## Facts

- Offshore Rental Co., Inc., a California corporation, derived substantial revenue from leasing oil drilling equipment in Louisiana’s Gulf Coast region.
- Continental Oil Co., a Delaware corporation headquartered in New York, conducted business in multiple states, including California and Louisiana.
- Offshore’s vice-president, Howard C. Kaylor, handled contract efforts tied to Offshore’s Louisiana business.
- In June 1968, Kaylor traveled to Louisiana to meet with Continental’s representatives.
- Kaylor was negligently injured on Continental’s premises in Louisiana.
- Continental compensated Kaylor for his personal injuries.
- Offshore sued Continental in California for approximately $5 million, seeking damages for the loss of Kaylor’s services as a “key” employee.
- California authority construing Civil Code section 49 had been read to permit an employer claim for injury to a key employee that impaired the employee’s ability to serve the employer, while Louisiana law did not recognize such an employer cause of action.

## Issues

1. Under California choice-of-law rules, whether California or Louisiana law governs an employer’s claim for loss of a key employee’s services when the injury occurred in Louisiana.
2. If Louisiana law applies, whether the employer has a cognizable cause of action for loss of the employee’s services resulting from negligent injury.

## Decision

- The California Supreme Court affirmed dismissal of Offshore’s complaint.
- The court held that Louisiana law governed because Louisiana had the stronger interest in regulating obligations arising from conduct on its soil.
- Under Louisiana law, Offshore could not maintain an independent action for damages based solely on loss of an employee’s services due to personal injury.

## Legal Principles

- California applies a governmental-interest choice-of-law approach; when both states have interests and their laws conflict, the court uses comparative impairment to decide which state’s policy would suffer greater harm if not applied.
- A state where the allegedly negligent conduct and injury occurred has a strong regulatory interest in defining the scope of tort duties and liability for activities within its territory.
- A forum state’s interest in compensating a local plaintiff may yield when the forum’s connection to the operative events is limited and applying forum law would impose liability the place-of-injury state has chosen not to recognize.
- When the place-of-injury state does not recognize an asserted category of tort recovery, applying that state’s law can preclude the claim even if the forum might provide a broader remedy in other settings.

## Conclusion

Because the negligent injury occurred in Louisiana and Louisiana’s regulatory interest in limiting tort obligations for in-state conduct outweighed California’s compensatory interest in a resident employer’s recovery, the court applied Louisiana law and upheld dismissal of the employer’s loss-of-services claim.


Offshore Rental Co. v. Continental Oil Co., 22 Cal. 3d 157 (Cal. 1978)