In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

No. 23-1185 

GREEN PLAINS TRADE GROUP, LLC, et al., 

Plaintiffs-Appellants, 

v.

ARCHER DANIELS MIDLAND COMPANY, 

Defendant-Appellee. 

____________________ 

Appeal from the United States District Court for the 

Central District of Illinois. 

No. 2:22-cv-02067 — Colin S. Bruce, Judge. 

____________________ 

ARGUED SEPTEMBER 20, 2023 — DECIDED JANUARY 12, 2024 

____________________ 

Before RIPPLE, JACKSON-AKIWUMI, and LEE, Circuit Judges. 

RIPPLE, Circuit Judge. Green Plains Trade Group, LLC 

(“Green Plains”) appeals from the district court’s grant of 

Archer Daniels Midland Company’s (“ADM”) motion to dismiss. Green Plains based its claim for tortious interference 

with contract on allegations that ADM unlawfully manipulated the price of ethanol downward, causing Green Plains to 

receive less money for the ethanol that it sold to third parties. 

Sitting in diversity and endeavoring to apply Nebraska state 
2 No. 23-1185 

law, the district court indicated the Nebraska Supreme Court 

might adopt Green Plains’s theory. Nevertheless, the district 

court declined to do so here. Instead, the court read our case 

law as forbidding such a course because it constituted an application of state law in a manner not yet adopted by the Nebraska Supreme Court. 

A federal court sitting in diversity has a basic constitutional responsibility to ascertain correctly the content of state 

law. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). When the 

highest court of the state has not spoken on the matter, this 

inquiry can be difficult, but it cannot be avoided. In such situations, our case law, and that of the Supreme Court, instructs 

us to search elsewhere for a persuasive indication of how the 

highest court of the state would rule if the present case were 

before that tribunal today. Over time, we have articulated several “guardrails” to guide and discipline our decision-making 

process. One such maxim counsels district courts against accepting novel state law claims when the evidence concerning 

the content of state law is in equipoise. But this maxim has its 

limits and should not be overused. The district court’s north 

star, and one constitutionally mandated by Erie, is to discern, 

as best it can, the content of state law as the highest court of 

the state would view it today. 

If Green Plains adequately amends its complaint, the district court should revisit its decision on the content of Nebraska law in a manner consistent with this opinion. 
No. 23-1185 3

I 

BACKGROUND 

A. Facts 

This case comes to us from the district court’s grant of a 

motion to dismiss under Rule 12(b)(6) of the Federal Rules of 

Civil Procedure. We therefore take as true the allegations of 

the complaint and base this present recitation on those allegations. 

Green Plains and ADM are two of the Country’s largest 

ethanol producers, capable of producing, respectively, over 

1 billion and 1.69 billion gallons of ethanol each year. Ethanol 

is a renewable fuel made primarily from corn and other 

grains. The United States produces over 16 billion gallons of 

ethanol annually. Federal law requires gasoline producers to 

blend renewable fuels, such as ethanol, into gasoline to be 

used as transportation fuel.1

 Ethanol purchasers may obtain 

ethanol directly from ethanol producers or from sales terminals located throughout the country. 

Because most of the Country’s ethanol production takes 

place in the Midwest, the industry treats the price set at the 

Kinder Morgan Argo Terminal (“Argo Terminal” or “Terminal” or “Argo”) in Argo, Illinois, as the key indicator of the 

value of ethanol. The pricing service S&P Global Platts 

(“Platts”) provides a benchmark price assessment that reflects 

the daily trading price of ethanol at the Argo Terminal. This 

“Chicago Benchmark Price” is calculated each day during the 

1 See 42 U.S.C. § 7545(o); Ergon-West Virginia, Inc. v. EPA, 896 F.3d 600, 

602–03 (4th Cir. 2018) (providing background on the federal renewable 

fuel standard program). 
4 No. 23-1185 

Argo Terminal’s Market-on-Close (“MOC”) window. During 

the MOC window, buyers post bids and sellers post offers; 

when a bid and an offer match, a sale is consummated. Platts 

bases the Chicago Benchmark Price on the quantity and price 

of ethanol sold during the MOC window and deliverable to 

buyers between five and fifteen days forward from the date 

of sale. The Chicago Benchmark Price serves as a reference 

price for more than 70% of physical ethanol pricing locations 

around the country. 

