Chapter 10: What Law Applies in Federal Court
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Introduction and Integration
○ RDA (Rules of Decision Act):
■ 28 USCS § 1652. State laws as rules of decision
■ The laws of the several states, except where the Constitution or
treaties of the United States or Acts of Congress otherwise
require or provide, shall be regarded as rules of decision in civil
actions in the courts of the United States, in cases where they
apply.
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Three different inquires:
○ Which state law applies? Klaxon: look at the state sitting in
diversity and use its choice of law rules (fed court in Texas
uses Texas choice of law rules, ex: apply law of state
where injury occurred, not Texas’s law)
○ What does “laws of the several states” mean? Pre-Erie is
Swift v. Tyson: definitely includes state statutes, but will not
apply state common law. Instead, we will apply general
federal common law.
○ When do we apply state law vs. federal law if we are a
federal court sitting in diversity? Pre-Erie it was substance
v. procedure (state law for sub [Klaxon tells us which state]
and fed pro)
Determining What Law Applies
○ The Erie Doctrine
○ Vertical choice of law problem
■ Erie Railroad Co. v. Tompkins [expanding what is the “laws of the several
states]
● P from PA injured in PA
● PA → NY in NY Fed court (forum shopping)
● Complete diversity and +$75k
● Do we even need to apply Pennsylvania law?
○ Klaxon tells us state statutes of PA
○ State law says he would be trespasser and no case, but
it’s not a statute it’s PA common law
○ P urges the general federal common law, hoping to be a
licensee under that law and a duty to warn
● If he chose NY or PA state court, he LOSES
● Is it fair to choose where he litigates to choose whether he wins or
not?
■ The Twin Aims of Erie
● (1) to discourage forum shopping among litigants, and (2) to avoid
inequitable administration of the laws.
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Majority opinion (Brandeis):
● Flaw of Tyson v Swift
○ Intended to stop discrimination, but created inequitable
administration (forum shopping)
○ There is no federal general common law overruled Swift v.
Tyson (meant to have said that Swift’s command to fill in
the gaps using general common law is too far)
■ Swift v. Tyson caused concern for federalism (10th
amendment) and separation of powers
○ Law of several states is now statutes and also common
law, all things they do
○ Interpretation of RDA was unconstitutional
■ Erie was a furthering of the political agenda of the time, SC judges scared
of getting their power taken away, so gave away power to create general
federal common law
● General federal common law: what it used to be is judges
referencing secondary sources to make law
Early Efforts to Describe When State Law Applies
○ Substantive law is actual elements of a claim
○ Procedural law is paperwork format, length of documents, etc.
○ Gray area addressed in :
■ Guaranty Trust (Hanna overlaps and renders it useless, “outcome test”)
● If state law would be outcome determinative, then the federal
court sitting in diversity would apply state law
● For everything else, apply federal policy (10 or 8 pages for brief?
Go with 8 which is fed policy)
■ Byrd v. Blue Ridge Rural Electrical Cooperative, Inc. (“balance of interests
test”, still good law but not strictly used in decisions)
● NC → SC in SC Fed Court sitting in diversity
● Byrd sued for negligence. Blue Ridge argued Byrd was a statutory
employee as defined by the South Carolina Workmen's
Compensation Act (SCWCA). SCWCA does not allow employees
to sue. Employees must accept the statutory compensation
benefits.
● The issue of whether Byrd qualifies as a "statutory employee"
must be decided by the trier of fact.
○ The state practice would have the factual question decided
by the judge. (employer wants this)
○ The federal practice is to leave such a question up to the
jury. (Byrd wants this)
● Blue Ridge argued that the case should be heard under South
Carolina state law which held that the employment issues in this
case should be decided by a judge, not a jury.
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Byrd argued that under federal law his Seventh Amendment right
to a jury trial should trump state law.
The trial court agreed with Byrd
The court of appeals reversed, finding for Blue Ridge.
The Supreme Court granted cert.
○ Spoke positively of Guaranty Trust “outcome test”
○ Created the balance of interests test: In the absence of an
FRCP, federal courts sitting in diversity/alienage must also
weigh the federal government’s interest in applying its law
versus the state government’ interest in applying its law.