ERIE DOCTRINE SUMMARY

1. BASIC RULE:

A federal court, in the exercise of its diversity jurisdiction, is required to apply the substantive law
of the state in which it is sitting.

A diversity case is just a state law case in a federal courtroom, for example a car crash, breach of
contract, property dispute, and so forth.

Therefore, the FIRST state substantive law the federal judge applies in a diversity case is the state’s
choice of law rule.

[This is what we studied in the Ferens and Piper cases.]

2. HOW TO HANDLE FACTS:

If you are given facts containing a Federal Rule of Civil Procedure (FRCivP) and a conflicting
state law or rule:

a. Basic legal test: “Substance v. Procedure” – Federal procedural law applies. If in the
facts there is a valid federal law (a federal statute or FRCivP) on point which conflicts
with a state procedural law or rule, apply the federal statute or federal rule.

Example: FRCivP permits substituted service of process. Suppose in the facts that the law of the
state in which the federal court sits does not permit substituted service. The federal court will
apply the FRCivP to permit substituted service of process.

Example: FRCivP 23 governs class actions status. Suppose in the facts that the state has a
conflicting class action rule. If a class action is filed in federal court, FRCivP applies and not the
state class action rule.

b. However, Federal rules are not applied when the matter is “procedural,” and the
conflicting state pronouncement is “substantive”.

Example: FRCivP 3 provides that a case is “commenced” when the complaint is filed. But that is
not the same thing as tolling the statute of limitations (SOL) in a state law case. Suppose in the
facts that the law of the state says a case is commenced for SOL purposes when the complaint is
served. When given a state “substantive” SOL in the facts which conflicts with a “procedural”
rule such as FRCivP 3, apply the state SOL.

Example: Elements of a claim or defense, for example what constitutes a tort, the elements of a
contract, or the defense of assumption of the risk, are substantive.

c. After analyzing facts based on the above “Substance v. Procedure” test, discuss
whether the federal or the state rule will apply, using these two alternative tests:
 i. “Outcome Determination” – A rule or law should be applied if it
substantially affects the outcome of the case.

ii. “Balance of Interests” – The federal court weighs whether the state or
federal judicial system has the greater interest in having its rule applied.

3. Statutes Involving Both Substance and Procedure

Sometimes, a state statute or rule may be both substantive and procedural. In one case, a state tort
law made it easier to grant a new trial than the federal law. The state tort law was held to be
substantive, so it applied in the federal trial court. The state appellate court was responsible for
deciding whether a new trial should be ordered. This responsibility was held to be procedural.
So, the federal trial court would decide whether a new trial should be ordered using the state
standard.

4. Interpreting State Law

The federal court is bound to apply the substantive state law which would be applied by the highest
court of the state. If the state courts have not decided the issue before the federal court, or if the
decisions on point are old and no longer current with the decisions of other jurisdictions, the federal
court may consider the law of other jurisdictions in reaching its decision. The federal court is to
determine the decision the highest court of the state would reach if confronted with the issue.

[This is what we study next in the DeWeerth and Guggenheim series of decisions.]