Wed. Apr. 16
Erie
Tompkins (a PA domiciliary) sues Erie
(a NY domiciliary) in NY state court
concerning an accident in PA
Can NY use its own standard of care?
Can NY use its own procedure?
Tompkins sues Erie in federal court
in NY concerning an accident in PA
Can the federal court apply a
federal common law standard of
care?
Can the federal court use federal
procedure?
P sues D in federal court in New York
under New York law
Can the federal court apply a federal
common law limitations period or
must it apply New York’s?
Guaranty Trust v York
(US 1945)
It is therefore immaterial whether statutes of limitation are
characterized either as "substantive" or "procedural" in State
court opinions in any use of those terms unrelated to the
specific issue before us. Erie R. Co. v. Tompkins ... expressed a
policy that touches vitally the proper distribution of judicial
power between State and federal courts. In essence, the
intent of that decision was to insure that, in 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 legal rules determine the outcome of a litigation, as it
would be if tried in a State court.
A Mississippi statute requires a corporation
doing business within the state to designate an
agent for the service of process before bringing
suit.
Should this statute be used by a federal court in
Mississippi?
A New Jersey statute requires small
shareholders bringing derivative actions to
post a bond.
Should this statute be used by a federal court
in New Jersey for a derivative action under
Delaware law?
Byrd v. Blue Ridge Elec. Coop. (US 1958)
“First. It was decided in Erie R. Co. v. Tompkins
that the federal courts in diversity cases must
respect the definition of state-created rights
and obligations by the state courts. We must,
therefore, first examine the [state] rule … to
determine whether it is bound up with these
rights and obligations in such a way that its
application in the federal court is required.”
Is a federal court forbidden to use its power
to create procedural common law to displace
state substantive law in federal court?
Is Congress forbidden to use its power to
create procedural law for federal courts to
displace state substantive law?
P sues D in federal court in NY
under PA law.
PA’s statute of limitations is bound
up with the PA cause of action.
A NY state court would use NY’s
statute of limitations anyway.
What statute of limitations should
the federal court use?
“But cases following Erie have evinced a broader
policy to the effect that the federal courts should
conform as near as may be -- in the absence of
other considerations -- to state rules even of form
and mode where the state rules may bear
substantially on the question whether the litigation
would come out one way in the federal court and
another way in the state court if the federal
court failed to apply a particular local rule.”
“But there are affirmative countervailing
considerations at work here.”
Hanna v. Plumer
(US 1965)
Suit in fed ct in MA under MA law
Should MA’s service rule be used or
can the ct use the FRCP governing
service instead?
The [Erie] decision was also in part a reaction to the practice
of 'forum-shopping' which had grown up in response to the
rule of Swift v. Tyson. That the York test was an attempt to
effectuate these policies is demonstrated by the fact that the
opinion framed the inquiry in terms of 'substantial' variations
between state and federal litigation. Not only are
nonsubstantial, or trivial, variations not likely to raise the sort
of equal protection problems which troubled the Court in Erie;
they are also unlikely to influence the choice of a forum. The
'outcome-determination' test therefore cannot be read
without reference to the twin aims of the Erie rule:
discouragement of forum-shopping and avoidance of
inequitable administration of the laws.
There is, however, a more fundamental flaw in
respondent's syllogism: the incorrect
assumption that the rule of Erie R. Co. v.
Tompkins constitutes the appropriate test
of the validity, and therefore the applicability,
of a Federal Rule of Civil Procedure. The Erie
rule has never been invoked to void a Federal
Rule.
“[T]he constitutional provision for a
federal court system (augmented by the
Necessary and Proper Clause) carries
with it congressional power to make
rules governing the practice and
pleading in those courts, which in turn
includes a power to regulate matters
which, though falling within the
uncertain area between substance and
procedure, are rationally capable of
classification as either.”
Could Congress pass a uniform
limitations period for state law
actions brought in federal court?
28 U.S.C. § 2072. - Rules of procedure and
evidence; power to prescribe
(a) The Supreme Court shall have the power
to prescribe general rules of practice and
procedure and rules of evidence for cases in
the United States district courts (including
proceedings before magistrate judges
thereof) and courts of appeals.
(b) Such rules shall not abridge, enlarge or
modify any substantive right. . . .’
“Under the cases construing the scope of the
Enabling Act, Rule 4(d)(1) clearly passes muster.
Prescribing the manner in which a defendant is
to be notified that a suit has been instituted
against him, it relates to the ‘practice and
procedure of the district courts.’
‘The test must be whether a rule really
regulates procedure, - the judicial process for
enforcing rights and duties recognized by
substantive law and for justly administering
remedy and redress for disregard or infraction
of them.’ Sibbach v. Wilson & Co.”
Erie flow chart...
is the federal court sitting in
diversity/alienage or is there a cause of
action with supplemental jurisdiction?
NO?
- Example: P sues D in federal court in
New York under federal securities law
no Erie problem - no need to worry
about state procedural law
But…
The FRCP or federal statute at issue
might still be invalid
- e.g. FRCP might abridge enlarge
or modify the federal substantive
right
is the federal court sitting in
diversity/alienage or is there a
cause of action with supplemental
jurisdiction?
