Wed., Nov. 19

In the light of Erie, how to interpret state law?

predict what relevant state SCt would say

The 4th Circuit issues a decision on Virginia law

Is the 4th Circuit decision binding on a Va state court?

what is the procedural power of a state court entertaining a sister

state cause of action?

P and D (both Pennsylvanians) get into a car accident in Pennsylvania

P sues D in state court in Virginia under Pennsylvania law

Can the Virginia court use Virginia’s:rule on D’s duty of care?rule on who has the burden of proof for

contributory negligence?statute of limitations?service rule?pleading standard?

Substantive = state that created the rule wants it to follow the

state’s causes of action into other court systems

Procedural = state that created the rule wants it to apply only in

the state’s own courts

what is the procedural power of a federal court entertaining a state law

cause of action?

For the moment consider only choices between state law and

federal common law

Guaranty Trust v. York (U.S. 1945)

A federal court in NY entertaining a NY cause of action must use NY’s statute of limitations and not a federal judge-made time limit, even if NY state officials do not think their statute of limitations is bound up with the NY cause of action.

policy of vertical uniformity between federal and forum state

court(if outcome determinative)

According to Kansas law, the statute limitations tolls upon

service. According to the federal rule (suggested by Fed R Civ P 3) it

is tolled upon filing. Which rule would determine whether statute

limitations was met in a case brought under Kansas law in

federal court in Kansas?

Ragan v. Merchants Transfer & Warehouse (US 1949)

- A Mississippi statute requires a corporation doing business within the state to designate an agent for the service of process before bringing suit. - There is no such requirement under federal law. - P (a Tennessee corporation doing business in Mississippi) is suing D in federal court in Mississippi. - P has designated no agent for service of process in Miss. - D moves for summary judgment on this ground. - What result?

Woods v. Interstate Realty (US 1949)

A New Jersey statute requires small shareholders bringing derivative actions to post a bond.

Federal courts have no such requirement. P, a small shareholder, brings a derivative action under Delaware law against D in federal court in New Jersey.

P has not posted a bond. D moves to dismiss.

What result?

Cohen v. Beneficial Indus. Loan Corp. (US 1949)

outcome determinative = if you switch rules from federal to forum state law it will make a difference

to how the case will turn out

Some pushback against York’s outcome determinative test

Byrd v. Blue Ridge Rural Electric Corp. (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 [S.C.] 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.

What is an example of a state rule where the bound-up test is

satisfied?

Second. 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. E.g., Guaranty Trust Co. of New York v. York.

P sues D is federal court in New York under Pennsylvania law

Pennsylvania’s two year statute of limitations is bound up with the Pennsylvania cause of action

New York has a three year statute of limitations.

But there are affirmative countervailing considerations at work here....An essential characteristic of [the federal] system is the manner in which, in civil common-law actions, it distributes trial functions between judge and jury and, under the influence--if not the command--of the Seventh Amendment, assigns the decisions of disputed questions of fact to the jury. The policy of uniform enforcement of state-created rights and obligations, see, e.g., Guaranty Trust Co. of New York v. York, supra, cannot in every case exact compliance with a state rule --not bound up with rights and obligations--which disrupts the federal system of allocating functions between judge and jury.

After Byrd: P sues D under SC law in SC.1) If US Constitution requires a procedural rule in federal court, it must be used (e.g. 7th Amendment)2) if SC rule is substantive in horizontal choice-of-law sense, federal court must use SC rule instead of federal common law rule3) but there is also a policy of vertical uniformity with SC state courts

(if difference is outcome determinative)4) BUT there may also be countervailing federal interests in favor uniform federal common law rule

federal procedural common law

- claim/issue preclusion- anything that federal courts simply don’t do that a state does (whether by state constitution, statute, or common law)

What about Fed. R. Civ. P.?