The price of ethanol futures contracts is also tied to the 

Chicago Benchmark Price.2

 In its complaint, Green Plains alleges that ADM began manipulating downward the price of 

physical ethanol at the Argo Terminal in November 2017. 

ADM’s manipulation of the price of physical ethanol led to 

reduced profits for ADM and other producers selling ethanol 

at prices tied to the Chicago Benchmark Price. But ADM 

shielded itself from this downward trend. Although ADM 

would ordinarily be vulnerable to decreased contract prices 

in the same way as the other producers, ADM protected its 

bottom line by holding outsized short positions in the ethanol 

futures market and therefore profiting when the price of ethanol fell. 

When the price of an underlying commodity falls, short 

positions in futures contracts pegged to that price turn a 

profit. Participants in futures markets speculate on the future 

price of an underlying commodity by buying or selling 

2 See Kohen v. Pac. Inv. Mgmt. Co. LLC, 571 F.3d 672, 675 (7th Cir. 2009) 

(“Changes in the demand for or the supply of the underlying commodity 

will make the price of a futures contract change over the period in which 

the contract is in force.”). 
No. 23-1185 5

futures contracts, which are “contract[s] for the sale of a commodity at a future date.” United States v. Dial, 757 F.2d 163, 

164 (7th Cir. 1985). Futures contracts “rarely result[] in actual 

delivery of the commodity,” id., but instead are often “cash 

settled,” with payment occurring between the parties based 

on the difference between the original contract price and the 

final settlement price. See Commodity Futures Trading Comm’n 

v. Zelener, 373 F.3d 861, 864 (7th Cir. 2004) (quoting Chicago 

Mercantile Exch. v. SEC, 883 F.2d 537, 542 (7th Cir. 1989)). Participants in the futures market can hold “long” or “short” positions. When the price of the underlying commodity rises, 

the “long” purchaser benefits; conversely, when the price of 

the underlying commodity falls, the “short” purchaser benefits. Kohen, 571 F.3d at 675. Short positions benefit from falling 

prices of the physical product because short sellers agree to 

sell a contract at the current going rate and then deliver at a 

later point. If the price of the product falls in the meantime, 

the short seller can then buy and deliver the contract at that 

lower price, profiting from the difference.3

 Investors taking 

short positions expect the contract’s price to drop; if or when 

it does, the seller makes a profit. 

Most commodity producers have an incentive to hedge 

their supply via short futures contracts in a manner consistent 

3 See Sullivan & Long, Inc. v. Scattered Corp., 47 F.3d 857, 859 (7th Cir. 1995) 

(“A short sale is a sale at a price fixed now for delivery later. A trader sells 

stock short when he thinks the price of the stock is going to fall, so that 

when the time for delivery arrives he can buy it at a lower price and pocket 

the difference. If, for example, he sells the stock short at 50 cents a share, 

and the price falls to 40 cents before he delivers the stock, he can buy the 

stock for 40 cents a share, deliver it to the buyer, and have made a profit 

of 10 cents.”). 
6 No. 23-1185 

with their monthly production schedule, a practice that aims 

to reduce volatility in revenue. Hedging consistent with production ensures that producers are not overexposed to downturns in the market; if the price of ethanol declines, falling revenue will be partially offset by short sale gains. But Green 

Plains has alleged that ADM’s behavior greatly exceeded expected hedging: ADM consistently held futures contracts that 

represented quantities more than twice as large as its monthly 

production of ethanol.4

 Because ADM held large quantities of 

short positions that increased in value when the price of ethanol decreased, ADM was not only protected from the falling 

price of ethanol, but profited from it. 

According to Green Plains’s complaint, ADM was able to 

effect this scheme by taking advantage of weaknesses at the 

Argo Terminal to drive down the price of physical ethanol. 

