resolve that issue.

Duncan, 665 S.W.2d at 421.

Since the decision in Duncan, the Texas courts have

neither overruled nor questioned the vitality of Morris for

the proposition that matters of remedy are governed by the

laws of the state where the action is sought to be maintained,

and continue to follow the Fifth Circuit’s analysis in Morris.

In re Chanel Financial, Inc., 102 B.R. 549, 550 (Bkrtcy. N.D.

Tex. 1988). Federal courts in Texas must follow the Texas

conflict rule even though applying the rule would bar the

plaintiff's recovery. Morris, 725 F.2d at 1027.

The critical question before the Fifth Circuit was whether

vicarious liability is substantive or remedial for conflict-of-law

purposes. Petitioner asserted below that vicarious liability is

remedial, and relied on Morris for its analysis. The Fifth Circuit

has not conducted this analysis.

E. The Fifth Circuit Decision Creates A Conflict As

To Whether The Application Of The Forum State’s

Substantive Law Can Be Invalidated When The

Forum State’s Contacts With The Litigation Is Not

Transient In Nature

The Fifth Circuit’s holding that Florida law governs

Hertz’s vicarious liability for the respondent’s judgment

against Creamer, based on the Court’s determination that

“the most relevant relationship [of the parties] is that which

arises from the lease of the automobile,” '* cannot be

reconciled with the Third Circuit’s holding in Budget Rent-

A-Car System, Inc. v. Chappell, 407 F.3d 166 (3d Cir. 2005)

and in Garcia v. Plaza Oldsmobile Ltd., 421 F.3d 216

(3d Cir. 2005).

In Budget, the Third Circuit considered a choice of law

question on facts similar to this case. The automobile rental

company, as an owner of the automobile, brought a diversity

action against the renter and passenger seeking a declaratory

judgment as to which state’s substantive law (New York’s,

13. Opinion, p. 16a.

Michigan’s or Pennsylvania’s) governed its vicarious liability

to the renter’s passenger. The passenger brought vicarious

liability and negligent entrustment counterclaims against the

company and a cross-claim against the renter. The injured

passenger was a New York resident and the renter was a

Michigan resident who had rented the car in Michigan (and

previously driven to New York). The accident occurred, and

the lawsuit was brought, in Pennsylvania. The district court

applied Pennsylvania law.

The Third Circuit conducted a thorough analysis of

public policies of each state, and the relative interests of those

states in the determination of the controversy. New York had

an unlimited vicarious liability statute whereas Pennsylvania

followed the common-law rule that, absent an agency

relationship, an automobile owner was not liable for the

negligence of its driver. Jd. at 172. The Third Circuit

determined that the New York legislature, in enacting

§ 388(1) of New York’s Vehicle and Traffic Laws, “intended

that the insured party be afforded a financially responsible

insured person against whom to recover for injures.” /d. at

170. Additionally, New York’s Courts of Appeal construed

§ 388(1) as having extraterritorial application. The Third

Circuit found that the interest of New York, the injured

passenger s domicile, in having its statute applied was “clear,

direct, and compelling.” The Third Circuit reversed the

district court’s application of its own law on the basis that

Pennsylvania had only a transient interest to the parties, and

had no interest in securing a recovery for the injured counter-

plaintiff and no interest in limiting Budget’s liability. The

Third Circuit determined that the interest of Michigan, the

place of the rental agreement, in having its statute applied

was “uncertain and tenuous at best.” Jd.

The Fifth Circuit’s determination that Florida, the place of

the rental agreement in this case, had a paramount interest in

having its dangerous instrumentality doctrine applied to the

vicarious liability issue creates a conflict with the Third Circuit’s

decision.

In Garcia, the Third Circuit, with the participation of then-

Judge Alito, considered again a conflict-of-law issue whether

Pennsylvania common law or New York’s statutory law

governed Plaza’s liability. A Pennsylvania driver, Garcia, who

was injured in a motor vehicle accident in Pennsylvania, brought

a diversity action against the New York driver and Plaza

Oldsmobile, a New York corporation with a principal place of

business in that state. Garcia asserted that New York statutory —

law applied, whereas Plaza asserted that Pennsylvania law

applied. The district court applied New York law. /d. at 219. ~

As in the decision in Budget, the Third Circuit conducted

an “interest analysis” of the policies of all interested states and

then - based on the results of that analysis - determined whether

the case involved a true of false conflict or whether it was an

“unprovided for” case. /d. at 220. The Third Circuit determined

that Pennsylvania had an interest in providing for the plaintiff's

recovery, and that New York’s vicarious liability law was not

so offensive to the policy of Pennsylvania as to prevent the

application of New York law. Accordingly, the Third Circuit

upheld the district court’s decision.

The Fifth Circuit erred in not conducting this “interest

analysis” of the policies underlying Texas law, and in not taking

into account the respondent’s domicile, place of injury, and place

of conduct causing injury, as well as the contractual nature of

the rental agreement. Review is necessary so that this Court

may remedy the Fifth Circuit’s error and bring a certainty to the

proper reach of Florida’s dangerous instrumentality doctrine.

CONCLUSION

For all the foregoing reasons, petitioner respectfully

requests that the Supreme Court grant review of this matter.

Respectfully submitted,

BLAZENA Psurny*

WESSON H. TRIBBLE

3050 Post Oak Boulevard

Suite 1350

Houston, TX 77056

(713) 622-0444

* Counsel of Record Attorneys for Petitioner

APPENDIX

APPENDIX A — OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FIFTH CIRCUIT

DATED AND FILED NOVEMBER 28, 2005

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 03-10404

PRISCILLA S. CATES, Individually and as Guardian of

the Person and Estate of Bobby Ray Cates,

an Incapacitated Person,

Plaintiff-Appellant-Cross-Appellee,

versus

MATTHEW SCOTT CREAMER,

Defendant-Appellee-Cross-Appellant,

LAMAE CREAMER; HERTZ CORPORATION,

Defendants-Appellees.

Appeal from the United States District Court for

the Northern District of Texas, Wichita Falls

- 3DC No. 7:00-CV-121

Before JOLLY, JONES and DEMOSS, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

The lease for the Hertz rental car was executed in Florida.

The wreck and Bobby Cates’s injuries occurred in Texas.

Appendix A

The defendant driver, Matthew Scott Creamer, momentarily

went to sleep while driving. Mr. Cates’s car had stalled on

the side of the highway when Creamer hit it, severely injuring

Bobby Cates. The first jury found no negligence and returned

its verdict for the defendant, Creamer. The district court

granted a new trial. The second jury found Creamer 70% at

fault for the accident and awarded damages to the plaintiff.

The court, however, applied Texas law and exonerated Hertz

from liability. Cates hopes to collect the award from Hertz

based on the Florida law relating to vicarious liability.

Creamer hopes to reinstate the first jury’s verdict, which

means we have to decide whether Creamer’s falling asleep

at the wheel was fault-free. If we uphold the grant of a new

trial and the verdict of the second jury, then we must decide

whether Texas or Florida law applies to determine Hertz’s

vicarious liability. If Texas law applies, Hertz prevails in this

appeal. If Florida law applies, Cates prevails.

Ultimately, we uphold the district court’s grant of a new

trial to Cates and, consequently, the verdict of the second

trial. We further hold that Florida law applies to the vicarious

liability issue and remand the case to the district court for

further proceedings applying Florida law.

On June 29, 1998, Florida residents Matthew and Lamae

Creamer rented a mini-van from Hertz Corporation (“Hertz”)

Appendix A

in Florida.' They planned to travel from Panama City, Florida

to Spearman, Texas for a family reunion. They apparently

told the Hertz agent that they planned to make the 24-hour

trip without stopping for the night by alternating drivers. The

Creamers signed a rental agreement that stated: “This

agreement is solely for the purpose of creating a bailment

that allows You to use the car as permitted by this agreement.”

Under the agreement, the Creamers could drive the minivan

anywhere in the United States and Canada, but they were

obligated to return it to Florida. The agreement referenced

Florida’s financial responsibility and “no fault” personal

injury laws but did not contain a choice-of-laws provision.

The Creamers began driving at around noon on June 29.

Matthew Creamer (“Creamer”) drove approximately eight

hours from Panama City to New Orleans, Louisiana, at which

time Mrs. Creamer began to drive. She drove through the

night into Texas while Creamer slept in the car. He awoke

near daybreak to discover that the car was pulled over to the

side of the road and that Mrs. Creamer was asleep. He then

resumed driving and set the cruise control to 70 miles per

hour, the highway’s speed limit. Creamer fell asleep at the

wheel and awoke as he hit Bobby Ray Cates’s (“Mr. Cates”)

parked car. Tragically, Mr. Cates was standing in front of the

front passenger door and the impact of the collision projected

him several feet into the roadway.

