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1. What law of negligence should the court apply?
A truck driver from State A and a bus driver from State B were involved in a collision in State B that injured the truck driver. The truck driver filed a federal diversity action in State B based on negligence, seeking $100,000 in damages from the bus driver.
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A is incorrect. There is no federal common law of negligence, and the federal courts are prohibited from creating general federal common law. Rather, they must adhere to state law in substantive matters.
B is incorrect. The court cannot simply select the law of the truck driver's state of citizenship as the governing law. In Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941), the Court made clear that in a federal diversity action a court must look to the choice-of-law rules of the state in which it sits to determine which of two competing states' laws should be applied to the action before it.
C is incorrect. If the court were to review both states' laws and select the one it found most appropriate, it effectively would be developing its own federal choice-of-law rules. This would violate both Erie R.R. v. Tompkins, 304 U.S. 64 (1938) and Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S.487 (1941). In Klaxon, the Court made clear that in a federal diversity action a court must look to the choice-of-law rules of the state in which it sits to determine which of two competing states' laws should be applied to the action before it.