First, ADM fabricated an appearance of a surplus of ethanol 

by overwhelming the Terminal with conveniently-timed 

barges. The Terminal receives ethanol shipments via rail, 

truck, and barge. But its ability to handle large numbers of 

barge deliveries at once is limited: it has manpower and space 

to load and unload, on average, only two barges each day. 

Aware of the Terminal’s limitations, ADM sent multiple 

barges into Argo at the same time, overloading its supply and 

unloading capabilities. And because Argo’s ethanol capacity 

is limited to 1 to 1.2 million gallons of ethanol, the Terminal 

4 Each ethanol futures contract represents 1,000 barrels, or 42,000 gallons, 

of ethanol. Monthly hedging consistent with ADM’s annual production of 

1.69 billion gallons would equal about 141 million gallons, or about 3,350 

contracts. During certain months, however, ADM acquired 6,000 to 7,000 

futures contracts, representing 252 to 294 million gallons of ethanol. 
No. 23-1185 7

was then forced to store ethanol in tanks, creating the appearance of an ethanol surplus and depressing prices. 

Next, ADM began selling high quantities of ethanol at low 

prices during the MOC window. Prior to its alleged manipulation, ADM was a consistent buyer at the Argo Terminal. But 

ADM changed course beginning in November 2017. From 

then until October 2019, ADM was a frequent seller and accounted for nearly 70% of the total volume of physical ethanol 

sales at the Terminal during the MOC window. Under normal 

circumstances, ethanol sellers “negotiate” with buyers in the 

MOC window by gradually decreasing offers while buyers 

gradually increase bids until the two parties match. But ADM 

eschewed this established practice and aggressively and routinely offered the lowest prices and quickly accepted buyers’ 

opening low-priced bids. Further, ADM frequently sold more 

ethanol during the MOC window than it could physically deliver and was often forced to purchase ethanol at a loss later 

in the month to satisfy its obligations. Finally, ADM repeatedly chose to sell at the Argo Terminal (and therefore continually exert its influence over the price) even though it could 

have made a profit by selling at non-Argo terminals operating 

at a price premium. 

ADM’s actions, the allegations continue, depressed the 

price of physical ethanol. Green Plains and the third parties 

that purchased ethanol from Green Plains used the Chicago 

Benchmark Price as a reference point for their contracts. Because ADM unlawfully depressed the price of ethanol, Green 

Plains received a lower price for its physical ethanol sales contracts tied to the Chicago Benchmark Price than it would have 

in the absence of ADM’s manipulation. 
8 No. 23-1185 

B. Proceedings in the District Court 

In October 2021, Green Plains brought this action against 

ADM in the United States District Court for the District of Nebraska. It predicated federal jurisdiction on diversity of citizenship. See 28 U.S.C. § 1332. Based on the allegations just described, Green Plains presented a claim of tortious interference with contract. ADM moved to dismiss or to transfer the 

case to the Central District of Illinois. The Nebraska district 

court granted ADM’s motion to transfer. Once in the Central 

District of Illinois, ADM renewed its motion to dismiss, contending Green Plains did not satisfy the elements for tortious 

interference with contract.5

 The district court agreed and dismissed the case with prejudice. 

First, the district court concluded that Green Plains was 

required to allege specific contracts with which ADM had interfered. Although Green Plains had “alluded to various contracts,” it had “not identified the third parties with whom 

[Green Plains] had the contracts, any other terms of those contracts, or what specific losses [Green Plains] suffered.” Green 

5 Under Nebraska law, a typical tortious interference with contract claim 

has five elements: “(1) the existence of a valid business relationship or expectancy, (2) knowledge by the interferer of the relationship or expectancy, (3) an unjustified intentional act of interference on the part of the 

interferer, (4) proof that the interference caused the harm sustained, and 

(5) damage to the party whose relationship or expectancy was disrupted.” 

Pettit v. Paxton, 583 N.W.2d 604, 609 (Neb. 2009) (citing Miller Chem. Co., 

Inc. v. Tams, 320 N.W.2d 759, 762 (Neb. 1982)). At times, the Nebraska Supreme Court has also reiterated that “one of the basic elements of tortious 

interference with a business relationship requires an intentional act which 

induces or causes a breach or termination of the relationship.” Id.;

Wiekhorst Bros. Excavating & Equip. Co. v. Ludewig, 529 N.W.2d 33, 40 (Neb. 

