Ascertaining the laws of the several states: positivism and judicial federalism after Erie.

AuthorClark, Bradford R.




    1. Identifying Indeterminacy in State Law

    2. judicial Federalism and Independent Judgment

    1. Erie and the Constitutional Structure

    2. Erie and Independent judgment


    1. Prediction of a Novel Cause of Action

    2. Prediction of a Novel Defense

    3. Prediction That State Precedent Will Be Overruled


    1. The Development of Erie-Based Abstention

    2. Erie-Based Abstention and the Separation of Powers


    1. Overview of the Static Approach

    2. The Static Approach and the Constitutional Structure

    3. The "Political and Social" Defects of the Static Approach


    1. The Rise of Certification

    2. Certification and the Constitutional Structure

    3. Implementing a Structural Presumption in Favor of



    "[L]aw in the sense in which courts speak of it today does not exist without

    some definite authority behind it."(1)


    The Constitution provides that the "judicial Power" of the United States shall extend to controversies "between Citizens of different States,(2) but does not specify the source of law to be applied in such cases. The first Congress, in section 34 of the judiciary Act of 1789, directed that "the laws of the several states, except where the constitution, treaties or statutes of the United States shall otherwise require or provide, shall be regarded as rules of decision in trials at common law in the courts of the United States in cases where they apply."(3) For most of our constitutional history, federal courts interpreted section 34 to permit the application of local or state law in some cases, and so-called "general law" in others.(4) The Supreme Court endorsed this approach in Swift v. Tyson,(5) a case involving a question of general commercial law, and over the course of the next century dramatically expanded the range of matters governed by general common law.(6) The Court abruptly abandoned this dichotomy in 1938, however, when it overruled Swift sua sponte in Erie Railroad Co. v. Tompkins,(7) and declared--as a matter of constitutional law--that "[e]xcept in matters governed by the Federal Constitution or by Acts of Congress, the law to be applied in any case is the law of the State."(8) The Court's approach in Erie drew support from its conclusion that "no clause in the Constitution purports to confer" "power [upon the federal courts] to declare substantive rules of common law applicable in a State."(9)

    When state law is clear, the task of applying "the law of the State" is relatively straightforward. When state law is unsettled or indeterminate, however, Erie's dual command--that federal courts apply but not declare state law--places federal courts in a precarious position. On the one hand, if federal courts exercise independent judgment and fashion common-law rules of decision by weighing competing policy considerations, they arguably usurp the lawmaking power of the states. On the other hand, if federal courts adopt a relatively static view of state law by simply ruling against the proponent of a novel claim or defense, they may unfairly disadvantage federal-court litigants by permitting forum shopping and inequitable administration of the law.

    Although the Supreme Court has provided only limited guidance in this area, lower federal courts confronted with this dilemma generally attempt to "predict" what rule the highest court of the state would adopt if the question were before it, and then apply that rule to the case at bar.(10) This Article suggests that the federal courts' use of the predictive approach itself raises constitutional concerns of the sort underlying the Supreme Court's decision in Erie. Specifically, the predictive approach is in tension with the principles of judicial federalism adopted in Erie to implement the constitutional structure. The Constitution operates to preserve "`the autonomy and independence of the States'"(11) not only by delegating limited powers to the federal government, but also by carefully restricting the means by which the federal government may exercise such powers.(12) By and large, the federal government may exercise its powers only through the conduct of actors subject to the "political safeguards of federalism."(13) In addition, the Constitution carefully specifies various procedures with which these actors must comply in order to adopt federal law. For example, Congress may exercise its legislative powers to declare substantive rules of law applicable in a state only if it complies with the purposely cumbersome requirements of bicameralism and presentment set forth in Article I, section 7.(14) Procedures of this kind tend to preserve state power--and thereby safeguard federalism--by sometimes preventing the federal government from exercising the full scope of its delegated powers.

    Erie recognized that, in the absence of federal law adopted in accordance with these constitutionally prescribed procedures, "`the authority and only authority is the State.'"(15) Erie employed a positivist conception of state law, under which such law consists exclusively of sovereign commands, and such commands may be issued by whatever organ of the state it deems appropriate. Thus, in Erie, the Court stressed that "whether the law of the State shall be declared by its Legislature in a statute or by its highest court in a decision is not a matter of federal concern."(16) In either case, absent positive federal law to the contrary, the constitutional structure requires federal courts to respect and apply the law adopted by whatever organs the state has authorized to act on its behalf.

    If agents of the state have not adopted rules of decision that provide determinate answers to the questions in the case at bar, then arguably there is simply no law to apply--state or federal--and federal courts should rule against the party who bears the burden of persuasion on the question at issue. This conclusion appears to follow from Erie's embrace of judicial federalism. If a rule of derision applied in federal court does not constitute a command of the state sovereign, then by default the rule in question is, at least in some sense, a command issued by agents of the federal sovereign. The federal courts' enforcement of such commands appears to contradict a fundamental feature of the constitutional structure recognized in Erie--namely, that federal courts (which the Constitution places beyond the reach of the political and procedural safeguards of federalism) have "no power to declare substantive rules of common law applicable in a State."(17)

    In order to avoid judicial federalism problems of this nature, some federal courts have, on occasion, adopted an alternative approach under which they abstain from adjudicating cases when the application of state law is indeterminate. Under this approach, federal courts generally stay their proceedings and direct the parties to institute a declaratory-judgment action in state court. Although the Supreme Court has permitted--and on occasion even required--abstention in cases of this kind,"(18) the Court has long maintained that abstention is "the exception, not the rule,"(19) presumably because this approach raises distinct constitutional concerns. The general judicial duty to implement constitutional acts of Congress--an aspect of the constitutional separation of powers--arguably gives rise to a "Virtually unflagging obligation of the federal courts to exercise the jurisdiction given them."(20) For this reason, expanded reliance on Erie-based abstention does not appear to be a satisfactory alternative to the predictive approach.

    A third approach, adopted by a growing number of federal courts, appears to respond to both federalism and separation-of-powers concerns. Under this approach, federal courts refuse to predict the future development of state law.(21) Rather, these courts simply "apply the law of the forum as [they] infer it presently to be, not as it might come to be."(22) The effect of this static approach is to deny the proponents of unrecognized rules of state law the benefit of such law in the case before the court. This approach alleviates the judicial federalism concerns associated with the predictive approach because federal courts cannot be charged with usurping the lawmaking power of the states. The static approach also mitigates the separation-of-powers concerns raised by abstention because federal courts employing this approach exercise their jurisdiction and adjudicate the case on the merits.

    A potential difficulty with the static approach, however, is that it works best in the context of a well-defined and relatively stable body of state law. In reality, neither characteristic is always present. Questions of state law frequently arise in federal court before state courts have had an opportunity to adopt rules of decision specifically designed to govern the transactions in question. Similarly, state courts have been increasingly willing to make rapid and sometimes dramatic changes in state law either by overruling prior precedent or by adopting novel causes of action and defenses. These realities highlight an important constitutional disparity between federal and state courts: State courts are capable of creating and revising "the law of the State" as warranted by circumstances and policy considerations in the case at bar, whereas federal courts may be precluded from exercising similar judicial creativity by principles of judicial federalism.(23) This disparity, in turn, may give rise to several "political and social" defects(24) by undermining the so-called "twin aims of the Erie rule"--to discourage forum shopping and to avoid inequitable administration of the law.(25) In other words, because of "the accident of diversity of citizenship,"(26) federal courts employing the static approach may at times apply law different from that which would have...

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