Also known as:forum-shopping deterrence · deterrence of forum shopping · anti-forum shopping
Written by attorneys · grounded in primary & secondary sources — see below
A principle requiring federal courts in diversity cases to apply state law when disregarding the state rule would cause litigants to select federal court over state court. The principle forms part of the Hanna framework for resolving Erie problems in the absence of a controlling federal directive.
Sources & Authorities
How it applies
Common Examples
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Insurer Counterclaim Barred by State Statute
Felicity French, a citizen of State A, sued Foster Forge, a State B corporation, in federal court under diversity jurisdiction after the company denied coverage on a liability policy. State A law required the insurer to raise coverage defenses only as affirmative defenses or in separate actions. Because applying the federal compulsory-counterclaim rule would induce insurers to file in federal court to evade the state restriction, the court followed state law and dismissed the counterclaim.
State Tolling Rule Applied in Diversity Suit
Freya Freeman filed a personal-injury action in federal court against Frostline Textiles after the state statute of limitations had run but within a state tolling provision for out-of-state defendants. The federal court applied the state tolling rule. Ignoring it would have prompted plaintiffs to choose federal court whenever the state limitation period posed a barrier, undermining the deterrence principle.
Put it into practice
Test Yourself
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Practice Essays1
· 1 primary source
Select any source to read its text and confirm it supports the definition.
Cases
Course Outlines
Common questions
Frequently Asked
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When does the forum-shopping deterrence test apply under Hanna?+
The test applies when no valid Federal Rule of Civil Procedure directly addresses the issue in a diversity case. In that situation the federal court must follow state law if disregarding it would encourage parties to select federal court.
How does forum-shopping deterrence relate to the twin aims of Erie?+
Forum-shopping deterrence is one of the twin aims of Erie. The other aim is avoiding inequitable administration of the laws between state and federal courts. Both aims are served when federal courts apply state rules that would otherwise induce forum selection.
Supporting sources
Does the forum-shopping deterrence test ever yield to a valid Federal Rule?+
No. When a Federal Rule is on point and valid under the Rules Enabling Act, the federal rule governs even if it produces different outcomes than state law. The deterrence test operates only in the absence of such a controlling federal directive.
Supporting sources
Civil ProcedureLaw applied by federal courts · State law in federal courtUBEFoundational