1. Lecture 26 Apr. 16, 2018

2. Erie

3. the horizontal substance procedure distinction

4. Tompkins (a PA domiciliary) sues Erie (a NY domiciliary) in NY state court concerning an accident in PA should NY use its own statute of limitations?

5. is substance v. procedure always answered by whether a rule is bound up with the cause of action? P (NY) sues D (NY) in state court in New York on a New York cause of action the question is whether Pa conversations between D and his Pa lawyer are privileged

6. Tompkins sues Erie in federal court in NY concerning an accident in PA should it use its own federal common law limitations period?

7. Guaranty Trust v York (US 1945) New York actions in federal court in New York what limitations period should the court use – NY’s statute of limitations or the federal judge-created limitations of laches?

8. 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.

9. outcome determinative

10. the policy of vertical uniformity is not constitutionally mandated so where does it come from?

11. the diversity statute?

12. a horizontal analogue P sues D in NY state court on a Pa cause of action NY has a 6-yr statute of limitations Pa’s 1 yr statute of limitations is not bound up with the Pa cause of action but NY has a borrowing statute

13. 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?

14. Byrd v. Blue Ridge Elec. Coop
Byrd v. Blue Ridge Elec. Coop. (US 1958) a federal court in SC is entertaining SC tort actions there is a question of whether the plaintiff was a statutory employee subject to SC worker’s comp whether he was is decided by a judge in SC state court the federal approach would be to decide the matter by a jury

15. “First. It was decided in Erie R. Co. v
“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.”

16. really? can a state bind up its entire procedural code into its cause of action?

17. “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.”

18. “But there are affirmative countervailing considerations at work here

19. 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?

20. assume there is no FRCP governing the matter, but instead a federal common law rule

21. 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.

22. are York, Woods, and Cohen still good law in the light of Hanna?

23. 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.

24. what is Congress’s power over the procedure of federal courts in diversity cases?

25. “[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.”

26. could Congress pass a uniform limitations period for state law actions brought in federal court?

27. what limits has Congress put on FRCPs?

28. 28 U.S.C. § 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 ’

29. “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.”

30. Erie flow chart...

31. 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

32. why don’t the twin aims apply if federal questions cases…?

33. is the federal court sitting in diversity/alienage or is there a cause of action with supplemental jurisdiction? YES?

34. is the relevant federal procedural law mandated by the U. S
is the relevant federal procedural law mandated by the U.S. Constitution? E.g. 7th A if yes it applies

35. is the relevant federal procedural law a federal statute
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

36. 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?

37. is the relevant federal procedural law a Fed. R. Civ. P
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

38. is the relevant federal procedural law common law
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

39. 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

40. really? could a state compel federal courts to limit the page length of briefs by folding up a rule into the cause of action...?

41. also - what about a state’s interest in law applying independently of the cause of action?

42. another problem – P sues D in federal court in NY on a Pa cause of action the Pa statute of limitations is bound up with the cause of action but a NY state court would use NY’s statute of limitations anyway

43. if not bound up…

44. 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?

45. forum shopping in general, not in the particular case

46. if no problem of forum shopping/ineq. admin
if no problem of forum shopping/ineq. admin., then use uniform federal common law rule example: federal common law rule concerning service

47. if there is a problem of forum shopping/ineq. admin
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

48. examples

49. P sues D in federal court in LA LA has no forum non conveniens should federal forum non conveniens law apply?

50. - Colorado passed a Certificate of Review Statute
- 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 - should the court use the Certificate of Review statute?

51. a federal court sitting in diversity in Del
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?

52. Klaxon v. Stentor Mfg. Co. (US 1941)

53. a federal court in Ga is interpreting the common law of Alabama a state court in Ga would come to its own conclusion about the content of the common law prevailing in Alabama what should the federal court interpret Ala common law?

54. P sues D in federal court in New York under Cal law, which is unsettled a NY state court would presume that Cal law is the same as NY law how should the federal court interpret Cal law?

