Adrift on Erie: Characterizing Forum-Selection Clauses

The University of Akron IdeaExchange@UAkron Akron Law Review Akron Law Journals May 2019 Adrift on Erie: Characterizing Forum-Selection Clauses Kermit Roosevelt III Bethan R. Jones Please take a moment to share how this work helps you through this survey. Your feedback will be important as we plan further development of our repository. Follow this and additional works at: https://ideaexchange.uakron.edu/akronlawreview Part of the Civil Procedure Commons Recommended Citation Roosevelt, Kermit III and Jones, Bethan R. (2019) "Adrift on Erie: Characterizing Forum-Selection Clauses," Akron Law Review: Vol. 52 : Iss. 2 , Article 5. Available at: https://ideaexchange.uakron.edu/akronlawreview/vol52/iss2/5 This Article is brought to you for free and open access by Akron Law Journals at IdeaExchange@UAkron, the institutional repository of The University of Akron in Akron, Ohio, USA. It has been accepted for inclusion in Akron Law Review by an authorized administrator of IdeaExchange@UAkron. For more information, please contact , . Roosevelt and Jones: Adrift on <i>Erie</i> ADRIFT ON ERIE: CHARACTERIZING FORUMSELECTION CLAUSES I. II. III. IV. V. The Arguments of Erie .............................................. 298 The Erie Problem....................................................... 305 Choice of Law Characterization Revisited ................ 309 Unresolved-Erie: Forum-Selection Clauses .............. 314 Conclusion ................................................................. 320 Kermit Roosevelt III ∗ and Bethan R. Jones ♦ Since it was decided 80 years ago, Erie has grown into one of our greatest, or perhaps most notorious, cases. But what does it stand for? What is it based on? Is it even correct? There is a wealth of scholarship addressing these questions. Erie has become something of a Rorschach test: a complex pattern onto which scholars can project a wide array of different concerns. Here, we aim to offer a very simple view of Erie. As we will describe it, Erie is a case about power. It is about, first, who has the power to make certain laws, and then, second, who has the power to interpret them. Seen from this perspective, Erie has nothing to do with a distinction between substance and procedure. That distinction becomes relevant only later, and only because of the conflict of laws rule that a forum will use its own procedural law, even if deciding a case according to foreign substantive law. This rule, of course, requires a court to decide what is substantive and what is procedural. That is a familiar conflict of laws topic: substanceprocedure characterization. Yet Erie analysis—though it is often associated with distinguishing issues of substance from procedure—is different from conflict of law substance-procedure characterization. Indeed, something that is ∗ Professor of Law, University of Pennsylvania Law School. ♦ Associate, Kellogg, Hansen, Todd, Figel & Frederick. The views expressed in this article are those of the authors alone. SYMPOSIUM, ERIE AT EIGHTY: CHOICE OF LAW ACROSS THE DISCIPLINES Published by IdeaExchange@UAkron, 2019 1 Akron Law Review, Vol. 52 [2019], Iss. 2, Art. 5 298 AKRON LAW REVIEW [52:297 procedural from the conflict of laws perspective may still be “substantive for Erie purposes.” How did this happen? And what insights can be learned from the conflict of laws perspective? In what follows, we will try to answer those questions. We will give the simple reading of Erie. We will show how it requires conflict of laws substance-procedure characterization, and how the Supreme Court has started doing something else instead. Or has it? No one really seems to know what the Court is doing when it engages in Erie analysis. Part of what we seek to demonstrate is that Erie analysis is just conflict of laws substance-procedure characterization with a few other steps thrown in. It is intelligible, that is, in conflict of laws terms—more intelligible, probably, than on its own terms. To demonstrate this last point, we will do two things: First, we will describe the approach that the Court has come up with—initially in the way the Court has developed it, and then from a conflict of laws perspective. We believe the conflicts description is far easier to understand and does a better job of illuminating the actual issues at stake. Second, we will turn to a problem that has puzzled both courts and scholars: Is a contractual choice-of-forum clause substantive or procedural for Erie purposes? Erie analysis struggles with this question but the conflict of laws analysis offers an easier resolution. I. THE ARGUMENTS OF ERIE The facts of Erie are well known and relatively simple; we rehearse them here only briefly. 1 On a dark night, Harry Tompkins was injured by a train operated by the Erie Railroad while walking alongside the tracks in Pennsylvania. 2 Tompkins was a Pennsylvania resident; the railroad company was a New York corporation. 3 Invoking federal diversity jurisdiction, Tompkins filed suit in the Southern District of New York. 4 A key issue in the case was the duty of care: what degree of fault on the part of the railroad was required for Tompkins to recover? Was mere negligence enough? Or would Tompkins have to show something more— 1. See, e.g., Kermit Roosevelt III, Choice of Law in Federal Courts: From Erie and Klaxon to CAFA and Shady Grove, 106 NW. U. L. REV. 1 (2012), for a more extended recital. 2. See Erie R. v. Tompkins, 304 U.S. 64, 70 (1938). For an in-depth recounting of the story, see, e.g., Edward A. Purcell, Jr., The Story of Erie: How Litigants, Lawyers, Judges, Politics, and Social Change Reshape the Law, in CIVIL PROCEDURE STORIES 21, 36–38 (Kevin M. Clermont ed. 2d. ed. 2008). 3. Erie, 304 U.S. at 69. 4. See id. https://ideaexchange.uakron.edu/akronlawreview/vol52/iss2/5 2 Roosevelt and Jones: Adrift on <i>Erie</i> 2018] ADRIFT ON ERIE 299 ”willful or wanton injury?” 5 A court addressing this question today would begin by deciding which law governed the issue. Most choice of law systems, modern and traditional, would select the law of the place of the accident: Pennsylvania law.6 That was also, more or less, the conclusion of the lower federal courts in Erie. Although Erie analysis is now used to choose between state and federal law, no one thought that federal law might govern this gardenvariety tort issue. (In fact, it couldn’t, since there was no federal law setting the duty of care). Nor did anyone think that the law of any state other than Pennsylvania law might govern the question of whether conduct within Pennsylvania was wrongful. The answer to the question of the required degree of fault, then, would have to come from Pennsylvania law. More or less. That qualification requires a brief explanation of the legal ontology of the pre-Erie regime—the one associated with Swift v. Tyson. 7 Under the thinking of that time, there were several different types of law that might have governed in a parti (...truncated)