Allstate Insur Co v. Menards Inc ( 2002 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 01-2139
ALLSTATE INSURANCE COMPANY, as subrogee of
Sam Lakhia,
Plaintiff-Appellant,
v.
MENARDS, INCORPORATED,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 99 C 1583--Harry D. Leinenweber, Judge.
ARGUED NOVEMBER 8, 2001--DECIDED April 5, 2002
Before BAUER, RIPPLE and WILLIAMS, Circuit
Judges.
RIPPLE, Circuit Judge. In this diversity
case, the Allstate Insurance Company
("Allstate"), as subrogee of Sam Lakhia,
appeals from the district court’s
dismissal of its claim for property
damage founded on the doctrine of strict
liability for a defective product. There
is a disagreement among the intermediate
courts of appeals in Illinois with
respect to the applicable statute of
limitations. The United States District
Court for the Northern District of
Illinois decided that it should follow
the rule established by the state
intermediate court for the state
appellate district in which the lawsuit
would have been brought. Accordingly, it
determined that the present lawsuit had
been filed beyond the time permitted by
the statute of limitations and dismissed
the action. Because we believe that the
district court erred in its belief that
it was required to follow the rule of the
state intermediate court of appeals for
the state appellate district in which the
suit would have been brought, we reverse
its decision on that issue. Finally,
because of the importance of the question
to the jurisprudence of Illinois, we
certify to the Supreme Court of Illinois
the issue of the applicable statute of
limitations.
I
BACKGROUND
Prior to December 18, 1994, Sam Lakhia
or a member of his family purchased a
torchiere halogen lamp in a Menards store
in Hillsdale, Illinois. The lamp was
placed in the family home in Bellwood,
Illinois and situated along the south
wall near the basement stairs for the
purposes of providing ambient light. On
December 18, there was a fire in the
Lakhia home that resulted in a claim by
Mr. Lakhia for $144,799.05 for property
damage and related living expenses
incurred as a result of the fire.
Allstate, Lakhia’s insurer and subrogee,
paid the claim and then brought this
action against Menards on March 10, 1999.
The jurisdiction of the district court
was based on the diverse citizenship of
the parties./1 Menards filed a motion
to dismiss on the ground that the action
was barred by the applicable statute of
limitations.
In a hearing before the district court,
the parties disagreed with respect to the
applicable statute of limitations period
for a products liability action. In
Allstate’s view, the applicable statute
of limitations was five years. It relied
upon the decision of the Second District
in American Family Insurance Co. v.
Village Pontiac-GMC, Inc., 538 N.E.2d 859
(Ill. App. Ct. 1989). Menards, on the
other hand, submitted that the applicable
statute of limitations was two years. It
relied on the decisions of the First
District in McLeish v. Sony Corp. of
America, 504 N.E.2d 933 (Ill. App. Ct.
1987) and Calumet Country Club v. Roberts
Environmental Control Corp., 483 N.E.2d
613 (Ill. App. Ct. 1985)./2
In discharging their responsibility to
ascertain the content of state law in
diversity cases, the sitting judges of
the Northern District of Illinois have
developed two conflicting approaches when
confronted with no controlling decision
of the Supreme Court of Illinois and with
conflicting decisions of the Illinois
Appellate Court./3 Some judges have
followed the standard practice for a
district court sitting in diversity and
have attempted to predict how the Supreme
Court of Illinois would resolve the
question./4 Others have deemed
themselves bound by the prevailing rule
of the state appellate district in which
the suit would have been brought in state
court,/5 reasoning that this approach
would prevent forum shopping. The
district court in this case had followed
the latter approach in earlier cases and
decided that, in the absence of explicit
guidance from this court, it would not
alter its course. Accordingly, it
followed the decisions of the First
District and held that the applicable
statute of limitations was two years and
dismissed the action./6
II
DISCUSSION
A.
We first address whether the district
court was correct in its decision to
consider itself bound by the view of the
state intermediate appellate court with
jurisdiction over the place where the
action would be brought in the state
court. Both parties before us, and all of
the judges of the United States District
Court for the Northern District of
Illinois who have addressed the matter,
acknowledge that the ultimate
responsibility of the district courts is
to apply the law of the state in which
the court sits with respect to
substantive matters. See Erie R.R. Co. v.