1. Hertz is incorporated in Delaware and its principal place of

business is New Jerscy.

Appendix A

As a result of the severe head injuries he sustained,

Mr. Cates is unable to work and is almost completely

incapacitated. Mr. Cates’s medical expenses exceed

$200,000. He resides at a long-term care facility. Priscilla

Cates (“Cates”) is his legal guardian.

—

Cates filed a diversity suit in the Northern District of

Texas against Creamer for negligent operation of a motor

vehicle under Texas law, seeking compensation for medical

expenses and lost wages. She also sued Hertz under Florida’s

“dangerous instrumentality doctrine,” which imposes

vicarious liability on the owner/lessor of a vehicle who

entrusts it to a lessee who operates it negligently, causing

damages. Hertz moved for summary judgment, contending

that Texas law, not Florida law, controls the vicarious liability

issue. Texas does not recognize the dangerous instrumentality

doctrine; instead, it has adopted the doctrine of negligent

entrustment, which provides that for Cates to make Hertz

vicariously liable she must show: “(1) entrustment of a

vehicle by the owner; (2) to an unlicensed, incompetent, or

reckless driver; (3) that the owner knew or should have

known to be unlicensed, (4) that the driver was negligent on

the occasion in question and (5) that the driver’s negligence

proximately caused the accident.” Schneider v. Esperanza

Transmission Co., 744 S.W.2d 595, 596 (Tex.1987). The

district court granted Hertz’s motion and dismissed Cates’s

suit against Hertz after finding that Cates could not make a

prima facie case of negligent entrustment against Hertz

under Texas law. It subsequently denied Cates’s motion to

reconsider its summary judgment order.

Appendix A

The first trial, with Creamer as the sole defendant, began

on July 9, 2002. Creamer denied that he was liable and argued

that Cates was contributorily negligent. The jury returned a

verdict in which it found that Creamer was not negligent.

The district court, however, granted Cates’s motion for new

trial. The second jury returned a verdict in favor of Cates,

finding that Creamer was 70% negligent and Mr. Cates

was 30% negligent. The jury assessed actual damages of

$3,080,000.00. The district court entered judgment of

$2,156,000 plus prejudgment interest of $851,782.47.

This appeal and cross appeal present two issues. First,

Cates appeals the summary judgment dismissing Hertz,

contending that Florida law, not Texas law, controls the issue

of vicarious liability. Creamer cross-appeals the grant of

Cates’s motion for new trial. He urges that the district court

abused its discretion in granting the motion for new trial

because the first verdict was not against the great weight of

the evidence. Creamer requests that we reinstate the first

verdict. We will address this issue first.

We review a district court’s grant of a motion for new

trial for abuse of discretion. Govt Fin. Servs. One Lid.

Partnership v. Peyton Place, Inc., 62 F.3d 767, 774

(Sth Cir. 1995). Where a motion for a new trial is granted,

we scrutinize that decision more closely. Scott v. Monsanto

Co., 868 F.2d 786, 789 (Sth Cir. 1989) (noting that when a

motion for new trial is granted “the broad discretion allowed

to the trial court is tempered by the deference due to a

jury[ J”). We review a grant of summary judgment de novo,

Appendix A

applying the same standard as the district court. U.E. Texas

One-Barrington, Ltd. v. Gen. Star Indem. Co., 332 F.3d 274,

276 (Sth Cir. 2003). Finally, we review a district court’s

conflict of laws determination de novo. Spence v. Glock, 227

F.3d 308, 311 (Sth Cir. 2000).

A district court can grant a motion for new trial if the

first trial was unfair or if the jury verdict was against the

great weight of the evidence. Monsanto, 868 F.2d at 789.

Several factors guide us in the review of a district court’s

order granting a new trial: We consider the simplicity of the

issues, “pernicious occurrences” at trial, and the extent to

which the evidence is in dispute. /d. (quoting Smith v.

Transworld Drilling Co., 773 F.2d 610, 613 (Sth Cir. 1985)).

If we determine that one or more of the above factors supports

the district judge, we generally affirm the grant of a new

trial. Shows v. Jamison Bedding, Inc., 671 F.2d 927, 931 (Sth

Cir. 1982). However, even if we find that all three of these

factors weigh against the grant of a new trial, we may still

apply an overriding consideration and affirm the district

court’s order of a new trial by determining “independently[ ]

that the jury verdict was against the great weight of the

evidence.” /d.

We will assume that each of the three factors tilts against

the grant of a new trial here. The question thus becomes

whether the fourth consideration, standing alone, supports

Appendix A

the grant of a new trial. See Shows, 671 F.2d at 931. We have

frequently affirmed district court grants of motions for new

trials on evidentiary grounds alone. See, e.g., Shows; United

States v. Horton, 622 F.2d 144 (Sth Cir. 1980); Bazile v. Bisso

Marine Co., Inc., 606 F.2d 101 (Sth Cir. 1979); Massey v.

Gulf Oil Corp., 508 F.2d 92 (Sth Cir. 1975); Weyerhaeuser

v. Bucon Construction Co., 430 F.2d 420 (Sth Cir. 1970).

Creamer argues that he presented sufficient evidence for

the jury to find in his favor. He maintains that falling asleep

at the wheel creates only a rebuttable inference of negligence.

Creamer further argues that he successfully rebutted that

inference by submitting evidence that Mr. Cates was drunk

at the time of the accident, that Mr. Cates did not turn on his

hazard lights after pulling over, that Mr. Cates’s car may not

have been entirely off the road,” that Creamer had no reason

to anticipate that he would fall asleep at the wheel because

he was well-rested when he began driving that morning, and

that Creamer had nodded off only momentarily.

Cates counters that Creamer did not present any evidence

that justified or excused his falling asleep at the wheel and

thus did not rebut the inference of negligence. She further

argues that any evidence tending to show Mr. Cates’s

negligence goes only to comparative negligence and does

not relieve Creamer of responsibility. She also contends that

Creamer’s contention that Mr. Cates’s car was in the roadway

2. Creamer argues that the jury could have concluded that

Catcs’s car was in the road from Creamer’s testimony that his car

had just hit the roadway’s rumble strips when he collided with Cates’s

parked car.

Appendix A

is meritless because it is controverted by the police officer’s

report, which found that Mr. Cates’s car was legally parked

on the shoulder. Finally, Cates argues that the danger of a

crash is foreseeable when the driver falls asleep while

traveling 70 miles per hour. These facts, Cates argues,

foreclose any doubt as to the foreseeability of the accident.

We agree with Cates that the district court did not abuse

its discretion in concluding that the first jury verdict was

against the great weight of the evidence. This conclusion is

clearly supportable when evaluated under Texas law. Texas

case law acknowledges that “[i]t is hardly possible to yield

to sleep without having premonitory symptoms of its

approach [.]” McMillian v. Sims, 112 S.W.2d 793, 797

(Tex.Civ.App.1937, writ dism. agr.). When a driver ignores

these warnings and falls asleep while driving, as Creamer

concedes, an inference of negligence arises. /d. (citing Potz

v. Williams, 113 Conn. 278, 155 A. 211, 212 (Conn. 1931)).

Creamer cannot point to any evidence that he did not

experience these premonitory symptoms of sleep. Creamer’s

evidence that he was well-rested before driving shows only

that he exercised due care before he became sleepy; it shows

neither that he had no warning signs of sleepiness nor that

he was excused or justified in ignoring such signs. Moreover,

the evidence relating to Cates's fault does not go to exonerate

Creamer—it goes to establish comparative fault for the injury.

Because we find that Creamer did not rebut the inference of

negligence arising from his nodding off at the wheel, we

affirm the district court’s holding that the first jury verdict—

Appendix A

relieving Creamer of all liability—was against the great

weight of the evidence.

We now turn to consider whether the district court erred

in applying Texas law instead of Florida law, which had the

effect of relieving Hertz of all liability.’

We review de novo a district court’s choice of law

determination. /n re Air Disaster at Ramstein Air Base,

Germany, 81 F.3d 570, 576 (Sth Cir. 1996).

