Civil Procedure II Outline

CIVIL PROCEDURE OUTLINE
Spring 2009
Lonnie Brown
 
THE ERIC DOCTRINE (What law should apply?)
I.     Erie Questions generally arise in diversity actions:
A.    Statutes:
1)    Rules of Decision Act: 28 USC §1652: “laws of the several states…regarded as rules of decision in civil actions”, unless Constitution, treaties of US, or Acts of Congress require.
2)    Rules Enabling Act: 28 USC §2072: Supreme Ct has power to prescribe rules of practice & procedure – that will not modify, abridge, or enlarge substantive rules.
B.    POLICY in favor of applying state law in federal court: FUP
1)    Federalism – pay respect to state – fed cts should reach same decision
2)    Uniformity – getting same decision on same c/o/a, regardless of federal or state court.
3)    Predictability – facilitates business and confidence in judicial system. 
C.    Initially SCOTUS held in 28 USC 1652 (RDA) the “laws of the several states…” only applied to state statutes.
D.    The Swift ct’s two goals: (1) create horizontal uniformity in fed ct & (2) establish fed. cts. as dominant.
E.    Problems: created unfairness & forum shopping. Did not create uniformity.
 
II.    Erie (1938) – overruled Swift; said in diversity cases, RDA’s “laws of the several states” means federal courts must apply state judge-made law on substantive issues and federal law on procedural issues (hazy line b/t the two).
1)    POLICY à Twin Aims of Erie: (1) forum shopping and (2) inequitable distribution of law. ???
2)    Inequitable Distribution: How judges imply the law ???
3)    Taxicabàinequitable distribution b/c they couldn’t get what they wanted in one st, so moved co to another
B.    Erie no longer fed general common law. General law in Swift was actually creating law (Const. prob)
1)    Violates 10th Amendment: Congress not given power to create “general laws” how could cts do it?
C.    Federalism key in Erie à Brandeis says judiciary overstepped its authority. Says apply state law.
D.    Even though in SDNY, events took place in Penn: choice of law in NY says deferring to Penn choice of law.
1)    Courts look to choice of law of the forum state where filed to determine which state you use.
E.    Butler Dissent: Precedent: Ct. applied Swift for years, Congress not changed it, means they approve of it. 
F.     New Issue: What a/b cases that are both substantive and procedural? à
 
III. York (1945) – Outcome Determinative Test: If applying fed law “significantly affects” outcome of case then apply state law. (This case in context of statute of limitations).
A.    Held BL of Erie was outcome of litigation in fed ct should be same as in state court. 
B.    Frankfurter avoiding forum shopping; don’t want choice of law to affect the outcome. (Erie fed principles).
C.    Procedural v. Substantive: Different shown in “manner and means” by which its enforced. 
D.    Held: Outcome of case should be substantially the same in state and federal court when exercising jurisdiction about diversity.
E.    Distinguishing b/t substance and procedural doesn’t matter anymore
F.     It is not label that determines the label; the outcome determines the label. 
G.    Dissent/Contra: (Rutledge)
1)    Traditionally SOL viewed as procedural, disagrees fed cts should be bound.
2)    Thinks ppl will now just forum shop for favorable statute of limitations.
3)    Congress had opportunity to step in and did not.
H.    Problem w/York: Fed cts. applied st. law too often.
1)    Almost any st. procedural rule could qualify as substantive b/c could affect outcome of case.
 
IV.   Triple Play Cases were all released on same day 4 years after York. ???
A.    *Showed straight outcome determinative is too broad and anything can be outcome determinative and no reason to use the federal rules so there would be no uniformity b/t federal courts. Showed needed to change
B.    Ragan – Service v. filing times: ct said could be outcome determinative.
C.    Cohen – St required posted bond, FRCP didn’t; ct. said outcome determinative; st law applies despite FRCP.
D.    Woods – St law barring unqualified business from appearing in St. ct. prevented them from appearing in a federal diversity action in that state.
1)    The concern after these cases à lack of uniformity. Outcome determination problem addressed in Byrd.
 
