The Origins of Diversity Jurisdiction, the Rise of Legal Positivism, and a Brave New World for Erie and Klaxon
55 Pages Posted: 30 Apr 2007
The conventional explanation for the inclusion the grant of diversity jurisdiction (i.e., federal court jurisdiction in cases between citizens of different states) in the Constitution and the first Judiciary Act is that it was necessary to prevent state-court discrimination against out-of-staters. However, the weight of the historical evidence supports the conclusion that diversity jurisdiction was also aimed at the application of parochial state laws, particularly state debtor protection enactments. This second purpose of diversity jurisdiction cuts against the Supreme Court's 1938 decision in Erie Railroad v. Tompkins which held that federal courts exercising diversity jurisdiction must apply the same substantive law as their state court counterparts. This article proposes a partially implementing diversity jurisdiction by over-ruling the Supreme Court's 1941 decision in Klaxon v. Stentor Electric which held that the Erie principle also requires federal courts to adhere to state choice-of-law rules. If diversity courts were to apply an independent choice-of-law approach they could avoid the forum-law bias that pervades most of state choice-of-law doctrine.
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