Tompkins, 304 U.S. 64, 78 (1938). It is
further beyond dispute that, as a general
rule, statutes of limitation are
considered to be substantive matters for
purposes of the Erie doctrine. See
Guaranty Trust v. York, 326 U.S. 99, 110
(1945).
As we have noted already, the district
court, relying on its past practice as
well as the practice of some other judges
sitting in this particular district, took
the view that, in the absence of a
definite ruling by the Supreme Court of
Illinois and faced with a conflict among
the state’s intermediate appellate
courts, it was obliged to follow the rule
established by the Illinois Appellate
Court with jurisdiction over the place
where the suit would have been filed, if
it had been filed in state court. The
view of the district court finds support
in several published cases of the
Northern District of Illinois. See, e.g.,
Abbott Labs. v. Granite State Ins. Co.,
573 F. Supp. 193 (N.D. Ill. 1983); Comm’l
Discount Corp. v. King, 552 F. Supp. 641
(N.D. Ill. 1982). As Menards points out
in its brief, these cases consider the
main focus of Erie to be a concern that
"’for the same transaction the accident
of suit by a nonresident litigant in a
federal court instead of a State court a
block away should not lead to a
substantially different result.’" Abbott
Labs., 573 F. Supp. at 197 (quoting
Guaranty Trust, 326 U.S. at 109). The
same theme, noted the district court in
Abbott Laboratories, was expressed by the
Supreme Court in Klaxon v. Stentor
Manufacturing Co., 313 U.S. 487, 496
(1941), when the Supreme Court wrote
that, unless state choice of law rules
are treated as anything other than
substantive, "the accident of diversity
of citizenship would constantly disturb
equal administration of justice in
coordinate state and federal courts
sitting side by side." Klaxon, 313 U.S.
at 496. The rule articulated in Klaxon
dealt with a state’s choice of law rules
governing when it would apply its own
substantive law and when it would apply
the substantive law of another state. The
district court in Abbott Laboratories
maintained, however, that Erie’s concern
with the equal administration of justice
requires that the same approach be taken
with respect to a state’s "internal
choice of law rule that requires the
state trial courts in Illinois to follow
the rule of the appellate court for the
district in which it is located."/7
Abbott Labs., 573 F. Supp. at 195. Thus,
when "’state law’ itself contains a
definitive rule as to the way to
ascertain ’state law’ in case of
intrastate appellate court disputes, we
must follow that first ’state law’ in
order to learn the second ’state law.’"
Comm’l Disc. Corp., 552 F. Supp. at 851.
In short, said the district court, the
"essential theory" of Erie is that "’a
federal court must decide substantive
questions in diversity cases in the same
way that a state trial judge in the same
location would.’" Id. at 847 (quoting
Nat’l Can Corp. v. Whittaker Corp., 505
F. Supp. 147, 148 n.2 (N.D. Ill. 1981)).
In assessing this perspective, we
believe that the most appropriate course
is to start with Erie itself. There can
be no doubt that, in setting forth the
rule that a district court sitting in
diversity must apply the law of the state
in which it sits, the Supreme Court was
concerned with forum shopping. See Erie,
304 U.S. at 74-75. It is necessary,
however, to go behind this concern and to
perceive the reasons for the Supreme
Court’s concern. Erie is not simply the
product of a search for a salutary rule
of judicial administration, but a holding
that the Supreme Court explicitly said
was constitutionally compelled: "If only
a question of statutory construction were
involved, we should not be prepared to
abandon a doctrine so widely applied
throughout nearly a century. But, the
unconstitutionality of the course pursued
has now been made clear, and compels us
to do so." Erie, 304 U.S. at 77-78.
Noting the federal government’s lack of
constitutional authority to create
substantive rules of law, the Supreme
Court viewed its holding as restoring to
the state governments the prerogative of
fashioning principles of law in matters
beyond the limited constitutional
competence delineated for the federal
government in the Constitution:
Except in matters governed by the Federal
Constitution or by acts of Congress, the
law to be applied in any case is the law
of the State. And, whether the law of the
State shall be declared by its
Legislature in a statute or by the
highest court in a decision is not a
matter of federal concern. There is no
general federal common law. Congress has
no power to declare substantive rules of
common law applicable in a State whether
they be local in their nature or
"general," be they commercial law or part
of the law of torts. And no clause in the
Constitution purports to confer such a
power upon the federal courts.