V.    In Byrd (1958) –Three Prong Balancing Test – Balancing Federal Interests v. Uniform Outcomes.
A.    Trying to decide if judge or jury should decide. Central character of federal system is having jury there.
B.    Held St. laws cannot alter essential character/function of fed. ct. b/c that function not a local matter.
C.    In deciding whether to follow state law in matters of “form and mode”, fed ct must consider York policy of uniform outcomes in diversity cases, but also any countervailing federal policies arising from fed ct’s status as independent judicial system. 
D.    J. Brennan à Three-pronged approach (Byrd permits application of St law only if these conditions met). ???
1)    Step #1: State Substantive Policy Furthered? 
(a)   Whether the St law is “so bound up w/state-created rights & obligations” that application relies on state law or is it instead a “form & mode” not being bound up & having to do w/the right itself?
(b) Federal court doesn’t have to follow
(i)    Whether the state procedural practice was so substantive that it was an integral part of state substantive right itself, or if state system followed it for internal housekeeping; less federal interest.
▪          If it is substantive, federal ct is bound to apply state law. Apply Erie and RDA.
▪          If not substantive, proceed à
2)    Step #2: Outcome-Determinative Test: 
(a)   Will application of federal procedural rule instead of state procedural law “significantly affect” the outcome of the case?
(i)    Could make a substantial difference, but not the only factor to consider.
3)    Step #3: Balancing Test: Balancing state & federal interests.
(a)   Are there important countervailing fed interests and should they yield to state rule?
(i)    In Byrd it was relationship b/t judge and jury –danger that following St. rule would disrupt policy. Thus, inquiry looks at fed ct’s interest in their own smooth functioning & in the uniformity/coherence of the decisional principles.
(ii)   Applies in areas where federal gov’t has strong interest in maintaining horizontal uniformity.
(iii) Essential character is more important than uniformity. 
E.    This condition may turn on the particular degree to which competing state rule is “outcome-determinative”; the less outcome-determinative it is, the greater the likelihood you should apply state law. (Sliding Scale).
F.     In Byrd Const. right under 7th Amend. at least somewhat implicated in making choice b/t judge/jury.
G.    Brennan concerned following st ct would create judicial economy problems b/c of lack of conformity. 
1)    Maybe we would rather have federal rules uniform. 
H.    Dissent: Relies on York test and applies state law.
I.     Problem: Balancing test unpredictable, indeterminate. Brenna finds on 7th Amend that prob not required.
1)    Lack of objective standard by which to evaluate the competing interests (very arbitrary). 
2)    Vague: Can say anything is so bound up in state created rights.
 
