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A. Swift v. Tyson (1842)
1. Facts:
a. Tyson bought non-existent land from Norton via promissory note.
b. Norton transferred the note to Swift.
c. Tyson asserted a defense of fraud against the note.
d. NY common law allowed this, “Merchant law” did not.
2. Held
a. “Laws” in judiciary act means only express written law.
b. Federal judges are free to ignore state common law in absence of state statute. Federal courts must only follow
1) State constitutions
2) State statutes
3) State common law on marriages, property, and other intrinsically local matters.
3. Effects:
a. A growing body of Federal common law.
b. Reached into torts, commercial law, contracts
c. Big divide between states’ common law and federal common law.
d. Allows P to forum shop in a big way.
e. Example: Black and White Cab reincorporated in another state
B. Erie Railroad v. Tompkins
1. Facts:
a. Tompkins was walking on commonly used footpath along tracks.
b. Tompkins was struck by open door from moving train.
c. Tompkins sued. Biggest issue was which law controlled.
1) Pennsylvania: People walking longitudinally along railroad right of ways are trespassers and due no care.
2) Federal: Tompkins was licensee.
2. Finding:
a. Problems w/ Swift
1) Swift’s original vision never realized since states’ common law did not
2) Encouraged sharp practices
3) Unfair to Ds.
b. Research from Charles L. Warren shows wrong as statutory interpretation.
c. Using federal common law for state claims is unconstitutional.
1) Courts were enacting laws that should have been enacted by Congress.
2) Courts were enacting rules governing behavior that were reserved for the state.
d. In adjudicating state claims, federal court must use state substantive law.
3. Results:
a. State law used in diversity cases.
b. State law used in supplemental jurisdiction
C. Immediate Puzzle after Erie
1. Why was Pennsylvania law applied?
2. Can federal government choose which law applies?
a. No: Klaxon Co. v. Stentor Electric Manufacturing Co: Federal courts must use choice of law rules of the forum state.
3. Federal law must find its root in constitution, statute, or ratified treaty.
4. Ultimate authority is state’s highest court.
a. Sometimes Fed court must decide how state supreme court would interpret ambiguous issues of state law.
b. Some states allow federal appeals court to submit certified questions to state court for interpretation
D. Problem area: No clear line of demarcation between substantive and procedural law.
1. Most are clearly one or the other.
2. Some rules infringe on substantive areas:
a. Statutes of limitations: relate heavily to ability to bring substantive claim
b. Presumptions
1) Rules of evidence that create rebuttable presumptions
3. Types of cases in gray area
a. Federal statute
b. Federal rule of procedure
c. Judge-made rule
E. Federal Statutes in the substantive/procedural gray area
1. Stewart Organization, Inc. v. Ricoh Corp.
a. Facts
1) Diversity case – assume proper venue in Alabama
2) D wants to transfer to Manhattan, NY.
3) K has forum-selection clause specifying Manhattan.
4) Alabama has statute that prohibits enforcement of forum selection clause when it sends case out of state.
5) Federal court has discretion to transfer case from one proper venue to another.
b. Issue: Does state procedural statute conflict w/ federal procedural rule? Yes
1) Under federal rule, judge could transfer to Manhattan.
2) Alabama law absolutely prohibits this.
3) Dispute between majority and Scalia:
a) Scalia does not think rule allows the transfers, since “considerations of justice” in 1404 should not take prior concerns into account.
4) Possible argument for Alabama view:
a) Forum-selection clause is part of contract.
b) Interpreting it is a matter of substantive contractual law.
c) Response: It’s a “procedural contract clause.”
c. Issue: Is the federal procedural rule in accord w/ the Constitution.
1) Federal provision must trace to specific clause.
2) Necessary and proper clause coupled w/ Article III power to create lower federal courts.
3) Creating court requires creating the rules of procedure for that court.
2. Rule:
a. Is there a conflict?
b. Can conflicting rules coexist?
c. Is Federal law constitutional?
3. Choice of law: is this the case?
a. Plaintiff breached forum selection clause, so he was never entitled to Alabama law.
b. 1404 says law doesn’t travel w/ case if original forum wasn’t proper.
c. This causes it to take on serious substantive
F. What’s left of federal common law?
1. Types
a. Constitutional Federal common law: Comprised largely of U.S. Supreme Court interpretations of Constitution.
b. Statutory federal common law:
1) Gap filling functions
2) Some statutes authorize judicial creation of common law in particular area.
c. Common law related to uniquely federal interests:
1) Liability of federal government on negotiable instruments.
d. Common law of foreign relations
e. Common law of interstate relations
f. Admiralty and maritime law
g. Federal procedural common law.
