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 federalcourt 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. Constitution? E.g. 7th 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 3-year 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,”§2072(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)