Erie doctrine
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The Erie doctrine is a fundamental legal doctrine of civil procedure in the American legal system that stems from Supreme Court Justice Louis Brandeis' watershed opinion in the landmark decision of Erie Railroad Co. v. Tompkins 304 U.S. 64 (1938). That decision overturned a previous decision of the court, Swift v. Tyson, which allowed federal judges sitting in a state to ignore the local decisions of state courts in the same state, in cases based on diversity jurisdiction.
Brandeis' opinion in Erie was his most influential opinion ever and is one of the most often cited cases in federal judicial opinions.
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[edit] Scope of Erie
It is important to note that the Erie doctrine does not apply to cases involving federal statutory law, but only those cases that are in federal court because of diversity jurisdiction. Diversity jurisdiction is based on the different citizenship of the parties (federal courts require "complete diversity," because of an old decision by Justice John Marshall, Strawbridge v. Curtiss 7 U.S. (3 Cranch) 267 (1806)). For example, while a Texan could get into federal court based on diversity by suing an Oklahoman, a citizen from Texas cannot bring a suit in federal court against both an Oklahoman and a Texan, as there is not "complete diversity." An "Erie" problem does not necessarily have to involve a diversity case, although the landmark cases were all diversity cases.
1. Is the case in federal court. If not, then no Erie issue.
2. If case is in federal court, how did it get there? Either by plaintiff's filing there, or by defendant's removal. In either event, the next sub question is what is the basis for federal subject matter jurisdiction? And here, it has be diversity of citizenship jurisdiction, under 28 USC 1332.
3. What type of claim is involved? If it is a diversity claim, we know that it is founded on STATE substantive law
4. Is there any thing in our fact pattern, that mentions a conflict between state substantive law and the law being urged on the federal court by a party? This could be a party asking the court to apply the law of another state, or asking the court to make up a "federal rule" for this case, claiming that there is no binding state precedent, or that the precedent is outmoded and the state's supreme court would overrule it, if asked.
5. Is the argument being made by the party in question 4 contrary to what the forum state's conflict of law rules would choose? Or is it an effort by one party to get the federal court to rule differently than a state court hearing this case in the forum would probably rule.
i. If those considerations, then you have to return to the fundamentals of Erie:
1) Federal district courts hearing state-law claims based on diversity of citizenship subject matter jurisdiction are to act as if they are just another court of the forum state
2) That means as to substantive law, the federal court must apply the same rule of substantive law to the state law claim as would a forum-state state court--whether that's the forum state's own substantive law, or whether it is a conflict of law rule that the forum state would apply (as in Erie) that would select the law of a 2d state to govern the issue at hand
[edit] Origin of the Erie doctrine
The Erie case involved a fundamental question of federalism and the jurisdiction of federal courts in the United States. Congress passed a law still in effect today called the Rules of Decision Act (28 U.S.C. 1652), which states that the laws of a state furnish the rules of decision for a federal court sitting in that state. Thus, a federal court in Texas, hearing a case based on diversity (as opposed to a federal question), has to follow the laws of Texas in resolving a case before it.
[edit] Swift v. Tyson
The Supreme Court's decision in Swift v. Tyson, 41 U.S. 1 (1841), had defined the laws of the state as meaning only laws passed by legislatures of that state (though Justice Joseph Story writing for the court suggested that federal courts should pay special attention to how the "local tribunals" of a state would resolve a dispute). Thus, on issues of "general common law," a federal court was free to ignore decisions by a state's highest court.
[edit] Aftermath of Swift
The decision in Swift resulted in inconsistent judicial rulings in the same state on the same legal issue depending on whether a plaintiff brought a case in state or federal court. In one case, for example, Black and White Taxicab Co. v. Brown and Yellow Taxicab Co. 276 U.S. 518 (1928), the Brown and Yellow Cab Company, a Kentucky corporation, sought to create a business association with the Louisville and Nashville Railroad, where Brown and Yellow would have a monopoly on soliciting passengers of the railroad, effectively eliminating the competition, the Black and White Cab Co. Such an agreement was illegal under Kentucky common law, as interpreted by Kentucky's highest court. Brown and Yellow dissolved itself, reincorporated in Tennessee, and executed the agreement there, where such an agreement was legal, bringing suit against Black and White in a Kentucky federal court to prevent them from soliciting passengers. The federal court upheld the agreement, citing Swift, and arguing that under general federal common law, the agreement was valid. If Brown and Yellow had brought suit in a Kentucky state court, the agreement would not have been upheld.
