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Civil Procedure II Outline - Part 22

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qqqq. The First Congress provided in section 34 of the judiciary act of 1789 that federal courts should apply state law in cases that did not involve federal law.

  1. The famous statute the Rules of decision act has been in the United States Code ever since. The RDS is codified at 28 USC 1652

rrrr. The RDA

  1. 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 the rules of decisions in civil actions in the court of the united states.
    1. Basically the RDA instructs a federal court to apply federal law to the case if federal law governs the issue, but otherwise to decide the case under applicable law.
  2. Swift Vs. Tyson
    1. Justice Story concludes that the RDA required federal courts to apply relevant state statutes to a case, but that they were not bound to follow the common law rulings of state judges.
      1. At the time of Swift such common law rules were thought of as a single body of rules developed by the english courts and adopted by american states rather than as the law of any individual states. Proceeding form this promise justice story concluded that the rda did not require a federal court in diversity cases to apply anyone's states common law, but to look at all common law cases to divine the true common law rule on the issue before.
  3. Taxi Cabo
    1. Holmes Dissent
      1. The common law is enforced in the state. It may be adopted by statute in p;ace of another system previously in force. I see no reason why it should have less effect when the law speaks in another voice.
        1. Swift is wrong.
  4. The Eerie Decision
    1. Whether the law of the state shall be declared by its legislature in a statute or by its highest court in a decision is not a matter of federal concern. There is no federal general common law. .. and if that be so the voice adopted by the state as its own whether it be of its legislature or of its supreme court should utter the last word.
  5. Choice of law problem
    1. In diversity problems which state law should be chosen
      1. Klaxon
        1. Holding - The substantive choice of law that would be applied by the state courts is in the state in which the federal courts sit.
Federal Common Law

ssss. Standard Oil Case

  1. In the absence of an applicable act of congress it is for the federal courts to fashion the governing rule of law according to their own standards.
    1. Factors
      1. Scope
      2. Nature
      3. Legal Incidents
      4. And Consequences of the relationship
        1. Whether these are governed from federal sources and governed by federal authority.
  2. Except where the government has simply substituted itself for others as successor to rights governed by state law the question is one of federal policy affecting not merely the federal judicial establishment and the grounding of its action but also the government's legal interest and relations, a factor not controlling in the types of cases producing and governed by the erie ruling.
  3. Standard English
    1. Before applying a federal common rule to the case the courts must find that a federal interest requires application of federal law.
      1. Once it determines that federal law must govern the issue, it proceeds in the absence of a federal statute to create it.
    2. Federal interest
      1. The federal government has a significant interest in determining the right to indemnification in this case.
    3. Creating a federal common law rule
      1. If the court must establish a new federal common rule to decide the case it is in the same position as a state court creating common law. It must consider the policies relevant to the field of law, basic principles of equity, rules of laws established in analogous fields, scholarly writings and other considerations.
      2. It could also decide that the governing rule must be federal but choose to borrow local state laws as the rule of decision where state laws would serve the relevant purpose and would not frustrate the objective of federal law.
        1. This is appropriate where a federal rule is needed but it doesn't have to be uniform in all 50 states.
      3. Similarly the federal courts sometimes incorporate local state law as federal common law
        1. Look this up I don't know what the difference is.

tttt. Summary of basic Principles

  1. Under swift v tyson federal courts did not alway apply state law to the substantive issues in diversity cases instead they often applied federal general common law.
  2. In Erie
    1. The supreme court held that the federal court may not apply federal general common law to determine the applicable legal principles in diversity cases
    2. Where the meaning of applicable state law is unclear, a federal court should apply the state supreme court predictive approach to determine what the law of the state is. Under this approach the federal court asks what rule the state's highest court would apply today, even if older cases have applied a different rule however federal judges are likely to require strong evidence before disregarding a state supreme court decision based on a prediction that it would be overruled today.
    3. State courts use choice of law rules to determines which states substantive law to apply to a claim
      1. The supreme court held in klaxon that you must apply the choice of law rules of the state in which it sits to determine the states substantive law to apply to a diversity case.
    4. While erie decreed that there is no federal general common law there still is federal specific common law. In some cases because of the national character of a question or the federal interests at stake the la applied must be federal in such situation if not federal statute provides a rule of decision a federal court must create a federal rule of decision
    5. In some cases where national uniformity is not needed the federal court may incorporate local state laws as the federal rule of decision rather than creating a uniform federal common law rule
Substance and Procedure Under the Erie Doctrine

uuuu. While Erie undeniably required federal diversity courts to apply state law on purley substantive matters it did not address whether he had to use state law in diversity cases on matters that might be classified as procedural rather than substantive.

