Opinion ID: 3036238
Heading Depth: 2
Heading Rank: 1

Heading: Erie and Choice-of-Law Principles

Text: When a district court’s jurisdiction is predicated on diversity of the parties, or when the court hears a state-law claim based on its supplemental jurisdiction, as we will assume it did here, the court must determine whether, under Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), a matter is substantive or procedural. Simmons v. City of Phila., 947 F.2d 1042, 1085 (3d Cir. 1991). If the matter is determined to be substantive, and a choice-of-law question is presented, the court must then perform a choice-of-law analysis to determine which state’s substantive law applies. The Supreme Court has made plain that these are two distinct questions. In Sun Oil Co. v. Wortman, the Court held that Guaranty Trust Co. v. York, 326 U.S. 99 (1945) had reject[ed] the notion that there is an equivalence between what is substantive under the Erie doctrine and what is substantive for purposes of conflict of laws. Except at the extremes, the terms “substance” and “procedure” precisely describe very little except a dichotomy, and what they mean in a particular context is largely determined by the purposes for which the dichotomy is drawn. 486 U.S. 717, 726 (1988) (citation omitted). We emphasize that there are two distinct questions. The first question, as suggested above, is for a court to determine whether, under Erie, the matter is procedural or substantive. If the matter is procedural, and an applicable federal statute, rule, or 4 Albeit belatedly, Chrysler argued in the District Court, and argues to us, that the District Court lacked subject matter jurisdiction because the initial complaint had pled a class claim under the Act but had not adequately alleged the Act’s jurisdictional requisites. We have reviewed the parties’ contentions and are satisfied that the District Court had subject matter jurisdiction. 9 policy exists, then federal procedural law applies; if the matter is substantive, the court must apply the substantive law of the forum state. See Abrams v. Lightolier Inc., 50 F.3d 1204, 1223 (3d Cir. 1995). If the court determines that it must apply the law of the forum state, and a choice-of-law question exists, the court must, at the second step, apply the choice-of-law rules of the forum state to determine which state’s law applies. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). A district court may find a particular state law to be substantive for Erie purposes but procedural for purposes of a choice-of-law analysis. See, e.g., Boyd Rosene & Assocs., Inc. v. Kan. Mun. Gas Agency, 174 F.3d 1115, 1118 (10th Cir. 1999).