1995) (same). 
No. 23-1185 9

Plains Trade Grp., LLC v. Archer Daniels Midland Co., 648 F. 

Supp. 3d 1028, 1033 (C.D. Ill. 2022). The district court held 

that, without such specificity, ADM did not have sufficient 

knowledge of the contracts with which it was alleged to have 

interfered. 

Next, the district court determined that Green Plains had 

failed to plead a breach of contract. In its view, Green Plains 

could not state such a claim for relief because Nebraska tortious interference law ordinarily requires plaintiffs to prove 

that an actual breach occurred. Green Plains had not alleged 

that ADM had caused the third parties to breach; rather, it alleged that ADM caused Green Plains’s completed contracts to 

be less profitable. 

But absence of breach was no impediment to Green 

Plains’s theory that, under Nebraska law, tortious interference does not always require a breach. This theory relied on 

section 766A of the Restatement (Second) of Torts. This provision allows a plaintiff to bring a successful tortious interference with contract claim on the ground that the defendant interfered with his contract by causing his performance to be 

“more expensive or burdensome” even if the contract was not 

breached. Restatement (Second) of Torts § 766A. Green Plains 

therefore submitted that because ADM’s downward manipulation of the price of ethanol caused its contracts tied to that 

price to be less profitable, it had a viable claim under section 

766A. 

In their submissions to the district court, the parties disputed whether Nebraska state law recognized section 766A 

claims. Both parties relied on the Nebraska Supreme Court’s 

decisions in Pettit v. Paxton, 583 N.W.2d 604 (Neb. 1998), and 

Recio v. Evers, 771 N.W.2d 121 (Neb. 2009). The district court 
10 No. 23-1185 

analyzed both decisions and reasoned that although “the Nebraska Supreme Court has not explicitly adopted or recognized § 766A and applied it to the facts under consideration, 

it has also not rejected that section out of hand or refused to 

recognize it as a cause of action under Nebraska tort law.” 

Green Plains, 648 F. Supp. 3d at 1036. Later, the court continued: “[I]t could be inferred that, under the proper factual circumstances, the Nebraska Supreme Court would recognize 

§ 766A-style claims as legitimate actions for tortious interference with contract.” Id. at 1037. 

Despite this conclusion, the district court refused to allow 

Green Plains to proceed on a section 766A claim. Notably, its 

refusal was based largely on its reading of our cases cautioning district courts sitting in diversity against expanding state 

law. These cases, in the district court’s view, required that it 

“choose the narrower interpretation that restricts liability.” Id.

at 1038. 

Consequently, the district court dismissed Green Plains’s 

complaint with prejudice but noted that if it had determined 

that Nebraska law recognized section 766A claims, it would 

have allowed Green Plains to amend its complaint and attach 

specific contracts. Green Plains timely appealed. 

II 

DISCUSSION 

Green Plains first submits that the district court’s requirement that it plead specific contracts was excessive in light of 

Rule 8 of the Federal Rules of Civil Procedure and the standards articulated by the Supreme Court of the United States in 

Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. 

Twombly, 550 U.S. 544 (2007). Green Plains further contends 
No. 23-1185 11

that the district court erred by failing to recognize section 

766A of the Restatement (Second) of Torts as part of the substantive law of Nebraska. Admitting that the Nebraska Supreme Court has not squarely applied this section of the Restatement, Green Plains nevertheless submits that, in both 

Pettit and Recio, that court necessarily acknowledged that section 766A was part of the state’s law. We address each of these 

submissions in turn. 

A. Pleading Standards 

We review a district court’s dismissal of a complaint under 

Rule 12(b)(6) de novo. West Bend Mutual Ins. Co. v. Schumacher, 

844 F.3d 670, 675 (7th Cir. 2016). Because Rule 8(a)(2) of the 

Federal Rules of Civil Procedure requires a pleading to contain “a short and plain statement of the claim showing that 

the pleader is entitled to relief,” in order “[t]o survive a motion to dismiss, a complaint must contain sufficient factual 

matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ A claim has facial plausibility when the 

plaintiff pleads factual content that allows the court to draw 

the reasonable inference that the defendant is liable for the 

misconduct alleged.” Ashcroft, 556 U.S. at 678 (citing Twombly, 

550 U.S. at 570). A plaintiff must “‘provide some specific facts’ 

to support the legal claims asserted in the complaint.” 

McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011) 

(quoting Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009)). And 

although “the required level of specificity ‘is not easily quantified,’ a plaintiff must allege ‘enough details about the subject-matter of the case to present a story that holds together.’” 

Bilek v. Fed. Ins. Co., 8 F.4th 581, 586 (7th Cir. 2021) (quoting 

McCauley, 671 F.3d at 616). 
12 No. 23-1185 

In the circumstances presented here, the district court was 

on solid ground in requiring Green Plains to plead more than 

the generalized allegation that it had valid contracts with 

third parties for the sale of physical ethanol tied to the Chicago Benchmark Price. A claim for tortious interference with 

contract requires the plaintiff to plead that a valid contract existed and that the defendant knew about the contract. Pettit, 

583 N.W.2d at 609. Although ADM conceivably could have a 

general understanding of the contracts to which Green Plains 

refers, “[a]n inadequate complaint will not survive a motion 

to dismiss simply because the defendants managed to figure 

out the basic factual or legal grounds for the claims.” Adams 

v. City of Indianapolis, 742 F.3d 720, 729 (7th Cir. 2014). Something more than Green Plains’s initial complaint is required. 

We do, however, caution the district court against requiring 

particularity akin to a Rule 9(b) requirement. Fed. R. Civ. P. 

9(b). In rejecting Green Plains’s complaint on specificity 

grounds, the district court found that “[p]laintiffs have not 

identified the third parties with whom they had the contracts, 

any other terms of those contracts, or what specific losses they 

suffered.” Green Plains, 648 F. Supp. 3d at 1033. Green Plains 

must provide ADM sufficient notice of its claims, supported 

by nonconclusory factual allegations, see Brooks, 578 F.3d at 

581, but Green Plains is not required to plead “the who, what, 

when, where, and how” required for claims of fraud or mistake under Rule 9(b). Vexol, S.A. de C.V. v. Berry Plastics Corp., 

882 F.3d 633, 637 (7th Cir. 2018) (quoting DiLeo v. Ernst & 

Young, 901 F.2d 624, 627 (7th Cir. 1990)). Consequently, although the district court correctly determined that the validity 

of the contracts must be set out in the complaint, it is not selfevident that without further justification, more particular information is required at this early stage of the proceedings. 
No. 23-1185 13

The district court specifically stated that, had it concluded 

that the Nebraska Supreme Court would recognize section 

766A claims, it would have allowed Green Plains leave to 

amend its complaint. As we will explain below, the district 

court employed improper methodology in determining the 

content of Nebraska state law. On remand, if Green Plains satisfactorily amends its complaint, the district court should revisit its section 766A analysis, guided by the following clarification. 

B. Ascertaining the Content of State Law 

In determining whether the district court erred in its assessment of Nebraska law, we set forth at the outset the fundamental principles governing this area. Indeed, resolution of 

this appeal turns on these basic principles, which are deeply 

rooted in our constitutionally-based federalism. As one treatise has emphatically stated, “[b]ecause of the important federalism concerns implicated in the application of state law by 

the federal courts, the accurate ascertainment of that law is 

extremely important.” 19 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 4507, 

at 170 (3d ed. 2016). 

