Harlan's Primary-Conduct Critique

Harlan's Primary-Conduct Critique

Justice Harlan concurred in the judgment in Hanna v. Plumer but rejected the majority's reasoning, and his opinion is the best-known objection to the view that a Federal Rule controls whenever it is arguably procedural.¹ He conceded that Erie and its progeny had not yet produced a workable doctrine for choosing law in diversity cases, and he respected the Court's effort to clarify the field. He charged, however, that the Court had misconceived the constitutional premises of Erie and had failed to deal adequately with the earlier decisions on which the courts below relied.² That charge rests on his account of what Erie was for.

On Harlan's reading, Erie rested on two commitments. The first is that two conflicting systems of law should not control the primary activity of citizens, because dual governing authority breeds a debilitating uncertainty in the planning of everyday affairs. The second is that the Constitution allocates lawmaking between state and federal legislative processes, and the allocation is undercut if the federal judiciary can make substantive law affecting state affairs beyond the bounds of Congress's legislative powers. In a diversity case, therefore, Erie commands that the state law governing primary private activity prevail.³ The Black & White Taxicab case shows the first commitment at work. Both cab companies needed clear rules on exclusive-dealing contracts to decide whether to invest in new cabs, and dual sovereigns issuing competing commands on that question threatened the uncertainty that led Montesquieu and other political thinkers to conclude that an ordered society needs a single sovereign.⁴

Harlan found both shorthand tests inadequate. Taken literally, the outcome-determinative test of Guaranty Trust Co. v. York proves too much, because any rule, however clearly procedural, can affect the outcome of litigation if it is not obeyed. The forum-shopping rationale, to which the majority returned, also proves too much, because litigants often choose a federal court to obtain what they consider the advantages of the Federal Rules or to try their cases before a supposedly more favorable judge.⁵

He thought the majority had overcorrected. Under what he called the Court's "arguably procedural, ergo constitutional" test, a duly adopted Federal Rule applies so long as a reasonable person could characterize it as procedural, however seriously it frustrates a State's regulation of the primary conduct and affairs of its citizens. The Advisory Committee, the Judicial Conference, and the Supreme Court formulate the Rules, and they are presumably reasonable, so the integrity of the Rules becomes absolute. The outcome and forum-shopping tests may err by honoring state rules too readily; the majority's test errs by moving too far and too fast in the other direction.⁶

His alternative was to stay close to basic principles and ask whether the choice of rule would substantially affect those primary decisions respecting human conduct that the constitutional system leaves to state regulation. If it would, Erie and the Constitution require the state rule to prevail, even in the face of a conflicting federal rule.⁷ The last clause marks where he parts from the majority. Under the majority's approach, a valid Rule on point decides the question and a court never weighs the state's interest.⁸ Under Harlan's approach, the state's interest in primary conduct can defeat the Rule.

The test favors neither side as such, and Harlan's own examples show it sorting cases in both directions. In Cohen v. Beneficial Industrial Loan Corp., a state statute required a small shareholder suing derivatively to post a bond securing the defendants' costs, and the diversity court applied it. Harlan thought Rule 23 did not purport to deal with the problem of strike suits, and he added that the state rule should still have prevailed even if the Rule had purported to do so and had provided a substantially less effective deterrent.⁹ That addition measures the whole distance between his view and the majority's. The majority attributes such overriding force to the Rules that it is hard to think of a case where a conflicting state rule would operate, even though the state rule reflects policy considerations that, under Erie, lie within the realm of state legislative authority.¹⁰

The Massachusetts service rule in Hanna itself comes out the other way. Harlan asked what applying Federal Rule 4(d)(1) in place of the state rule would do to the speed and assurance with which estates are distributed, and he answered that the effect would not be substantial. An executor would have to check at his own house or at the federal courthouse, as well as the registry of probate, before distributing the estate with impunity, and that burden did not impair the state policy the rule served.¹¹ The line he drew runs between primary decisions respecting human conduct and litigation-related matters, and the method of serving process falls on the litigation side.¹² The bond in Cohen was aimed at a whole category of suits, while the service rule changed only where an executor looks for notice of one.

A second federal-side result is the Kansas limitations decision in Ragan v. Merchants Transfer & Warehouse Co., which Harlan thought wrong. Applying the Federal Rule there would at most have made potential Kansas tort defendants wait a few days for the comfort of knowing they had not been sued within the limitations period. It would have had no effect on the primary stages of private activity from which torts arise and only the most minimal effect on behavior after the tort, so the federal system's interest in proceeding under its own rules should have prevailed.¹³

Critics answer that Harlan replaces one hard line with another. Requiring federal courts to decide what counts as law governing the primary conduct and affairs of a state's citizens raises the vagueness and lack of objectivity that plagued the balancing test of Byrd, and in effect it asks only for a new definition of "substantive."¹⁴ Two judges can look at the same state rule and disagree about whether it substantially affects primary conduct, and the test does not say where "substantial" begins. The majority's sequence gives a court a text to read and a delegation to check. The Court's later return to that sequence in Shady Grove accepted the inflexibility Harlan pointed out in exchange for clarity in federal procedure: "We do not wade into Erie's murky waters unless the federal rule is inapplicable or invalid."¹⁵

The idea outlasted the objection because it identifies a real difference among procedural rules. A rule on whether exclusive-dealing contracts are enforceable changes how businesses decide what to sign and build, while a rule on how process is served changes only how a suit is conducted. Harlan's test would certainly send Erie itself to state law.¹⁶ He did not carry the day on what happens when a federal rule is on point, since the federal rule always gets applied in federal court, but his opinion proved indispensable in bringing coherence to the application of Erie.¹⁷ The next section takes up the cases where no federal directive controls.

The controlling law is the majority's. A Federal Rule that covers the disputed point is valid if it deals with practice or procedure and does not abridge, enlarge, or modify a substantive right, and a valid Rule controls without any inquiry into its effect on state-regulated conduct. Shady Grove applied that sequence, holding that Rule 23 governs class certification and displaces the conflicting New York statute.¹⁸ On an exam, Harlan's concurrence is a minority position, the source of the charge that the majority makes the Rules absolute, and an argument for state law where no federal directive is on point. An answer that uses his test to defeat a valid Rule on point misstates the law.