A question for civil litigators in diversity cases–should federal district judges construe state law broadly or narrowly?

Today, I want to pose a hypothetical to civil litigators. It relates to whether a federal trial judge in a diversity case should be an “activist” judge when it comes to applying state law.


As background for the question I am about to ask, concentrate on the “litigation privilege” discussion and read the federal district court opinion in Williams v. BASF CATALYSTS LLC, Civil Action No. 11-1754 (SRC) (Part IV.C.4. “fraud) (D. New Jersey 2012) (applying New Jersey’s “litigation privilege” and dismissing common law fraud claim as a result). Again concentrating on the “litigation privilege” discussion, read Williams v. BASF CATALYSTS LLC, No. 13-1089 (Part III.B.2.” Analysis”) (3rd Cir. 2014)  (reversing and concluding that New Jersey’s “litigation privilege” did not apply because “New Jersey would [not] extend its litigation privilege to a claim of fraud directed at the integrity of the judicial process.”).

With a tip of the chapeau to Howard Bashman and How Appealing at his appealing new address, there has been a lot of news coverage of the Williams case. You might also read that new coverage for background. See Alison Frankel, How to (allegedly) hide evidence, lie to opponents – and get away with it, Reuters (October 3, 2014); Jef Feeley and Sophia Pearson, BASF Must Face Asbestos Coverup Fraud Claims, Court Says, Bloomberg (Sep 4, 2014);  Peg Brickley, Appeals Court Breathes New Life Into Fraud Case Involving BASF, Cahill Gordon, WSJ Law Blog (September 4, 2014).


Let’s say I have a diversity action. See 28 U.S. Code § 1332. Assume I am required to apply the law of the forum. The law of the forum tilts pretty strongly one way, but I believe the result is unjust and I can, with an almost straight face, go the other way and conclude that state law would dictate the result that I favor. To be clear, my view of the right result is not crazy and is roughly consistent with conventional legal reasoning. However, my preferred construction of state law would produce a result for which there is no state law precedent and it might even be said to conflict with state law precedent.

As a matter of jurisprudence, what should I do and why? Any war stories you care to share?



21 responses

  1. When I clerked for a federal appeals court judge, I was assigned a mandamus petition in which a hospital, the defendant in a civil action under state law, had been ordered to produce for in camera inspection psychiatric records of two patients who had allegedly raped the plaintiffs-respondents’ daughter. But a state statute said that all such records are absolutely privileged. The District Judge ordered production anyway, reaosining that the purpose of the statutory privilege — to encourage frank disclosure during treatment — would not be furtherered by insulating the hospital (or the assaultive patients) from tort liability. While the District Judge made a persuasive case for why the state legislature could not hacve intended to bar disclosure of treatment records in those circumstances, the panel unanimously voted to grant the writ, noting in the process that it is not the role of a federal court sitting in diversity to trump the policy choices of a state legislature as reflected in its duly enacted statutes.


  2. Judge —

    I think the case law is pretty clear that you have to try to predict what the state’s highest court would do if confronted with the question and then follow that prediction even if you don’t like it or it’s out of step with the majority of other jurisdictions. Now, if there really is no indication and the state’s intermediate appellate courts haven’t considered the issue, I suppose you might have a freer hand. But that’s a pretty rare circumstance.

    Much of my work is in federal courts sitting in their diversity jurisdiction. In certain unsettled areas of the law, I spend a lot of time trying to map out why the federal court should make this prediction or that one. The Pennsylvania Supreme Court helped by instituting a process by which federal courts of appeals may certify questions of state law to the Pennsylvania Supreme Court. If the state court accepts the question, it then provides an answer and the federal court (presumably) need only apply it. I have such a certified question before the court now.


  3. In theory, it’s a no-brainer. The judge’s office “is jus dicere and not jus dare; to interpret law, and not to make law, or give law.” Federal judges tend to forget that the Article III judicial power does not constitute a license to impose their own personal brand of ad hoc justice from the bench. It is the province of state legislatures to write and courts to interpret their own constitutions, and their established judgments ought to be followed, constitutional considerations notwithstanding.

    In practice, federal judges are going to do what they damn well please, precedent be damned, as exemplified by Da Man’s anecdote above. As Justice Scalia recently said about his critics: “What are they going to do? I have life tenure.” Unless it’s an interesting case, the Court of Appeals is a rubber-stamp, and the worst that could happen is that it comes back to you in two or three years. What is the loser going to do? The Supreme Court doesn’t correct errors.

    If a judge doesn’t care about the outcome, s/he will follow precedent. If not, s/he won’t, because there is no consequence for defying it. It’s up to your own conscience, as that is the only actual constraint on your actions.

