Choice of Law

Question 1

Federal Courts Follow Federal Procedural Law

Answer 1

Federal courts must follow federal procedural law. If a federal rule regulates only the manner by which the litigants’ rights are enforced, it is procedural and therefore valid.

Question 2

Erie Doctrine (What Law Applies)

Answer 2

In diversity actions, federal courts are required to apply federal procedure law and the substantive law of the state in which it sits.

1) If there is a federal procedural rule on point, the court must follow it.
2) If there is no federal rule on point, determine whether the law is substantive or procedural. If the law is arguably procedural apply federal law. If the law affects substantive rights, the court must follow state law.
3) Courts use a variety of tests to determine whether a law is substantive or procedural: 1) an issue is substantive if it “significantly affects” the outcome of the case – this is known as the outcome determinative test 2) the balancing of interests test in which the court weighs both the federal and state interests in having its rule applied AND 3) whether application of state law would deter forum shopping.
4) The statute of limitations, choice of law rules, and the elements of a cause of action definitively considered substantive. This means in a diversity action in federal court, the federal court must apply the state’s statute of limitation, the state’s choice of law rules, and the elements of the cause of action provided by state law. Furthermore, in diversity cases, state law determines where a privilege exists.
1) State –> Substantive
2) Federal –> Procedural

Question 3

ESSAY TIP

Answer 3

ESSAY TIP: Erie analysis will only apply in diversity actions.