Anna Nicole Smith and contracting for law

The subjects in this post's title might seem to be about as oddly paired as Gary Cooper and Katharine Hepburn in Bringing up Baby. Anna Nicole Smith, as every tabloid reader knows, wants half of J. Howard Marshall's billion-dollar Texas-based estate, not just the $6 million Marshall gave her. After Texas rejected her claim, Smith went to California, where she got a California federal judge to reach a different conclusion. The case has been to the 9th circuit, the Supreme Court and back.

As Ron Cass said in Friday's WSJ (linked by Walter Olson):

Risks associated with ordinary litigation are magnified by opportunities to choose favorable venues for litigation, and even more by the prospect that litigants can engage in a repeat-play game, trying successive venues in search of a sympathetic forum. Forum shopping smacks of manipulation to reduce predictability and to secure biased decision makers.* * *Ms. Smith's story demonstrates that a determined litigant with resources can move litigation among legal forums, tailor legal claims to prolong litigation, tie up assets, and make life difficult enough that most opponents would pay substantial amounts merely to bring the matter to a close. A victory for her would encourage forum-shopping, multiply costs and undermine the predictability of legal rules, doing damage that would last well beyond her 15 minutes of fame. A defeat for her would show that the system can at long last bring such manipulation to an end.

I have a solution: an enforceable choice of law and forum clause in the ante-nup. I have proposed similar solutions for electronic commerce, marriage validity, legal professional rules, securities regulation, durable powers of attorney. For discussions of recent issues, see my Jurisdictional competition archive. My book on this subject, The Law Market, with Erin O'Hara, will be coming out in the next year or so from Oxford University Press.

In the meantime, here's some writings to chew on, with links to SSRN drafts: From Efficiency to Politics in Contractual Choice of Law, 37 Ga. L. Rev. 363 (2003); From Politics to Efficiency in Choice of Law, 67 U. Chi. L. Rev. 1151 (2000) (with O'Hara); Calling a Truce in the Marriage Wars (with Buckley), 2001 University of Illinois Law Review 561; State Regulation of Electronic Commerce (with Kobayashi), 51 Emory L.J. 1 (2002).

Enforcing choice-of-law clauses, like enforcing other contracts, is not a perfect solution to life's problems.  But can it be worse than the results we get in cases like the one Cass writes about?

Comments

[Keith Sharfman]

Larry:

Choice of law and forum selection clauses are great, and I'm all for using and enforcing them whenever possible. But they can't be used to bind third parties who haven't signed on. Smith never agreed to such a clause with her late husband. But even if she had, Smith's creditors would still have a right to litigate her bankruptcy in the bankruptcy forum. Moreover, even Smith's own right to the bankruptcy forum isn't contractually waivable. As I explain in a post about the case (see http://www.truthonthemarket.com/2006/02/28/bankruptcy-versus-probate/), bankruptcy jurisdiction is necessary in such cases to protect creditor claims that aren't legally cognizable in the probate forum.

[Larry E. Ribstein]

I made a policy proposal -- i.e., enforce the clauses. I never asserted they were currently enforced. Bankruptcy is not the only impediment right now. Anyway, for what it's worth, a bankruptcy court would apply state law unless a specific bankruptcy-related rule applies (e.g., preference, fraudulent conveyance). Moreover, one my proposals is a federal contractual choice of law statute, which presumably could provide for bankruptcy cases.

[Keith Sharfman]

The idea of a federal choice of law statute is very interesting. And yes, I think a bankruptcy court would enforce choice of law clauses against parties who agree to them. But forum selection clauses are trickier--because the right of access to the bankruptcy forum may not be contractually waivable. See 11 U.S.C. sec. 365(e), which probably renders such waivers unenforceable.

[Robert Schwartz]

No contract can prevent this kind of fiasco. The real question is why didn't the California judge throw the suit out as res judicata?

[mike]

It's a really shocking situation that she died, what happen's with her child? And who is the real father.... There are 3 men http://www.anna-nicole-dies.com/dannielynn_smith_father.php
claiming to be the father... whoa

[Dr BLT]

My thoughts and emotions on this matter are summarized in this original song of mine, written from my perspective as a songwriting shrink:

Hole in the Soul
(of Anna Nicole)
Dr BLT (c)2007
http://www.drblt.net/music/AnaNicole.mp3

Dr BLT
Blog n roll artist

[Jessy]

Does the judge have the guts to do the right thing or is he full of hot air.

Anna and her son are gone and the father of this child needs to be determined YESTERDAY. If this child is not with the bio father--what a disgusting judge and court system we have to not place this child first and foremost.

This chid is aging everyday for courts to be fightning over not having the DNA test done. This should be done by lawyers on both side to witness so no fraud takes place.