Cates argues that the district court erred in its conflict

of laws analysis, specifically, by failing to follow the narrow

issue-by-issue approach set forth in the Second Restatement

on Conflicts of Laws, which Texas has adopted. See Duncan

v. Cessna Aircraft Co., 665 S.W.2d 414, 421 (Tex.1984). She

contends that the court should have focused on the facts and

circumstances surrounding the issue of vicarious liability—

not on the issue of general negligence. In support of her

argument she cites § 174 of the Second Restatement on

Conflict of Laws, which provides that

[t]he local law of the state which has the most

significant relationship to the occurrence and the

parties with respect to the issue of vicarious

3. Cates does not challenge the district court’s analysis of

Texas’s negligent entrustment law.

10a

Appendix A

liability should be applied in determining whether

one person is liable for the tort of another person.‘

Hertz argues that § 174 should not be applied to this

case because it contains a specifically felevant limitation: In

determining which state’s law should apply to an issue of

vicarious liability, “the forum will be influenced by rules of

vicarious liability prevailing in other states.” Restatement

¢Second) Conflict of Laws § 174 cmt. b (1971). Hertz asserts

that state laws have overwhelmingly rejected vicarious

liability arising from the dangerous instrumentality doctrine.

Thus, Hertz concludes, the prevailing view of the majority

of the states should persuade the forum court not to apply

vicarious liability under Florida law.

(1)

Hertz’s argument that we should disregard the Florida

rule on vicarious liability because only three states have

adopted the dangerous instrumentality doctrine ignores the

broader and more relevant consideration. Although § 174

requires us to “be influenced by the rules of vicarious liability

prevailing in other states[,]” it also directs that “a relationship

which forms the basis for the imposition of vicarious liability

in a substantial number of states” will likely be adequate for

— —_— oe ———

4. Further support for this proposition is found in the

Restatement’s statement that “[c]ach issue is to receive separate

consideration if it is one which would be resolved differently under

the local law rule of two or more of the potentially interested states.”

Restatement (Second) Conflict of Laws § 145 cmt. d (1971).

lla

Appendix A

such an imposition, “even if it would not result in such

liability under the forum’s local law.” Restatement (Second)

Conflict of Laws § 174 cmt. b. The relevant inquiry, thus,

is not how many states have adopted the precise rule that

prevails in Florida, but how many states recognize vicarious

liability in comparable relationships between bailor and

bailee. We note that at least nineteen states, including the

District of Columbia, arguably impose vicarious liability on

automobile lessors in some circumstances, oftén under the

principles of agency.° At least eight of those jurisdictions

would likely impose vicarious liability on automobile lessors

5. See 59 Bus. Law. 1161; N.Y. Veh. & Traf. Law § 388

(McKinney 1996 & Supp.2004); Shuck v. Means, 302 Minn. 93, 226

N.W.2d 285, 287 (1975); Mich. Comp. Laws § 257.401; Burton v.

Gardner Motors, Inc., 117 Cal. App.3d 426, 429, 172 Cal. Rptr. 647,

649 (1981); Conn. Gen. Stat. § 14-154a (2003); Enter. Leasing Co.

S. Cent., Inc. v. Hughes, 833 So.2d 832, 837-38 (Fla. Dist. Ct. App.

2002); Me. Rev. Stat. Ann. 29-A § 1652; RI Stat. § 31-34-4; Curtis

v. Cuff, 537 A.2d 1072, 1074 (D.C. 1987); Iowa Code § 321.493;

Del.Code Ann. tit. 21, § 6102(a) (1995); Bell v. Reid, 118 Ill. App.

3d 310, 73 Ill. Dec. 868, 454 N.E.2d 1117, 1119 (1983) (holding

that the vehicle owner is liable for negligence of the driver unless

the owner can rebut the presumption of agency); Williams v. Wheeler,

252 Md. 75, 249 A.2d 104, 110-11 (1969) (holding that the owner of

a vehicle who was not driving at the time of the accident cannot be

held vicariously liable unless there was evidence of agency); Mass.

Gen. Laws Ann. ch. 231 § 85A; Harvey v. Craw, 110 N.J.Super. 68,

264 A.2d 448, 451 (N.J. Super. Ct. App. Div. 1970), cert. dismissed,

56 N.J. 479, 267 A.2d 61 (1970) (noting that the owner/lessor may

be held vicariously liable unless the presumption of agency is

rebutted); Okla. Stat. Ann. tit. 47, § 8-102(c); Wis. Stat. Ann.

§§ 344.51(2), 344.01(2)(d) (1999); McGrew v. Stone, 998 S.W.2d 5,

6 (Ky. 1999); Nev.Rev.Stat. § 482.305.

12a

Appendix A

in the same manner that Florida does.® We think that this

establishes an adequate basis for a Texas court to impose

Florida’s law of vicarious liability despite the fact that Texas

itself does not recognize vicarious liability under these

circumstances. Accordingly, we reject Hertz’s argument that

the imposition of vicarious liability on these facts is so

aberrant that we should disregard a § 174 analysis.

(2)

Section 174 directs forum courts to apply “[t]he local

law of the state which has the most significant relationship

to the occurrence and the parties with respect to the issue of

vicarious liability” in deciding “whether one person is liable

for the tort of another.” Restatement (Second) Conflict of

Laws § 174 cmt. a (1971). The district court mistakenly

focused solely on the factors generally relevant to tort cases

without following the directive of §§ 145 and 174 to apply

the conflicts analysis with respect to the individual issues

that may arise in a given tort case. Here, the specific issue is

whether Florida or Texas law should apply to the question

of Hertz’s vicarious liability for Creamer’s negligence.

Our finding that the district court erred in its analysis by

not focusing on § 174, however, does not determine the

6. See Burton v. Gardner Motors, Inc., 117 Cal. App. 3d 426,

172 Cal. Rptr. 647, 649 (1981); Conn. Gen. Stat. § 14-154a (2003);

Enter. Leasing Co. S. Cent., Inc. v. Hughes, 833 So.2d 832, 837-38

(Fla. Dist. Ct. App. 2002); Me. Rev. Stat. Ann. 29-A § 1652; RI Stat.

§ 31-34-4; Curtis v. Cuff, 537 A.2d 1072, 1074 (D.C. 1987); lowa

Code § 321.493; Mich. Comp. Laws § 257.401.

13a

Appendix A

ultimate question in this case: whether the court erroneously

held that Texas, not Florida, law should apply on the question

of vicarious liability. We must now conduct an analysis of

that ultimate question.

(3)

(a)

As we have already noted, Texas has adopted the

Restatement (Second) on Conflict of Laws and the “most

significant relationship” test outlined in §§ 6 and 145 of the

Restatement. See Duncan, 665 S.W.2d at 420-21. Section

145 directs that the law of the state with the most significant

relationship to the particular issue in tort should govern that

issue. Restatement (Second) Conflict of Laws § 145(1)

(1971). Section 6 requires us to consider the relative interests

of the respective states in having their laws applied to

this case.

Comment a of § 145 states that §§ 156-174 “dealf ] with

particular issues in tort” with greater precision as compared

to § 145, which is “cast in terms of great generality.” This

comment concludes that “the best way to bring precision into

the field is by attempting to state special rules for particular

torts and for particular issues in tort.” /d.’

7. The Restatement’s framework does not provide a precise

method for analyzing its provisions. See Gann v. Fruehauf Corp.,

52 F.3d 1320, 1325 (Sth Cir. 1995) (noting that the factors and

principles in the Second Restatement “defy mechanical application”

and are not to be “precisely followed in every instance[ ]}”).

14a

Appendix A

We therefore turn once again to § 174, which directs us

to consider

(1) whether the relationship between the

defendant and the other person makes the

imposition of vicarious liability reasonable and

(2) whether there is a reasonable relationship

between the defendant and the state whose local

law is to be applied.

§ 174 cmt. a. As to the first inquiry, the rental agreement

created a bailment relationship between Creamer and Hertz

in Florida. Comment b of § 174 states that a bailment

relationship establishes “an adequate relationship” for the

imposition of vicarious liability. As to the second inquiry,

there is clearly a reasonable relationship between Hertz and

Florida law: Hertz does business in Florida, and the rental

contract that provides the potential basis for the imposition

of vicarious liability refers to Florida law. Furthermore, the

rental agreement required the Creamers to return the car to

Hertz in Florida. On this basis, we are persuaded that the

bailor-bailee relationship between Hertz and Creamer

establishes an adequate basis for the imposition of vicarious

liability against Hertz and that-Hertz had a reasonable

relationship with the state of Florida. We thus find that

§ 174 weighs in favor of applying Florida law to the vicarious

liability issue.

