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.

Background

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).

Hypothetical

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?

RGK

 

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