Eerie Doctrine

I. INTRO - erie Doctrine : State law in Federal Courts

a. This is only an issue for diversity claims, arising in Federal Court, and we have a vertical
choice of law
i. Vertical choice of law: we are choosing between state law v. federal law.
Choosing between state laws is it's own thing
i. Diversity Claims: We are only concerned with claims coming to federal court bc f
diversity , b/c if it were federal question, that means there's federal law on
point that should govern b/c of the Supremacy Clause.
i. Federal Court: if it were in state court, the state would apply its own rules
a. The question is whether the Federal Judge must follow state rules on that issue.
b. Applicable Law
i. 28 U.S.C. §1652 - Rules of Decision Act
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 rules of decision in civil actions in the court
of the United States, in cases where they apply. "
1. If there's no federal substantive law on point, then you have to apply
the State Law.
ii. Constitution - 10th Amendment
1. Preserves to the state all powers that have not been given to the
Federal government in the constitution .
II. HISTORY
a. SWIFT V TYSON
i. GENERAL
1. Court said the RDA required Federal Courts to follow State law – but this
was found to mean they must follow the statutes and certain local
usages of the law NOT judicial opinions of state courts.
2. This comes from the logic that not the role of the court to make the law,
rather to FIND THE LAW.
ii. SPECIFICS
1. Facts: Tyson gave a bill of exchange to some land speculators in exchange for some
land. The speculators gave Tyson's bill to Swift in exchange for Swift forgiving a
preexisting debt. Tyson later found out the speculators didn’t actually own the land, and
he refused to pay the bill of exchange. Swift sued Tyson to pay the bill. In NYC - fraud
was a valid defense for Tyson | Elsewhere- beginning to recognize "bona fide" holders
of bills w/o knowledge of fraud were entitled to repayment.
2. Issue: Does the RDA obligate the Federal Court to apply common law decisions from
state courts in non-federal claims?
3. Holding: No- the court in swift rejected the idea that the RDA obligated it to adhere to
the common law decision of state courts in resolving non-federal claims
4. Reasoning:
a. State court decisions / common Law are not actually manifestations of "Law",
thus the RDA does not require the federal court to apply state common law in
non-federal claims before them.
b. What is Common Law?

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 I. The prevailing view of common law was that there was one true
body of common law that transcended state boundaries and that all
judges - both state and federa; - were in the business of trying to
ascertain that law
II. Thus judges expressions in judicial opinions were merely conveying
their understandings of the common law, and were not themselves
"law"
5. Swift stood for the idea that judges do not create law, rather it already exists in nature ,
in it's proper form. Thus, it is the job of the federal judge to use general reasoning and
legal analogies to ascertain the just and correct rule.
a. The decision posits that this will foster uniformity. The theory being that if
there is one correct law out there, all of the smart, federal, judges will come to
the same conclusion on an issue.
b. Does it really promote uniformity? Isn't this just a slap in the face to state level
judges?
6. RULE: When the legislature is silent, there is no law for the state, therefore federal court
must discover or discern the correct rule based on federal common law, and general
principles. X overturned by Eerie
b. BLACK AND WHITE TAXI CAB CO V. BROWN AND YELLOW TAXICAB CO
i. Brown and yellow Taxi Cab sought to enforce a K with the RR that it was to have
exclusive rights to pick up and drop off passengers at a station in KY. KY didn’t
enforce such Ks, so B&Y reincorporated in Tennessee (creating diversity) and
sued B&W in federal court. KY federal court upheld the monopoly K.
ii. By invoking diversity J, the P was able to choose a substantive rule of law
which upheld, rather than barred the K.
1. …this is bad, the court doesn’t like it
III. EERIE RR V. TOMKINS
a. BRIEF
i. Facts: Tomkins was walking alongside a RR when he was hit by a door left open on the train. The
Eerie said that PE state law should be applied, and it should owe Tompkins the duty owed to a
trespasser. Tompkins said no such law existed, and RRs liability should be determined as a matter
of general law
ii. Issue: In actions in diversity, except in matters governed by the Constitution or Acts of congress,
must federal courts apply state common law in addition to statutory law?
iii. Holding: Yes- In diversity cases, federal courts must apply state law as declared by the highest
state court in addition to state statutory law. There is no federal general common law. Congress
has no power to declare substantive rules of common law applicable in a State and the
Constitution does not confer such a power upon the federal courts.
iv. Theory of Law: Eerie says that judges and policy makers CREATE law. Law is no longer thought
about as something that is out there to be discovered. Law only exists when someone (who has
the power) creates it.
1. Thus, the majority says that Swift is unconstitutional.
2. There can be no general common law b/c judges don't have the power to create it
b. Overturned SWIFT V TYSON
i. The Eerie Court phrased the issue: “the question for decision is whether the oft-
challenged doctrine of swift v Tyson shall now be disapproved”. Court said YES
for several reasons:
1. “general common law”, where federal judges would find the right
answers to questions, and their wisdom would trickle down… never
really happened. State judges thought they were capable of finding
correct law too.
2. Making “federal common law” led to discrimination in the
administration of justice. Introduced discrimination in favor of the out
of stater.