(b)

Continuing our analysis of the relevant Restatement

provisions, § 174 next requires us to apply “the rule of

§ 145.” We thus turn to § 145, which provides a list of

15a

Appendix A

contacts that should be considered in determining what state

law applies to a specific issue in a tort case. These contacts

include:

(a) the place where the injury occurred,

(b) the place where the conduct causing the

injury occurred,

of incorporation and place of business of the

parties, and

(d) the place where the relationship, if any,

between the parties is centered.

Hertz emphasizes that both the injury and the conduct

causing the injury in this case occurred in Texas. These

factors, however, are meant to be “evaluated according to

their relative importance with respect to the particular issue.”

§ 145. We also evaluate these contacts qualitatively instead

of quantitatively. Spence v. Glock, Ges.m.b.H., 227 F.3d 308,

312 (Sth Cir. 2000).

That both the injury and the conduct causing the injury

occurred in Texas would weigh heavily in favor of applying

Texas law to the issue of Creamer’s negligence that caused

an injury to a Texas citizen on a Texas road. But those contacts

are less important in determining which state’s law should

apply to the issue of Hertz’s vicarious liability for those

injuries caused by its lessee. More relevant to Hertz’s

vicarious liability is the place where the relationship of the

16a

Appendix A

parties is centered. See § 145(2)(d). The most relevant

relationship is that which arises from the lease of the

automobile. Although Cates may have a real interest in the

lease, Cates, a Texas resident, essentially has no relationship

with the lease. Texas has no relationship with the lease, and

Hertz has no relationship with Texas concerning this lease.

Creamer has no relationship with the state of Texas arising

from the lease. Creamer, however, is a Florida resident and

is a party to the lease. Hertz is the other party to the lease

and does its relevant business in Florida. Florida is the situs

where the lease was executed. In short, Florida, not Texas,

has the most significant relationship to the issue of Hertz’s

vicarious liability.

(c)

Now that we have identified the most significant

contacts, § 145 directs that these contacts are to be considered

under the principles provided in § 6. Section 6 requires us to

engage in an analysis of the relative interests of the respective

states. Specifically, we should assess:

(a) the needs of the interstate and international

systems,

(b) the relevant policies of the forum,

states and the relative interests of those states in

the determination of the particular issue,

(d) the protection of justified expectations,

17a

Appendix A

(e) the basic policies underlying the

particular field of law,

(f) certainty, predictability, and uniformity of

result, and.

(g) ease in the determination and application

of the law to be applied.

We note that the interests we consider are those that are

specifically relevant to the issue of vicarious liability. Our

analysis of these factors leads us to conclude that Texas has

only a minimal interest in having its law apply to the vicarious

liability issue. Texas’s interest in avoiding judgments against

defendant bailors is not implicated here because Hertz is not

a Texas corporation and did not conduct the business relating

to this rental agreement in Texas. Furthermore, although

Texas has the greater interest in seeing Cates compensated

for her husband’s injuries and in avoiding the burden of

providing medical care for Mr. Cates, it is Florida law, not

Texas law, which offers greater protection of those interests.

Florida’s interests in having its law applied to the

vicarious liability issue in this case, however, are also

minimal. Florida’s dangerous instrumentality doctrine

protects plaintiffs from impecunious drivers by imposing

liability on the owners of the vehicles, but here, the plaintiff

is not a Florida resident. Further, although Florida may have

an interest in regulating the conduct of vehicle bailors to

reduce the incidence of accidents, we are not persuaded that

that interest extends beyond Florida’s borders.

18a

Appendix A

Thus, because the interests of neither state clearly

predominate over those of the other, the interest analysis of

§ 6 provides little impact on our decision. We are, however,

persuaded by our reading of the most significant relationship

test of §§ 145 and 174 that Florida clearly has the greater

connection to the facts and circumstances as they relate to

the vicarious liability issue.* We therefore conclude that the

district court erred in applying Texas law to the issue of

Hertz’s vicarious liability. Because the district court did not

conduct a vicarious liability inquiry under Flo.ida law,

we remand this case to it for determination, under Florida

law, of Hertz’s vicarious liability for Cates’s judgment a

gainst Creamer. On remand, the district court should focus

particularly on whether the Florida law of vicarious liability

may be applied to benefit non-Florida residents in a situation

such as the case at hand. It seems that the district court will

have to make an Erie guess to resolve this question, as no

Florida precedent exists to resolve the question.

In sum, we conclude that the district court did not abuse

its discretion in granting Cates’s motion for new trial because

Creamer did not present evidence rebutting the inference of

negligence that arose from his falling asleep at the wheel.

8. The dissent criticizes our failure to cite Bartley v. Budget

Rent-A-Car Corp., 919 S.W.2d 747 (Tex.App.1996), for its reasoning.

As previously noted, Texas has adopted the Restatement (Second)

of Conflicts of Laws, and § 174 is the section that directly addresses

vicarious liability. We find Bartley, because it fails to address § 174,

unhelpful to our analysis.

19a

Appendix A

The first jury’s verdict denying relief to Cates was, therefore,

against the great weight of the evidence. We further hold

that the district court erred in failing to analyze the conflict

of laws question in the specific context of the vicarious

liability issue and in failing to apply § 174 of the Restatement.

Our own analysis of that section leads us to conclude that

Florida, not Texas, law should apply to the vicarious liability

issue because the bailment relationship, which is the basis

for vicarious liability here, is centered in Florida and because

§ 174 specifically states that a bailment relationship is an

adequate basis for the imposition of vicarious liability.

Accordingly, we AFFIRM Cates’s judgment against Creamer,

VACATE the judgment for Hertz, and REMAND to the

district court for determination of Hertz’s vicarious liability

under Florida law for the judgment entered against Creamer.

AFFIRMED in part; VACATED in part and REMANDED.

20a

Appendix A

DeMOSS, Circuit Judge, concurring in part and dissenting

in part:

Insofar as the majority opinion upholds the district

court’s grant of a new trial to Cates and, consequently, the

verdict of the second trial, I concur. However, I respectfully

dissent from the portion of the majority’s opinion that holds

that Florida law applies to the issue of vicarious liability.

This case is undisputedly based on diversity jurisdiction,

and our responsibility in diversity cases is to determine what

the substantive law of the forum state is, not what we think

it should be. See Am. Nat’! Gen. Ins. Co. v. Ryan, 274 F.3d

319, 328 (Sth Cir. 2001); Boardman v. United Servs. Auto.

Ass'n, 742 F.2d 847, 851 (Sth Cir. 1984). Moreover, once

we have determined what the law is, our duty is to apply it,

not to define its contours. Boardman, 742 F.2d at 851. I

dissent from the majority’s opinion because the majority uses

the wrong approach in determining what Texas’s conflicts

law is and in doing so, reaches the wrong result.

The majority cites a Texas Supreme Court case, Duncan

v. Cessna Aircraft Co., 665 S.W.2d 414 (Tex.1984), for the

proposition that Texas follows the Restatement (Second) of

Conflict of Laws to determine choice of law in tort cases and

appears to conclude that Texas would adopt section 174

of the Restatement in the vicarious liability context. The

majority then provides a quite voluminous analysis of how

section 174 applies to the facts of this case. But the Texas

Supreme Court has never applied the most-significant-

relationship test in a vicarious liability case. Consequently,

2la

Appendix A

it is unclear (1) whether Texas’s highest court would adopt

section 174 as controlling law in the vicarious liability

context and (2) how that same court would interpret that

section even if it did. Moreover, where a state’s highest court

has not yet spoken on an issue, we have stated that we will

look to the state’s appellate courts for guidance unless we

are convinced that the highest court of the state would not

adopt the appellate courts’ reasoning. Primrose Operating

Co. v. Nat'l Am. Ins. Co., 382 F.3d 546, 564-65 (Sth Cir.

2004). The best evidence of what the Texas Supreme Court

would do in this case can be found in Bartley v. Budget Rent-

A-Car Corp., 919 8.W.2d 747 (Tex.App.— Amarillo 1996),

which I describe below in my discussion of how this case

should have been decided.? Remarkably, the majority makes

no mention at all of Bartley and fails to indicate why it

believes the supreme court of Texas would not follow the

reasoning set out there. And even if the majority has good

reason not to follow Bartley, it fails to consider the next best

solution in a choice of law case in which guidance from the

State’s supreme court is lacking: certification.