55. P sues D in federal court in California under California state law it comes to a judgment P then sues D under California law in Maryland state court concerning the same transaction which law determines the preclusive effect of the federal judgment?

56. Semtek v. Lockheed Martin, 531 U.S. 497 (2001)

57. what about the substantive right limitation in the REA?

58. Shady Grove Orthoped. Assoc. V. Allstate (U.S. 2010)

59. Allstate refused to pay NY statutory interest on late payment of claims - class action against Allstate for the interest

60. N. Y. Civ. Prac. Law Ann. §901 (no class actions for penalties or statutory minimum damages)

61. Rule 23(a) provides: “(a) Prerequisites
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).

62. Scalia (with Thomas, Roberts & Sotomayor)

63. “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…”

64. “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.”

65. assume there is a new FRCP that determines who has the burden of proof for contributory negligence is it valid, accd to Scalia?

66. The dissent’s approach of determining whether state and federal rules conflict based on the subjective intentions of the state legislature is an enterprise destined to produce “confusion worse confounded.” It would mean, to begin with, that one State’s statute could survive pre-emption (and accordingly affect the procedures in federal court) while another State’s identical law would not, merely because its authors had different aspirations. It would also mean that district courts would have to discern, in every diversity case, the purpose behind any putatively pre-empted state procedural rule, even if its text squarely conflicts with federal law.

67. Stevens

68. Stevens: The New York law at issue, N. Y. Civ. Prac. Law Ann
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.

69. “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. [I]t 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.”

70. why was §901(b) procedural, according to Stevens?

71. The text of CPLR § 901(b) expressly and unambiguously applies not only to claims based on New York law but also to claims based on federal law or the law of any other State. And there is no interpretation from New York courts to the contrary. It is therefore hard to see how § 901(b) could be understood as a rule that, though procedural in form, serves the function of defining New York’s rights or remedies.

72. Ginsburg (with Kennedy, Breyer, & Alito)

73. 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.”

74. “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.”

75. Rule 23 prescribes the considerations relevant to class certification and postcertification proceedings—but it does not command that a particular remedy be available when a party sues in a representative capacity. Section 901(b), in contrast, trains on that latter issue. … In this regard, it is immaterial that § 901(b) bars statutory penalties in wholesale, rather than retail, fashion. The New York Legislature could have embedded the limitation in every provision creating a cause of action for which a penalty is authorized; § 901(b) operates as shorthand to the same effect. It is as much a part of the delineation of the claim for relief as it would be were it included claim by claim in the New York Code.

76. Shady Grove urges that the class-action bar in § 901(b) must be regarded as “procedural” because it is contained in the CPLR, which “govern[s] the procedure in civil judicial proceedings in all courts of the state.” Placement in the CPLR is hardly dispositive. The provision held “substantive” for Erie purposes in Gasperini is also contained in the CPLR (§ 5501(c)), as are limitations periods, prescriptions plainly “substantive” for Erie purposes however they may be characterized for other purposes.

77. Shady Grove also ranks § 901(b) as “procedural” because “nothing in [the statute] suggests that it is limited to rights of action based on New York state law, as opposed to federal law or the law of other states”; instead it “applies to actions seeking penalties under any statute.” It is true that § 901(b) is not specifically limited to claims arising under New York law. But neither is it expressly extended to claims arising under foreign law. … Shady Grove overlooks the most likely explanation for the absence of limiting language: New York legislators make law with New York plaintiffs and defendants in mind, i.e., as if New York were the universe.

78. what cases would help you decide whether § 901(b) is substantive or procedural

79. a class action for statutory penalties under New York law brought in state court in New York?

80. a class action for statutory penalties under Pennsylvania law brought in state court in New York?

81. a class action for statutory penalties under New York law brought in state court in Connecticut?

82. is the relevant federal procedural law a Fed. R. Civ. P
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, probably)