Great Lakes Insurance SE v. Raiders Retreat Realty Co., LLC - Post-Decision SCOTUScast

On February 21, 2024, the Supreme Court issued its ruling in Great Lakes Insurance SE v. Raiders Retreat Realty Co., LLC. At issue was whether choice-of-law provisions in maritime contracts are presumptively enforceable under federal maritime law.

Join us to hear Professor Andrew Hessick break down the decision and discuss its potential ramifications.

Featuring:
Prof. Andrew Hessick, Judge John J. Parker Distinguished Professor of Law and Associate Dean for Strategy & Planning, University of North Carolina School of Law

Episode Transcript

(00:02):
Welcome to SCO Discust, a projectof the Federalist Society for Law and Public
Policy Studies. Our contributors joined usfrom around the country to bring you expert
commentary on US Supreme Court cases asthey are argued and the decisions are issued.
The Federalist Society takes no position onparticular legal or public policy issues.
All expressions are those of the speaker. Hello, and welcome to SCO Discust.

(00:29):
I'm your host, Kyle hamerniz On, behalf of the Faculty division of
the Federalist Society. We are heretoday to discuss Great Lakes Insurance se versus
Raiders Retreat Realty Co LLC, inwhich the Supreme Court issued a nine to
zero decision on February twenty first,twenty twenty four. It is my honor
to introduce our guests today, ProfessorAndrew Hesseck. Professor Hesseck is the Judge

(00:55):
John J. Parker Distinguished Professor ofLaw and Associate Dean for Strategy Planning at
the University of North Carolina School ofLaw. His teaching and research interests include
federal courts, administrative law, remedies, and criminal sentencing. And with that,
I like to turn things over toour guest to discuss the overview of

(01:15):
the case and the court's decision.Well, thank you for having me on.
So the Great Lakes case, itstarted out as what seemed like a
basic contract dispute case. The caseinvolved a maritime insurance contract. Raiders wanted
to get insurance for its voted enteredinto a contract with Great Lakes for insurance,

(01:41):
and the contract had a standard choiceof law clause, said New York
law would apply to claims arising underthe contract or related to the contract.
So subsequently there were events that ledraiders to want to possibly make insurance claims.

(02:06):
But Great Lakes it said that theinsurance claims the insurance policy was void
because raiders hadn't complied with the termsof it by not doing fire checks and
providing information to Great Lakes. Okay, so, so far, very basic
insurance claim. Great Lakes file suitin Pennsylvania in federal court. That's consistent

(02:30):
with the form selection clause in thecontract. And so because it's in Pennsylvania,
Pennsylvania law presumptively applies. But thereis the choice of law provision in
the contract, so Pennsylvania law wouldsay, hey follow New York law.
For the contract raiders file some counterclaimsunder Pennsylvania law. Now these counterclaims under

(02:53):
Pennsylvania law, they are not availableunder New York law. Right says,
yes, I know that the choiceof law clause would say, apply New
York law, which would preclude myclaims under Pennslvania law. But we're in
Pennsylvania. Pennsylvania law presumptively applies,and we think that under Pennsylvania has a

(03:15):
special rule that says that if applyinga different are applying a choice of block
claw sorry, precludes a Pennsylvania claim. Basically, Pennsylvania law will trump.
You're not going to enforce the choiceof law clause in that context because it's
against Pennsylvania's public policy. Right,that's the important part. It's against Pennsylvania's

(03:35):
public policy. Now Great Lakes responds, well, this is a maritime insurance
contract, and so Pennsylvania law shouldnot dictate whether the choice of law clause
applies. Instead, federal law shoulddictate whether the choice of law clause applies.

