Has the Erie Doctrine Been Repealed by Congress?

The enactment of the Class Action Fairness Act of 2005 (CAFA) is a congressional pronouncement implying that the Erie Doctrine is seriously erroneous. In broad terms, CAFA allows class actions that have been filed in state courts and that are based on state substantive law to be removed to federal court if they involve out-of-state defendants and more than five million dollars in claimed damages. The legislation is very complex and in many respects ambiguous. The Act, however, can be interpreted as the most recent legislative affirmation that federal procedure is appropriate for the enforcement of state law rights. This affirmation should be taken seriously by the judiciary, even if legislators are regarded as relatively untutored in the interaction of federal and state law. Put in positive terms, CAFA asserts that, in certain types of cases, the judicious administration of state law is better entrusted to federal courts. This statement contradicts two pronouncements, themselves conflicting, by the Supreme Court concerning the relationship between state substantive law and federal procedure. On the one hand, the Court famously said in Guaranty Trust Co. v. York that a federal court, in adjudicating state law, is “only another court of the State.” On the other hand, the Court notably held in Byrd v. Blue Ridge Rural Electric Cooperative, Inc. that “[t]he federal system is an independent system for administering justice.” More recently, in Gasperini v. Center for Humanities, Inc. the Court quoted from Guaranty and Byrd, while acknowledging that dealing with both is a “challenging endeavor.”