Hanna v. Plumer(U.S. 1965)

- Hanna sued Plumer, Osgood’s executor, for Osgood’s negligence in auto accident. - left summons and complaint with Osgood’s executor’s wife at place of residence in accordance with 4(e) (4d at the time)- Mass statute required hand delivery to an executor or administrator- DCt granted motion for sum j - Ct App aff’d

- outcome determinative- SCt reversed

“When a situation is covered by one of the Federal Rules, the question facing the court is a far cry from the typical, relatively unguided Erie choice: the court has been instructed to apply the Federal Rule, and can refuse to do so only if the Advisory Committee, this Court, and Congress erred in their prima facie judgment that the Rule in question transgresses neither the terms of the Enabling Act nor constitutional restrictions.”

Why no concern about vertical uniformity when a FRCP is at issue?

Why does vertical uniformity matter only when federal courts are creating federal procedural

common law?

Rules of Decision Act28 U.S.C. § 1652

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.

Green’s theory:The source of federal courts’ obligation to consider vertical uniformity when creating federal procedural common law in diversity cases comes from the purposes of the diversity statute.

P(NY) sues D(Cal.) in state court in NY under NY law 2 ½ years after an accident.D is worried about state-court bias against him.NY has a 3-year statute of limitations.What would happen if federal courts had a common law 2 year limitation period?

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. . . .

What is Congress’s power over federal procedure?

“[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.”

- Congress passes a uniform statute of limitations applicable for all actions in federal court, including state law actions- is the statute valid?- even if a shorter state statute of limitations is bound up with the state cause of action?

A New York state court is entertaining a Pennsylvania action with a 2-year statute of limitation bound up with it. May the NY legislature command the NY court to use a NY 3-year statute of limitation for the action?

- Pursuant to the order of a Florida state court (that was ultimately affirmed by the Florida Supreme Court), Terry Schiavo’s feeding tube was removed- the US SCt denied cert.- In response, Congress passed Public Law 109-3, “An Act for the relief of the parents of Theresa Marie Schiavo.”- This act allowed Ms. Schiavo's parents to bring an action in federal district court concerning whether their daughter's federal constitutional or statutory rights had been violated as a result of the Florida courts' orders - this meant not giving the Florida judgment Full Faith and Credit- constitutional?

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. . . .

Now – assume that the federal service rule had been common

law

“[I]t is doubtful that, even if there were no Federal Rule making it clear that in-hand service is not required in diversity actions, the

Erie rule would have obligated the District Court to follow the Massachusetts procedure.”

“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.”

twin aims of Erie

Look back at old cases in light of Hanna’s rejection of the outcome

determinative test...

Could a federal court sitting in diversity create a common law limitations

period different from that of the forum state? (York)

The forum state has a statute requiring any out of state corporation doing business in the state to appoint an agent for service of process before

bringing suit

Should a federal court sitting in diversity in the state use the rule too?

(Woods)

The forum state has a statute requiring anyone bringing a

shareholder derivative action to post a bond. (Cohen)

Should a federal court sitting in diversity in the state use the rule

too?

Erie flow chart...

is the federal court sitting in diversity/alienage (or is there a cause of action with supplemental jurisdiction)?

if no – no Erie problem

- just use federal procedure

- Example: P sues D in federal court in New York under federal securities law

Assume now that a federal court entertains a state law action (or an

action under the law of another nation)

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

- Green wonders about the power of Congress to preempt state rules bound up

with the state’s 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 (will discuss later)

is the relevant federal procedural law federal procedural common law?

- remember, includes cases in which the federal court simply doesn’t have anything

if so first determine if1) state rule is bound up with the cause of action (Byrd) – if so, use state law2) if not look to

twin aims of Eriedifference leads to forum shopping and

ineq. admin. of laws?countervailing federal interests

Walker v. Armco Steel Corp.(US 1980)

- according to forum state law, the statute of limitations tolls upon service- federal rule (inspired by Fed. R. Civ. P. 3) is that it tolls upon filing

- Ragan said use forum state rule- but does Hanna make a difference?

Rule 3. Commencement of Action

A civil action is commenced by filing a

complaint with the court.

Application of the Hanna analysis is premised on a "direct collision" between the Federal Rule and the

state law.

