Eerie Erie

THE PENDULUM SWINGS BACK . . . A LITTLE

Next in this intimidating line of post-Erie decisions is Byrd v. Blue Ridge Rural Electrical Cooperative, Inc., 356 U.S. 525 (1958). The Erie issue in Byrd was whether the judge or the jury should determine the plaintiff’s status as an “employee” of the defendant. State law left the question to the judge, but the practice in federal court was to send such issues to the jury.

Although Byrd is often viewed as a departure from York, the Byrd Court actually reaffirmed the holdings of both Erie and York. First, the Court reiterated that federal courts must honor the “definition of state-created rights and obligations by the state courts.” 356 U.S. at 535. This is the constitutional prong of the Erie doctrine, exemplified by Erie itself, in which the rule at issue was a clearly “substantive” standard—duty of care to a trespasser—that the Constitution reserves to the states. In this category of cases, Byrd reaffirms, the federal court must follow state law because it has no power to create a separate federal rule. In Byrd, however, the South Carolina rule authorizing the judge to decide “employee” status was not “bound up with the definition of the rights and obligations of the parties,” but “merely a form and mode of enforcing” the compensation scheme. 356 U.S. at 536. Thus, the issue was a matter of procedure as to which the federal court was not constitutionally compelled to apply the state practice.

Having determined that Erie’s constitutional analysis did not require the federal court to apply South Carolina’s rule, Justice Brennan next considered whether York did. He acknowledged that York evinced a “broader policy” than Erie, requiring federal courts to follow state practices even of “form and mode” (as opposed to clearly substantive law) if ignoring them would substantially affect the outcome of the litigation. 356 U.S. at 536. Thus, Byrd reaffirmed that, under York, federal courts should apply outcome-determinative state law even on procedural issues as to which there is federal constitutional authority to make its own rule. Brennan even conceded that, absent other considerations, the outcome determinative test would very likely require the court to apply state law to the judge-jury issue before it in Byrd. 356 U.S. at 537.

However, Justice Brennan went on to hold that, in deciding whether to follow state law in matters of “form and mode” (that is, the area in which the court follows state law as a matter of policy rather than constitutional command), the federal court must consider not only the York policy of uniform outcomes in diversity cases, but also any countervailing federal policies that arise from the federal court’s status as an independent judicial system. In Byrd, the constitutional right to jury trial under the Seventh Amendment to the Constitution was at least tangentially implicated in making the choice between judge and jury. Given the importance of that right in the administration of federal courts, Justice Brennan concluded that the Erie policy of maximizing uniformity of outcome should yield to the federal policy of broad availability of jury trial. 356 U.S. at 538-539.

Because Byrd reaffirmed that state rules of form and mode should usually be applied if they might prove outcome determinative, it still appeared after Byrd that state procedural rules would often displace the Federal Rules of Civil Procedure in diversity cases. It remained for the Warren Court to rescue the Rules in Hanna v. Plumer, 380 U.S. 460 (1965).