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Foreword: Erie’s Gift - Symposium, Erie Under Advisement: The Doctrine After Shady Grove
Abstract
This foreword is an introduction to a symposium on the ways in which the Supreme Court’s recent Shady Grove decision has affected the Erie doctrine. The foreword briefly examines the jurisprudential, constitutional, interpretive, legal, and political dimensions of the Erie doctrine in its most vexing context: the choice between federal and state procedural rules.
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This Article advocates that the Supreme Court recalibrate the avoidance canon it uses in Erie cases in which Federal Rules are in potential conflict with state law. The Article examines the Court’s historical use of avoidance in Erie cases, observing that contemporary jurists inappropriately conflate the purposes of pre- and post-Hanna avoidance when they conclude that avoidance in both periods protected state interests. Avoidance in the post-Hanna period has been premised on protecting important state interests and regulatory policies, but pre-Hanna avoidance attempted, with mixed success, to protect the Federal Rules. The Article also discusses the Court’s post-Hanna focus on federalism interests as the guiding principle for avoidance, which has permitted state law to override Federal Rules and has permitted differing interpretations of a single Federal Rule in diversity and federal question cases. This focus has permitted replication, on a Rule-by-Rule basis, of the results realized under Guaranty Trust’s outcome determinative principle. In the Court's most recent Erie case, Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co, 130 S. Ct. 1431 (2010), the justices, for the first time, enage in an extended discussion of the extent and nature of an appropriate avoidance principle. Justice Scalia, in dicta, proposes a type of “classical” or “narrow” avoidance; Justice Stevens, in concurrence, suggests a broader avoidance canon modeled on “serious doubts” principles, which would counsel avoidance if the most natural construction of a Rule would raise serious doubts about the Rule’s validity under the Rules Enabling Act (REA); and Justice Ginsburg, in dissent, advocates avoidance based almost solely on respect for important state interests and regulatory policies. The Article concludes that an avoidance principle is warranted in REA cases, and it should be based on analogy to construing statutes narrowly to avoid serious constitutional doubts, in a manner similar to the avoidance principles proffered by Justice Stevens in Shady Grove.
In piecing together the fragments of the Supreme Court’s 2010 decision in Shady Grove Orthopedic Associates v. Allstate Insurance Company, the Court’s most extensive treatment of, “Erie/Hanna,” issues since Gasperini unsettled the doctrinal waters 14 years earlier, this symposium article finds, in Justice Stevens’ pivotal concurrence that lies at the Court’s center between the plurality and the dissent, a principled Middle Way to guide the Court in calibrating the balance of power in judicial federalism between the federal courts’ interest in procedural uniformity and the states’ interest in uniform intra-state enforcement of their substantive policies. Shady Grove augurs a return to a modified formalist approach to interpreting procedural rules that recognizes a normative difference between, “procedure,” and, “substance,” and that accords considerable, but not determinative, weight to the text of rules to achieve greater predictability in the uniform application of the Federal Rules. Gasperini left unanswered two key, “Erie,” issues. First, what is the principled mode of analysis to employ when a Federal Rule potentially conflicts with a state law which, if not applied by the federal court in a diversity suit, could substantially affect the outcome of litigation? In Gasperini, Justice Ginsburg’s majority opinion counseled that federal courts should interpret the scope of Federal Rules, “with sensitivity to important state interests and regulatory policies.” Did Gasperini portend the Court’s retreat from its robust defense of the Rules Enabling Act’s policy of federal procedural uniformity articulated in its 1965 decision in Hanna v. Plumer? Did Gasperini mark a return to pre-Hanna jurisprudence when, under the sway of Guaranty Trust Co. v. York, federal courts bent over backwards to apply state procedure over a Federal Rule to avoid different litigation outcomes? The proposition has been advanced that Gasperini charts a new direction in, “Erie,” jurisprudence by requiring federal courts in diversity suits to apply state case law to interpret Federal Rules. This article concludes that such a prediction is premature after Shady Grove which appears to moderate Gasperini’s potential to undermine the Rules Enabling Act’s policy of Federal Rules uniformity. The Shady Grove majority did not go out of its way to avoid a conflict between the federal class action rule and New York’s outcome determinative state class action rule. Justice Stevens’ concurrence suggests a principled approach to resolving federal-state procedural conflicts that achieves a balance between the Court’s plurality, led by Justice Scalia, and the dissent, led by Justice Ginsburg. In determining whether a conflict exists, courts should look to the purpose behind the state rule as indicated by the rule’s text and legislative intent. When legislative history is inconclusive, as it was in Shady Grove, courts should, “respect the plain textual reading,” of the federal and state rules as a default principle.The second issue left unresolved in Gasperini is the role of the Rules Enabling Act’s, “substantive rights,” proviso. For seventy years since Sibbach v. Wilson & Co. announced a single test for determining the validity and applicability of the Federal Rules that focused on whether the Rule in question, “really regulates procedure,” the Court, as recently as Hanna, declined to attribute independent force to the substantive rights proviso. Staking out a Middle Way between the Shady Grove plurality’s adherence to Sibbach’s single test and the dissent’s approach which, effectively, defines the proviso’s term, “substantive,” as, “outcome determinative.” Justice Stevens’ concurrence interprets the proviso as an independent check on the federal rulemaking power, but not a potent a check, by defining, “substantive rights,” as encompassing only state law that, in somewhat Byrd-like terms, defines rights and remedies and state procedure that is intimately bound up with substantive state law. This approach accords significant weight to the normative goal of federal rules uniformity, since it will be a rare Federal Rule that will violate this narrow construction of the proviso.