Supreme Court of the United States · 1987 · Civil Procedure
Civil ProcedureErie doctrineFederal Rules of Appellate ProcedureDiversity jurisdictionErieHanna v. PlumerRule 38FRAP 38
Facts
Respondents sued for injuries from a motorcycle accident in Alabama state court, and petitioner removed the case to federal district court on diversity grounds. A jury awarded $800,000 to Alan Woods and $5,000 to Cara Woods, and petitioner posted bond to stay the judgment pending appeal. After the Court of Appeals affirmed without modification, respondents sought Alabama's statutory 10% affirmance penalty, which applies when a money judgment is stayed by bond and then affirmed. The penalty was imposed, but petitioner argued the statute conflicted with Federal Rule of Appellate Procedure 38 and therefore could not apply in federal court.
Issue
In a diversity action, must a federal court apply Alabama's statute requiring a mandatory 10% penalty against an appellant who stayed a money judgment by bond and then lost the appeal? More specifically, does the Alabama statute apply in federal court notwithstanding Federal Rule of Appellate Procedure 38?
Rule
When a Federal Rule, fairly construed, is sufficiently broad to cause a direct collision with state law or otherwise control the issue, the Federal Rule applies in diversity cases if it is a valid exercise of rulemaking authority under the Constitution and the Rules Enabling Act. Federal Rule of Appellate Procedure 38, which gives courts of appeals discretion to award just damages for frivolous appeals, displaces a conflicting state law that mandates a fixed affirmance penalty.
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Nora Benton won a $420,000 negligence judgment in federal district court in Georgia against Red Clay Hauling, LLC, after the case was removed on diversity grounds. Red Clay posted a supersedeas bond to stay execution, appealed, and the Eleventh Circuit affirmed without modification. Benton then invokes a Georgia statute requiring a 9% penalty whenever a money judgment is stayed by bond and later affirmed.
Should the federal court apply the Georgia penalty statute?
Explanation. Under the majority's Hanna analysis, the first question is whether the federal rule is sufficiently broad to control the issue or create a direct collision. FRAP 38 gives the federal appellate court discretionary authority to award just damages for frivolous appeals. A state law that makes a fixed percentage penalty mandatory upon affirmance after a bonded stay conflicts with that discretionary federal regime. Because FRAP 38 is a valid procedural rule under the Constitution and Rules Enabling Act, it governs and the state statute has no application in federal diversity appeals. (Derived from Burlington Northern Railroad Co. v. Woods (1987).)