A. Arises out of DIVERSITY cases only.
B. Erie: Federal courts are to apply the substantive law of the state in which they sit.
i. Discourages forum shopping and inequitable administration of laws.
C. York: Outcome Determinative Test.
i. Federal court should apply STATE PROCEDURAL LAW if the federal procedural law would or could vitally affect the outcome of the case.
ii. If applying federal law would mean a different outcome, state law statute of limitations would apply.
i. If there is a strong federal policy backing up a federal procedure (e.g. the 7th amendment guarantee of a jury trial) it can override state procedural law EVEN IF it is outcome determinative.
E. Hanna: TWO part test.
i. If there is a valid federal rule on the subject (on point), it is to be followed.
ii. If there is not a federal rule that exactly applies, apply the Erie test (will federal rule application result in forum shopping and inequitable administration).