When a district court’s jurisdiction is predicated on diversity of citizenship, it must apply the law of the state in which 

it sits, including that state’s choice of law rules. See Klaxon Co. 

v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); Erie, 304 U.S. 

at 78. We review a district court’s interpretation of state law 

de novo. Salve Regina Coll. v. Russell, 499 U.S. 225, 231–32 
14 No. 23-1185 

(1991).6

 We must apply state law as we believe the highest 

court of the state would apply it if the case were now before 

that tribunal rather than before our court. See Bernhardt v. Polygraphic Co. of America, 350 U.S. 198, 203 (1956); Todd v. Societe 

Bic, S.A., 21 F.3d 1402, 1405 (7th Cir. 1994) (en banc). When the 

state’s highest court has squarely addressed the issue, a federal court’s task is straightforward: apply the law as determined by that court.7

 But when the highest court of the state 

has not spoken, ascertaining the present content of state law 

is often a delicate and, at times, arduous process. Frequently, 

we encounter significant ambiguity; our obligation, however, 

remains constant: We must ascertain, as best we can, the rule 

of law that the highest court of the state would apply if the 

case were now before it. We must “decide, not avoid” the 

question. Daily v. Parker, 152 F.2d 174, 177 (7th Cir. 1945). Accuracy in the determination of the content of state law is, 

moreover, a most serious responsibility because, as Erie

makes clear, our determination implicates one of the most essential aspects of our constitutional federalism: the right of a 

state to determine, within constitutional bounds, the content 

of its state law. See Allstate Ins. Co. v. Menards, Inc., 285 F.3d 

630, 634–35 (7th Cir. 2002) (noting the constitutional basis of

Erie’s holding); Bernhardt, 350 U.S. at 202 (same). 

Given the importance of the undertaking, it is not surprising that the case law sanctions, indeed encourages, a broad 

6 See also Leavitt v. Jane L., 518 U.S. 137, 145 (1996) (holding that the Supreme Court will not defer to a court of appeals determination as to the 

content of state law). 

7 City of Chicago v. Morales, 527 U.S. 41, 61 (1999); Wainwright v. Goode, 464 

U.S. 78, 84 (1983); Mullaney v. Wilber, 421 U.S. 684, 691 (1975). 
No. 23-1185 15

inquiry by federal courts when faced with untangling ambiguity. We may consult “other persuasive authority” to determine what the highest court of the state would do if the case 

was before it. Todd, 21 F.3d at 1405; see also McKenna v. Ortho 

Pharm. Corp., 622 F.2d 657, 662–63 (3d Cir. 1980).8 We may 

look to the decisions of the state’s other courts, including 

“considered dicta,”9 for clues as to how the highest court of 

the state might resolve the open question. On occasion, the 

state’s highest court’s decisions in other, but somewhat parallel areas, may yield important clues as to how the court might 

resolve the issue. For instance, decisions in parallel areas may 

8 See, e.g., Heller Int’l Corp. v. Sharp, 974 F.2d 850, 858–59 (7th Cir. 1992) 

(examining, in the absence of a decision from the state’s highest court, the 

holding of a state intermediate appellate court and cases from other circuits). 

9 McKenna, 622 F.2d at 662. Without doubt, when considering dicta, the 

key phrase is “considered dicta.” In Todd, we relied on our earlier holding 

in Northwestern National Insurance Co. v. Maggio, 976 F.2d 320, 323 (7th Cir. 

1992). There we wrote: 

Judicial opinions are frequently drafted in haste, with imperfect 

foresight, and without due regard for the possibility that words 

or phrases or sentences may be taken out of context and treated 

as doctrines. We shouldn’t like this done to our opinions and 

are therefore reluctant to do it to the opinions of other courts. 

No court, even a federal court in a diversity suit, is obliged to 

treat a dictum of another court (or, for that matter, its own dicta) 

as binding precedent. 

Todd, 21 F.3d at 1411 (quoting Northwestern, 976 F.2d at 323). On the other 

hand, there is a significant difference between “mere obiter” and a “carefully considered statement by the state court.” McKenna, 622 F.2d at 662 

n.21 (quoting Charles Alan Wright, Law of Federal Courts, § 58, at 270 (3d 

ed. 1976)). 
16 No. 23-1185 

reveal fundamental policy choices and therefore cast a significant crosslight on the issue now before the federal court. See, 

e.g., Toro Co. v. Krouse, Kern & Co., Inc., 827 F.2d 155, 161–62 

(7th Cir. 1987) (relying on the Indiana Supreme Court’s general approach to privity to resolve the appropriate standard 

with respect to accountant’s liability). Finally, we may consult 

learned treatises and articles and, of course, the applicable Restatements.10

While canvassing these sources is helpful and necessary, 

the wide-ranging nature of the inquiry also presents the danger of it becoming undisciplined. Consequently, the federal 

courts have developed, over the years, certain maxims of selfdiscipline designed to ensure that our inquiry remains focused on its sole legitimate objective: ascertaining the law that 

the highest court of the state would articulate if our case were 

before it today. 

