In a diversity case filed in federal court, the plaintiff seeks damages for breach of contract. The defendant argues that the plaintiff’s claim is barred by a state statute that prohibits recovery if the plaintiff failed to provide written notice of the alleged breach within 30 days of the breach occurring. Federal procedural rules, however, do not impose such a notice requirement. How should the federal court determine whether to apply the state statute or the federal rule?
The court should apply the state statute because state laws govern aspects of the contract claims in federal court.
The court should apply the federal rule because federal procedural rules typically take precedence over state laws in federal courts.
The court should apply the federal rule because the Rules Enabling Act prohibits using state rules in federal courts.
The court should apply the state statute if failing to do so would create an unfair advantage for one party based on forum selection.
The correct answer is based on the Erie doctrine, which requires federal courts to apply state substantive law and federal procedural law in diversity cases. To determine whether the state notice statute is substantive or procedural, the court must consider whether the choice between the two would materially affect the outcome of the case and analyze the purpose served by the state law. Applying the state law ensures consistency with state policies and prevents forum-shopping. Incorrect answers either misrepresent the Erie analysis or fail to correctly describe the relationship between state and federal law.
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