By Donald Earl Childress III
105 Nw. U. L. Rev. (forthcoming 2011)
Certain cases live long in the legal imagination, even though some lawyers and law students would just as well forget about them. One prime example of this is the Supreme Court’s decision in Erie Railroad Company v. Tompkins,1 which has been described as “one of the modern cornerstones of our federalism, expressing policies that profoundly touch the allocation of judicial power between the state and federal system”2 and as “a star of the first magnitude in the legal universe.”3 As almost every first-year law student comes to know,4 the so-called “Erie doctrine”5 generally requires federal courts to apply the law of the forum state in which the court sits, unless the matter before the court is governed by the Constitution, a federal statute, a Federal Rule of Civil Procedure, or some other federal rule.6 Since the Erie decision, the Supreme Court has sought to settle the doctrine’s puzzles in a series of cases . . .7 involving the interplay between federal and state laws and procedural rules.8
One such Erie puzzle involves the choice of applicable substantive law in federal courts when a legal dispute crosses
state borders. What state’s law should apply when the laws of more than one state are potentially applicable to a case? The Supreme Court provided an answer to that question in Klaxon Company v. Stentor Electric Manufacturing Company,9 when it held that a federal court must apply not only state substantive law but it also must apply state conflict-of-laws rules. . . .10 11 12 In the Supreme Court’s view, to do otherwise “would constantly disturb equal administration of justice in coordinate state and federal courts sitting side by side” and “would do violence to the principles of uniformity within a state, upon which the Erie decision is based.”13 This holding, while well settled, is not without vigorous criticism.14
Nearly all of the cases developing the Erie doctrine have arisen in the federal/state (whether federal or state laws or procedural rules control) or state/state (whether the laws of State A or B control) context. While the Erie doctrine may make sense in the intra-state context given that as a constitutional matter states and their citizens must be treated equally,15 another Erie question arises in the international context—namely, must a federal court apply the law of a foreign country when directed by state conflict-of-laws rules? What happens when the Erie doctrine goes international?16
The Supreme Court resolved this “subpuzzle” within the larger Erie/Klaxon puzzle in a short per curiam opinion in the case of Day & Zimmermann, Incorporated v. Challoner,17 which held that federal courts must apply state conflict-of-laws rules, even when those rules direct the court to apply the substantive law of a foreign country.18 19 20
The purpose of this article is to unsettle the quiescent waters of this Erie/Klaxon subpuzzle in private transnational cases. It should be asked up front: If the law is so settled, why unsettle it and perhaps further befuddle generations of lawyers and law students whose only hope has been to find any semblance of consistency in the dictates of the Erie doctrine? Three preliminary answers can be given.
First, it is a mistake to treat international and domestic conflict-of-laws cases in the same way because “international choice of law requires more flexibility than domestic choice of law.”21 22 [W]hile the Constitution, the Rules of Decision Act, the Rules Enabling Act, and various policy considerations may require the application of the laws of the several states, these same sources should not be read as similarly and automatically requiring the application of the law of foreign states because the application of foreign law, unlike sister state law, is entirely voluntary. . . .23 24
Second, to the extent there is increased private transnational litigation in United States courts,25 these Erie questions will arise with more frequency. To the extent they arise, courts should question the mechanistic application of a doctrine announced in the 1930s (and updated to conflict of laws in the 1940s and 1970s) to the realities of today, especially in light of more recent Supreme Court cases concerning constitutional constraints on choice of law.26
Third . . . the animating ethos of the Erie doctrine is perhaps thwarted by its application in private international cases. If it is correct that the Erie doctrine is about separation of powers and federalism,27 it does little to effectuate these goals by requiring federal courts to apply uncritically foreign law. Furthermore, recognizing that in unclear areas the Erie choice requires consideration of the “twin aims” of “discouragement of forum shopping and avoidance of inequitable administration of the laws,”28 these aims must be balanced against the strength of having a consistent federal policy. [T]his article shows through empirical analysis that forum shopping might be encouraged by the Erie doctrine’s application to cases involving foreign law. The discussion of forum shopping uncovers a previously unrecognized connection in the scholarly literature: internationalizing the Erie doctrine may in part explain the increased use of the forum non conveniens doctrine by federal district courts.29
Donald Earl Childress III (“Trey”), associate professor of law, teaches and works extensively on the topic of international civil litigation, comparative law, and conflicts of law. Among other activities, he is the American coeditor of the blog Conflictoflaws.net, the leading private international law portal on the Internet. His scholarship has appeared in the Duke Law Journal, UC Davis Law Review, and Georgetown Law Review, in addition to this excerpt from the Northwestern Law Review. His article challenges the widely held belief that the Erie doctrine automatically applies in private international law cases.