Most prominent among these “guardrails” is the principle 

that, in the absence of persuasive reasons to the contrary, we will 

follow a holding of the state’s intermediate appellate court.

Allstate, 285 F.3d at 637. This safeguard is anchored in the very 

reasonable notion that a state’s intermediate appellate courts 

engage in constant dialogue with the state’s highest court and 

therefore have a sophisticated idea of the jurisprudential 

10 Trytko v. Hubbell, Inc., 28 F.3d 715, 721 (7th Cir. 1994) (noting court must 

look to cases from other jurisdictions, treatises, and restatements to ascertain Indiana law in absence of guidance from Indiana courts); McKenna, 

622 F.2d at 662–63 (“[F]ederal courts may consider scholarly treatises, the 

Restatement of Law, and germane law review articles . . . .”); Wright, Miller & Cooper, supra, at 179–89. 
No. 23-1185 17

vectors that its high court is setting.11 Any state’s jurisprudence contains, moreover, many rules of decision that never 

receive the scrutiny of the state’s highest tribunal. These rules 

are, nevertheless, an integral part of the law of the state, and 

a federal court is not free to ignore their substance when seeking to ascertain the content of state law. See West v. Am. Tel. & 

Tel. Co., 311 U.S. 223, 236–37 (1940). 

Of course, a “guardrail’s” role is to assist in staying on 

course. An overly rigid deference to the decision of an intermediate appellate court can easily distract a federal court 

from the constitutionally-based north star of its inquiry: what 

would the highest court of the state do if the present case was 

now before that court? Consequently, a federal court must be 

alert to indications that the highest court of the state might 

well reject the view of the intermediate appellate court. See 

McGeshick v. Choucair, 9 F.3d 1229, 1234 (7th Cir. 1993) (declining to follow intermediate appellate court’s interpretation 

when it was contrary to the clear intent of the statute); United 

Fire & Cas. Co. v. Prate Roofing & Installations, LLC, 7 F.4th 573, 

583 (7th Cir. 2021) (considering, but ultimately rejecting, argument that intermediate appellate court case law conflicted 

with case law from the state’s highest court).12

11 Cf. Fidelity Union Trust Co. v. Field, 311 U.S. 169, 177 (1940) (“An intermediate state court in declaring and applying the state law is acting as an 

organ of the State . . . .”); Wright, Miller & Cooper, supra, at 142 (“[T]he 

decisions of the state’s intermediate appellate court or courts constitute 

the next best indicia of what state law is . . . .”). 

12 A division among state intermediate appellate courts on the issue militates towards certifying the issue to the highest court of the state. Indeed, 

such a certification not only ensures that the federal courts apply a definitive interpretation of state law but also affords the state’s highest court an 
18 No. 23-1185 

We also have regularly employed another “guardrail.” We 

have said, albeit in varying formulations, that a federal court, 

faced with two equally plausible readings of state law, should 

not choose the alternative that requires us to predict a change 

or an expansion in extant state legal doctrine. These cases suggest it is not our place to alter state law, but simply to apply 

it. See Shaw v. Republic Drill Corp., 810 F.2d 149, 150 (7th Cir. 

1987) (“[O]ur policy will continue to be one that requires 

plaintiffs desirous of succeeding on novel state law claims to 

present those claims initially in state court.”). 

The district court relied on this decisional “guardrail” in 

deciding the present case, even though it predicted that the 

Nebraska Supreme Court would apply section 766A in an appropriate case. In short, it read our case law to say that a district court must always opt for the interpretation of state law 

that is the most restrictive, even when the evidence as to the 

content of state law is not in equipoise and, in fact, points to 

the less restrictive option. 

