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?



Get rid of diversity jurisdiction

Conservatives in Congress want to downsize government including the federal judiciary.  Most particularly, these folks want to get the federal judiciary out of the daily lives of our citizens, and they also want to empower the states to function without federal judges mucking with state law.  If the conservatives who are behind this movement are intellectually honest then there is a real easy way to begin accomplishing that task.  Moreover, this easy way won’t gut the ability of the federal judiciary to function in those spheres that even  conservatives agree are proper.

Congress could do away with diversity jurisdiction.  Sure, that would mean that some corporations would  find themselves in “hell holes” where judges and juries are overly sympathetic to plaintiffs.  On the other hand, there are many other jurisdictions that are not particularly plaintiff-friendly.  For example, Nebraska doesn’t allow punitive damages for plaintiffs in most cases.

Diversity jurisdiction for the federal courts once made sense.  No so anymore.  I would be happy to trade diversity jurisdiction for an end to (or even a lessening of) judicial sequestration.  And, even if that trade-off were not possible, ending diversity jurisdiction would allow the federal judiciary to concentrate its reduced resources on federal questions that really matter.*  This is a “conservative” idea that intellectually honest legislators of all stripes could embrace.

Any takers?


*Why in the hell should I know the slightest thing about the comparative negligence law of Nebraska?

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