I have spoken out on the importance of certification

several times in the past, see, e.g., Tanks v. Lockheed Martin

Corp., 417 F.3d 456, 468 (Sth Cir. 2005) (DeMoss, J.,

9. There is another Texas appeals court case that not only agrees

with Bartley but also agrees with the district court below that Texas

law should apply in a case like this. Perkins v. Dynasty Group Auto,

No. 08-01-00493-CV, 2003 WL 22810452, at *3-*4 (Tex.App.—

E] Paso Nov. 25, 2003) (unpublished). However, because that case is

not published, [ only cite it here to bolster my contention that Bartley

is the best evidence of what the Texas Supreme Court would do.

22a

Appendix A

specially concurring); Compass Bank v. King, Griffin &

Adamson P.C., 388 F.3d 504, 506-07 (Sth Cir. 2004)

(DeMoss, J., dissenting), and one reason I dissent here is to

emphasiz<¢ my position regarding that important judicial tool.

As I have said before, certifying an unanswered question to

a State’s supreme court is a preferable course of action to our

trying to make an Erie guess as to the question of state law

involved. Granted, we have refused to certify when the state’s

law is clear, but the law is anything but clear here—section

174 is ambiguous, and it has never been adopted or inter-

preted by a Texas court. This Circuit used to subscribe to a

federalist policy of seeking guidance in diversity cases from

“the one court constitutionally entitled to supply it,” the

supreme court of the forum state. Boardman, 742 F.2d at

851; see also Puckett v. Rufenacht, Bromagen, & Hertz, Inc.,

903 F.2d 1014, 1021 n. 13 (Sth Cir. 1990) (“This course [of

certifying questions directly to the supreme court of the forum

state] has been pursued often by the Fifth Circuit and has

been enthusiastically endorsed by the Supreme Court.”).

However, the majority’s refusal to even consider certification

indicates this Circuit’s increasing animosity towards the use

of certification in diversity cases. I urge the Court to return

to these principles of federalism. As former Chief Judge

Brown aptly stated ir Boardman, quoting his own law review

article, “Federal courts should hesitate to ‘trade judicial robes

for the garb of prophet’ ... when an available certification

procedure renders the crystal ball or divining rod unnecessary.”

Boardman, 742 F.2d at 851 (quoting John R. Brown,

Certification—Federalism in Action, 7 Cums. L. Rev. 455,

455 (1977)). We should heed Judge Brown’s advice and use

the great tool of certification more freely.

23a

Appendix A

Another reason I dissent is that even if the majority uses

the right approach, I believe it reaches the wrong result.

First, Bartley is a good indicator of how the Texas Supreme

Court would decide this case. Not only are Bartley’s facts

substantially similar (a Texas plaintiff suing a Michigan car

rental agency for the negligence of a driver), but also the

underlying policy reason for selecting Texas substantive law

is the same. In Bartley, the Seventh Court of Appeals of Texas

declined to apply the law of Michigan, the state where the

car rental agency was located, because it found that layering

Michigan’s “no fault” liability scheme on top of Texas’s

system of “proportional responsibility and recovery” would

have an unjust result, especially when the limited damages

aspect of Michigan law was not also imported. Bartley, 919

S.W.2d at 755-56. The Bartley court found it determinative

that the plaintiff sought a recovery unlimited by law through

application of part of a Michigan law that, if applied in its

entirety, would have limited recovery. Jd. at 755. In this case,

the plaintiff attempts to recover $2,156,000.00 from the

defendant car rental agency under Florida’s dangerous

instrumentality doctrine. Yet the plaintiff does not seek

apnlication of the rest of Florida’s laws, which limit

the liability of lessors who rent or lease a motor vehicle for

less than one year. See Fla. Stat. Ann. § 324.021(9)(b)(2)

(generally limiting a lessor’s liability to $100,000 per

individual and $300,000 per incident (unless the lessor does

not carry adequate insurance)); see also Fischer v.

Alessandrini, 907 So.2d 569, 570- 71 (Fla.Dist.Ct.App.2005)

(discussing the policy for limiting recovery under the

dangerous instrumentality doctrine). I do not see how the

majority can ignore Bartley on these facts, especially where

24a

Appendix A

“applying the law of the forum, Texas, will further its own

policy of serving the interest of certainty, predictability and

uniformity of result, thereby providing ease in the determination

and application of the law.” Bartley, 919 S.W.2d at 756.

The second reason I believe the majority reaches the

wrong result is that it misinterprets sections 174 and 145 of

the Restatement. First, the comments to section 174 do not

cover the situation where party A, a domiciliary of state X,

rents a car from B rental agency in state X and, with

permission, drives to state Y and negligently injures party C

there. Furthermore, comment c states, .

Vicarious liability may also be imposed by

application of the local law of some state other

than that of conduct and injury. So, for example,

vicarious liability may be imposed under the local

law of the state where the relationship between

the one sought to be held liable and the tortfeasor

is centered. Application of the local law of this

state to impose vicarious liability is particularly

likely if this state has some relationship to the

injured plaintiff.

Restatement (Second) of Conflict of Laws § 174 cmt. c (1971)

(emphasis added). Here, Florida has no relationship to the-

injured plaintiff. Therefore, section 174 does not provide a

concrete answer as to whether vicarious liability should be

imposed on the car rental agency in our case, contrary to the

majority’s assertion.

25a

Appendix A

Turning to section 145, the majority incorrectly interprets

the fourth contact to be considered under that section in

determining what state law applies to a specific issue in a

tort case—” the place where the relationship, if any, between

the parties is centered.” See id. § 145(2)(d). The majority

states that the relevant relationship is “that which arises from

the lease of the automobile.” But there was no relationship

between the parties prior to the accident in this case, and at

least one Texas court has held that section 145’s fourth

contact is irrelevant in that situation. Bartley, 919 S.W.2d

at 755. Because the majority finds this contact to be

determinative in Part B.3.b of its opinion, | believe its result

is flawed.

Because I have not been able to convince the majority to

certify the conflicts question presented in this case to the

Texas Supreme Court, I suggest what I believe is the next

best option for the district court on remand: Now that we

have affirmed the $2,156,000.00 judgment in favor of Cates

against Creamer, the district court should dismiss without

prejudice Cates’s claim against Hertz, and thereby permit

Cates to sue Hertz in Florida on the theory that Florida’s

vicarious liability law makes Hertz liable to pay the judgment

against Creamer. See Manshack v. Southwestern Elec. Power

Co., 915 F.2d 172, 174 (Sth Cir. 1990) (“[T]he courts have

generally followed the traditional principle that dismissal

should be allowed unless the defendant will suffer some plain

legal prejudice other than the mere prospect of a second

lawsuit.”). Although some courts have held that dismissal is

not appropriate when the plaintiff will reinstate the action in

a forum that will apply a different body of substantive law,

26a

Appendix A

see, e.g., Rodriguez v. Marks Bros. Pickle Co., 102 F.R.D.

104 (E.D. Wis. 1984), that is not the case here. The majority

Opinion requires the district court in Texas to apply Florida

state law, and that is the same body of substantive law that a

Florida court would apply if the claim against Hertz were

brought there. No prejudice to the defendant would result.

Manshack, 915 F.2d at 174 (finding no prejudice where the

same choice of law principles would apply in state court).

For the above reasons, I respectfully dissent from the

portion of the majority’s opinion that holds that Florida law

applies to the issue of vicarious liability, and I recommend

that the district court below dismiss the claim against Hertz

without prejudice so that the plaintiff can bring her claim

against Hertz in Florida state court.

27a

APPENDIX B — MEMORANDUM OPINION AND

ORDER OF THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS,

WICHITA FALLS DIVISION,

SIGNED AUGUST 6, 2001 AND

FILED AUGUST 7, 2001

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

WICHITA FALLS DIVISION

Civil Action No.: 7:00-CV-121-R

PRISCILLA S. CATES, INDIVIDUALLY AND AS

GUARDIAN OF THE PERSON OF AND ESTATE OF

BOBBY RAY CATES, AN INCAPACITATED PERSON,

Plaintiffs,

vs.

MATTHEW SCOTT CREAMER, LAMAE CREAMER,

AND THE HERTZ CORPORATION,

Defendants.

MEMORANDUM OPINION AND ORDER

Plaintiffs Prisc:'la and Bobby Ray Cates (collectively

the “Cates”) have asserted claims against Matthew and Lamae

Creamer (collectively the “Creamers”) for negligence and

against the Hertz Corporation (“Hertz”) under Florida’s

dangerous instrumentality doctrine or, alternatively, under

Texas’s negligent entrustment laws. Now before this Court

28a

Appendix B

is Hertz’s Motion for Summary Judgment, filed July 3, 2001.'

For the reasons stated below, Hertz’s Motion is GRANTED.