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 a. Allowed out of state Ps to choose a different substantive law,
while in state Ps didn’t get this choice.
3. The doctrine was unconstitutional b/c it allowed federal judges to
“make” law in areas in which the federal government had no delegated
powers.
a. Ignoring state common law rules invaded rights reserved to the
states under our federal system of divided power.
c. BASIC (EASY) RULE
i. In diversity cases, Federal Courts must apply the law that would be applied by
the couts in the state in which they sit.
1. Rather than create “general common law” their job in a diversity case is
to apply state common law.
ii. What is State Law?
1. Early post eerie:
a. In deciding what state law is The Federal Court was to follow
ANY existing state precedent, w/o making creative predictions
about how that precedent might be treated in a future case.
I. Follow state SC cases
II. If no state SC case, then state appellate level court
III. If no appellate level court, then trial level
I. This is notable, b/c the federal court was bound
to follow precedent that no other state judge
would have been bound by
2. Today
a. SCOTUS has since given Federal courts a bit more leeway. 2 step
process
I. 1- give “proper regard” to decisions of trial and
appellate level courts.
II. Apply the law as announced or WOULD BE ANOUNCED
by the state’s highest court.
I. Federal judge must predict how the SC would
handle the issue if it took it up today
II. Some states have certification procedures.
d. TWIN AIMS OF ERIE
i. 1, avoid forum shopping
ii. 2, avoid unequal administration of law
IV. The Problem with Eerie – Substance v. Procedure
a. Eerie required Federal Courts to follow state rules when Federal Courts had no power to
make rules (substantive law), courts did have the power to make procedural rules, but
the application of procedural rules became problematic when they interfered with the
application of state law.
b. GUARANTEED TRUST V YORK
i. “In all cases where a federal court is exercising jurisdiction solely b/c of the
diversity of citizenship of its 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”
ii. OUTCOME DETERMINATIVE TEST- To prevent parties from gaining an unfair
advantage simply b/c the can choose federal court, if a federal practice (diferent

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 from a state practice) might “significantly affect the result of a litigation” the
court must apply the state rule instead.
1. Note: this is a matter of policy, not constitutional compulsion. Based on
the idea that uniformity of outcomes in state and federal court was
more important than following a separate federal rule whenever it
constitutionally could.
2. PROBLEM: problem with this test is that almost any rule becomes
outcome determinative, at some point.
a. i.e. : filing on letter v. legal sized paper.
iii. Key Points:
1. The label the state puts on a particular thing is largely irrelevant! States
can label things as whatever they want, what matters is the EFFECT of
the law
a. THE LABEL OF THE RULE IS IRRELEVANT. WE NO LONGER CARE
ABOUT WHETHER THE LAW IS SUBSTINATIVE V. PROCEDURAL
WE JUST CARE WHETHER THE LAW IS OUTCOME
DETERMINATIVE. (The distinction doesn't go away, we just
don’t care about what the state says it is)
2. Key Reasoning
a. SOL have elements of both substantive and procedural law
b. Remedies are Largely procedural (dictates which court we’re in)
c. SO THE Q IS : is SOL remedial in nature? YES! They dictate
whether or not you can recover.
d. Underlying theme: make sure fed courts , sitting in diversity,
would not allow recovery if it would be unavailable in state
court.
3. Rule from Guaranty Trust: If applying the federal law would change the
outcome of the case, then you have to apply to state law.
c. BYRD V. BLUE RIDGE COOPERATIVE
i. Broader than Erie , required federal courts to follow state practices, even of
“form and mode” if ignoring them would substantially affect the outcome of the
litigation.
1. In deciding whether to follow state law of “form and mode”, federal
court must consider 2 things
a. 1- York policy of uniform outcomes in diversity case.
b. 2- BALANCING TEST
I. Test: that emerges is that you balance the federal and
state interests.
I. Consider any countervailing federal policies that
arise from the federal court’s status as an
independent judicial system.
II. We must look at the purposes of the state
created rule, and does the relate to the state
created rights
II. In this case, the court found that the Erie policy of
maximizing uniformity of outcome should yield to the
federal policy of broad availability of jury trial.
ii. RULES :

