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3. Which law governs whether relation back will be permitted under these circumstances?
The company moved to dismiss, arguing that the forum state had enacted a one-year statute of limitations for medical malpractice actions and that the company had been served after the limitations period had expired. The company also noted that the state's highest court has interpreted the limitations statute as forbidding any relation back of amendments adding parties in medical malpractice actions. The patient argued that the Federal Rules of Civil Procedure control, and that they allow relation back under the circumstances of this case.
Ten months after surgery in a hospital, a patient who had suffered complications from the surgery sued the surgeon and the hospital in federal court for medical malpractice, seeking $750,000 in damages. Timely personal service was made on the surgeon and the hospital. Three months later, during discovery, the patient learned that the hospital was owned by a national health-care company and moved to amend the complaint to substitute the company for the hospital.
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B is incorrect. This answer reaches the correct conclusion with incorrect legal reasoning. The Supreme Court has held that federal courts sitting in diversity are bound by both state common law and state statutory law under the Rules of Decision Act. Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938).
C is incorrect. Although state statutes of limitation are outcome-determinative and therefore controlling in federal diversity actions, the question posed here is whether the federal rules or state law controls the standards for deciding relation-back issues. See Guaranty Trust Co. v. York, 326 U.S. 99 (1945). Thus, the fact that the state limitations statute applies to the substantive claim does not answer the question of whether the court should allow relation back to avoid the consequences of missing the applicable statute of limitations deadline.
D is incorrect. State laws that prohibit relation back do not apply in federal courts. FRCP 15(c)(1)(A) specifically provides that federal courts sitting in diversity may follow the state law supplying the limitations statute when that law «allows relation back.» This provision is designed to broaden the opportunity for actions to move forward even when the other provisions of FRCP 15(c) would not allow relation back. If, however, the state law prohibits relation back, the sole basis for determining whether relation back applies are the standards set out in Rules 15(c)(1)(B) and (C).