Hanna's Unruly Family: an Opinion for Shady Grove Orthopedic Associates v. Allstate Insurance

• Publication year: 2022

44 Creighton L. Rev. 89. HANNA'S UNRULY FAMILY: AN OPINION FOR SHADY GROVE ORTHOPEDIC ASSOCIATES V. ALLSTATE INSURANCE

HANNA'S UNRULY FAMILY: AN OPINION FOR SHADY GROVE ORTHOPEDIC ASSOCIATES V. ALLSTATE INSURANCE

Jeffrey L. Rensberoer (fn*)

Justice Rensberger dissenting.

I disagree with both the result and the underlying analytical approach of Justice Scalia. I also part company with some of Justice Stevens's and Justice Ginsberg's analyses. For these reasons I write this separate dissent.

I.

Federal Rule of Civil Procedure 23 would plainly allow this action to recover a statutory penalty to proceed as a class action, assuming that the case is allowed to go forward and the procedural requirements of Rule 23 are met. New York's C.P.L.R section 901(b) would plainly bar the case from proceeding as a class action if applicable. This case requires that we decide which of these two laws govern this case brought under diversity jurisdiction. In answering that question, it becomes necessary to reconcile two lines of cases which are at odds with each other. In Sibbach v. Wilson and Co.,(fn1) we set out a test for determining whether under the Rules Enabling Act(fn2) a Federal Rule is valid. The hurdle for validity was set extremely low: a Federal Rule is valid if it "really regulates procedure, the judicial process for enforcing rights and duties recognized by substantive law and for justly administering remedy and redress for disregard or infraction of them."(fn3) In Hanna v. Plumer,(fn4) we held that Federal Rule of Civil Procedure 4 applied in a diversity case as against a state rule that forbade a particular type of service of process allowed by Rule 4. We reasoned there that if a Federal Rule is valid, it must apply as a matter of congressional mandate.(fn5) Because a regulation of the manner of service of process, such as Rule 4, clearly "really regulates procedure," it applied instead of the conflicting state rule. Had matters ended there, we would have an exceedingly simple framework for deciding the applicability of Federal Rules in diversity cases: we are simply to assess the Federal Rule's validity under Sibbach and if it meets that simple standard, apply it under Hanna.

But matters did not so end. Hanna failed to adequately reconcile its holding with several earlier cases. Moreover, this pre-Hanna variant branch of Erie(fn6) refused to die off. Several post-Hanna cases are impossible to explain under the Sibbach-Hanna syllogism. Despite Hanna's command to apply a valid Federal Rule in diversity cases, these other cases, the extended family of Hanna, fail to apply a Federal Rule that easily satisfies the Sibbach standard. Something has to give.

A.

In 1949, well before Hanna, we decided in Ragan v. Merchants Transfer and Warehouse Co.(fn7) that state law applies to determine when a case is "commenced" for statute of limitations purposes. Federal Rule of Civil Procedure 3 provides in plain language that a "civil action is commenced by filing a complaint with the court."(fn8) State law in Ragan provided that a case is not commenced for purposes of the statute of limitations until process is served upon the defendant.(fn9) On its face, this result is inconsistent with Hanna. Rule 3 would seem easily to pass the validity test of "really regulating procedure," but Ragan declined to apply it. In Hanna, we explained this away by asserting that

It is true that there have been cases where this Court has held applicable a state rule in the face of an argument that the situation was governed by one of the Federal Rules. But the holding of each such case was not that Erie commanded displacement of a Federal Rule by an inconsistent state rule, but rather that the scope of the Federal Rule was not as broad as the losing party urged, and therefore, there being no Federal Rule which covered the point in dispute, Erie commanded the enforcement of state law.(fn10)

It may be that the Court was simply trying heroically to line up the cases and explain an older case away so as to not interfere with the new thinking. But the reasoning of Hannathat Rule 3 was "not as broad" as was assertedis alien to Ragan itself. The reasoning of Ragan was not that a textual analysis of Rule 3 revealed that it did not address the statute of limitations. Rather it was that "Erie ... was premised on the theory that in diversity cases the rights enjoyed under local law should not vary because enforcement of those rights was sought in the federal court rather than in the state court" and that if "recovery could not be had in the state court, it should be denied in the federal court."(fn11) In short, in Ragan, Rule 3 was not applied in diversity because it would too greatly affect the outcome. Ragan was a straightforward application of the then dominant test of Guaranty Trust Co. v. York,(fn12) which focused the analysis on the degree to which the difference between state and federal law was determinative of the outcome.

