The Erie Problem

Question 1

The Erie Problem

Answer 1

whose law applies when a state law claim is being litigated in federal court

Question 2

Rules of Decision Act

Answer 2

The laws of the several states . . . shall be regarded as rules of decision in civil actions in courts

Question 3

Swift

Answer 3

federal rule applies (purpose: uniformity, more neutral law)

Question 4

Erie

Answer 4

Fed court needs to follow state court (balance shifted)

Question 5

Justice Reed in Erie

Answer 5

line b/w procedural and substantive law is hazy, but federal rules over procedure

Question 6

York

Answer 6

i. New York substantive law governed the claim of breach of trust.
ii. The state statute of limitations for breach of trust conflicted with federal court practice for equity cases.
iii. If the state statute of limitations governed, the case was over; if the federal practice governed, the case could go forward.
iv. Held: If a state law claim would be barred by the SoL in state court, then the state law claim is also going to be barred from being brought in federal court using diversity jurisdiction.

Question 7

Justice Frankfurter in York (outcome-determinative test)

Answer 7

“[D]oes it significantly affect the result of a litigation for a federal court to disregard a law of a State that would be controlling in an action upon the same claim by the same parties in State court?” OR “[I[n all cases where a federal court is exercising jurisdiction solely because of the diversity of citizenship of the parties, the outcome of the litigation in the federal court should be substantially the same, so far as the legal rules determine the outcomes of a litigation, as it would be if tried in State court.”

Question 8

Byrd

Answer 8

i. Facts: Pl is an independent contractor injured on a construction job. The pl files a tort suit. The d claims the pl is a “statutory” employee who can only recover in worker’s compensation, not in tort. The question is whether the issue of the pl’s status as a statutory employee is a question to be decided by a judge (South Carolina law) or a question to be decided by the jury (federal law).

Question 9

Byrd soft balancing test

Answer 9

ii. First, “respect the definition of state-created rights and obligations by the state courts” and also ask whether the state rule is “bound up with the [state-created] rights and obligations in such a way that [the state rule’s] application is required.”
iii. Second, even if not “bound up with state-created rights” (i.e., even if the state rule is one of “form and mode”), ask whether applying the state rule would dictate the result of the case.
1. If applying the state rule would dictate the result then you need to balance the interest (the “policy”) of uniform enforcement against the federal interest in having “an independent system for administering justice for litigants.”
2. Examples: Clearly substantive: e.g., the negligence standard. Follow state law; In the middle: whether a judge or a jury decides. Not clear which way this will go; Clearly procedural: The size of paper. Follow federal law
vi. Third, “there is not present here the certainty that a different result would follow or even the strong possibility that this would be a case”

Question 10

Hanna

Answer 10

i. The conflict: MA rule: personal service on Ds who are executors of estates & federal rule: service with any competent adult at D’s residence

Question 11

Rules Enabling Act

Answer 11

The test must be whether a rule really regulates procedure

Question 12

Statutory Track (best for party that wants fed court)

Answer 12

• If a state law conflicts (direct conflict) with a Federal Rule of Civil Procedure (or a federal statute),
• Then the federal court will use the Federal Rule of Civil Procedure (or a federal statute)
• Unless, the FRCP does not comply with the Rules Enabling Act (or is otherwise unconstitutional) or the federal statute is otherwise unconstitutional (violate due process)

Question 13

Constitutional Track (for state)

Answer 13

• If a federal judicial practice conflicts with a state law, then the state law should be used if use of the federal judicial practice would lead to:
 1. Forum-shopping; or
 2. The inequitable administration of the laws.
 And if there is not a strong federal interest in using the federal judicial practice (see Byrd)
• To figure out if there is forum-shopping or the inequitable administration, use outcome-determinative test
• Interest: having an independent federal judiciary
• 7th amendment concerns

Question 14

Walker

Answer 14

i. OK law: lawsuit is commenced when complaint served on D; FRCP 3: lawsuit commences upon filing the complaint
ii. No direct conflict (read narrowly) → get off of statutory track

Question 15

Burlington Northern Railroad:

Answer 15

i. Alabama law: Defendant who loses appeal of money judgment must pay 10% extra.
ii. Federal law: No automatic 10% rule.
1. But, Federal Rule of Appellate Procedure 38 says: “If the court of appeals shall determine that an appeal is frivolous, it may award just damages and single or double costs to the appellee.”
iv. Considerations: (1) Alabama also had its own version of Federal Rule of Appellate Procedure 38; (2) Alabama had passed its 10% rule in order to provide additional damages as compensation to the appellee for having to suffer the ordeal of defending the judgment on appeal.
v. Conflict.

Question 16

Stewart Organization:

Answer 16

iii. Alabama law: Forum selection clauses in contracts are void.
iv. Federal law: Forum selection clauses in contracts can be valid.

vi. Conflict: Federal law was in conflict with state law because federal law allowed the consideration of forum selection clauses as one of the factors in making decisions on whether to transfer a case; in contrast, state law totally prohibited use of the forum selection clause.

Question 17

Shadygrove

Answer 17

· Diversity case in federal court

· Allstate wants dismissal because class action isn’t allowed according to 901(b) of New York state law

o When there is a statutory penalty involved, section 901(b) says you can’t have class action (with no class action, the amount in controversy would only be $500

· Shady Grove argues that as a class action, it falls under Rule 23 of FRCP

o Argues that Rule 23 directly conflicts with 901(b)

· Statutory Track

· Allstate says no direct conflict because there is a difference between being eligible (statute) and being certified (federal rule) to maintain a class action lawsuit

· Shady Grove argues that there is no difference between certifiability and eligibility

· Ginsburg says we should interpret 901(b)’s purpose is to decide how much you get to recover (remedies)

o It is aimed at capping damages, therefore it is substantive

· What is it about 901(b) that demonstrates this is not New York state law speaking to substantive recovery?

o ?

o Doesn’t change anyone’s amount of liability toward someone else

· Other state’s substantive laws can be applied in state court

· Test for Rules Enabling Act is whether it really regulates procedure

o What does this mean though?

· Joinder – who can join together in litigation

· What does Justice Stevens say about the Rules Enabling Act?

o Believes there is a direct conflict between rule 23 and 901(b)

o Doesn’t think only “really regulates procedure” should be the Rules Enabling Act

§ Can’t change substantive liabilities

§ May be some state procedural rules that are so bound up with state substantive law that it would violate the Rules Enabling Act for federal rules to trump them

o He is worried that the statutory track tramples too much upon state law and state’s rights; he wants to provide some wiggle room in the Rules Enabling Act portion

§ Would want to look at New York state law’s purpose to see if it is so bound up that it would violate the second portion of the rules enabling act

· Allstate argues forum shopping because people are going to want to bring these kind of cases in federal court

· Ginsburg says that the outcome of this case (where you have a class action lawsuit survive in federal court) seems to go against Congress’ desire to limit the ability to bring class actions. So there is a federal interest in not having a class action lawsuit