Where do federal courts sitting in diversity look for the law of substance and procedure?
Although analysis under the RDA (Hanna I) and REA (Hanna II) are more difficult than this chart indicates, the top and bottom rows give a rough sense of how significantly things have changed in 1938.
|Before Erie and FRCP||Federal courts created federal general common law, and could ignore state common law. But if the state law was from a state constitution, state statute, or hard-to-define “local usage,” then state law would be used. (Swift 1842)||Oftentimes state (Conformity Act of 1872), though federal procedural law sometimes applied (such as diversity statute, federal common law of evidence).|
|After Erie and FRCP (both of them were in 1938)||First. To determine which state’s substantive common law would apply, federal courts must first use the choice of law principles of the state the federal district court is located in (Klaxon 1941). This might point to the law of that state or of another state.
Second. Use state law. If the applicable substantive law is common law, then use the common law enunciated by the highest court of the relevant state (Erie). This requires making a “prediction” of how that state court would rule on the issue today.
|Federal: FRCP (and other federal rules such as the FRE, FRAP, and procedural statutes such as sections 1331, 1331, 1404, 1406, 1441, etc.)|
Added March 23, 2015