Law Applied in Federal Court Flashcards
In federal court what law applies?
Assume that we have a diversity of citizenship case in federal court. Remember, the claims in a diversity case will be based on state law. Now assume the federal judge must decide a particular issue. When she decides that issue, must she follow state law or is she free to ignore state law?
What is step one of the erie doctine?
a. Step 1. Ask: Is there some federal law (like the
Constitution, federal statute, Federal Rule of Civil Procedure, or Federal Rule of Evidence) on point that directly conflicts with state law? If so, apply the federal law, as long as it is valid. This is based on the Supremacy Clause.
• So we know that an on-point FRCP governs so long as it is valid. How do we know if an FRCP is valid? The FRCP are presumptively valid and are OK if they are “arguably procedural.” None has ever been held invalid. So, for example, the pleading requirements of Rule 8 govern pleadings in federal court. Likewise, discovery is controlled by the discovery rules in the FRCP, notwithstanding any limits on discovery that a state might have.
What is step 2 of the erie doctrine?
b. Step 2. If there is no federal law on point, the federal judge must apply state law if the issue to be decided is “substantive.” Five issues are clearly “substantive” and the federal court must apply state law on these issues:
• Conflict (or choice) of law rules;
• Elements of a claim or defense;
• Statutes of limitations;
• Rules for tolling statutes of limitations; and
• The standard for granting a new trial because the jury’s damages award was excessive or inadequate.
What is step 3 of the erie doctrine?
c. Step 3. If there is no federal law on point and the issue is not one of the five just listed above, the federal judge must determine whether the issue is “substantive.” The law is very unclear, consisting of some factors that no one knows how to weigh:
• Outcome determinative: Would applying or ignoring the state rule affect the outcome of the case? If so, it’s probably a substantive rule, so the court should use state law.
• Balance of interests: Does either the federal or state system have strong interest in having its rule applied? The one with the greater interest should have its law applied.
• Avoid forum shopping: If the federal court ignores state law on this issue, will it cause parties to flock to federal court? If so, the court should probably apply state law.