[edit] The Erie decision
The decision in Erie involved a railroad accident. The plaintiff, Tompkins, was walking along side Erie's railroad tracks in Pennsylvania when a train passed. An open door struck him and knocked him under the train, severing his arm. In most states, Tompkins could sue for negligence of the railroad and recover monetary damages for his loss. In Pennsylvania, Tompkins would have been considered a trespasser, and would not be able to recover for an ordinary negligence claim in their state court (He would have to prove "wanton" negligence). Thus, Tompkins brought his case in federal court to avoid the unfavorable state law. He subsequently won. However, on appeal to the Supreme Court, Justice Brandeis held that such decisions and inconsistent rulings based on a general federal common law were unconstitutional, and that decisions by a State's Supreme Court were "laws" that federal courts were bound to follow under the Rule of Decision Act. Brandeis and the court felt that Swift allowed federal courts to make unconstitutional modifications of the substantive law of a state, violating the right to equal protection under the law (but Brandeis did not mean in the sense of the Fourteenth Amendment). Interestingly, neither of the parties in Erie asked the Supreme Court to reverse Swift, so the Court did so on its own initiative.
[edit] Development of the doctrine
Several later cases have added to the vague Erie decision (Brandeis cited no provision of the Constitution that Swift violated, although theoretically it might have violated the Tenth Amendment's reservation of powers to the state). Speaking generally, there are two approaches in determining whether a federal court will apply a state law: (1) the Hanna & Rules Enabling Act approach, per 28 USC 2072 when there is a Federal Rule of Civil Procedure and statute that conflicts with a state law; and (2) the Byrd-Erie approach when there is as conflict between a state and federal practice.
[edit] The Hanna approach
Under this approach, established by Hanna v. Plumer, , the federal court of a state hearing a case based on diversity jurisdiction should apply state law in the event of conflict between state and federal law if the state law deals with substantive rights of state citizens. The Supreme Court has defined substantive rights as, "rights conferred by the law to be protected and enforced by the adjective law of judicial procedure." Sibbach v. Wilson 312 U.S. 1 (1941). An example of a substantive right would be a state law on fraud, which may vary widely in composition depending on the jurisdiction. If the state law is merely procedural --i.e., relating merely to the form and mode of judicial operations-- then the federal court does not have to apply the conflicting state law. However, the substance-procedure distinction is a generality as the Court rejected any test based upon "litmus paper criterion." Thus, a choice between state and federal law must be made with reference to the underlying policy of the Erie decision. The Court announced a modification of the "outcome-determinative" test in York, whereby the test must be applied in light of the twin aims of Erie, which are the discouragement of forum-shopping and avoidance of inequitable administration of the laws. Under this rule, state procedural law would not supplant federal procedural law if the differences in the outcome are nonsubstantial or trivial, fail to raise Equal Protection concerns, and are unlikely to influence the choice of forum.
[edit] The Byrd-Erie approach
This approach suggests that unless there is a major countervailing federal policy that trumps the state practice, if ignoring the state law would lead to forum shopping by plaintiffs and unequal administration of the laws (like in Yellow Cab above), the court should apply the state law. The main goal of the Erie decision was to prevent "forum-shopping," a practice where plaintiffs choose a legal forum simply because of the probability of a more favorable ruling. The main problem with the decision is that sometimes there is simply no state law or practice on which a federal court may defer. Federal judges are left to guess how a state court would rule on a given legal question, and a state court is in no way bound by a federal decision interpreting their own state law.
Justice Frankfurter in Guaranty Trust Co. v. York, summarizes the main point of Erie differently... "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...." This suggest that Erie's main goal was to achieve equal protection under the law. One way that equal protection is intentionally disregarded would be through "forum shopping," but the reduction of inequality was the main target of the doctrine.
[edit] Gasperini
The most recent Supreme Court case to address the Erie problem is Gasperini v. Center for Humanities, . Gasperini is a post-Hanna decision that deals with how a jury verdict would be reviewed. The state law allowed the court of appeals to overturn the verdict if it "deviates materially from what would be reasonable compensation." The conflicting federal practice had a more stringent standard. The SCOTUS held that the federal court had to use the state law standard, but it would be the trial court (not the court of appeals) that would apply the standard. This is because the difference in standards would be likely to cause forum shopping. (Source: Emanuel's Civil Procedure Outline).