One could regard Ragan as simply an older case which time has passed by, a "derelict on the waters of the law."(fn13) But that is foreclosed by its reaffirmance in Walker v. Armco Steel Corp.,(fn14) a decision that comes after Hanna. Walker presented exactly the same question as Ragan and reached the same conclusion. But to conform to the dictates of Hanna, it characterized Rule 3 as not being applicable to the statute of limitations issue: "There is no indication that the Rule was intended to toll a state statute of limitations, much less that it purported to displace state tolling rules for purposes of state statutes of limitations."(fn15)

I am at a loss to know what purpose Rule 3 serves if not to specify the event-the filing of the complaint-necessary to defeat the statute of limitations. Prior to Ragan, lower courts had held that Rule 3 applied to the statute of limitations issue on federal causes of action.(fn16) Recent lower court cases affirm that conclusion.(fn17) Walker in fact was oddly careful in its language. It did not say that Rule 3 was not intended to give a tolling rule for statutes of limitations. It instead said that Rule 3 was not "intended to toll a state statute of limitations."(fn18) Now, that is slicing the bread rather finely. Rule 3 was "intended" to provide a tolling rule for statutes of limitations for causes of action based on federal law, but it was not intended to do so for causes of action based on state law. Where one finds this intention for the differential application of Rule 3 is nowhere stated.

In an attempt to provide an explanation of what Rule 3 does apply to, if not the statute of limitations, we said in Walker that rather than applying to statute of limitations issues, "Rule 3 governs the date from which various timing requirements of the Federal Rules begin to run."(fn19) What these other "timing requirements" are we did not specify. But upon examination one finds few if any Rules tied to the date of the "commencement" of an action. The time for a defendant to answer is not tied to commencement of the action, but to the date of service.(fn20) The time to implead a third party as of right is tied to the date of service of the answer.(fn21) The time for amending a pleading as of right runs for a period initiated by the date of service of the pleading.(fn22) The timing of initial disclosures and discovery is tied, via the scheduling conference provided for by Federal Rule of Civil Procedure 16, to the date of service, not commencement.(fn23) A few of the current Federal Rules refer to the commencement of an action, but they are either later additions not present when the original Rule 3 was drafted or simply do not contain a timing requirement. Federal Rule of Civil Procedure 13(a)(2)(A) excepts from what would otherwise be a compulsory counterclaim a claim that was "the subject of another pending action" when "the action was commenced."(fn24) But it could not have been the intent of the drafters of Rule 3 to supply a timing rule for this portion of Rule 13 because the original version of Rule 13, the one contemporaneous to Rule 3, made no reference to the time when the "action was commenced."(fn25) Likewise, although the current version of Federal Rule of Civil Procedure 17 states that after joining a missing real party in interest "the action proceeds as if it had been originally commenced by the real party in interest," the original Rule 17 had no such language.(fn26) Rule 3 could not then have been written to supply a timing rule for Rule 17. Federal Rule of Civil Procedure 64(a) does state that "at the commencement of and throughout an action, every remedy is available that, under the law of the state where the court is located, provides for seizing a person or property to secure satisfaction of the potential judgment."(fn27) While this could conceivably be characterized as a timing provision, it more logically reads as a simple declarative statement that state provisional remedies are available throughout the proceedings. Federal Rule of Civil Procedure 71.1(c)(3) provides that in condemnation actions, "when the action commences, the plaintiff need join as defendants only those persons who have or claim an interest in the property and whose names are then known."(fn28) Again, the original version of this Rule, drafted at the same time as Rule 3, contained no similar reference to commencement of the action.(fn29) Finally, Federal Rule of Civil Procedure...