Conflicts 4/16
Erie
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Tompkins (PA) sues Erie (NY) in NY state court concerning accident in PA
◦ Can NY use its own standard of care? Probably not, due to expectations of P in PA
where the accident occurred.
◦ Can NY use its own procedure? Yes. It's a NY state court action.
◦ If PA had bound up SoL in its cause of action, there would be a question as to whether
NY could use longer SoL. SCOTUS hasn't answered this.
◦ If NOT bound up in COA, no problem with forum using its own procedure.
Tompkins sues Erie in federal court in NY concerning PA accident
◦ Can the federal court apply a federal common law standard of care? May be a
problem with this scenario in displacing state law, despite the fact that Congress
hasn't told the court not to. Not our primary concern.
◦ Can federal court use federal procedure? Here's the issue.
Federal power is defined by subject matter, not geography. Added element is separation of
powers worry in the creation of federal common law. State courts do not have such a restriction
on common law creation, absent statute to the contrary.
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P sues D in federal court in NY under NY law
◦ Can the federal court apply a federal common law limitations period or must it apply
NY's? Must use that of NY. (York → Statute of limitations that would be used by
forum state court).
◦ On horizontal level, important to determine whether SoL bound up in the CoA. In
York, didn't matter that SoL wasn't bound up in CoA. Federal court must use the
statute of limitations that would be used by the state in which the court sits. No real
analogue to horizontal choice of law. Prima facie obligation.
▪ Reason? Outcome of the litigation in federal court should be substantially the
same as if the cause of action had been brought in a state court. Uniformity with
forum state procedure characterized as ensuring reliability of results. Ex-post
determination.
▪ If the difference between federal and state law would be “outcome determinative”
(later rejected), then must use law of the state.
◦ Sister states need not follow a given state's procedural rules, but the federal court in
that state must use that procedural rule.
NJ statute requires small shareholders bringing derivative suits to post a bond. Federal
court in NJ for action under DE law?
◦ Not bound up in CoA, but SCOTUS says that the rule would have to be used here, as
it is outcome determinative.
◦ Forum procedure is almost always outcome determinative. Usually, makes a
difference as to how the case goes, in that it may be dismissed if the rules aren't
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followed. Looks like forum state rules would have to be used no matter what,
displacing federal common law.
Byrd v. Blue Ridge Elec. Coop.
◦ P sues in tort under SC law in SC federal court. D argues sole right to workers' comp.
◦ Under SC law, this is a judge-determined inquiry.
◦ In federal court, this issue submitted to jury.
◦ Two types of inquiries:
▪ First, examine the state rule to determine whether it is bound up in
rights/obligations such that it must be applied in federal court.
 Looks like federal procedure law must submit to state substance, at least
where federal procedure is common law.
 Conflict arises when state court would not apply this sister state SoL, but the
federal court might be required to.
▪ Court concludes that this SC rule not bound up in the cause of action.
▪ But another policy consideration of vertical uniformity – outcome determinative
test. Federal courts should conform as near as may be to state rules of procedure
where the state rules may bear substantially on the question as to whether the
litigation would come out one way in fed. Court and another way in state court. \
 Not clear case would come out differently if jury rather than judge used
anyway.
 But even if it would, goal of vertical uniformity can be overridden by
countervailing federal interests. Here, interests in favor of using the federal
rule. History of using juries to determine findings of fact.
Hanna v. Plumer
◦ Suit in fed ct in MA under MA law
◦ MA service rule or FRCP service rule?
▪ MA service rule seems not bound up in CoA. Outside of Byrd constitutional
analysis.
▪ Would still be ok to use federal rule if it was common law. Outcome
determinative is not the relevant test after all. Instead, ex-ante. Don't look to
specific person; in general, will it make a difference to forum shopping? No.
People don't choose court generally based on their procedural rules.
▪ When a FRCP or federal statute, then a Congressional mandate exists. Goal of
vertical uniformity only exists when a court is creating its own rules. Congress not
bound by this consideration.
▪ When is a federal statute regulating federal procedure valid? All that matters is
that the regulated subject can be rationally classified as procedure. Could
Congress than pass a uniform limitations period for state law actions brought in
federal court? Sounds like it, but may not be the case.