(03:58):
And at that point that's where thecase flips from being a normal contracts
case to an extremely complicated issue thatled to the Supreme Court's intervention. The
question was basically, does federal lawcontrol that choice of law provision, that
is to say, the enforcement ofthe choice of law provision? And if
so, if federal law does apply, what would be the content of that

(04:21):
federal law? Right? So weactually have three really complicated issues for federal
courts. The first is under erie, is it say, federal issue or
a state issue? Right? Shouldfederal law control or should state law control?
The second is admiralty right, thisis just an admiralty area. And

(04:42):
then the third is okay, iffederal law controls, what should be the
content of federal common law? Sowe have eerie, federal common law,
and admiralty very complicate. So youknow, when you look at the opinion,
how does how does Kavanaugh address eachof these issues when when he's bringing
the well, when when he's writingin the opinion right. So, so

(05:05):
it goes to the Supreme Court andGreat Lakes ends up winning. So the
Supreme Court takes the position that federallaw controls not Pennsylvania law, and federal
law is not going to follow Pennsylvanialaw. That was an option. It's
going to be that federal law hasits own separate sort of content that applies

(05:26):
uniformly across the country. So Kevinaugh, who wrote the opinion for the court,
addresses all three issues. The firstwas sort of eerie question, does
federal law apply or does? Isthis a state law issue? And and
choice of law is probably a substantiveissue to which to which state law would

(05:47):
apply. I guess we know thatfrom Claxon and and Kevinall says no,
you know, in the context ofadmiralty law, the federal law law applies
admiralty is one of the exceptions toeerie right, because the Constitution says,
or it has been read, let'ssay to uh to say that there shall

(06:11):
be federal law controlling admiralty and thatincludes federal common law. Okay, it's
been extended to cover maritime insurance contracts. Not the most obvious conclusion in the
world, but it has been extendedin that way that was in prior opinions
that that wasn't questioned in this case. Okay, So that's the first question.
First two questions essentially like we're inadmiralty and and federal law is going

(06:35):
to control. Now the big questionis what will be the content of that
federal law. And this is whereit gets really interesting, actually, because
normally the Supreme Court is the onewho who makes up federal law, right
when they're when they're going to createfederal common law. That's in court fashion

(06:55):
said, that's not quite what happenedhere. So the Court says, look,
if there's a set federal rule,we will follow that federal rule.
And if there's not a set federalrule, then we have to decide should
we make a federal rule or shouldwe follow state law? Should we adopt
state law as our federal rule.And the Court said that there is a

(07:16):
set federal rule in this context,and they said, the set federal rule
is that a choice of law clauseapplies and presumptively unless there's a really good
federal public policy for it not toapply. Depends on being a public policy.
Wouldn't matter, it would be federalpublic policy. And what's so interesting
is the Court said that the federalrule had largely been established by the lower

(07:42):
court's decisions, by decisions of thecourts of appeals. There are a few
Supreme Court opinions that sort of hintedthat choice of law clauses should be applied,
but it was really the federal courtsof appeals that the Court pointed to.
So there's a context where it's reallyinteresting that Supreme Court pointed to lower
court decisis as strong evidence of establishingthe federal rule, and then their decisions

(08:05):
fashion the federal rule that then dictatedwhat the content of federal law would be.
The Court also acknowledged upfront that there'slots of complicated questions about how precisely
eerie and federal common law interact witheach other. And they said that they
have this quote that's great. Itsays that basically it's one of the most

(08:28):
complex areas in all law, andthey're just they're going to avoid it,
right, And they say, likehere that the answer is easy, We're
just going to follow the federal ruleas established. Great. And then obviously
Justice Thomas wrote a concurring opinion,right, and he basically is almost warning,
you know, litigants and courts aboutthe Wilburn boat case. Can you

(08:54):
go a little bit more into that, you know, kind of explaining what
that case is about and then alsomaybe how it applies in future litigation.
Yeah. Sure, So Wilburn Boateis this case out of the nineteen fifties
that was sort of an anomaly.Let's say under admiralty law involving maritime insurance

(09:16):
contracts. So in Wilburn vote,there was a claim for a warranty under
I think it was under a contract, and the and the Supreme Court said
there was no set federal rule aboutwarranties and therefore state law would control the

(09:39):
warranty claims under those maritime contracts.Now, the problem with that is is
the court has said, look,you know, maritime contracts, they're part
of admiralty animalty controls. So federallaw should control across the board and so

(10:01):
and so it should never be thatthere's sort of like sometimes federal law and
sometimes state law. As a matterof just how the eerie analysis shapes out,
it should all be federal law.It's just like what would the content
of that federal law be. AndI think Justice Thomas is really getting at
is that wilverm Boat is anomalist forsaying that state law plays a role here.
It just doesn't. Right, Thisis all federal law. And now