YES
is the relevant federal procedural
law mandated by the U.S.
th
Constitution? E.g. 7 A
if yes it applies
Is the relevant federal procedural law a
federal statute?
if yes it applies if it is arguably
procedural
it does not matter if it leads to
forum shopping
Really? Could Congress pass a 3year statute of limitations for tort
actions brought in federal court
that displaced a 2-year statute of
limitations that a state had bound
up with its cause of action?
Is the relevant federal procedural law a
Fed. R. Civ. P.?
if yes only questions are
- is it arguably procedural and
- does it abridge enlarge or modify
substantive rights
(Sibbach test? Shady Grove?)
28 U.S.C. § 2072. - Rules of procedure and
evidence; power to prescribe
(a) The Supreme Court shall have the
power to prescribe general rules of
practice and procedure and rules of
evidence for cases in the United States
district courts (including proceedings
before magistrate judges thereof) and
courts of appeals.
(b) Such rules shall not abridge, enlarge
or modify any substantive right. . . .
how can you tell if you are in the
FRCP track…?
Walker –
Application of the Hanna analysis
[i.e. FRCP track] is premised on a
“direct collision” between the
Federal Rule and the state law.
federal rule (suggested by FRCP 3) – tolling of
statute of limitations at filing
forum state rule – tolling at service
which applies in a diversity case?
Rule 3. Commencing an Action
A civil action is commenced by filing a
complaint with the court.
is the relevant federal procedural law
common law?
- remember, includes cases in
which the federal court simply
doesn’t have anything on point, but
doesn’t do what the forum state does
1st
is the state rule is bound up with the
cause of action (Byrd)
– if so, use state law
examples?
- statute of limitations folded into a
statutory cause of action
- burden of proof for contributory
negligence
Really? Could a state compel
federal courts to limit the page
length of briefs by folding up a rule
into the cause of action...?
not bound up…?
Look to twin aims of Erie
- would having a federal common
law rule different from the forum
state’s rule lead to…
- vertical forum shopping
- inequitable administration of
the laws?
forum shopping in general, not in
the particular case
“The best explanation of what constitutes
inequitable administration of the laws is that
found in Erie itself: allowing an unfair
discrimination between noncitizens and citizens
of the forum state. Whether discrimination is
unfair in this context largely turns on how
important is the matter in question. The decision
of an important legal issue should not turn on the
accident of diversity of citizenship, or the
presence of a federal question unrelated to that
issue.” Stewart Organization, Inc. v. Ricoh Corp.
(US 1988) (Scalia, J. dissenting)
P(NY) sues D(NY) in state court in
NY concerning a car accident in NY.
Action gets dismissed due to the NY
2-year statute of limitations.
P(NY) sues D(Pa) in federal court in
NY concerning a car accident in NY.
Federal court applies a common law
time limit and lets the action
proceed.
Why are we concerned about forum shopping?
What is inequitable about vertical procedural
differences?
P sues D on a Pa cause of action in Miss state
ct.
The Pa 2 year statute of limitations is not
bound up with the Pa cause of action.
The Miss state court applies its own longer
statute of limitations.
28 USC § 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.
“Rules of Decision Act Analysis”
“Relatively unguided Erie choice”
28 U.S. Code § 1332 - Diversity of citizenship; amount in controversy; costs
(a)The district courts shall have original jurisdiction of all civil actions where the
matter in controversy exceeds the sum or value of $75,000, exclusive of interest and
costs, and is between—
(1)citizens of different States;
(2)citizens of a State and citizens or subjects of a foreign state, except that the district
courts shall not have original jurisdiction under this subsection of an action between
citizens of a State and citizens or subjects of a foreign state who are lawfully admitted
for permanent residence in the United States and are domiciled in the same State;
(3)citizens of different States and in which citizens or subjects of a foreign state are
additional parties; and
(4)a foreign state, defined in section 1603(a) of this title, as plaintiff and citizens of a
State or of different States.
if no problem of forum
shopping/ineq. admin., then use
uniform federal common law rule
example: federal common law rule
concerning service
if there is a problem of forum
shopping/ineq. admin., then use
forum state rule
- unless sufficiently strong
countervailing federal interests in
favor of the uniform federal
common law rule
P (NY) sues D (Germany) in federal court in NY
on a German cause of action that arose in
Germany.
NY has no doctrine of forum non conveniens
Federal courts have created a federal common
law doctrine of forum non conveniens outside
of diversity/alienage cases that would dismiss
the case.
- Colorado passed a Certificate of Review Statute
- anyone suing a licensed professional for
malpractice must provide, with the complaint filed, a
certificate stating that an expert in the licensed
professional’s area of practice has examined the claim
and has determined that it has substantial justification.
- P (a citizen of New York) sues D (a citizen of Colorado)
in the Federal District Court for the District of Colorado
for medical malpractice under New York law.
- P’s suit concerns an operation that D performed upon P
in New York City. P does not file a Certificate of Review
with her complaint. In his answer, D asks that the action
be dismissed for failure to file a Certificate of
Review. What result and why?
