Good Intentions Gone Bad: The Special No-Deference Erie Rule for Louisiana State Court Decisions

AuthorJohn Burritt McArthur
PositionB.A. Brown University, 1975
Pages313-363

Page 313

Until 1938, federal courts routinely created their own interpretations of substantive state law in the guise of creating a "federal common law." They had been empowered to do so in 1842 by the United States Supreme Court's decision in Swift v. Tyson.1 This lack of deference to state courts created two major interjudicial problems.Page 314

First, federal courts deciding diversity cases generally ended up interpreting state law, allowing independent federal court judgments over what state law required. All too often, this created two conflicting systems of rights. Citizens of a state could only have their rights decided by their own state courts. A non-citizen, however, could and often did exploit diversity jurisdiction to move a case to federal court and seek there an entirely different and much more favorable reading of state law from a federal judge. This dual system of law denied state citizens the same rights and protections as non-citizens; the latter had a unique chance to thwart state law by securing a different rule in federal court. Thus, non-citizen litigants, often powerful and distant corporations, had available a special procedure allowing them to attempt to evade state rules that would have held them liable under settled state precedent.

Second, permitting federal judges to essentially tell their state counterparts that the latter did not know how to interpret their own law betrayed a strong institutional disregard for the capabilities of state courts. The Swift v. Tyson system, where state law decisions were made by federal judges, men nominated by the President and confirmed by the United States Senate yet often having no link at all to the state whose law was in question, ran contrary to the federalist structure in the Constitution and injected constitutionally suspect friction into the relationship between the state and federal judiciaries.

The Supreme Court reversed Swift v. Tyson and required federal courts to follow substantive state law in 1938 in Erie Railroad Company v. Tompkins.2 This decision announced a new rule of deference to state judicial opinions. In an eloquent opinion by Justice Louis D. Brandeis, Erie held that federal judges in diversity cases who refused to follow state court decisions denied state citizens protection of the law equal to that given non-citizensPage 315 and, in an independent constitutional affront, thwarted the Constitution's federalist structure.3

Since Erie, it has become well settled that federal courts are bound to follow a state supreme court's interpretation of its own law, and that federal deference to the state system extends to intermediate state courts as well "in the absence of other persuasive data."4 "Other persuasive data" cannot just mean that a federal judge thinks a state judge got it wrong, or even very, very wrong. That would be a rule of no real deference. "Other persuasive data" means that there must be a specific, demonstrable reason within state law or some new fact unavailable at the time of the prior state decision that provides an objective foundation for the belief that state courts would change their position if they revisited the issue in dispute. An example would be a new statute right on-point, or a subsequent state supreme court decision in a closely related area that adopts a new approach and indicates that existing on-point precedent would be reversed.

Down on the bayou in Louisiana, however, something funny has happened to Erie in its application to decisions made by Louisiana's intermediate courts. Erie has been submerged beneath a flood tide of federal courts exulting over Louisiana's civilian law tradition, yet refusing to accept Louisiana precedent. Forty years ago, Judge John Minor Wisdom, one of the Fifth Circuit's most respected members and a lawyer from an old New Orleans family, used Louisiana's civil law method of interpretation in his 1964 opinion, Shelp v. National Surety Company,5 as a rationale for reaching his own decision on Louisiana state law de novo. Judge Wisdom followed the procedures of a Louisiana state court in going right to primary sources of Louisiana law in the civilian manner.6 He asserted the right of a federal judge deciding Louisiana law to also look directly at the sources of substantive state law, even if to do so meant largely ignoring state courtPage 316 decisions, at least (and this is a somewhat illogical qualification) those below the state supreme court level.7 Judge Wisdom viewed his approach as compelled by Louisiana's civilian tradition.

This special, Louisiana-only discounted Erie rule against deference to state court precedent was powerfully bolstered a few decades later by another of the Fifth Circuit's most respected members, Judge Alvin Rubin. In an influential law review article, Judge Rubin urged federal courts to adopt civilian methods when reviewing Louisiana law and, in essence, to ignore, or at least downplay, the decisions of Louisiana's state courts in the same area.8

The no-deference rule was hatched from a surfeit of fidelity to civilian interpretive procedures. Yet this dismissive rule, which applies only to the lower courts of one state, Louisiana, has had the opposite effect. Erie declares a rule of institutional deference.9

Shelp is a rule of institutional disregard. Erie demands that state courts, not federal courts, interpret state law and that citizens and non-citizens alike have the same rights under state law, whether their case is decided in state or federal court. But under Shelp's no-deference rule, federal courts enjoy license to indulge their private readings of Louisiana law, and the supposedly abandoned pre-Erie discriminatory dual system of law symbolized by Swift v. Tyson has been revived. The rule encourages federal courts to disagree with Louisiana state judges and to substitute their own reasoning whenever they think their reading of Louisiana law is superior. A rule founded on respect for Louisiana's unique processes has ended up having the opposite effect.

I Erie Was Designed to End Dual Systems of Law and to Uphold State Judges' Right to Determine Their Own Law

The facts that gave rise to Erie seemed likely to be of more interest to the plaintiff, Harry J. Tompkins, than to anyone else. "[S]omething which looked like a door projecting from one of the moving cars" on an Erie Railroad Company train hit TompkinsPage 317 while he was walking along a footpath that bordered the train tracks in Hughestown, Pennsylvania.10 When Tompkins sued the railroad for his injuries, he recovered thirty thousand dollars under what the trial court and court of appeals treated as a "general" law of recovery.11 The railroad argued that it did not owe Tompkins anything because he was a trespasser, that it had no duty under Pennsylvania common law and, because Tompkins had been injured in Pennsylvania, that Pennsylvania's law applied and created a shield from liability.12

Although the Supreme Court began its opinion by citing new, "more recent research" on the applicable federal statute, section 34 of the Federal Judiciary Act of 1789,13 the most forceful portions of Erie discuss the "defects, policy and social," that flowed from Swift v. Tyson's fractious rule.14 In the Court's view, Swift v. Tyson created two problems. First, independent federal readings of state law had given federal judges free rein to re-read state law and create a discriminatory dual system of law.15 Second, this federal intrusion deprecated the abilities of state courts.16 The Supreme Court therefore reversed and sent the case back for decision under Pennsylvania precedent.

A Erie Sought to Avoid a "Discriminatory" Dual System of Law

The graphic problem created by the older system of federal common law was that non-citizens were petitioning federal courts to reject unfavorable state rules. Non-citizens thus might receive extra rights in federal court that they could not expect to get in state court. In such cases, non-citizens did not necessarily fear the subjective bias of state courts, the traditional rationale for diversity jurisdiction.17 They sought instead to evade the substantive rulesPage 318 of law that a state court could be expected to apply evenhandedly to citizens and non-citizens alike. The problem the non-citizen sought to avoid was not bias, but the rule of state law itself.

Giving federal courts the power to declare state law rules "made rights enjoyed under the unwritten 'general law' vary according to whether enforcement was sought in the state or in the federal court."18 With non-citizens having every incentive to seek a more favorable opinion in federal court whenever they feared existing state court decisions, the dual options open to them "rendered impossible equal protection of the law."19 Although the idea of a federal common law might suggest a striving for national uniformity, in practice the dual system "prevented uniformity in the administration of the law of the state."20

The Supreme Court surveyed the way that Swift v. Tyson had spawned improper, differential systems of state law in everything from commercial law, contracts, and torts to the law of punitive damages, mineral law, and real estate law.21 The Court might have been tempted to uphold Swift v. Tyson on stare decisis grounds because it had been on the books for so long, but Swift v. Tyson's...

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