2. All except constitutional can be modified by Congress.
Swift Era Post-Erie
• Federal Constitution, Statutes, Treaties
• Federal General Common Law
• State Law: Constitutions, Statutes, General State Common Law, Local State Common Law
Note: Bold entries represent state law federal courts had to respect. • Federal Constitution, Statutes, Treaties, Limited Federal Common Law
• State Law: Constitutions, Statutes, State Common Law, Local Laws
G. Rules-enabling act: Sibbach v. Wilson & Company
1. P and D residents of Illinois – accident happens in Indiana.
2. Trial Court ordered medical examination for P.
3. P refused and argued Indiana law does not empower court to order such exam, constituting a substantive right.
4. Rules Enabling Act prohibits modifying substantive rights.
5. Decision:
a. Ability to order a medical examination is inherently related to how claims are defended w/in a court.
b. If rule can be construed as procedure-relevant then it is, despite substantive concerns.
c. Therefore it is procedural and within federal courts rules.
d. A procedural right’s importance does not make it substantive.
H. Guaranty Trust Co. of N.Y. v. York
1. York filed diversity action in equity challenging treatment of notes by GTCNY.
2. NY had statute of limitations on equity actions, not laches, so suit could not be brought there.
3. Federal used laches on actions in equity.
4. Decision: Outcome determinative test: Does choice of rule affect the outcome?
a. Is the outcome likely to be affected by choice of statute of limitations v. laches?
b. Yes, because in NY case could not go to trial.
5. Example of problem w/ GTCNY
a. Claim pleading filed April 1
b. Statute runs out April 15
c. Claim pleading amended May 2 due to discovery.
d. FRCP 15(c) says amended claim speaks on April 1 (is back-dated).
e. This could affect outcome – how does it get applied in diversity cases?
I. Byrd v. Blue Ridge Rural Electric Cooperative
1. Byrd was working for independent contractor who was working for BRREC.
2. If Byrd is statutory employee, Byrd can’t sue.
3. Question to be answered to determine Byrd’s employment status is whether Byrd is performing same work as BRREC employees.
4. In Federal system, this is jury question. In South Carolina, it’s a judge-resolved question.
5. “Countervailing federal considerations” Even when the outcome determinative test suggests deferring to state law, countervailing considerations of federal importance can overcome.
a. Federal deference to jury as decider of fact (w/ 7th Amendment as backdrop)
b. Federal ability as separate sovereign to control judge-jury relationship is very important.
J. Other Erie-problem cases
1. Ragan v. Merchants Transfer & Warehouse Co.: State claims filed in diversity actions must comply w/ state statutes of limitation rules. (In this case, statute is tolled when D is served, not when case is filed as in federal). (Rule 3)
2. Woods v. Interstate Realty Co.: P filed diversity suit in Mississippi claiming D had not paid commissions due. D moved for summary judgment claiming that contract was void because P had not registered to do business in state. Supreme Court held that since P was denied access to Mississippi courts, then P is also denied access to federal courts based on Mississippi laws. (§1332)
3. Cohen v. Beneficial Industrial Loan Corp: Court held that state law requirements for Ps to post security deposit in a diversity shareholder derivative suit must be used by federal district court, despite federal procedural rule that did not require such deposits. (Rule 231)
K. Walker v. Armco Steel Corp: Ragan affirmed
1. Does Rule 3 toll a state statute of limitations in diversity cases?
2. No: Rule 3 says a civil action commences on filing. This starts various clocks running for processes w/in federal rules.
3. Rule does not say statutes of limitations is tolled.
4. If rules said statutes of limitations was tolled, then Hana v. Plumer would apply.
5. States have right to create statutes of limitations – as part of this right they have right to say when statutes of limitations are tolled.
L. Hanna v. Plumer (READ CLOSELY) – Resolving Problem Cases, reshapes GTCNY
1. Facts
a. P filed diversity suit against estate of man involved in automobile accident.
b. P filed service according to Federal rules.
c. State law required in-hand service to executors of estates.
d. Trial Court granted motion to dismiss on grounds of improper service.
e. P appealed to Supreme Court.
2. Should service of process be made in accordance w/ state law or in accordance w/ Federal Rules of Civil Procedure? FRCP
a. There is a clear conflict between the state and federal rules.
b. Warren concerned by threat of uniformity. (Cites Sibbach, etc.).
c. Warren distinguishes “problem” cases by stating the rules in those instances did not go as far as people had thought they did. (They were rule construing, not constitutional tests).
d. Congress has power to set rules and procedures for federal courts.
e. Service rules are procedure rules and set by FRCP.
f. Service rules have been proposed by judges and lawyers, approved by Supreme Court, and given to Congress for chance to overturn. There is no way FRCP are unconstitutional or outside Rules Enabling Act.
g. So only inquiry needed:
1) Is rule broad enough? (Does it apply?)
2) Is it w/in scope of Rules Enabling Act?
3. Second part of decision.
M. Specific state/federal rules
1. Federal rules given preference
a. Judge/jury relationship
2. State rules deferred to (as substantive not procedural law)
a. Burden of proof (Judge-made)
b. Presumptions (Judge-made)
c. Statute of Limitations
d. Security Deposit
e. “Door Closing” Statutes

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Check out "Examples and Explanations: Civil Procedure" by Gannon.

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