Id. at 78; see also Bernhardt v.
Polygraphic Co. of Am., 350 U.S. 198, 202
(majority), 208 (Frankfurter, J.,
concurring) (1956). To maintain the
constitutional line between limited
federal lawmaking power and state
residual lawmaking power, Erie requires
that the federal court follow an
analytical path that ensures that the law
applied in federal proceedings is the law
that "ultimately would be applied were
the case to be litigated in the state
courts." Roberts v. S. Life Ins. Co., 568
F. Supp. 536, 539-40 (N.D. Ill. 1983)
(emphasis in original)./8
Application of the approach employed by
the district court in this case would not
achieve this result because it would deny
the litigant any opportunity to receive a
judicial assessment about what the
supreme court of the state might
determine the law to be through a
resolution of conflicting precedent in
the lower state appellate courts. The
litigant in an Illinois state court is no
doubt bound by the approach articulated
in People v. Thorpe, 367 N.E.2d 960, 963
(Ill. App. Ct. 1977), and Garcia v. Hynes
& Howes Real Estate, Inc., 331 N.E.2d
634, 636 (Ill. App. Ct. 1975), and
therefore can expect to be bound in the
trial court by the substantive rule of
law articulated by the state appellate
court for the district in which the trial
court is located. Upon rendition of
judgment by the trial court, however,
that litigant has the right to appeal to
the intermediate appellate court and to
convince that court that the prevailing
rule ought to yield to that embraced by
an appellate court in another district.
Absent satisfactory relief in that court,
yet a further attempt may be made to
convince the state’s highest tribunal to
resolve the conflict among the districts.
For the litigant in federal court,
however, there is no such direct path to
the Supreme Court of Illinois. If the
mandate of Erie is to be satisfied and
the law ultimately employed is to be the
law of the state, the federal court,
exercising its authority to hear
diversity cases,/9 must make a
predictive judgment as to how the supreme
court of the state would decide the
matter if it were presented presently to
that tribunal.
In many instances, therefore,
application of the rule employed in
Abbott Laboratories would result in the
precedent of the state intermediate
appellate court being given more effect
in federal court than it would receive in
the state judicial system. Under the
rationale of that case, both the district
court and this court would be bound by
the precedent of the state intermediate
appellate court. If the case were brought
in the state system, however, that court
would be free to reevaluate its own
precedent and determine that, despite the
usual constraints of stare decisis and
precedent, that decision ought not stand.
See Geri J. Yonover, Ascertaining State
Law: The Continuing Erie Dilemma, 38
DePaul L. Rev. 1, 33 (1988).
Although the Supreme Court of the United
States has not had to confront the
precise issue before us today, its
decisions make it clear that the Court
views the Erie doctrine as imposing on
federal courts the responsibility to
determine the content of state law at the
state, not the local, level. Erie itself
appears to have contemplated that the
duty of the federal court, sitting in
diversity, is to determine the content of
state law as the highest court of the
state would interpret it. See Erie, 304
U.S. at 78, 80; see also Wichita Royalty
Co. v. City Nat’l Bank, 306 U.S. 107
(1938). In Bernhardt, the Court also
focused on the clarity of the entire
state’s decisional law in ascertaining
the content of state law. See Bernhardt,
350 U.S. at 205. Most recently, and
perhaps most pointedly, in holding that
federal courts of appeals must review de
novo the district court’s determination
of the content of state law, the Supreme
Court noted that deferential review
invites "divergent development of state
law among the federal trial courts even
within a single state." Salve Regina
College v. Russell, 499 U.S. 225, 234
(1991).
Finally, we do not think that the
Supreme Court’s decision in Klaxon is of
any help to Menards. A fair reading of
Klaxon makes clear that its focus is on
ensuring that, in determining whether to
apply the substantive law of the state in
which it sits or the substantive law of
another state, a district court should
follow the choice of law rules of the
forum state to ensure that the
replacement of one state’s law by another
is based on a state policy decision and
not a federal one. As the Court stated:
Any other ruling would do violence to the
principle of uniformity within a state,
upon which the Tompkins decision is
based. Whatever lack of uniformity this
may produce between federal courts in
different states is attributable to our
federal system, which leaves to a state,
within the limits permitted by the
Constitution, the right to pursue local
policies diverging from those of its
neighbors. It is not for the federal
courts to thwart such local policies by
enforcing an independent "general law" of
conflict of laws. Subject only to review
by this Court on any federal question
that may arise, Delaware is free to
determine whether a given matter is to be
governed by the law of the forum or some
other law.
