Civil Procedure.  The Erie Doctrinefirst set forth in Erie Railroad Company v. Tompkins, 304 U.S. 64 (1938), requires that a federal court hearing a diversity matter must apply the substantive law of the state in which it is located.  However, the federal court must still follow the federal procedural laws.

Substantive vs. Procedural Laws

It is not always easy to determine whether a law/rule is procedural or substantive.  “The distinction between substance and procedure has proved highly elusive.” Lundgren v. McDaniel, 814 F. 2d 600, 605-06 (11th Cir. 1987); Hanna, 380 U.S. at 471; Guaranty Trust Co. of New York v. York, 326 U.S. 99, 108 (1945)(“The line between ‘substance’ and ‘procedure’ shifts as the legal context changes[]”). Courts have, however, developed some methods for identifying statutes that are so patently substantive in nature that any need for labored analysis is obviated.

One such class of laws are those intended to be bound up with the definition of the rights and obligations of the parties.  Another such class of “easy cases” are those in which a state procedural rule, “though undeniably ‘procedural’ in the ordinary sense of the word, is limited to a particular substantive area.” S.A. Healy Co. v. Milwaukee Metro. Sewerage Dist., 60 F. 3d 305, 310 (7th Cir. 1995).

In the “difficult cases” where it is not as clear whether the law is procedural or substantive, the courts consider whether the likelihood that failure to apply the state law would significantly affect the outcome of the case, encourage forum shopping, or encourage inequitable administration of the laws. Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 428 (1996).  Federal jurisprudence holds that “ostensibly procedural” state laws should be applied in federal court where failure to do so would make federal courts attractive to plaintiffs for improper reasons. See Woods v. Holy Cross Hosp., 591 F.2d 1164, 1168 (5th Cir. 1979).

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