(10:26):
there are ways of reconciling it.You can say, like go, in
some context federal law should follow statelaw, but it would be a matter
of federal law right, and theway Well Wilburn is written is much more
like, well, state law iscontrolling here, and it's just it is
confusing. And then I guess ifwe're just you know, looking out into
the into the future, what Imean, how does this shape the landscape

(10:48):
of admiralty law and that sort ofthing as we look forward into Obviously there's
going to be future litigation from obviouslydifferent parties. You know, it's it's
inevitable that that it comes up inthese cases are then use as precedent.
Are what do you see as beingthe real ramification of a decision like this?

(11:11):
Yeah, so I think two things. So theoretically is that federal law
is going to just play more andmore of an important role in animalty law.
It already had, but now it'sgoing to play even more. Because
there was wilbrim Boat out there whichsuggested state law sometimes played a role,
it was confusing. This helped cleanit up. But the way that it

(11:33):
cleaned it up is basically to say, federal law is always going to control
and so you know, to theextent we're going to have any state law,
it's only going to be because thefederal courts have decided to incorporate it,
not because they are bound by statelaw. And what's interesting about that
is actually it goes It shows thatadmiralty law is really one of those small

(11:58):
bubbles. It sort of goes inthe opposite direction from the general trend of
the court towards not making federal commonlaw. Right. This is very opposite
the more recent Vivince cases like aBassi, in that the court says like,
this is a this is a realmwhere we get to make all sorts
of law. And that's that's actuallybeen the case. Let's say since since

(12:22):
post Erie, right, I meanafter Erie, they said anualty is one
of those areas where there can befederal common law, and they are.
They are capitalizing on it right now, and they are really making it more
practically. I think what happens is, you know, almost there must how
do I say this. I'm surethat most people engaged in maritime commerce are

(12:48):
engaged are entering into contracts that havechoice of law provisions, and now they
have a little bit more clarity abouthow those choice of law provisions are going
to be enforced. And so Idon't know that in the end it's going
to affect things too much. Itmight reduce the cost of business. Because

(13:09):
the contracts are a little clearer andthey know exactly which law is going to
apply. It's going to be thelaw that they have specified. They don't
have to worry about like the idiosyncrasiesof Pennsylvania or Delaware or Florida. They
know that if we pick New York, it's going to be New York unless
there's some really strong reason why it'snot going to be New York. Great.

(13:30):
Thank you so much for joining us. Andy. Do you have any
concluding thoughts points that you want towant to make or do you think that
that settles it? I think thatsettles it. I think that settles it.
I do think that there's some areasof the law where where the Court
has done a really good job ofthe last like twenty or thirty years,

(13:52):
cleaning up areas that were so complicated, like complete preemption or Rooker Feldman,
and where there were just decisions goingin different directions it was hard to figure
out what was going on. Thisisn't quite to that level, but it's
definitely pushing in that direction, sayingbecause Wilburn vote was one of those decisions
that you're like, how do yousort of make this all work? And
they have said you make it workby sort of ignoring Wilburn vote, and

(14:15):
so you know it, regardless ofwhat one thinks of like the precise outcome,
I think that part of it isgood. Well, Andndy, thank
you so much for joining us.Sure, thank you, Thank you for
listening to this episode of SCO Discast. SCO Discust is a project of the
Federalist Society, not for profit educationalorganization of conservative and libertarian law students,

(14:41):
law professors, and lawyers, foundedupon the principles that the state exists to
preserve freedom, that the separation ofgovernmental power is essential to our constitution,
and that it is emphatically the provinceand duty of the judiciary to say what
the law is, not what itshould be. Don't forget to subscribe to
our podcast series. Include scotoscasts andpractice group podcasts on iTunes or Google Play.

(15:03):
For an archive of past podcasts,as well as audio and video of
past Federalist Society events, please visitour website at FEDSOC dot org slash multimedia.
That's f E d s OC dotorg slash multimedia. This has been

(15:24):
a FEDSOC audio production