Erie as a Choice of Enforcement Defaults

Abstract

The Erie doctrine governs, among other things, when a federal court sitting in diversity jurisdiction may use a federal procedure that differs from the procedure that would be used in state court. Displacing the state procedure with the federal procedure (or not) may impact the substantive objectives of either state or federal law, but the current Erie doctrine provides little guidance. This article argues that the Erie doctrine is best understood as governing a choice of enforcement defaults. As argued below, the primary function of civil liability is to protect a substantive entitlement to avoid the legal violation, either directly through specific performance remedies or through deterrence. Accordingly, procedures in federal and state court can be understood as default procedures to enforce this substantive entitlement, and these defaults are often abrogated by contract or through legislation. Understood in this way, the Erie doctrine governs when a federal court may abrogate a state enforcement default with a federal one. This article then uses the existing literature on default rules to argue that the Erie doctrine should itself use default rules to force information from both state and federal governments about the relationship of default procedures to substantive policies. In this way federal courts can make better choices between enforcement defaults.

Keywords: erie, rules enabling act, default rules, substance, procedure

JEL Classification: K13, K41