 About Congress' power in the absence of competing state substantive law. In
Hanna, no competing substantive rule.
 Strong and weak interpretations: Green goes for weak interpretation as shown
above.
◦ About conflicts b/w federal procedure and state substance. What makes a FRCP
valid? Created by SCOTUS, using power delegated by Congress. “Rules shall not
abridge, enlarge, or modify any substantive right” → what does this mean?
▪ Sibbach and Hanna, only requirement is that the federal rule really regulate
procedure, even if it happens to trump substance.
▪ Shady Grove casts doubt on this standard.
ERIE Flow Chart
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Is the federal court sitting in diversity/alienage or is there a CoA with supplemental
jurisdiction?
◦ No → no Erie problem
◦ But the FRCP or federal statute at issue might still be invalid
▪ Might abridge, enlarge, or modify the federal substantive right
Is the federal court sitting in diversity/alienage or is there a CoA with supplemental
jurisdiction?
◦ Yes → Erie problem
◦ Is the relevant federal procedural law mandated by Constitution?
▪ Yes, then it applies.
◦ Is the relevant federal procedural law common law?
▪ Is the state rule bound up with the state cause of action?
 If so, use state law
▪ If not?
 Look to twin aims of Erie
◦ Would it lead to forum shopping?
◦ Would it lead to inequitable administration of the laws? → Something
unfair about letting accident of diversity decide the case.
◦ Where to the twin aims come from?
▪ May come from diversity statute itself. Federal court taking diversity
action is performing a particular function which states entertaining
sister state causes of action do not have (preventing discrimination
against out-of-state defendants). The function would be frustrated if
there were procedural differences.
▪ Given Congressional purpose, inequitable for Federal courts to make
up their own time limits, as that would encourage its use to extend
time to bring suit, not its actual purpose.
◦ If no problem of forum shopping/ineq. administration of laws, then use
federal rule.
◦ If there is a problem, then use forum state law.
▪ UNLESS sufficiently strong countervailing federal interests in favor of
the uniform federal common law rule.
◦ Is the relevant federal procedural law a federal statute?
▪ If yes, applies if it is arguably procedural.
▪ Direct conflict test (wishy-washy)
▪ Doesn't matter if it leads to forum shopping.
◦ Is it a FRCP?
▪ If yes, is it arguably procedural?
▪ And does it a,e,m substantive rights?
 Sibbach test (really, or trying to regulate procedure) Shady Grove
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Walker → application of the Hanna analysis (FRCP analysis) is premised on a direct
collision between state rule and federal law. In a diversity case, does the state or federal
tolling rule apply?
◦ FRCP suggests the federal rule, but no direct conflict here. Thus, in federal common
law track where we worry about vertical uniformity → state law applies.
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Klaxon → Can a federal court sitting in diversity in DE apply federal common law choice
of law rules to determine between PA and NY law?
◦ NO – must use choice of law rules of the forum state.
▪ Forum shopping would be an enormous concern.
▪ Byrd test → choice of law bound up in state cause of action? Desistement →
choice of law rule bound up in state's cause of action. (Theory) When state has
CoL rule saying CoA doesn't apply to the facts, this is meant to be used by any
court entertaining the CoA.
 2 states who want their law applied → can't be bound up in cause of action.
 What Klaxon says is that forum shopping is so enormous a problem that
federal courts should borrow the choice of law rule of the forum state.
Shady Grove → various approaches:
◦ Conflict b/w NY rule saying no class actions for statutory penalties and federal rule
23(a) allowing class actions.
▪ Scalia says to use the Sibbach test: not whether NY's rule is bound up in NY
CoAs. FRCP wins out, as the test for FRCP validity just means that it must really
regulate procedure. Can trump state substantive law.
▪ Stevens: Not the case. Have to figure out if the state rule is substantive. If so,
FRCP cannot trump it. 5 justices in favor of this. NY law not substantive,
however so FRCP wins out.
▪ Ginsburg: FRCP must respect state substantive law, and the NY law is
substantive.
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