The Full Faith and Credit Clause and statute require federal and state courts to give the same effect to a state court’s judgment as would the state court that rendered the judgment. Thus, the provisions promote national unity and prevent litigants from resorting to other courts after incurring adverse judgments. While the full faith and credit provisions do not acknowledge exceptions, the Court has long recognized that exceptions to them exist. However, the Court has not set forth the limits of many of these exceptions. Absent Supreme Court guidance, state and federal courts have considered and applied various novel full faith and credit exceptions.
The Erie Doctrine requires federal courts sitting in diversity jurisdiction to apply the substantive laws of their forum states unless compelled to do otherwise by a federal provision. This requirement ensures that the “accident” of diverse parties will not result in different outcomes in federal court than in state court when a matter is governed by state law. The effect of another court’s judgment is a substantive matter with the potential to determine a dispute’s outcome. Therefore, Erie suggests that a federal court sitting in diversity should apply its forum state’s preclusion law, which is informed by the full faith and credit provisions. However, federal courts generally consider the full faith and credit provisions, and possible exceptions to them, without regard to forum-state law. In doing so, they create the possibility of differeing outcomes between state and federal courts in diversity cases—Erie problems.
Part One considers the two bases for a federal court sitting in diversity jurisdiction applying state preclusion law—the full faith and credit statute and the Erie Doctrine. Part Two analyzes the possible exceptions to the full faith and credit provisions and considers the Erie problems that these exceptions could give rise two. Part Three proposes two ways to resolve these Erie problems without greatly encroaching on federal judicial power.
Available at: http://works.bepress.com/jonathan_ross/1/