The Fruits of Shady Grove: Seeing the Forest for the Trees
Glenn S. Koppel
Western State University - College of Law
June 13, 2011
Akron Law Review, Vol. 44, No. 999, 2011
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.
Number of Pages in PDF File: 114
Date posted: June 20, 2011 ; Last revised: February 8, 2012