  1. Cities Oil CO V. Dunlap
    1. The court considered whether a federal diversity case required the court to apply the state rule on the issue of who bore the burden of proof on a question of title to land.
      1. The burden of proof is a matter that relates to the court process not directly underlying the substantive rights that exist outside of litigation.
        1. But the supreme court held that the issue relates to a substantial right and required the federal court to apply the state burden of proof rule.
          1. Oil CO suggested that the federal court in a diversity case would be required to defer to state law on at least some procedural issue in order to implement the principle of consistent results in state and federal court even though it would apply a different rule in a federal question case.
  2. Guaranty Trust Co of New York V. York.
    1. Outcome Determinative Test
      1. Would allowing the federal court to ignore state laws lead to a different outcome in federal court than the plaintiff would receive in the state court. Must look at this retrospectively
        1. This suggests that a federal court should sometimes choose to follow state practice to further eries policy of uniform outcome in diversity cases.
          1. Even if there is constitutional authority for the federal court to go its own way
  3. Byrd V, Blue Ridge Rural Electric Cooperative
    1. Recognized that erie requires federal diversity couts to apply state law on matters of substantive law. “ THe definition of state-created rights and obligation” THe court further reaffirmed that even on arguably procedural matters a diversity court should often defer to state practice if the difference between state and federal procedure is likely to be outcome- determinative.
      1. However the Byrd court suggested that when the issue before a federal diversity court is one of procedure the decision to defer to state law is a policy choice.
        1. A choice to apply the state rule to assure the same outcome in federal court that the parties would get in federal court and not a constitutional command.
    2. Did not overrule guarantee trust.
      1. But did say where the difference between state and federal practice involves matters of procedure. They may choose to do so after balancing the state interest in the procedure against any countervailing federal interest. Byrd Recognizes that state practice should frequently be followed to assure uniform outcomes but that in some circumstances that policy must yield if applying state law would interfere with other policies important to the administrations of federal courts
  4. Hanna V. Plumer Segment 20
    1. Prospective Approach
    2. Part one Test
      1. Would a plaintiff choose federal court over state court?
    3. Why should a conflict between a federal rule and state law by analyzed differently from other conflicts
      1. Hanna Holds that a conflict between one of the federal rules of civil procedure and state law requires a distinct analysis from the erie choice. In federal rules conflict the court has adopted a federal rule under a delegation of power from congress to govern in federal courts. If congress enacts federal law the resulting law is the supreme law of the land (supremacy clause of the united states constitution) as long as congress had the power to enact it because congress delegated its power to govern federal procedure to the supreme court in the REa the validity of a federal rule turns on whether Congress had the constitutional power to regulate the issue covered by the federal rule itself and if so whether the supreme court, in adopting the rule, acted in accordance with the congressional delegation. If so the rule is valid and applies in the face of a contrary state law.
    4. Part Two Test
      1. 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.
    5. Thus the bottom line is that If Congress has authorized the Court to write the Rule and the Rule is “arguably procedural” it is valid federal law that applies under the SUpremacy clause even if it contradicts state prediction.
      1. However there is an additional limit on Congress delegation in the REA
        1. A rule even if it passes the test of procedurality may not “abridge, enlarge, or modify any substantive right.
    6. Plain English Hanna Tests
      1. Hanna Held that different analyses are required for conflict between a federal rule and state law and for conflict between a federal judicial practice and state law.
        1. If the case involves a conflict between a federal judicial practice and state law., it must be analyzed under Hanna Part one
          1. Whether ignoring the state statute would lead to forum shopping or inequitable administration of the law.
      2. If the case involves a conflict between a federal statute and state law.
        1. When that is true the federal statute prevails under the supremacy clause if Congress had the authority to enact it.
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