  4. in my opinion, your comment that you could “go the other way” with “an almost straight face” sort of answers your question. that admission sounds to me like you would be attempting to fit a square peg in a round hole just to fit your own personal notion of justice.

  5. I can not resist the temptation to steal from John R. Brown of 5th Cir., my Erie lights are dim, not all State Supreme Courts are easy to predict and I can not remember if you are supposed to follow Neb(Unof).

  6. Justice Frankfurter used to speak of the it will not write limit on judicial creativity, it is that limit or the almost straight face that keeps the judge from applying a personal sense of justice as apposed to part of the shared traditional senses of justice within the rule of law.

  7. But…but….you are the judge who said that you never let your policy preferences interfere with your decisions….and here you are, ready to do what’s “just,” whatever that might be…tsk tsk….

    I am in exactly the position you describe at the moment. I am representing a defamation plaintiff in federal court who has been held to be a public figure. My diversity libel claims have been dismissed because, says the district judge, I did not sufficiently plead facts to demonstrate constitutional malice. Yet under uniform and long-standing NY State law, malice in a defamation complaint need only be stated generally, with specific facts to await discovery. Thus there is a conflict what the judge did, and NY State law, as well as Rule 9(b), both of which say that malice can be stated generally. Is this procedural or substantive? I will ask the Second Circuit, and maybe they will tell me…

    The outcome of any diversity case is supposed to be the same whether it’s brought in state or federal court. You are supposed to do your best to figure out what state law is, and apply it, whether you agree with it or not. The case you cited says precisely that. The trouble is that, while circuit courts can in some states (NY is one) ask their highest state court for an answer, district judges can’t. But if you didn’t follow the state law, I think you would be wrong.

  8. Can you come down differently from a state court precedent? Sure. Should you?

    I tend to come out contrary to the other comments and many of your own posts. I am less adverse to doing justice. I’ve practiced for 10 years. I’ve spent too much time looking for cases that support my position, where one court did what I wanted, said something that supported my position. My conclusion is that doing that, which is effectively trying to point the court to a precedence or a strong persuasive reasoning, is less effective if the court does not agree with the outcome.

    While that background is useful, I have seen far more attorneys prevail with a less researched position, but with more pure advocacy that under these circumstances and the governing law, their position is the just position. My conclusion is that there’s nothing wrong with those rulings. Is it really that had to distinguish other decisions? Even precedent? No. Particularly if the precedent is merely an affirmation of the trial court’s ruling. You just have to discern what the state’s highest court would do, right? Is there anything that would stop you from doing that if you believe the state’s highest court would come down differently, either based on the facts before you or the resulting outcome? I fully believe the court has an obligation to explain itself in reaching a “different” conclusion. That’s good for the parties, good for the appellate record, good for everyone.

  9. You’ve posed the same questions the Founders faced when creating the three separate branches and the question addressed in Erie. A federal judge’s sense of “justice” is not grounds to overturn the legislature’s policy decisions, unless the statute offends a constitutional provision or superior federal statute. Erie rejected the idea of independent federal common law for state law. What might be the sense of “justice” expressed by the state’s legislature and its highest court is binding. If the result seems unjust, a federal judge can say so, while noting that a contrary result is required by the law of the state.

    In some ways, the question is philosophically no different from a controlling federal precedent that is deemed “unjust.” In a diversity case, the state’s highest court is the “superior” court, even though there is no direct appeal there.

  10. David,

    The certification alternative is interesting. The Nebraska Supreme Court almost never accepts such a question and so that alternative is not normally available here.

    Just guessing, but I believe the Nebraska Supreme Court frequently declines such requests because the Justices frequently believe the certified question is factually dependent. My sense is that the Justices believe that if there is any disagreement among the parties on the facts or the certified question does not include important facts, the question is not appropriate for resolution through the certification mechanism.

    All the best.


  11. The Absinthe-Minded Perfesser,

    You write: “It’s up to your own conscience, as that is the only actual constraint on your actions.” Perhaps inadvertently, you have hit on the universal difficulty of being a federal judge.

    We do have a great deal of power, and that is why adherence to conventional legal methodolgy (as opposed to doing “justice”) is so important as we try to shoehorn the federal judiciary into our otherwise strongly democratic traditions.

    All the best.


  12. Focusing on the impetus for RGK’s post — the BASF case — it is important to note that the litigation privilege the Third Circuit construed was judge-created, so the panel did not trample on the NJ citizens’ right to express their will through statutory enactments. However, if the privilege as developed to date is so plainly absolute, and so plainly covers the litigation misconduct over which the plaintiffs had sued, then I think it would have been wiser, and more consistent with notions of federalism and comity, for the panel to certify the question to the New Jersey Supreme Court. The decision not to do so may have been drived by the outrage the panel felt over the allegations in the complaint: i.e., that a corporation and its lawyers (from a respected Wall Street law firm) conspired to conceal evidence and defraud civil plaintiffs out of a tort recovery.

