Court Opinion

ID: 9918445
Source: CourtListenerOpinion
Date Created: 2024-01-12 23:00:47.532318+00
Date Added: 2024-06-11T08:01:38.971777
License: Public Domain

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 dis-
miss. Green Plains based its claim for tortious interference
with contract on allegations that ADM unlawfully manipu-
lated 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 ap-
plication of state law in a manner not yet adopted by the Ne-
braska Supreme Court.
    A federal court sitting in diversity has a basic constitu-
tional 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 sit-
uations, 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 sev-
eral “guardrails” to guide and discipline our decision-making
process. One such maxim counsels district courts against ac-
cepting 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 dis-
trict court should revisit its decision on the content of Ne-
braska 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 allega-
tions.
    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
                                 1
used as transportation fuel. Ethanol purchasers may obtain
ethanol directly from ethanol producers or from sales termi-
nals 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 “Termi-
nal” 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
                               2
Chicago Benchmark Price. In its complaint, Green Plains al-
leges 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 eth-
anol 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 com-
modity 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)). Par-
ticipants in the futures market can hold “long” or “short” po-
sitions. When the price of the underlying commodity rises,
the “long” purchaser benefits; conversely, when the price of
the underlying commodity falls, the “short” purchaser bene-
fits. 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
                                                        3
lower price, profiting from the difference. 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 pro-
duction ensures that producers are not overexposed to down-
turns in the market; if the price of ethanol declines, falling rev-
enue will be partially offset by short sale gains. But Green
Plains has alleged that ADM’s behavior greatly exceeded ex-
pected hedging: ADM consistently held futures contracts that
represented quantities more than twice as large as its monthly
                           4
production of ethanol. Because ADM held large quantities of
short positions that increased in value when the price of eth-
anol 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 appear-
ance 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 manipu-
lation, 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 ac-
counted 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 rou-
tinely 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 de-
liver and was often forced to purchase ethanol at a loss later
in the month to satisfy its obligations. Finally, ADM repeat-
edly chose to sell at the Argo Terminal (and therefore contin-
ually 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. Be-
cause ADM unlawfully depressed the price of ethanol, Green
Plains received a lower price for its physical ethanol sales con-
tracts 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 Ne-
braska. It predicated federal jurisdiction on diversity of citi-
zenship. See 28 U.S.C. § 1332. Based on the allegations just de-
scribed, Green Plains presented a claim of tortious interfer-
ence 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, con-
tending Green Plains did not satisfy the elements for tortious
                                 5
interference with contract. The district court agreed and dis-
missed the case with prejudice.
    First, the district court concluded that Green Plains was
required to allege specific contracts with which ADM had in-
terfered. Although Green Plains had “alluded to various con-
tracts,” it had “not identified the third parties with whom
[Green Plains] had the contracts, any other terms of those con-
tracts, 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 ex-
pectancy, (2) knowledge by the interferer of the relationship or expec-
tancy, (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 Su-
preme 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 tor-
tious 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 al-
leged 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 interfer-
ence does not always require a breach. This theory relied on
section 766A of the Restatement (Second) of Torts. This provi-
sion allows a plaintiff to bring a successful tortious interfer-
ence with contract claim on the ground that the defendant in-
terfered 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 manipu-
lation 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 dis-
puted 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 Ne-
braska Supreme Court has not explicitly adopted or recog-
nized § 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 contin-
ued: “[I]t could be inferred that, under the proper factual cir-
cumstances, the Nebraska Supreme Court would recognize
§ 766A-style claims as legitimate actions for tortious interfer-
ence 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 caution-
ing 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 require-
ment that it plead specific contracts was excessive in light of
Rule 8 of the Federal Rules of Civil Procedure and the stand-
ards 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 sub-
stantive law of Nebraska. Admitting that the Nebraska Su-
preme Court has not squarely applied this section of the Re-
statement, Green Plains nevertheless submits that, in both
Pettit and Recio, that court necessarily acknowledged that sec-
tion 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 con-
tain “a short and plain statement of the claim showing that
the pleader is entitled to relief,” in order “[t]o survive a mo-
tion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plau-
sible 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 quan-
tified,’ a plaintiff must allege ‘enough details about the sub-
ject-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 Chi-
cago Benchmark Price. A claim for tortious interference with
contract requires the plaintiff to plead that a valid contract ex-
isted 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). Some-
thing 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 mis-
take 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, alt-
hough the district court correctly determined that the validity
of the contracts must be set out in the complaint, it is not self-
evident that without further justification, more particular in-
formation 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 sat-
isfactorily amends its complaint, the district court should re-
visit its section 766A analysis, guided by the following clarifi-
cation.
B. Ascertaining the Content of State Law
    In determining whether the district court erred in its as-
sessment of Nebraska law, we set forth at the outset the fun-
damental 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 trea-
tise has emphatically stated, “[b]ecause of the important fed-
eralism 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. Mil-
ler & Edward H. Cooper, Federal Practice & Procedure § 4507,
at 170 (3d ed. 2016).
     When a district court’s jurisdiction is predicated on diver-
sity 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