Klaxon, 313 U.S. 496-97./10
As one scholar has written:
All that was decided in Klaxon was that
the federal court in Delaware should
follow the conflict of laws rules
prevailing in the state in which it sits.
The conflict of laws rules contemplated
by Klaxon are those rules, whether they
be traditional First Restatement of
Conflict of Laws method or one of the
more modern approaches, which would
direct the forum jurisdiction to apply
the law of another jurisdiction. The
intrastate precedential effect of
intermediate state court decisions on
state courts as exemplified by
Thorpe/Garcia is an apple, or better yet
an asparagus, compared to Klaxon’s
orange!
Yonover, supra at 35.
Although we believe that the task of the
federal court sitting in diversity is to
ascertain the substantive content of
state law as it either has been
determined by the highest court of the
state or as it would be by that court if
the present case were before it now, we
pause to emphasize that this
determination in no way implies any
erosion of our precedent that, in the
absence of prevailing authority from the
state’s highest court, federal courts
ought to give great weight to the
holdings of the state’s intermediate
appellate courts and ought to deviate
from those holdings only when there are
persuasive indications that the highest
court of the state would decide the case
differently from the decision of the
intermediate appellate court. See State
Farm Mut. Auto. Ins. Co. v. Pate, 275
F.3d 666, 669 (7th Cir. 2001); Lexington
Ins. Co. v. Rugg & Knopp, Inc., 165 F.3d
1087, 1090 (7th Cir. 1999); Allen v.
Transamerica Ins. Co., 128 F.3d 462, 466
(7th Cir. 1997). See generally E.
Chemerinsky, Federal Jurisdiction sec.
5.3 at 323-26 (3d ed. 1999) (discussing
Supreme Court authorities); Yonover,
supra at 5 n.21. As the Supreme Court has
held, "[w]here an intermediate appellate
state court rests its considered judgment
upon the rule of which it announces, that
is a datum for ascertaining state law
which is not to be disregarded by a
federal court unless it is convinced by
other persuasive data that the highest
court of the state would decide
otherwise." West v. Am. Tel. & Tel. Co.,
311 U.S. 223, 237 (1940)./11
In sum, we adhere today to the general
rule, articulated and applied throughout
the United States, that, in determining
the content of state law, the federal
courts must assume the perspective of the
highest court in that state and attempt
to ascertain the governing substantive
law on the point in question. See Allen,
128 F.3d at 466-67. See generally 19
Charles Alan Wright, Arthur R. Miller &
Edward H. Cooper, Federal Practice and
Procedure: Jurisdiction 2d sec. 4507 at
157-61.
B.
As we have noted earlier, federal courts
have, under Article III, the authority
and, indeed, the duty to ascertain the
content of state substantive law when
called upon to do so in the exercise of
the diversity jurisdiction of the federal
courts. Exercising this responsibility is
no easy task. As one jurist-author has
noted, "[f]inding the applicable state
law . . . is a search that often proves
elusive."/12 Moreover, although often
lost in the debate about the continued
importance of diversity jurisdiction in
our constitutional scheme--a debate that
usually focuses on the number of cases
involved--there is a significant impact
on the health of our federalism as
federal courts interpret, with increasing
frequency, issues of state law./13 As
the same author pointed out, there is
some evidence that federal courts are not
the best prognosticators of the future
course of state doctrinal issues./14
Unless and until corrected, these
missteps by federal courts can have a
grave impact on the principled and
orderly growth of state law principles.
These decisions "inevitably skew the
decisions of persons and businesses that
rely on them and inequitably affect the
losing federal litigant who cannot appeal
the decision to the state supreme court;
they may even mislead lower state courts
that may be inclined to accept federal
predictions as applicable
precedent."/15 It may be that, in the
process of ascertaining the content of
state law, federal judges make, on
occasion, significant contributions to
the growth of state jurisprudence./16
Yet, the potential for significant
intrusion, sometimes with disastrous
results, counsels that the task be
undertaken with great care, thoroughness
and a full realization of the impact that
the process, even when executed adroitly,
has on "Our Federalism." See Younger v.
