The fact pattern
Read it twice before you look at the answer
A plaintiff brings a state-law negligence claim in federal court under diversity jurisdiction. The forum state has a statute capping non-economic damages in negligence cases at $250,000. There is no federal statute or Federal Rule directly on point governing damages caps. A federal jury awards the plaintiff $600,000 in non-economic damages. The defendant asks the federal court to apply the state cap and reduce the award.
Try it before you scroll
Spend 15 minutes writing your own IRAC answer first — the model below is far more useful after you have committed to your own issue list. These issues are in the facts:
- Erie doctrine in a diversity case
- Substance vs. procedure
- Whether a Federal Rule or statute is on point (Hanna)
- Outcome-determinativeness and forum-shopping
Model IRAC answer
One way to write it — not the only way. Compare it to yours.
Issue
Whether a federal court sitting in diversity must apply a state statutory cap on non-economic damages to a state-law negligence claim.
Rule
Under the Erie doctrine, a federal court sitting in diversity applies state substantive law and federal procedural law. When a Federal Rule of Civil Procedure or federal statute is directly on point and valid under the Rules Enabling Act, it governs (the Hanna analysis). When no federal rule is on point, the court asks whether the state law is substantive — bound up with the parties' rights and obligations — considering whether applying federal law instead would be outcome-determinative and would encourage forum-shopping or inequitable administration of the law.
Application
No Federal Rule or statute governs damages caps, so this is not a Hanna 'rule on point' case; the analysis proceeds under the Erie substance/procedure inquiry. A statutory ceiling on recoverable damages is best characterized as substantive: it defines the scope of the remedy available for the state-created negligence claim and is bound up with the parties' substantive rights, not merely the manner of litigating.
The outcome-determinativeness and forum-shopping considerations reinforce this. Ignoring the cap would change the result dramatically — $600,000 versus $250,000 — and if federal courts disregarded state damages caps, plaintiffs would systematically prefer federal court to escape the limit, producing exactly the forum-shopping and inequitable administration Erie aims to prevent. A defendant should not face a larger judgment merely because the case landed in federal rather than state court.
Conclusion
The federal court must apply the state damages cap. Because no federal rule is on point and the cap is substantive — outcome-determinative and a magnet for forum-shopping if disregarded — Erie requires the court to reduce the non-economic award to $250,000.
Verify before you rely on this. This is an original teaching example, not legal advice. Rules vary by jurisdiction and by your professor's framing — check every rule statement against your casebook and class notes before using it.
Now try it timed.
Open the IRAC Practice Gym, set a 15-minute timer, and write your own answer to this fact pattern. You get feedback that helps you think — never an answer written for you.