Adjunct Law Prof Blog

Editor: Mitchell H. Rubinstein
New York Law School

Wednesday, June 27, 2007

How Binding Is a Federal Appellate Court's Prediction of State Law?

Howard Bashman in a June 25, 2007 article entitled "How Binding Is a Federal Appellate Court's Prediction of State Law?" addresses an important issue that remains unresolved almost 80 years after Erie Railroad Co. v. Tompkins (1938). We know that where there is no state court definitive legal answer, a federal court, sitting in diversity, will predict how the state court of last resort will rule. What remains unresolved is how much weight should that federal court decision be given by later federal courts.

The article also discusses a June 18, 2007 Third Circuit case, Worowski v. Ciasulli, ___F.3d___ (3d Cir. 2007) where this important issues was raised. As Mr. Bashman states:

[The Third Circuit]  renounced an Erie prediction of New Jersey law from 1988 in favor of an opposite prediction even though the Supreme Court of New Jersey has yet to directly confront the particular question of state law at issue.

Ordinarily, three-judge panels of the 3rd Circuit view themselves as powerless to overrule one another, unless the legal question at issue has been definitively resolved by a higher court: the U.S. Supreme Court on issues of federal law, or a state court of last resort on issues of state law. In the absence of a definitive ruling to the contrary from a higher court, only the 3rd Circuit sitting en banc can overrule a three-judge panel's decision. Nevertheless, in last week's 3rd Circuit ruling, a three-judge panel considered itself authorized to overrule the Erie prediction of an earlier three-judge panel from 1988 based on intervening intermediate appellate court rulings from the New Jersey judicial system.

Civil Procedure buffs take note. This is an important development to watch.

Mitchell H. Rubinstein

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Bashman's article considers several questions, one of which I considered last week as a hypothetical for my legal research students: What if the district court was convinced that the 19-year-old Third Circuit prediction of state law was wrong? Could it have ignored the Third Circuit decision and reached its own determination of how the state's highest court would decide the issue?

In answering the question, Bashman sides with predictability, apparently feeling that the better approach is for the district court to adhere to the circuit's ruling until the circuit decides to alter its prediction of state law. In my consideration of the issue, I opted for accuracy over predictability, suggesting that the district court should use the circuit opinion as a starting point and evaluate the prediction in light of subsequent developments in state law.

I posted:

"It seems to me that a federal court decision on state law has a limited shelf life. Such a determination in the absence of a decision from the state’s high court is, by definition, a prediction subject to being proven wrong. And the older the federal decision, the greater the chance that state law has changed in the interim.

"A logical compromise between the two principles would be for the district court to start with the court of appeals decision and then evaluate whether the analysis still holds up in light of intervening events at the state level. If there were no changes in legislation, no new decisions, or other changes that would influence the question, then the district court would be bound to follow the circuit court determination. But if there were intervening changes at the state court level, the district court logically should have to evaluate them in the context of the circuit court’s prior analysis to see if they change the result."

(I think its bad "netiquette" for me to put in a link directly to my post, but you can find it by going to the URL associated with this comment and searching for the word "conundrum.")

As for what the Third Circuit did in this case . . . I think it is the only thing that makes sense. Again, a federal court prediction of how a state's highest court has a limited shelf life. It would make no sense at all for the circuit to stick to a former prediction it no longer agrees with. I don't really see the absenc of en banc review as a problem. The question isn't really the same unless there has been absolutely no change in the factors the state court would consider. Since 19 years had passed in this case, with many intervening developments at the state court level, I think you could say the question wasn't even the same as 19 years ago. Unless and until the state's highest court speaks on the issue, the question is always, "How would the state's highest court decide the issue NOW."

I do recognize one could say that if the question is always what the state's highest court would do NOW, then the federal court could conceivably reevaluate the issue even AFTER the state supreme court speaks. But absent a state high court ruling, I think that is the relevant question.

Posted by: Greg May | Jun 27, 2007 11:51:12 PM

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