Harris, 401 U.S. 37, 44 (1971).
Certification of a controlling issue of
state law to the highest court of the
state is one method of reducing the
possibility of error in making an "Erie
guess." Many states have now enacted,
through their state constitutions,
statutes, or rules of court, specific
provisions that permit a federal
appellate court, and sometimes a federal
district court, to seek such
guidance./17 In this circuit we are
the fortunate recipients of this option
by all three states within the circuit.
See Ind. R. App. P. 64; Ill. S. Ct. Rule
20; Wisc. Stat. ch. 821.01. However, as
we pointed out recently in Pate, although
certification is a "useful tool of
cooperative federalism," Pate, 275 F.3d
at 671, because it permits the federal
court to obtain a definitive ruling on
the content of state law, see City of
Houston v. Hill, 482 U.S. 451, 470
(1987), the use of the procedure is "not
without its costs to the litigants and to
the state court which already must
contend with a crowded docket of its
own." Pate, 275 F.3d at 671.
Consequently, we wrote, "a respect for
the burdens of our colleagues on the
state bench and concern for the litigants
before us counsel that we approach the
decision to certify with circumspection."
Id. We then set out a series of factors
that federal courts ought to consider
before deciding to certify an uncertain
question of state law. See id. at 672-73.
First, we said that the federal court
ought to weigh the degree of uncertainty
that exists on the state law issue. See
id. We noted that, in the past, our cases
have directed that a court also consider
whether the issue presents a matter of
public concern, whether the issue is
likely to recur, whether the issue is
outcome determinative, and whether the
state supreme court has had an
opportunity to address the issue in other
cases. See id. at 672./18 We must also
consider whether the supreme court of the
state would consider the issue an
important one in the growth of the
state’s jurisprudence/19 and whether
resolution of the issue definitively will
benefit future litigants/20 or will
almost exclusively affect the citizens of
the state./21 See Pate, 275 F.3d at
672. Notably, we also said that, in
determining whether an intrusion on the
time of our colleagues on the state court
is justifiable, we shall be more inclined
to certify the question when the
intermediate courts of the state are in
disagreement on the issue or the issue is
one of first impression for the court of
last resort. See id. On the other hand,
we have said that fact specific issues,
as well as issues upon which there is no
serious doubt or that are not dispositive
of the case, are not candidates for
certification. See id.
After giving the matter considerable
study, we believe that the present case
justifies certification to the Supreme
Court of Illinois. Statutes of
limitations reflect significant policy
choices by the state and have grave
consequences for the administration of
justice within the state. Certainly, our
colleagues on the Supreme Court of
Illinois are far more familiar with the
policy choices that have been made, and
have far more direct responsibility for
the administration of justice within the
state than do the members of this court.
Moreover, as we have noted earlier, the
intermediate appellate courts in the
state are in disagreement about the
applicable statute of limitations. The
intrusion of unguided federal precedent
into the situation will only serve to
destabilize further the state of Illinois
jurisprudence on this issue and make it
more difficult for members of the
Illinois bar to counsel their clients
accurately. The issue is, moreover, a
recurring one and is likely to arise with
significant frequency both in state and
federal forums. To this date, moreover,
it appears that the Supreme Court of
Illinois has not had an opportunity to
address the question squarely. Before
deciding to certify this issue, we asked
counsel to confirm that none of the
intermediate court decisions on this
issue have been presented to the Supreme
Court of Illinois.
Conclusion
Accordingly, pursuant to Circuit Rule 52
and Rule 20 of the Supreme Court of
Illinois, having determined that there is
no controlling precedent from the Supreme
Court of Illinois on an issue that may be
determinative of this litigation, we
respectfully certify the following
question:
What is the applicable statute of
limitations in Illinois for an action for
damage to property based on the doctrine
of strict liability in tort when that
action is brought within the applicable
statute of repose?
QUESTION CERTIFIED
FOOTNOTES
/1 Allstate Insurance Company is incorporated
in the state of Illinois; it maintains its
principal place of business in Northbrook,
Illinois. Menards is incorporated in the state of
Wisconsin; it maintains its principal place of
business in Eau Claire, Wisconsin. American
Lighting, a third-party defendant in the district
court, filed a motion to dismiss in this court.