Reprinted with permission of the Northwestern University Law Review
3 BRUCE ACKERMAN, PRIVATE PROPERTY AND THE CONSTITUTION 272 n.4 (1971).
Less fawningly, it has also been described as a “myth” and a “religion” that has “accumulated a fringe of extremists, cultists, and fanatics.” See, e.g., R. Craig Green, Repressing Erie‘s Myth, 96 CAL. L. REV. 595, 596-97 (2008) (“The old myth is the Court’s original claim that its decision had a valid constitutional basis . . . [T]he new separation-of- powers myth [is that] Erie was chiefly concerned with stripping the unguided policymaking authority that federal courts had exercised under Swift v. Tyson.”); Marian O. Boner, Erie v. Tompkins: A Study in Judicial Precedent: II, 40 TEX. L. REV. 619, 635 (1962) (“Like a religion, Erie . . . has its dissenters and protestants.”).
4 See Thomas D. Rowe, Jr., Not Bad for Government Work: Does Anyone Else Think the Supreme Court is Doing a Halfway Decent Job in its Erie-Hanna Jurisprudence?, 73 NOTRE DAME L. REV. 963, 1015 (1998) (noting that the Erie decision is “a key part of the rite of passage through which most of us went and continue to put our students”).
5 See generally Adam N. Steinman, What is the Erie Doctrine? (And What Does It Mean for the Contemporary Politics of Judicial Federalism?), 84 NOTRE DAME L. REV. 245 (2008) (providing a recent explanation of the doctrine).
8 See, e.g., Guaranty Trust Co. v. York, 326 U.S. 99 (1945); Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U.S. 525 (1958); Hanna, 380 U.S. at 460; Burlington Northern R.R. Co. v. Woods, 480 U.S. 1 (1987); Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22 (1988); Gasperini, 518 U.S. at 427.
14 See, e.g., RICHARD H. FALLON, JR. ET AL., HART & WECHSLER‟S THE FEDERAL COURTS AND THE FEDERAL SYSTEM 698-701 (4th ed., Foundation Press 1996) (collecting sources). But see, e.g., DAVID F. CAVERS, THE CHOICE OF LAW PROCESS 222 (1965) (opposing overruling Klaxon in order to avoid mechanical conflict-of-laws rules); John Hart Ely, The Irrepressible Myth of Erie, 97 HARV. L. REV. 693, 715 n.125 (defending Klaxon‘s implementation of the Erie doctrine).
16 In this Article, I will use “international conflict of laws” as shorthand for a case in which a United States court is asked to apply foreign, non-United States law. The discussion that follows will involve the Erie doctrine’s application to foreign law, which I define as the law of a foreign state (e.g. the United Kingdom or France) as opposed to sister-state law (e.g. the law of California or Virginia), which is also “foreign” law for conflicts purposes but not the foreign law that is the subject here. See, e.g., Laycock, supra note 15, at 255 (noting the distinction).
23 See, e.g., JOSEPH STORY, COMMENTARIES ON THE CONFLICT OF LAWS § 23 (1834)
(“[W]hatever force and obligation the laws of one country have in another, depends solely upon the laws, and municipal regulations of that latter, that is to say, upon its own proper jurisprudence and policy and upon its own express or tacit consent.”).
25 See, e.g., Jenny S. Martinez, Towards an International Judicial System, 56 STAN. L. REV. 429, 441 (2003) (“[N]ational courts face transnational issues with increasing frequency”). But see Christopher A. Whytock, The Evolving Forum Shopping System, 96 CORNELL L. REV. (forthcoming 2010-2011), available at http://papers.ssrn.com/sol3/ papers.cfm?abstract_id=1596280 (questioning whether this is the case based on currently available empirical evidence).
27 See, e.g., Bradford R. Clark, Separation of Powers as a Safeguard of Federalism, 79 TEX. L. REV. 1321, 1327 (2001); Paul J. Mishkin, Some Further Last Words on Erie—The Thread, 87 HARV. L. REV. 1682, 1687 (1974). But see Green, supra note 3, at 616 (arguing that Erie had nothing to do with these concerns but was about enumerated powers).