9. Is the court likely to find the jeweler's complaint sufficient?

When determining whether to do an Erie analysis, the threshold question is whether there is a controlling Federal Rule or federal statute. If any federal law controls (is «on point»), there is no Erie problem. However, in the absence of a controlling federal statute or Rule, the question becomes whether the issue at hand is substantive or procedural.

In the Erie decision, the U.S. Supreme Court held that a federal court sitting in diversity must apply state substantive law of the state in which it sits on all substantive issues in a case. This includes the state's conflict of law rules. For all procedural issues, a federal court sitting in diversity must apply federal procedural rules (the FRCP).

Exam tip: When a potential Erie analysis arises on the MBE, pay close attention to the facts. If the court is not sitting in diversity and is exercising federal question jurisdiction, federal law will apply and there is no need to examine applicable state law.

The guiding principle of pleading under the FRCP is known as «notice pleading,» codified under Federal Rules of Civil Procedure (FRCP) 7-10. Notice pleading refers to a system of pleading requirements that emphasizes pleadings only as a way to notify parties of general issues in a case. This allows plaintiffs to state their claims in general terms without alleging detailed facts to support each claim. However, a complaint must contain sufficient factual allegations to allow a district court to find that the claim is plausible, not merely possible. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007); Ashcroft v. Iqbal, 556 U.S. 662 (2009).

B is correct. The issue is whether the jeweler's complaint is sufficient under federal notice pleading requirements, which are procedural (not substantive) under Erie. Notice pleading is a federal procedural rule, codified in FRCP 7-10 and expanded upon in the Twombly and Iqbal decisions. Federal pleading requirements apply to federal courts even when they hear diversity cases.

In this case, the jeweler merely alleged that the designer drove negligently, which does not satisfy the notice pleading requirement that the complaint must contain not just legal conclusions, but enough facts that make a claim plausible, not merely possible.

A is incorrect. This answer choice states the correct conclusion with the incorrect legal reasoning. The court should not find the jeweler's complaint sufficient, but not because it fails to satisfy State A's pleading requirements. It is not State A's pleading requirements, but the federal pleading requirements, which apply to this diversity action. The complaint's insufficiency is based on its failure to state enough facts to show that the claim is plausible, not just possible.

C is incorrect. This choice applies the correct rules (federal) but comes to the incorrect conclusion. The bare assertion that the designer drove negligently does not satisfy the federal requirements that the complaint must contain sufficient factual allegations to allow a federal district court to find that the claim is, at the very least, plausible. The jeweler made only a conclusory statement that the designer drove negligently, without alleging any other factual allegations to back up his conclusion. Thus, it will not meet the federal notice pleading requirements.

D is incorrect. Similar to the explanation for the incorrect choice A, state pleading requirements do not apply here. When a court has diversity jurisdiction over a dispute, it must apply the substantive laws of the state in which it sits, but for all procedural issues, a federal court sitting in diversity must apply federal procedural rules. Here, neither State B's nor State A's pleading rules apply.