We construed American Lighting’s motion as a
motion for non-involvement in this appeal and
granted it. Therefore, American Lighting is not
a party to this appeal.
/2 The dispute between the appellate
districts arises from differing interpretations
of 735 ILCS 5/13-213. The First District reads
13-213 as providing the specific limitations
period for products liability actions, with a
statute of repose in 13-213(b) and the statute of
limitations in 13-213(d), which thereby trumps
the catchall limitations period for property
damage found in 735 ILCS 5/13-205. The Second
District reads 13-213 as providing a statute of
repose, with an exception to that statute of
repose in 13-213(d). Under this view, the
applicable statute of limitations is not found in
13-213 and the catchall statute of limitations of
five years, found in 13-205, applies.
The First District, however, has interpreted 13-
213(d) to provide the limitations period for all
products liability actions. See Calumet Country
Club v. Robert Envtl. Control Corp., 483 N.E.2d
613, 616 (Ill. App. Ct. 1985). The First District
has determined that "[a] reading of the statute
[13-213] reveals that a plaintiff who knows, or
should know, that a product has caused damage
must bring his action in products liability
within two years of when he becomes aware of that
damage." McLeish v. Sony Corp. of Am., 504 N.E.2d
933, 935 (Ill. App. Ct. 1987).
The Second District in American Family reasoned
that the two-year period in 13-213(d) was an
exception to the statute of repose, not the
statute of limitations for products liability
suits. See Am. Family Ins. Co. v. Village
Pontiac-GMC, Inc., 538 N.E.2d 859, 861 (Ill. App.
Ct. 1989). The Second District rejected the First
District’s reading of 13-213, and reasoned that
the Second District’s "interpretation is borne
out by a close examination of the language of 13-
213(d). The section begins with the phrase
’Notwithstanding the provisions of subsection
(b).’ ’Notwithstanding’ means ’in spite of.’"
American Family, 538 N.E.2d at 861. 13-213(b) is
the statute of repose, thus, the court reasoned,
13-213(d) is an exception to the statute of
repose and not the applicable limitations period
for products liability actions. See id. The court
concluded that 13-213(d) did not replace the
omnibus five-year statute of limitations for
property damage actions.
/3 See Brian E. Mattis & B. Taylor Mattis,
Erie and Florida Law Conflict at the Crossroads:
The Constitutional Need for Statewide Stare
Decisis, 18 Nova L. Rev. 1333, 1365-75 (1994)
(presenting a general discussion of this
disagreement).
/4 See, e.g., Allstate Ins. Co. v.
Westinghouse Elec. Corp., 68 F. Supp. 2d 983, 986
(N.D. Ill. 1999) (Kennelly, J.) (using the
predictive approach the court concluded that
five-year statute of limitations applies to
product liability actions for property damage in
Illinois); Applied Micro, Inc. v. SJI
Fulfillment, Inc., 941 F. Supp. 750, 755 (N.D.
Ill. 1996) (Castillo, J.) (acknowledging the
disagreement among the judges of the Northern
District of Illinois and deciding to follow the
predictive approach); Am. Dental Assoc. v.
Hartford Steam Boiler Inspection & Ins. Co., 625
F. Supp. 364, 367 (N.D. Ill. 1985) (Plunkett, J.)
(following predictive approach); Barr Co. v.
Safeco Ins. Co. of Am., 583 F. Supp. 248, 252-53
(N.D. Ill. 1984) (Moran, J.) (following
predictive approach as more consistent with
Erie); Roberts v. Western-Southern Life Ins. Co.,
568 F. Supp. 536, 539-45 (N.D. Ill. 1983)
(Marshall, J.) (holding that while decisions of
intermediate appellate courts are important data
for ascertaining the content of state law, they
were not binding on federal district court);
Kelly v. Stratton, 552 F. Supp. 641, 644-45 (N.D.
Ill. 1982) (Marshall, J.) (holding that
predictive approach is more consistent with
Erie).
