Conflict of Laws for the Age of Cybertorts: A Game-Theoretic Study of Corporate Profiteering from Choice of Law Loopholes and Interstate Torts
Abstract
This Article identifies a choice of law loophole that corporations can exploit to commit interstate torts against individuals without paying damages—by inducing victims to sue in a state where they are guaranteed to lose. The Second Restatement requires plaintiffs bringing interstate tort claims to allege which state has the most significant relationship to their injury, because most federal courts rely on plaintiffs’ allegations to choose a state law to resolve motions to dismiss. But when torts are committed over state lines (as in, over the internet), plaintiffs can be misinformed or misled as to where the tortious conduct really occurred, even if their knowledge of how they were harmed is otherwise correct. Therefore, if a plaintiff is induced to sue under a wrong state’s law, she would waste years litigating only to lose, even if her claims are meritorious. Her complaint would survive a motion to dismiss because her allegations are plausible, but would be dismissed at discovery, which would reveal that her injury originated in a state other than the one she alleged.
This Article has two objectives. First, I show how corporations committing torts remotely can profit from this loophole, using a game-theoretic model and a Third Circuit case in which a corporate defendant apparently exploited the loophole. I argue that corporations can deter victims from suing at all in the long run. By using the loophole often enough, defendants can create an expectation that victims would waste years trying cases they are guaranteed to lose. Second, I use my study as evidence against the prevailing notion that conflict of laws scholarship is unhelpful to the practice of law. I argue that, by focusing more on studying how existing choice of law rules affect actual litigation, conflicts scholarship can fix our territorially tethered, increasingly unsustainable legal system and design one fit to survive the age of cybertorts.