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 1.If a rule is intended to be bound up with the definition of the rights and
obligations of the parties, then it is more substantive in nature ,and we
should apply the state law.
2. If a rule is merely a form and mode of enforcing the immunity, then it is
more procedural in nature, and it needn't be applied.
iii. Take away: look so see if the issue is bound up in states rights, if it is you should
use state rule. If not, you can apply the fed rule, if there is an important federal
policy underlying the rule.
V. WHAT DO YOU DO WITH AN ERIE PROBLEM – (HANA V. PLUMER)

a. HANNA PART 1: UNGUIDED ERIE DECISION  THE STATE RULE DOES NOT DIRECTLY
CONFLICT WITH THE FEDERAL RULE
i. Choice between an uncodified federal judicial practice and a state law : Analyze
the conflict between the rules under a modified outcome determinative test.
1. Modified outcome determinative test: whether a federal procedure is
outcome determinative must be viewed in light of the twin aims of Erie
a. To prevent forum shopping
I. If applying federal law would create forum shopping 
use STATE LAW
I. Look if the FEDERAL RULE is more favorable
II. You look at whether it would be outcome determinative
AT THE OUTSET.
I. This is b/c we’re trying to avoid forum shopping.
So we want to see if it looks deferent at the
outset.
b. Avoid inequitable administration of the law

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 I. Pretty much the same thing, but slightly diff.
I. EX: Federal Juries are selected from a wider
pool. This may lead people to forum shop. BUT
it wouldn’t necessarily lead to inequitable
admin of the law.
b. HANA PRONG 2: GUIDED EERIE DECISION  THE STATE RULE DIRECTLY CONFLICTS
WITH A FEDERL RULE
i. If there is a Federal rule on point, and it directly conflicts with state law: two
step analysis
1. STEP 1: Constitutional prong: is the rule constitutional (necessary and
proper clause)?
a. The rule is that it only has to be “arguably procedural”
I. This will always be yes. The SC makes the FRCP, so
they’ll never say they aren’t constitutional. Plus, its got
the word “procedure” in the name… that’s a pretty
good arg that it’s procedural.
b. This prong is also dictated by the REA (a) which says the SC has
power to make rules of practice and procedure.
2. STEP 2: Statutory Prong : Is the rule valid under the REA?
a. First- the REA says the SC has the power to make rules of
practice and procedure
I. It has to actually be about procedure
b. Second – such rules cannot abridge, enlarge, or modify any
substantive right
I. Substance/procedure distinction again
I. Even if a rule is procedural under the first
prong, it is invalid under the second if it
impinges on “substantive rights.”
VI. Final Notes
a. The tricky part will be deciding to use Hanna pt 1 or 2. ON THE EXAM ALWAYS DO BOTH
b. REA- Hanna Part 1
c. RDA – Hanna Part 2

IN BRIEF

STATE LAW IN FEDERAL COURTS

1. When in Federal Court on Diversity, Always apply Federal Procedural Law and State Substantive Law
a. Erie R. Co. v. Tompkins
i. Two Policy Concerns of Erie
1. Prevent Forum Shopping
2. Prevent Inequitable Administration of laws (getting different results in different
places)
2. Outcome Determinate Test – (Guaranty Trust Co. v. York)
a. Must apply state law where the outcome would be different if it was brought in state court
b. Process from Schwemm Imagine you are in the state of the law because there was no
diversity, and the Result should be the same.
3. Balancing Test – (Byrd v. Blue Ridge Rural Electric Co-op, Inc)

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 a. Weigh “Outcome Determinate Policy” v. “How Strong the U.S. Policy underlying the US Way”
b. Thus, shows that outcome determinate test can push you towards state law, but it cannot be
outweighed by US policy.
i. This is only a case of weak outcome determinate(doesn’t bar suit) against strong US
policy (trial by jury).
ii. The role of state policy is only second nature may be for tie break
4. Hanna Test – (Hanna v. Plumer) (case of way of service)
a. Test for FRCP is the Rules Enabling Act
b. Follow Federal Rule of Procedure unless it “abridges, enlarges, or modifies any substantive right”
(Rules Enabling Act Test) and every one that made the rule was wrong because the power is from
the (28 USC § 2072)
c. This is a real strong presumption that it is Procedural
i. Test is you must put yourself in the position of the P’s attorney and see if the difference
in rules would cause forum shopping and inequitable administration of law
5. FRCP should be read narrowly not to conflict with state laws if possible (Walker v. Armco Steel Corp.)
6. OVERALL PROCESS
a. What is the source of the Federal Way?
i. If a Federal rule
1. Does the Rule Directly Conflict with the state rule?
a. If yes, apply Hanna
i. Follow FRCP unless every one messed up.
b. If no, try to apply both or turn to Byrd/Guaranty/Erie if test still
needed
ii. If not a rule, apply Byrd/Guaranty/Erie
1. Weighing “outcome Determinate” v. “US Policy”

ASCERTAINING STATE LAW

1. This is how you determine which state law to apply and what is the state law?
2. Two Step Process to Determine what State law Governs (Klaxon Co. v. Stentor Electric Mfg. Co.) (apply
conflicts of law rules of the state in which it sits)
a. Pretend you are a state court in the state in which the District Ct. sits
b. Apply that State’s Choice of Law Law
3. What is the State’s Law
a. Act like you are a trial court in the state and decide the best you can (as to what a trial court
would think its highest state court would rule)
i. Must follow recent precedent and laws, but if unclear. . .
ii. Look at precedent, dictum, trends, etc.

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