/5 See, e.g., Systemax, Inc. v. Schoff, 972
F. Supp. 439, 441, 443-44 (N.D. Ill. 1997)
(Shadur, J.) (reaffirming adherence to the rule
that in diversity cases a federal court is bound
by a state’s internal choice of law rules); Rizzo
v. Means Servs., Inc., 632 F. Supp. 1115, 1131-32
(N.D. Ill. 1986) (Shadur, J.) (articulating
support of deference to Illinois’ internal choice
of law rules); Abbott Labs. v. Granite State Ins.
Co., 573 F. Supp. 193, 196-98 (N.D. Ill. 1983)
(Shadur, J.) (criticizing predictive approach as
inconsistent with Erie when there is a split of
authority between intermediate state courts of
appeal).
/6 Allstate voluntarily dismissed three
other counts, leaving only this product liability
claim against Menards.
/7 See People v. Thorpe, 367 N.E.2d 960, 963
(Ill. App. Ct. 1977) ("Where two or more
appellate districts are in conflict the circuit
[trial] court should follow the decision of the
appellate court of its district."); Garcia v.
Hynes & Howes Real Estate, Inc., 331 N.E.2d 634,
636 (Ill. App. Ct. 1975) (holding that "[t]he
opinions of any Appellate Court necessarily are
binding on all Circuit [trial] Courts across the
State, but not on the other branches of the
Appellate Court"). The rule of these two cases is
known as the Thorpe-Garcia rule and was approved
by the Supreme Court of Illinois, which, citing
Thorpe and Garcia, stated that a trial court
"faced with conflicting decisions from the
various appellate districts and, in the absence
of controlling authority from its home district,
. . . [is] free to choose between the decisions
of the other appellate districts." State Farm
Fire & Cas. Co. v. Yapejian, 605 N.E.2d 539, 542
(Ill. 1992).
/8 See Henry J. Friendly, In Praise of Erie
and the New Federal Common Law, 39 N.Y.U. L. Rev.
385, 385-98 (1964).
/9 See U.S. Const. art. III, sec. 2, cl.1.
/10 We do not mean to intimate that Klaxon is
constitutionally compelled. See Friendly, supra
at 401-02; see also Robert Jackson, Full Faith
and Credit--The Lawyer’s Clause of the
Constitution, 45 Colum. L. Rev. 1 (1945).
/11 Were we to endorse the approach taken by
the district court here, an intermediate state
appellate court in conflict with its sister
districts would be entitled to more deference
than that accorded to decisions of all the
districts when they are in accord. There is no
reason for a federal court to be bound by the
relevant appellate district where there is
conflict among the appellate districts but free
to decide that the Supreme Court of Illinois
would choose a different rule if the appellate
districts agree on a particular point. To hold
otherwise would be a departure from the
longstanding rule of West.
/12 Dolores K. Sloviter, A Federal Judge
Looks at Diversity Jurisdiction, 78 Va. L. Rev.
1671, 1675 (1992).
/13 See id. at 1671.
/14 See id. at 1678-80.
/15 Id. at 1681; see also Factors Etc., Inc.
v. Pro Arts, Inc., 652 F.2d 278, 282-83 (2d Cir.
1981) (Newman, J.).
/16 See William Landes and Richard A. Posner,
Legal Change, Judicial Behavior, and the
Diversity Jurisdiction, 9 J. Legal Stud. 367, 386
(1980).
/17 See Judith S. Kaye & Kenneth I. Weissman,
Interactive Judicial Federalism: Certified
Questions in New York, 69 Fordham L. Rev. 373,
373 (2000).
/18 See also In re Badger Lines, Inc., 140
F.3d 691, 698-99 (7th Cir. 1998)
("[C]ertification is appropriate when the case
concerns a matter of vital public concern, where
the issue will likely recur in other cases, where
resolution of the question to be certified is
outcome determinative of the case, and where the
state supreme court has yet to have an
opportunity to illuminate a clear path on the
issue.").
/19 See Stephan v. Rocky Mountain Chocolate
Factory, Inc., 129 F.3d 414, 418 (7th Cir. 1997);
Nagy v. Riblet Prod. Corp., 79 F.3d 572, 577 (7th
Cir. 1996).
/20 See Hanlon v. Town of Milton, 186 F.3d
831, 835 (7th Cir. 1999).
/21 See Brownsburg Area Patrons Affecting
Change v. Baldwin, 137 F.3d 503, 509 (7th Cir.
1998).