Brief Fact Summary
An injured employee of subcontractor sued the prime contractor in federal court on diversity jurisdiction.Â The prime contractor asserted a defense that it claimed was to be ruled on by the judge, instead of a jury, according to controlling state law.Â A jury decided against the contractor on the defense asserted.
Synopsis of Rule of Law
A federal court sitting in diversity jurisdiction is obligated to enforce the substantive law of the state in which it sits unless there is a compelling federal policy to the contrary.
Byrd (Plaintiff) was an employee of a subcontractor to Blue Ridge Rural Electric Coop., Inc. (Blue Ridge) (Defendant) and was injured on the job in South Carolina.Â South Carolina provided a workman’s compensation system for statutorily defined employees.Â Plaintiff brought suit against Defendant in federal district court in South Carolina on the grounds of diversity jurisdiction.Â Defendant asserted a defense that, since Plaintiff was a statutory employee of the subcontractor, his exclusive remedy was in workman’s compensation.Â Defendant argued further that the issue of whether Plaintiff was a statutory employee was to be decided by the judge, not a jury, since the Supreme Court of South Carolina had held that this issue of fact was for the judge to decide rather than a jury.Â The trial court submitted the factual determination of the defense to a jury that found in favor of Byrd (Plaintiff).Â Blue Ridge (Defendant) appealed.
Must a federal court sitting in diversity jurisdiction give force to a substantive law or policy of the state where there exists an express federal policy to the contrary?
(Brennan, J.)Â No.Â In Erie v. Tompkins, 304 U.S. 64 (1938), it was held that a federal court sitting in diversity jurisdiction must decide the issues presented on the basis of prevailing law of the state where the federal court sat. Â This doctrine was meant to embrace the substantive law of the forum state.Â The Erie Doctrine has been expanded to include procedural law where the outcome of the decision would be affected by employment of federal procedure.Â In the present case, however, the decision relied on by the state court appears to be a rule based on habit or custom rather than substantive policy of the state.Â In addition, there are countervailing considerations of strong federal policy.Â The Seventh Amendment to the Constitution is strong policy in favor of jury determination of issues of fact.Â There is no indication that jury determination of the factual issues of the Blue Ridge (Defendant) defense would produce an outcome different than if a judge rendered a determination.Â Due to a lack of showing compelling state policy and the existence of strong federal policy, the trial was correct in submitting the issue to a jury.Â Reversed and remanded.
(Whittaker, J.)Â The federal district court is bound to apply the law of the state where it sits so that the state court â€œacross the streetâ€ would not reach a different conclusion than that reached by the federal court.Â As South Carolina law requires the court, rather than the jury, to determine whether jurisdiction over the subject matter of cases like the one here is vested in its industrial commission, it would appear that the jurisdictional issue should have been determined here by the judge, rather than the jury.
The pendulum has begun to swing back.Â Prior to Erie v. Tompkins, the federal courts were thought to be independent of either substantive or procedural state law.Â After Erie v. Tompkins, the federal courts became almost fanatically mindless to state law.Â Then, as illustrated here, the federal courts began to reassert their independence.Â The countervailing considerations doctrine involving federal policy was invoked to allow a federal court to disregard nearly all state procedural law and, in some cases, even substantive law.Â The countervailing considerations were at first found to be in the federal Constitution.Â However, soon the base would be broadened to also include federal statutes.