  13. Da Man,

    I don’t know that I agree with you that for a federal judge it should make a difference that state statutory law is involved rather than state judicially created law. That said, assuming the NJ Supreme Court regularly accepts certified questions, I think the Third Circuit would have been well advised to ask the New Jersey Supreme Court for the answer.

    All the best.


  14. Maybe there is no difference — the risk of misreading state law is the same in either case.

    At any rate, the irony in BASF is that the plaintiffs-appellants were the ones asking for certification in both their opening and reply briefs in the Third Circuit. Now that they have won, it is the defendants-appellees who have filed rehearing petitions ask the Third Circuit to certify the privilege question to the New Jersey Supreme Court. Even if the en banc court votes to grant that request, I’m not sure that the defendants will fare any better. But at least they will have an authoritive statement from the state’s highest court saying that they must defend on the merits.

  15. If the idea is a prediction, then in a statutory case should not the judge apply the jurisprudence or methodology of the State Supreme Court, so that in Da Man’s mandamus case C of A was only right if State did Scalia imitations but wrong if it did Breyer imitations. Similarly on case law make it fit pattern of case law, which is what CA 3 did. In practice to steal from Cardozo this time,”they do things better with logarithms.” Reading pleading discussions makes me wonder why I gave away my Clark on Code Pleading.


    The Court of Appeals WAS right in the mandamus case I discussed in the first comment.

    State decisional law stressed that the statute should be construed strictly (meaning the privilege should be construed broadly). There was only one case in which the state court found that the privilege had to give way, i.e., where a different state statute trumped the non-disclosure obligation.

    Since state law made it clear that the state courts would enforce the statutory privilege (even if it meant that the victimized patient could not get access to important information that might be the difference-maker in her effort to hold the hospital liable for negligently failing to protect her), the appellate court was right to overturn an order requiring disclosure of privileged treatment records. (And the District Court was wrong for doing what he thought was “just,” instead of what the law plainly required.)

  17. Actually, that was my point. Our judges have arrogated (or, if you want to be technical, “usurped”) an almost god-like power over those unfortunate souls forced to appear before them. And if an outcome really matters to a judge, the parchment barrier we call the Constitution may as well not exist.

    The problem is that when you have the kind of power that would tempt a saint, it isn’t a matter of if you abuse it, but when. This is why those who are in authority over us should have as little discretion as possible, and be as accountable for their actions as possible.

    Since we were on the subject of Shon, I would remind you of the effusive praise you lavished on Janice Rogers Brown: “Janice Rogers Brown is a hero. Although pilloried by the left when she was appointed, the woman I came to know while serving on the Codes of Conduct Committee for six years is a stunning combination of brilliance and perfectly centered good judgment. She is also a wonderfully humble, kind and decent person.”

    Imagine Congress, passing a law negating the constitutional rights of individuals on an ad hoc and ex post facto basis which is impervious to constitutional challenge by those who are directly and uniquely affected. And try to imagine that Congress really didn’t mean what they said in the straightforward 28 U.S.C. Sec. 1361, which most veteran federal judges can probably recite from memory. Inexplicably, JRB could.

    I don’t know her, but will assume that she is everything you say and more. But as John Adams opined, “It is weakness rather than wickedness which renders men unfit to be trusted with unlimited power.” She succumbed to the temptation of substituting her preference for rational interpretation of unambiguous statutory law because she knew she could.

    The problem with our system is that judges are not accountable for their occasional flights of despotism. All of the accountability mechanisms the Framers put into place have been interpreted out of existence, and the judiciary itself has an ethos facilitating licentious judicial behavior. When a judge, s/he is never set upon by colleagues (like English judges of old would do), because “there, but for the grace of God, go I.”

    This, I would submit, is why I concur with Professor Kerr (apart from the fact that I don’t see how it is even logically possible to have equal justice under law if errors are not reviewed by the Supreme Court). Give a cop an inch, and he’ll take a time zone. http://www.youtube.com/watch?v=3kEpZWGgJks. (John Oliver, formerly of The Daily Show with Jon Stewart, on the travesty that is civil forfeiture laws) Judges, truth be told, are even worse.

    I would put strict time limits on the length of time that a motorist could be detained, and create a presumption against admissibility of any evidence obtained in a custodial stop. Granted, it will make law enforcement more difficult, but the right to be let alone is not of de minimis value.

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