A federal court sitting in diversity in
Del. needs to determine whether Pa.
or NY law applies
can it use federal common law
choice of law rules?
NO – must use the choice of law
rules of the forum state
Klaxon v. Stentor Mfg. Co. (US
1941)
P sues D in federal court in New York under 42
USC 1983 for civil rights violations. 1983 does
not have its own statute of limitations, so
federal courts borrow from analogous state
statutes. New York's statute of limitations ran
out between the time that P filed in federal
court and the time P served D. Under the
federal rule, statute of limitations are tolled at
filing. Under the New York state rule they are
tolled at service. Is P's action barred?
West v Conrail (U.S. 1987)
Shady Grove Orthoped. Assoc. V.
Allstate (U.S. 2010)
Allstate refused to pay NY statutory
interest on late payment of claims
- class action against Allstate for
the interest
N. Y. Civ. Prac. Law Ann. §901
(no class actions for penalties or
statutory minimum damages)
Rule 23(a) provides: “(a) Prerequisites. One or more
members of a class may sue or be sued as
representative parties on behalf of all members only
if: “(1) the class is so numerous that joinder of all
members is impracticable; “(2) there are questions
of law or fact common to the class; “(3) the claims or
defenses of the representative parties are typical of
the claims or defenses of the class; and “(4) the
representative parties will fairly and adequately
protect the interests of the class.” Subsection (b)
says that “[a] class action may be maintained if Rule
23 (a) is satisfied and if” the suit falls into one of
three described categories (irrelevant for present
purposes).
Scalia (with Thomas, Roberts &
Sotomayor)
Scalia: “The fundamental difficulty with
…these arguments is that the substantive
nature of New York’s law, or its substantive
purpose, makes no difference. A Federal
Rule of Procedure is not valid in some
jurisdictions and invalid in others—or valid
in some cases and invalid in others—
depending upon whether its effect is to
frustrate a state substantive law (or a state
procedural law enacted for substantive
purposes). That could not be clearer in
Sibbach…”
Scalia:
“In sum, it is not the substantive or
procedural nature or purpose of the affected
state law that matters, but the substantive or
procedural nature of the Federal Rule. We
have held since Sibbach , and reaffirmed
repeatedly, that the validity of a Federal Rule
depends entirely upon whether it regulates
procedure. If it does, it is authorized by §2072
and is valid in all jurisdictions, with respect to
all claims, regardless of its incidental effect
upon state-created rights.”
Assume there is a new FRCP that
determines who has the burden of
proof for contributory negligence –
is it valid?
Stevens
Stevens:
The New York law at issue, N. Y. Civ. Prac. Law
Ann. (CPLR) §901(b) (West 2006), is a procedural
rule that is not part of New York’s substantive law.
Accordingly, I agree with Justice Scalia that
Federal Rule of Civil Procedure 23 must apply in
this case and join Parts I and II–A of the Court’s
opinion. But I also agree with Justice Ginsburg
that there are some state procedural rules that
federal courts must apply in diversity cases
because they function as a part of the State’s
definition of substantive rights and remedies.
Imagine that a class action for
statutory penaties under
Pennsylvania law had been brought
in state court in New York. Would
section 901 have applied?
Imagine that a class action for
statutory penaties under New York
law had been brought in state court
in Pennsylvania. Would section 901
have applied?
“Justice Scalia believes that the sole Enabling Act question is
whether the federal rule “really regulates procedure,”which
means, apparently, whether it regulates “the manner and the
means by which the litigants’ rights are enforced”…. I
respectfully disagree. This interpretation of the Enabling Act is
consonant with the Act’s first limitation to “general rules of
practice and procedure,Ӥ2072(a). But it ignores the second
limitation that such rules also“not abridge, enlarge or modify
any substantive right,” §2072(b) (emphasis added), and in so
doing ignores the balance that Congress struck between
uniform rules of federal procedure and respect for a State’s
construction of its own rights and remedies. It also ignores the
separation-of-powers presumption, and federalism
presumption that counsel against judicially created rules
displacing state substantive law.”
Ginsburg (with Kennedy, Breyer, &
Alito)
Ginsburg:
“The Court today approves Shady Grove’s attempt
to transform a $500 case into a $5,000,000 award,
although the State creating the right to recover has
proscribed this alchemy. If Shady Grove had filed
suit in New York state court, the 2% interest
payment authorized by New York Ins. Law Ann.
§5106(a) (West 2009) as a penalty for overdue
benefits would, by Shady Grove’s own measure,
amount to no more than $500.”
“In sum, both before and after Hanna , the
above-described decisions show, federal
courts have been cautioned by this Court to
‘interpre[t] the Federal Rules … with
sensitivity to important state interests,’ and
a will ‘to avoid conflict with important state
regulatory policies.’ The Court veers away
from that approach…in favor of a
mechanical reading of Federal Rules,
insensitive to state interests and productive
of discord.”
Is the relevant federal procedural law
a Fed. R. Civ. P.?
if yes only questions are
- is it arguably procedural and
- does it abridge enlarge or modify
substantive rights
(must consider state substantive
policies)