Choice of Law and Jurisdictional Policy in the Federal Courts

Abstract

For seventy-five years, Klaxon v. Stentor Electric Manufacturing has provided a one-line answer to choice-of-law questions in federal diversity cases: Erie requires the federal court to employ the same law that a court of the state would select. The simplicity of the proposition likely accounts for the unqualified breadth with which federal courts now apply it. Choice of law doctrine is difficult, consensus in hard cases is elusive, and the anxiety that Erie produces over the demands of federalism tends to stifle any reexamination of core assumptions. The attraction of a simple answer is obvious. But Klaxon cannot bear the weight with which it has been loaded.

This Article examines the intellectual history of the Klaxon decision and situates the ruling in the restructuring of jurisdictional policy, federal judicial power and federal common law that the Court undertook following its paradigm-shifting decision in Erie three years earlier. It concludes that Klaxon spoke to an important but discrete question: the approach that federal courts must take to choice of law in mine-run cases governed by the general diversity statute. Klaxon did not address the approach to be taken in cases governed by different jurisdictional policies -- most notably, class actions of national scope that come into federal court through diversity by way of a statute like the Class Action Fairness Act of 2005 (CAFA), which embodies jurisdictional policies substantially different from those that characterize the general diversity statute. The Article provides a new methodological and doctrinal approach to these questions and concludes that federal courts do have the power to employ their own uniform approach to resolving conflicts in CAFA cases when multiple states would seek to apply their law to a dispute. Whether it makes sense as a matter of policy for federal courts to employ that power is a question that the Article leaves for future examination, but the power exists.

Keywords: choice of law, conflict of laws, Klaxon, CAFA, Class Action Fairness Act, jurisdiction, diversity, Erie, federal common law, MDL, multi-district litigation, federalism