VI.   Hanna – situation w/FRCP open door for further tinkering. 1st part state law; If FRCP go to 2nd part.
A.    Whether a FRCP is outcome-determinative, must be viewed in light of “Twin Aims” policy of Erie have to be considered w/the outcome determinative test.
1)    Discouraging Forum Shopping
2)    Inequitable Administration of Laws.
B.    Both Enabling Act & Erie say roughly that fed courts apply state “substantive” law and federal “procedural” law, but it need not follow that the tests are identical. They are designed for very different situations. 
C.    When a situation is covered by FRCP question is different from typical Erie choice: court has to apply the FRCP, and can refuse to do so only if the Advisory Committee, SCOTUS, and Congress erred in their judgment that the Rule in question transgresses the terms of the Enabling Act nor constitutional restrictions. 
D.    To hold a FRCP must cease to function whenever it alters the mode of enforcing state-created rights would be to disembowel either the Constitution’s grant of power over federal procedure or Congress’ attempt to exercise power in the Enabling Act. 
E.    Hanna confirms the scaling back of York.
F.     It suggests that while the test survives, it is to be applied in modified form in light of the policies underlying the Erie rule. 
G.    Held: the FRCP govern.
1) HANNA ANALYSIS: Part 1: Three questions in deciding whether a FRCP can be applied in contravention of the state procedural rule: This is ERIE
(a)   Has to be in conflict. à If not, use state rule. Does rule apply to case? 
(i)    If federal judicial practice is in conflict with state law à
▪          Modified Outcome-Determinative test w/Twin Aims Approach:
¨        Discouragement of forum shopping
¨        Avoidance of inequitable administration of the laws. ???—need elaboration
▪          – Not a mechanical test à should see if these policies are served.
(b) *Has to be both*: Part 2: Is the FRCP authorized by the REA §2072(b) (Congressional authorization)? Does this rule “abridge, enlarge, or modify any substantive right”?
(i)    Strong presumption of validity – a FRCP must be applied unless it appears that the Rules Advisory Committee, the SCOTUS, and Congress erred in their initial judgment that the FRCP doesn’t transgress the REA or the Constitution. No FRCP has ever been invalid.
(ii)   Almost any rule will affect substantive rights, but the rule must not abridge or modify them.
(iii) (3a) If the answer is no, then you’re back to the modified outcome determinative test (because conflict between state rule and federal judge-made rule). ???
(c)   (3b) Is the delegation in the REA constitutional? Has to be practice/procedure.
(i)    Erie says neither Congress nor the fed courts can formulate rules that trump states w/o Constitutional authorization. The Constitution (Art. I §8 Necessary and Proper Clause) only grants Congress ability to make rules governing procedure in federal courts (Art. III grant of the judicial power to the SCOTUS and those inferior courts as Congress creates). Thus, if the rule is rationally classifiable as procedural, it is Constitutional. (Procedural: judicial process for enforcing rights and duties and administering remedy).
H.    Harlan’s concurring test: When determining whether to apply a state or federal rule, whether substantial or procedural, stay close to basic principles by inquiring if the choice of rule would substantially affect those everyday decisions respecting human conduct which constitution system leaves to state regulation. *If so, Erie & Constitution require state rule prevail, even in the face of conflicting federal rule.
1) Not any practical room to challenge to Federal Rules. à Have to overrule too many things
 
VII.Walker –read FRCP 3 narrowly to not conflict with state SOL and therefore no Hanna analysis. 
A.    State said service was time barred, but FRCP 3 would still allow it.
B.    Held Hanna did not apply b/c there was not direct conflict b/t FRCP 3 and state SOL.
C.    Courts will go to extreme lengths to make no confliction, so they don’t have to do the analysis.
1) They went around the REA à they would have to overrule everything
D.    FRCP should be given their plain meaning. 
E.    Why did the court try to avoid this conflict?
1) If FRCP 3 had governed, would have to go through REA test of “abridge, modify, enlarge” sub. right.
(a)   Could have “modified” it. Maybe interpreting in a way to not create a problem.
 
VIII.             Stewart –held since fed venue statute (mandating consideration of forum selection clause) & state venue transfer statute (mandating no consideration of forum selection clause) conflict, Hanna dictates fed statute controls.
A.    They end up applying federal law. Federal law supreme in direct conflict.
B.    Does statute control the issue before the court? = direct conflict analysis for FRCP.
1) Here, Court reads broadly to say that it’s on point. It “occupies the same field.”
2) 1404(a) is “sufficiently broad” to control the forum-selection issue b/c place discretion in courts for case by case consideration of convenience and fairness.
C.    Key: 1404 covered issue and b/c it was valid, it was supreme, and had to be applied. 
D.    Scalia dissent: Goes through outcome determinative w/twin aims
1) When the statute enacted forum selection clauses were not liked b/c violated state’s rights.
2) Form selection is K – K is state – apply state law.
3) Another option/argument: Walker says they can exist side by side: State law with forum selection, and federal law with transfer. Ct trying to avoid à could just say let the parties decide à it would be what they agreed upon.
E.    Kennedy concurrence:
1) Judicial Economy: should encourage and favor FSC, b/c saves court time and money.
 
IX.   Gasperini – Issue: NY “materially deviates” from reasonable or Federal “shocks the conscience”?
A.    Held: NY’s law can be given effect, w/o detriment to 7th Amendment, if review standard is applied by federal trial court judge, w/appellate control of trial court’s ruling confined to “abuse of discretion”. 
B.    They apply the state law over the SOL period
1) Appellate courts cannot review questions of fact.
2) Accommodates states interest to assure greater scrutiny in amount of verdicts and protect greater stability in the tort system and greater fairness for similarly situated Ds throughout the state while still protecting the federal procedure.
(a)   Ginsberg ac