← Civ Pro 5- Erie Doctrine Export Options Alphabetize Word-Def Delimiter Tab Comma Custom Def-Word Delimiter New Line Semicolon Custom Data Copy and paste the text below. It is read-only. Select All Swift Facts: P sued D in federal court on the state law claim to payment due on a negotiable instrument given for land. a. Held: Federal courts are permitted to develop common law when exercising diversity jurisdiction. 2. Issue- In a diversity action must the federal court follow state law on the claim both judge made and legislative? 3. Rules: a. The phrase laws of the several states means the statutory laws, the federal courts are free to create federal common law in diversity cases. b. Federal courts are permitted to develop federal common law and are not bound or limited by state judicial decisions. Erie Facts: Tompkins was injured in PA while walking close to Erie's railroad tracks. He sued in NY. The federal court had to decide whether to apply PA law or NY law. a. Held: Court applied state law. No federal common law. Swift overruled. 2. Issues: a. In a diversity action, must the federal court follow state law on the claim both judge made and legislative? b. When should prior precedent be overruled? 3. Rules: a. In a diversity action, the federal court must follow the laws of the state in which the court sits. b. A prior case can be overruled when it is found to be erroneous by 1. criticism that is widespread 2. experience of the court reveals defects in the rationale and/or implementation of the prior case rule; and 3. The benefits expected to flow from the rule did not happen. 4. Federal courts must apply state substantive rules of law and apply federal procedural laws. 5. Goals: 1. Limit forum shopping 2. Promote Uniformity/ equitable administration of the law. York Facts: York filed case in federal court as a part of a class action that would've been barred by the SOL of NY state law. a. Held: SOL would change the outcome of the case, P would lose. State SOL applied. 2. Issue: a. Whether a federal court in a diversity case is required to apply state SOL? 3. Rules: a. Federal courts must apply state substantive law in diversity cases. b. State procedural rules are not required to be followed as the federal court has its own rules of procedure. c. A rule is substantive if it changes the outcome or has a substantial affect on the outcome (looking at the case from the start of the case, not in hindsight. Byrd Facts: P filed suit against a corporation, D. Under state law, the judge determines whether a person is an employee, under federal law, a jury determines it. a. Held- federal policy trumped state policy. Ask whether the law is bound up with the rights and obligations of the parties. 2. Issue: a. Do state rules that are potentially outcome determinative always apply in federal courts in diversity actions? 3. Rules: a. Substantive provisions are the rights and obligations created by state law, these are what Erie requires to be applied by the federal court sitting in a diversity case. b. Federal courts have a greater interest in maintaining its internal procedures than the state interest in assigning what is tried by the judge and what is tried by the jury. Rules Enabling Act- 28 U.S.C. 2072(a). The Rules Enabling Act gives the Supreme Court "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." Hanna Facts: P sued D in federal court. D claims service was not proper under state law. It was proper under federal law. a. Held: Service was proper. State rule yields to the federal rule. 2. Issues: a. When a federal rule of civil procedure conflicts w/ outcome determinative state law, must the state law control in a diversity case? b. Whether service of process must comply with FRCP 4 or w/ a conflicting state rule? 3. Rules: a. The FRCP supersedes state rules in most situations. b. A state rule is substantive if it does more than regulating the efficiency and fairness of a state litigation process. c. (Harlan)- A law is substantive if it is designed to have a substantial impact on the way people conduct themselves outside of court. d. Federal rules govern service of process. Hanna 1 Modified Outcome Determinative Test i. Law does not involve FRCP, but involves a conflict between state law and federal practice. ii. Test- would the outcome of applying federal law lead to forum shopping and inequitable administration of the law? 1. No- use federal law. 2. Yes- use state law. Hanna 2 Conflict between state practice and FRCP i. Is the law broadly procedural in form and mode? 1. Yes- use federal law. ii. Does it enlarge, restrict, or modify a substantive right? 1. Yes- use state law. Gasperini Facts: Jury awards P $450k. Second Circuit Court allowed Appellate Division to reduce judgment to $100k by applying NY standard for reducing awards. Court followed state substantive rule of when to reduce an award and federal procedural rule of who does the reducing. The state standard of review, (does it differ from reasonable compensation), is much lower than the federal standard of review, (does it shock the conscience.) a. Held- Judgment vacated. Remanded back to order district court (federal law according to 7th Amendment) to apply NY standard for review of verdicts. (state law)/ 2. Issue- Does a state rule for court review of jury awards apply in federal court? 3. Rule: a. In federal district court sitting under diversity jurisdiction, the standard the judge uses to determine whether a jury's verdict is excessive is that of state law, and is only subject to appellate review for "abuse of discretion." Gasperini Analysis 4. Under the 7th Amendment, Appellate courts cannot reverse the trial court's decision to uphold or reverse a jury's verdict unless there was an abuse of discretion by the District Court. Federal policy trumps state policy. 5. Applying the federal standard of review over the state standard would result in the amount awarded being far greater. Therefore, the state standard of review for awards should be applied. 6. Judge looked at both state law and federal law and combined them.