- 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

- Twombly and Iqbal were federal question cases...- P sues D in federal court in NY under NY law for negligence. - NY state courts have notice pleading. - D makes a motion for a more definite statement on the ground that Twiqbal has not been satisfied. - P argues that NY’s rule should be used.- What result?

Semtek Int'l Inc. v. Lockheed Martin Corp.,

(U.S. 2001)

- Semtek sues Lockheed in state court in Ca. under Ca. law-the action is removed under diversity- then dismissed on statute of limitations grounds- Semtek then brings an action in state court in Maryland (where there is a longer statute of limitations)- claim precluded?- assume that under federal law a dismissal under statute of limitations grounds has claim preclusive effect- under California law it does not

Dupasseur v. Rochereau (US 1875)

Conformity Act – in actions at law federal courts were to use the forum state’s procedural rules

Rule 41. Dismissal of Actions. . .

(b) Involuntary Dismissal; Effect. If the plaintiff fails to prosecute or to comply with these rules

or a court order, a defendant may move to dismiss the action or any claim against it. Unless the dismissal order states otherwise, a dismissal under this subdivision (b) and any dismissal not

under this rule — except one for lack of jurisdiction, improper venue, or failure to join a

party under Rule 19 — operates as an adjudication on the merits.

We think, then, that the effect of the “adjudication upon the merits” default provision of Rule 41(b)...is simply that, unlike a dismissal

“without prejudice,” the dismissal in the present case barred refiling of the same claim in the

United States District Court for the Central District of California.

Moreover, as so interpreted, the Rule would in many cases violate the federalism principle of Erie..., by engendering “ ‘substantial’ variations [in outcomes] between state and federal litigation” which would “[l]ikely … influence the choice of a forum,”.... Out-of-state defendants sued on stale claims in California and in other States adhering to this traditional rule would systematically remove state-law suits brought against them to federal court—where, unless otherwise specified, a statute-of-limitations dismissal would bar suit everywhere.

And even apart from the purely default character of Rule 41(b), it would be peculiar to find a rule governing the effect that must be accorded federal judgments by other courts ensconced in rules governing the internal procedures of the rendering court itself. Indeed, such a rule would arguably violate the jurisdictional limitation of the Rules Enabling Act: that the Rules “shall not abridge, enlarge or modify any substantive right,”.... In the present case, for example, if California law left petitioner free to sue on this claim in Maryland even after the California statute of limitations had expired, the federal court’s extinguishment of that right (through Rule 41(b)’s mandated claim-preclusive effect of its judgment) would seem to violate this limitation.

Rule 13. Counterclaim and Crossclaim(a) Compulsory Counterclaim.(1) In General. A pleading must state as a counterclaim any claim that—at the time of its service—the pleader has against an opposing party if the claim:(A) arises out of the transaction or occurrence that is the subject matter of the opposing party's claim...

In federal common law track

- is Ca’s preclusion law bound up with the Ca cause of action?

will difference between federal and state law lead to forum

shopping?

are there countervailing federal interests?

In other words, in Dupasseur the State was allowed (indeed, required) to give a federal diversity judgment no more effect than it would accord one of its own judgments only because reference to state law was the federal rule that this Court deemed appropriate . In short, federal common law governs the claim-preclusive effect of a dismissal by a federal court sitting in diversity.

- P sues D in federal court in diversity in Nebraska. P's suit is for rent due. Judgment for D - the lease is held to be in violation of the statute of frauds (it should have been in writing). - P subsequently sues D in state court in Nebraska state court for quantum meruit (that is, for the fair value of the use of P's apartment). - Under Nebraska's law of claim preclusion, an action at law concerning a transaction may be followed by an action at equity concerning that same transaction. - Does the Nebraska or the federal (transactional) rule concerning the scope of P's claim against D?

Rule 13. Counterclaim and Crossclaim(a) Compulsory Counterclaim.(1) In General. A pleading must state as a counterclaim any claim that—at the time of its service—the pleader has against an opposing party if the claim:(A) arises out of the transaction or occurrence that is the subject matter of the opposing party's claim...