        6
(1991). 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. Pol-
ygraphic 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 fed-
eral court’s task is straightforward: apply the law as deter-
                          7
mined by that court. 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). Ac-
curacy 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 es-
sential 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 surpris-
ing 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 Su-
preme 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 ambi-
guity. We may consult “other persuasive authority” to deter-
mine 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
                                                                 8
Pharm. Corp., 622 F.2d 657, 662–63 (3d Cir. 1980). We may
look to the decisions of the state’s other courts, including
                        9
“considered dicta,” 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 paral-
lel 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 cir-
cuits).
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 “care-
fully 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 signif-
icant 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 gen-
eral 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 Re-
              10
statements.
    While canvassing these sources is helpful and necessary,
the wide-ranging nature of the inquiry also presents the dan-
ger of it becoming undisciplined. Consequently, the federal
courts have developed, over the years, certain maxims of self-
discipline designed to ensure that our inquiry remains fo-
cused 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 ascer-
tain 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, Mil-
ler & Cooper, supra, at 179–89.
No. 23-1185                                                                 17

                                                11
vectors that its high court is setting. Any state’s jurispru-
dence 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 seek-
ing 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 inter-
mediate 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) (declin-
ing 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, ar-
gument that intermediate appellate court case law conflicted
                                                         12
with case law from the state’s highest court).

11 Cf. Fidelity Union Trust Co. v. Field, 311 U.S. 169, 177 (1940) (“An inter-
mediate 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 mil-
itates towards certifying the issue to the highest court of the state. Indeed,
such a certification not only ensures that the federal courts apply a defin-
itive 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 sug-
gest 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 ap-
propriate case. In short, it read our case law to say that a dis-
trict 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 ev-
idence before it indicates that the state court would choose a
less restrictive alternative. This approach would render of sec-
ondary 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 counsel-
ing that we avoid expanding state law simply state the pru-
dential 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 infor-
mation are also ambiguous about the present state of state
law, we should not presume, without solid evidentiary sup-
port, that the state court would take a significant leap away
                                              13
from its established jurisprudence. Any other course would
risk interfering, based on significantly little support, with the
state court’s right to make policy choices on fundamental ju-
                               14
risprudential questions.
    Here, the district court seemed to believe that the Ne-
braska 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 Su-
preme 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 ap-
ply 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”) (quot-
ing 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 de-
termination of the content of Nebraska law. On remand, the
district court may determine, unburdened of any misappre-
hension 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
                                15
Nebraska Supreme Court. 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 re-
quested 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 before-
hand.
                         Conclusion
    The judgment of the district court is vacated and the case
is remanded for further proceedings consistent with this opin-
ion.
   The parties will bear their own costs of this appeal.
                                         IT IS SO ORDERED.