Such an approach has troubling implications. It suggests 

that, in making the “Erie guess,” a district court must choose 

the most restrictive interpretation of state law, even if the evidence before it indicates that the state court would choose a 

less restrictive alternative. This approach would render of secondary importance the basic constitutional mandate of Erie 

that we must ascertain and apply state law as the highest 

court of the state would articulate it today. Our cases counseling that we avoid expanding state law simply state the prudential rule that where the decisions of the state courts do not 

opportunity to clarify its own law. See United States v. Glispie, 943 F.3d 358, 

372 (7th Cir. 2019). 
No. 23-1185 19

reveal a clear result and other traditional sources of information are also ambiguous about the present state of state 

law, we should not presume, without solid evidentiary support, that the state court would take a significant leap away 

from its established jurisprudence.13 Any other course would 

risk interfering, based on significantly little support, with the 

state court’s right to make policy choices on fundamental jurisprudential questions.14 

Here, the district court seemed to believe that the Nebraska Supreme Court might well be willing to apply section 

766A. Yet, it also believed that it could not take that course 

because it required applying section 766A for the first time in 

Nebraska without explicit direction from the Nebraska Supreme Court. But there is no such impediment to a district 

court applying the rule it believes the highest court of the state 

would apply. As we have noted earlier, a district court sitting 

in diversity has a fundamental constitutional obligation to apply the law it believes the state court would apply. Of course, 

if the evidence as to whether the Nebraska Supreme Court 

would apply section 766A was in equipoise, the district court 

could have determined, in its sound judgment, to resolve the 

conundrum before it by opting for the more restrictive 

13 See, e.g., Roppo v. Travelers Com. Ins. Co., 869 F.3d 568, 596 (7th Cir. 2017) 

(“We consistently have held that ‘it is not our role to break new ground in 

state law.’”) (quoting Lopardo v. Fleming Cos., Inc., 97 F.3d 921, 930 (7th Cir. 

1996)); Dinerstein v. Google, 73 F.4th 502, 516 n.4 (7th Cir. 2023) (noting that 

“innovative state law claims . . . should be brought in state court”) (quoting Insolia v. Philip Morris Inc., 216 F.3d 596, 607 (7th Cir. 2000)). 

14 See, e.g., Birchler v. Gehl Co., 88 F.3d 518, 521 (7th Cir. 1996) (“We avoid 

speculation about trends in diversity cases . . . .”). 
20 No. 23-1185 

approach and ruling that section 766A did not apply. But a 

district court should not fear adopting the “less restrictive” 

approach if it believes the state’s highest court would adopt 

that approach. 

We think that, if Green Plains satisfactorily amends its 

complaint, the district court should reexamine its earlier determination of the content of Nebraska law. On remand, the 

district court may determine, unburdened of any misapprehension about the contours of its duty to ascertain state law, 

that the information before it reasonably establishes that the 

Nebraska Supreme Court would adopt section 766A. But if it 

should believe that equally plausible arguments remain on 

both sides of the question, it may resort to the “guardrail” that 

it invoked in its earlier decision. The north star of the district 

court’s decision-making process must always be to ascertain, 

as best it can, what the highest court of the state would do if 

the issue were before it today. 

Finally, we respectfully invite the district court’s attention 

to the possibility of certifying the section 766A issue to the 

Nebraska Supreme Court.15 Use of this avenue to determine 

the content of state law might well become more viable if the 

15 See Neb. Rev. Stat. § 24-219 (“The Supreme Court may answer questions 

of law certified to it by the Supreme Court of the United States, a Court of 

Appeals of the United States, or a United States District Court, when requested by the certifying court, if there are involved in any proceeding 

before it questions of law of this state which may be determinative of the 

cause then pending in the certifying court as to which it appears to the 

certifying court there is no controlling precedent in the decisions of the 

Supreme Court of this state.”). 
No. 23-1185 21

issue of the specificity of the complaint were resolved beforehand. 

Conclusion 

The judgment of the district court is vacated and the case 

is remanded for further proceedings consistent with this opinion. 

The parties will bear their own costs of this appeal. 

 IT IS SO ORDERED.