I. BACKGROUND FACTS

On June 29, 1998 the Creamers rented a 1998 Ford

Windstar from a Hertz agency in Panama City, Florida. This

vehicle was registered and licensed in Florida. The Creamers

told Philip Long (“Long”), the Hertz agent, that they were

- traveling from Panama City to Spearman, Texas and that they

planned to make the twenty-four hour drive by alternating

drivers through the night. Long checked Mrs. Creamer’s

driver’s licence and credit card, but failed to check Mr.

Creamer’s driver’s license. Moreover, he did not add Mr.

Creamer as an authorized driver to the vehicle.

Long then spoke with Mr. Creamer about insurance

coverage. The Creamers had an automobile liability policy

with Allstate Insurance Company with coverage limits of

$20,000 per person and $40,000 per accident. Long indicated

that the Creamers may not be covered under their own policy

and suggested Hertz’s insurance coverage. The Creamers

purchased loss damage waiver coverage, which protected the

vehicle but did not offer liability coverage. Mrs. Creamer

then initialed a provision waiving Hertz’s primary liability

protection and personal injury protection under Florida law.

1. Hertz was seven days late in filing its Motion for Summary

Judgment and the Cates have objected. Although June 26, 2001 was

the deadline for joint submission of dispositive motions, the Cates

have failed to establish that they have been prejudiced by Hertz’s

minimal tardiness. Therefore, the Cates’ objection is overruled.

29a

Appendix B

The Creamers then loaded the van and began driving

around noon. Mr. Creamer drove approximately eight hours

from Panama City to the outskirts of New Orleans, Louisiana.

Mrs. Creamer then drove through the night while

Mr. Creamer slept in the front passenger seat. Mr. Creamer

awoke near daybreak and realized the car was stopped on

the side of the road and Mrs. Creamer was sleeping.

He moved to the driver seat and resumed driving. At some

point he fell asleep while driving and awoke as he hit the

Cates’ 1977 Chevrolet on U.S. Highway 81, about three miles

south of Bowie, Texas. Mr. Cates was standing in front of

the open front passenger door when the accident occurred

and the impact projected him several feet into the roadway.

As a result of the accident, Mr. Cates sustained severe

head injuries and is now unable to care for himself. He resides

at a long-term care facility and Mrs. Cates has been appointed

his guardian. Mr. Cates’ medical expenses exceed $200,000

and he can no longer engage in employment as a result of his

condition. The Cates have initiated the present lawsuit to

recover for Mr. Cates’ personal injuries. The Cates argue that

Florida law should control this case. Hertz disagrees.

Il. LEGAL ANALYSIS

A. Standard of Review

Rule 56(c) of the Federal Rules of Civil Procedure allows

summary judgment only when there is no genuine issue as

to any material fact and the moving party is entitled to

judgment as a matter of law. See Fed. R. Civ. P. 56(c); Celotex

Corp. v. Catrett, 477 U.S. 317, 322 (1986); Melton vy.

30a

Appendix B

Teachers Ins. & Annuity Ass'n. of Am., 114 F.3d 557, 559

(Sth Cir. 1997). An issue is “material” if it involves a fact

that might affect the outcome of the suit under governing

law. See Burgos v. Southwestern Bell Telephone Co., 20 F.3d

633, 635 (Sth Cir. 1994). The court must decide all reasonable

doubts and inferences in the light most favorable to the party

opposing the motion. See Walker v. Sears, Roebuck & Co.,

853 F.2d 355, 358 (Sth Cir. 1988); Thornbrough v. Columbus

& Greenville R.R. Co., 760 F.2d 633, 640 (Sth Cir. 1985).

In addition, when both parties have submitted contradictory

evidence, factual controversies are resolved in favor of the

nonmovant. See Little v. Liquid Air Corp., 37 F.3d 1069, 1075

(Sth Cir. 1994). As long as there appears to be some support

for the disputed allegations such that “reasonable minds could

differ as to the import of the evidence,” the motion must be

denied. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

250 (1986).

The party moving for summary judgment bears the initial

burden of identifying those portions of the pleadings,

depositions, answers to interrogatories, and admissions on

file, together with affidavits, if any, which it believes

demonstrate the absence of a genuine issue of material fact.

See Celotex, 477 U.S. at 323. Where the nonmoving party

bears the burden of proof on a claim upon which summary

judgment is sought, the moving party may discharge its

summary judgment burden by showing that there is an

absence of evidence to support the nonmoving party’s case.

See id. at 325. Once the moving party has satisfied this

burden, the nonmoving party must go beyond the pleadings

and by its own affidavits or by depositions, answers to

interrogatories, and admissions on file set forth specific facts

3la

Appendix B

showing a genuine issue for trial. See id. at 324; Anderson,

477 U.S. at 256-57. Summary judgment will be granted

“against a party who fails to make a showing sufficient to

establish the existence of an element essential to that party’s

case, and on which that party will bear the burden of proof

at trial .” Celotex, 477 U.S. at 322.

B. Choice of Law

In diversity cases, such as the matter presently before

this Court, federal courts must apply the choice of law rules

for the forum state. See Klaxon Co. v. Stentor Electric Mfg.

Co., 313 U.S. 487, 496 (1941). Texas courts use the “most

significant relationship test” as set out in the Restatement

(Second) of Conflict of Laws (the “Restatement’’) to evaluate

choice of Jaw in a tort case. Gutierrez v. Collins, 583 S.W.2d

312, 318 (Tex. 1979). Section 6 of the Restatement outlines

the general principles that inform a choice of law

determination. Restatement (Second) of Conflict of Laws at

§ 6. Without a statutory directive, the factors relevant to the

choice of applicable rule of law include:

(a) the needs of the interstate and international

systems, (b) the relevant polices of the forum, (c)

the relevant policies of other interested states and

the relative interests of those states in the

determination of the particular issue, (d) the

protection of justified expectations, (e) the basic

policies underlying the particular field of law, (f)

certainty, predictability and uniformity of result, -

and (g) ease in the determination and application

of the law to be applied. Jd.

32a

Appendix B

More specifically, section 145 addresses choice of law

analysis in tort cases. Jd. at § 145. In applying the principles

of section 6 to a tort case, the Court should consider (a) the

place where the injury occurred, (b) the place where the conduct

causing the injury occurred, (c) the domicile, residence,

nationality, place of incorporation and place of business of

the parties, and (d) the place where the relationship, if any,

between the parties is centered. /d. Courts should evaluate

these contacts for their quality, addressing their relative

importance with respect to each particular case, rather than

for quantity. Gutierrez, 583 S.W.2d at 319.

Mr. Cates sustained personal injuries from a collision

that occurred in Texas. Without legal authority, Cates urges

this court to classify the place of injury as fortuitous, thereby

minimizing the role this factor plays in the determination of

choice of law. The argument, however, overlooks the fact

that the Cates lived in Texas during the time period leading

up to the accident. It is not fortuitous that Cates was injured

in Texas because he lived in Texas and was very unlikely to

have been injured in any other place. See Crisman v. Cooper

Indus., 748 S.W.2d 273, 278-79 (Tex.App.—Dallas 1988)

(holding that Texas law cannot apply when a defective trailer

was @perated solely im Florida thereby allowing injuries to

occur only in Florida).

Furthermore, the doctrine of fortuity generally applies

only to aircraft injuries where the plaintiffs were on board

the plane during the crash. Jn re: Air Crash Disaster near

Chicago, Illinois on May 25, 1979, 644 F.2d 594, 615 (7th

Cir. 1981). These plaintiffs do not include bystanders on the

ground. /d. Even applying the airplane rationale to this case,

33a

Appendix B

Cates’ argument fails because at the time of the crash he was

effectively a bystander who became involved in the accident

when the crash vehicle driven by Mr. Creamer collided with

his car. Thus, in the absence of appropriate facts, the doctrine

of fortuity will not be applied in this case. As a result, this

first factor indicates that Texas law should govern this matter

because the injury occurred in Texas.

The second factor to evaluate is where the conduct

causing the injury occurred. The Cates argue that their injuries

are not their actual personal injuries, but rather their inability

to adequately recover damages from the Creamers their for

personal injuries. Then, without discussion, the Cates

conclude that this injury occurred in Florida where the car

was rented. This reliance is misplaced. The Cates have not

sustained financial injuries but rather personal injuries for

which they seek compensatory damages.* The conduct

leading to the personal injuries was Mr. Creamer falling

asleep at the wheel and subsequently striking the Cates’ car.

This conduct occurred in Texas, not Florida, and therefore

this second factor supports the application of Texas law.

The third factor for the Court to consider is the domicile,

residence, nationality, place of incorporation, and place of

business of the parties. The Cates are Texas residents. Hertz

is a Delaware corporation with its principal place of business

in New Jersey. The Cates assert that Hertz has subjected itself

to Florida law by conducting business within the state. This

argument neglects to consider that Hertz operates in many

2. However, even if the Court were to deem the injury to be

financial in nature, the conduct causing it results from Texas law

which precludes recovery under dangerous instrumentality laws.

34a

Appendix B

states, including Texas, and can therefore be subjected to

the laws of a multitude of states. Furthermore, compensation

of an injured plaintiff is primarily a concern of the state in

which the plaintiff is domiciled. Torrington Co. v. Stutzman,

2000 WL 1862923,*16 (Tex.2000). Texas has the most direct

interest in the Cates’ recovery, and therefore, Texas law should

govern such recovery. /d.

The final factor concerns the place where the relationship

between the parties, if any, is centered. Section 145 indicates

that this relationship is one between plaintiff anid defendant.

See Restatement at § 145. The Cates concede that they had

no relationship with Hertz and therefore this factor should

be moot. Nevertheless, without authority, the Cates argue

that the relationship the Court should consider is that between

the co-defendants. This relationship was indeed formed in

Florida, but because this is not the type of relationship

envisioned by the Restatement, this Court will not consider

it further.

The three relevant factors of the significant relationship

test uniformly suggest that Texas law be applied in this case.

Texas has the most significant relationship to the case, and

therefore, section 145 mandates application of Texas law.

Accord Bartley v. Budget Rent-A-Car Corp., 919 S.W.2d 747,

755- 56 (Tex.1996).

In determining under section 6 the law of the state

controlling the rights and liabilities of the parties with respect

to the issue in tort, the only contact of importance is the Cates’

residence in Texas and Hertz’s incorporation in Delaware,

its principal place of business in New Jersey, and its residence

in a variety of states including Florida. See id. at 755. The

35a

Appendix B

Cates seek application of the dangerous instrumentality.

doctrine of Florida tort law to replace Texas’ doctrine of

negligent entrustment.

Texas implemented a system of proportional responsibility

and recovery in causes of action based upon torts. Jd. The

purpose of this legislation was to make the Texas civil justice

system fairer and more predictable by favorably affecting

the affordability and availability of liability insurance,

thereby promoting economic development in the state.

See id. These policies would be frustrated if Florida’s

dangerous instrumentality law were imposed on the Texas

system. The Cates have not suggested a Florida policy that

would be advanced by the export of Florida’s state tort laws.

Moreover, a decision to use Texas law allows the state

to protect the litigation interests of its own residents.

See Stutzman, 2000 WL 1862923 at *16. Accordingly, under

the guidance of sections 6 and 145, this Court will apply

Texas law in this matter because Texas has the most

significant relationship to the case.

C. Negligent Entrustment

Under Texas tort law, the Cates concede that their only

cause of action against Hertz is for negligent entrustment.

The elements of negligent entrustment are (1) entrustment

of a vehicle by the owner, (2) to an unlicensed, incompetent,

or reckless driver, (3) that the owner knew or should have

known to be unlicensed, (4) the driver was negligent on the

occasion in question, and (5) the driver’s negligence

proximately caused the accident. Schneider v. Esperanza

Transmission Co., 744 §.W.2d 595, 596 (Tex.1988); Williams

36a

Appendix B

v. Steves Indus., Inc., 699 S.W.2d 570, 571 (Tex.1985)

(overruled on other grounds). Knowledge of the driver’s

incompetency at the time of the entrustment is an essential

element to establish negligence. Monreo v. Grider, 884

S.W.2d 811, 815 (Tex.App.—Dallas 1994). Hertz disputes

that the Windstar was entrusted to an unlicensed,

incompetent, or reckless driver.

The Florida Department of Highway Safety and Motor

Vehicles report reveals that Mr. Creamer had a valid Florida

driver’s license at the time he rented the vehicle. Even if, as

the Cates allege, Hertz failed to properly check the driver’s

license of Mr. Creamer, the license existed in good standing

at the time of rental. Therefore, Hertz did not entrust the

vehicle to an unlicensed driver. Thus, the Cates must proceed

on the argument that Mr. Creamer was either an incompetent

or reckless driver.

A prior accident or traffic violation does not create an

inference or conclusion that a driver is incompetent or

reckless. /d. In a scenario such as this where a party rents a

vehicle from a clerk with whom he is not acquainted, a

driver’s license generally serves as the only possible test of

competency. Since Mr. Creamer did not know the Hertz

representative and he maintained a valid driver’s license at

the time of rental, the facts indicate that Mr. Creamer was

competent at the time of rental.

The Cates argue that Mr. Creamer’s admission of his

intent to drive non-stop alternating with his wife between

shifts of driving and sleeping indicated that they would be

driving in a reckless manner. Texas courts have held that

negligent entrustment does not exist when drivers rotate

37a

Appendix B

throughout a long distance trip, even when the party

entrusting the vehicle saw the driver consuming alcohol soon

before the trip. Rodriguez v. Sciano, 18 S.W.3d 725, 728

(Tex.App.—San Antonio 2000) (upholding summary

judgment against the plaintiffs where the only facts

supporting negligent entrustment were that the drivers drove

in shifts). Under the circumstances of this case, where the

Creamers, like the drivers in Rodriguez, simply planned to

drive in shifts, there is no evidence that at the time of rental

Mr. Creamer was a reckless driver. Because the Cates have

presented insufficient evidence to show that Mr. Creamer

was either unlicensed, incompetent, or reckless when he and

Mrs. Creamer rented the Windstar, the Cates cannot establish

this element of their negligent entrustment claim against

Hertz. Therefore, the Cates are not able to establish a prima

facie case of negligent entrustment and Hertz is entitled to

summary judgment on the claim.

iil. CONCLUSION

For the aforementioned reasons, Hertz’s Motion for

Summary Judgment is GRANTED. The Cates’ claims

against Hertz are DISMISSED.

IT IS SO ORDERED.

Signed this 6 day of August, 2001.

s/ Jerry Buchmeyer

CHIEF JUDGE JERRY BUCHMEYER

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

38a

APPENDIX C — MEMORANDUM OPINION AND

ORDER OF THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS,

WICHITA FALLS DIVISION, DATED AND FILED

OCTOBER 17, 2001

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

WICHITA FALLS DIVISION

7:00-CV-121-R

PRISCILLA S. CATES, INDIVIDUALLY AND AS

GUARDIAN OF THE PERSON OF AND ESTATE OF

BOBBY RAY CATES, AN INCAPACITATED PERSON,

Plaintiffs,

vs.

MATTHEW SCOTT CREAMER, LAMAE CREAMER,

AND THE HERTZ CORPORATION,

Defendants.

MEMORANDUM OPINION AND ORDER

On August 7, 2001, this Court’s Memorandum Opinion

and Order granted Defendant Hertz’s Motion for Summary

Judgment (filed July 3, 2001). Now before this Court is

Plaintiffs’ Motion for Reconsideration of Summary

Judgment. Plaintiffs Motion is DENIED for the reasons

stated herein.

39a

Appendix C

Motions for reconsideration are permitted only in limited

situations, primarily “ ‘to correct manifest errors of law or

fact or to present newly discovered evidence.’ ” Waltman v.

Int’! Paper Co., 875 F.2d 468, 473 (5 th Cir. 1989) (quoting

Keene Corp. v. Int'l Fidelity Ins. Co., F.Supp. 656, 665

(N.D.II1.1982), aff’d 735 F.2d 1367; aff'd 736 F.2d (7th Cir.

1984)). In their Motion for Reconsideration of Summary

Judgment, Plaintiffs contend that this Court erred in its choice

of Texas law and argue that Florida law applies. Having taken

all of Plaintiffs’ choice of law arguments into consideration

once again, this Court finds that Plaintiffs fail to elucidate

any manifest errors of fact or law, or to present any newly

discovered evidence.

The central issue of this case, the Cates’ and Creamers’

car accident, occurred in Texas. The relationship between

the Cates and the Creamers was thus created in Texas.

Plaintiffs Priscilla and Bobby Cates lived in Texas. The Court

notes that Florida’s law could be more generous to Plaintiffs’

recovery; however, the most significant state contact in terms

of quality and quantity is Texas. Therefore, the Court is

satisfied with its application of Texas’ Most Significant

Relationship Test in holding that Texas law applies in

this tort case. The claims against Hertz remain dismissed.

Plaintiffs’ Motion for Reconsideration of Summary Judgment

is DENIED.

40a

Appendix C

It is so ORDERED.

SIGNED THIS 17 DAY OF OCTOBER, 2001.

s/ Jerry Buchmeyer

CHIEF JUDGE JERRY BUCHMEYER

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

4la

APPENDIX D — ORDER OF THE UNITED STATES

COURT OF APPEALS FOR THE FIFTH CIRCUIT

DENYING THE PETITION FOR REHEARING AND

THE PETITION FOR REHEARING EN BANC DATED

AND FILED APRIL 11, 2006

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 03-10404

PRISCILLA S. CATES, Individually and as Guardian of

the Person and Estate of Bobby Ray Cates,

an Incapacitated Person

Plaintiff-Appellant-Cross-Appellee

MATTHEW SCOTT CREAMER;

Defendant-Appellee-Cross-Appellant

LAMAE CREAMER; HERTZ CORPORATION

Defendants-Appellees

Appeals from the United States District Court for

the Northern District of Texas, Wichita Falls

ON PETITION FOR REHEARING AND

REHEARING EN BANC

(Opinion 11/28405,5 Cir, , F3d_ )

42a

Appendix D

Before JONES, Chief Judge, JOLLY and DeMOSS, Circuit

Judges.

PER CURIAM:

(XX) The Petition for Rehearing is DENIED and no

member of this panel nor judge in regular active service on

the court having requested that the court be polled on

Rehearing En Banc, (Fep. R. App. P. and 5™ Cir. R. 35) the

Petition for Rehearing En Banc is also DENIED.

( ) The Petition for Rehearing is DENIED and the

court having been polled at the request of one of the members

of the court and a majority of the judges who are in regular

active service not having voted in favor, (Fep. R. App. P. and

5™ Cir. R. 35) the Petition for Rehearing En Banc is also

DENIED.

( ) A member of the court in active service having

regested a poll on the reconsideration of this cause en banc,

and a majority of the judges in active service not having voted

in favor, Rehearing En Banc is DENIED.

ENTERED FOR THE COURT:

s/ [illegible] Jolly

United States Circuit Judge

DeMOSS, Circuit Juuge, concurring in part and dissenting

in part.

43a

APPENDIX E — STATUTORY PROVISION INVOLVED

Restatement (Second) of Conflict of Laws § 174 (1971)

Topic 1. Torts

Title C. Important Issues

§ 174. Vicarious Liability

The law selected by application of the rule of § 145

determines whether one person is liable for the tort of another

person.

Comment:

a. Rationale. The local law of the state which has the most

significant relationship to the occurrence and the parties with

respect to the issue of vicarious liability should be applied

in determining whether one person is liable for the tort of

another person. This state should be selected in accordance

with the choice-of-law principles stated in § 6. These

principles require that the forum consider (1) whether the

relationship between the defendant and the other person

makes the imposition of vicarious liability reasonable and

(2) whether there is a reasonable relationship between the

defendant and the state whose local law is to be applied.

b: Relationship to tortfeasor. One person should not be held

liable for the tort of another person unless his relationship to

the other person makes the imposition of such liability

appropriate. In making this determination, the forum will

not be guided exclusively by its own local rules of vicarious

liability. The fact that vicarious liability would not be

imposed by the local law of the forum will not of itself be

44a

Appendix E

decisive. It is enough that the forum believes that the

relationship between the defendant and the other person

affords a fair and reasonable basis for the imposition of such

liability. In reaching its decision as to what is fair and

reasonable, the forum will be influenced by rules of vicarious

liability prevailing in other states. It is unlikely that a

relationship which forms the basis for the imposition of

vicarious liability in a substantial number of states will be

held inadequate by the forum even if it would not result in

such liability under the forum’s local law. Generally speaking,

any arrangement whereby one person has been authorized to

assist in carrying out the business affairs of another person

will provide an adequate relationship for this purpose. And

the same is true of the relationship between bailor and bailee

and of the relationships involved in the family purpose

doctrine which concerns automobiles (see Comment e).

Illustrations:

1. In state X, A enters into an agreement with B whereby B

is to transport A’s goods from X to state Y in B’s truck. In Y,

B negligently runs his truck over C and injures him. C brings

suit in X against A to recover for his injuries. Under X local

law, the relationship between A and B would be that of

employer and independent contractor and A would not be

vicariously liable for B’s torts. Under Y local law, however,

the relationship between A and B would be that of master

and servant anc A would be liable. The X court will hold

that A’s relationship to B provides a reasonable basis for the

imposition upon A of vicarious liability.

45a

Appendix E

2. In state X, A gives B the use of his automobile and

authorizes him to drive it into state Y. In Y, B negligently

runs the car over C and injures him. C brings suit in X against

A to recover for his injuries. Under X locai law, A would not

be iiable for B’s torts. Y, however, has a statute which makes

the owner of an automobile liable for injuries resulting from

the negligent operation of the automobile by one who is using

it with the owner’s permission, express or implied. The X

court will hold that A’s relationship to B provides a reasonable

basis for the imposition upon A of vicarious liability.

3. Aand B, husband and wife, are domiciled in state X. With

A’s knowledge, B goes to state Y on a vacation and there she

assaults C. C brings suit in X against A to recover for his

injuries. Under X local law, a husband is not liable as such

for his wife’s torts. The contrary is true, however, under the

local law of Y which still retains the almost universally

discarded common law rule. The X court will find that the

relationship between A and B is not such as to make the

imposition of vicarious liability reasonable.

Comment:

c. Relationship to state. One person should not be held liable

for the tort of another person by application of the local law

of a state to which he has no reasonable relationship. The

forum will use its own judgment and will apply its own rules

in determining whether such a reasonable reiationship exists

(See § 7).

To date, the majority of the decisions have been concerned

with the question whether vicarious liability should be

46a

Appendix E

imposed under the local law of the state where the

complained-of conduct and the resulting injury occurred.

These decisions indicate that vicarious liability will be

imposed under the local law of the state of conduct and injury

if the tortfeasor entered the state on the instructions of the

one sought to-be held vicariously liable. The same will be

true if the one sought to be held liable authorized, but did

not direct, the tortfeasor to enter the state (see Illustration

4), or simply if he had reason to foresee that the tortfeasor

might enter the state (see Illustration 5) or might take action

elsewhere that would have tortious consequences in the state.

Illustrations:

4. In state X, A lends his automobile to B without placing

any restriction upon its use. B takes the automobile to Y, a

neighboring state, and there negligently injures C. C brings

suit in X against A to recover for his injuries. Under X local

law, A would not be liable for B’s torts. Y, however, has a

statute which makes the owner of an automobile liable for

injuries resulting from the negligent operation of the

automobile by one who is using it with the owner’s

permission, express or implied. The X court will hold that

A’s relationship to Y provides a reasonable basis for the

application of the Y statute to hold A vicariously liable.

5. Same facts as in Illustration 4 except that A forbids B to

take the automobile to Y. A knows, however, that B has a

pressing reason to go to Y and that he sought the loan of the

automobile for this purpose. The X court will hold that A’s

relationship to Y provides reasonable basis for the application

of the Y statute to hold A vicariously liable.

47a

Appendix E

Comment ¢ (cont.):

Vicarious liability may also be imposed by application of

the local law of some state other than that of conduct and

injury. So, for example, vicarious liability may be imposed

under the local law of the state where the relationship between

the one sought to be held liable and the tortfeasor is centered.

Application of the local law of this state to impose vicarious

liability is particularly likely if this state has some

relationship to the injured plaintiff (see Illustration 6). There

are undoubtedly still other situations where vicarious liability

may be imposed.

Illustration:

6. In state X, A, who is domiciled in X, reats a car from the

B rental agency. With C, who is also domiciled in X, as a

guest passenger, A drives into Y, an adjoining state, and there

negligently injures C. Under an X statute, the bailor of an

automobile is liable for injuries caused by the negligence of

the bailee. No such liability is imposed upon the bailor by Y

local law. B will be held liable to C.

Comment:

d. Independent contractor. An employer will be held liable

for the torts of an independent contractor if he would be so

liabll under the law selected by application of the rule of

this Section.

e. Family purpose doctrine. A person will be held liable for

the torts of a member of his family who is driving the person’s

48a

Appendix E

automobile with his permission if he would be so liable under

the law selected by application of the rule of this Section.

f. Principal-agent. A principal will be held liable for the tort

of an agent if he would be so liable under the law selected by

application of the rule of this Section.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.