By Andrew L. Palmison
In September 2011, this author concluded that, in the context of a strict liability claim arising under Indiana law, Indiana Rule of Evidence (IRE) 407 would likely preclude the admission of subsequent remedial measures. Indiana Lawyer, Sept. 14, 2011, “Admissibility of Subsequent Product Modifications.” Other states, such as California, hold that the subsequent remedial measures would be admissible. See Ault v. Int’l Harvester Co., 528 P.2d 1148, 1151 (Cal. 1974). If a conflict arises between a state which does not follow the exclusionary rule and either a state or federal district which does, the question arises as to whether the interpretation of the rule of evidence is substantive or procedural. This article concludes that, in such a conflict in a diversity action, a majority treats the rule as procedural and applies the federal interpretation. The result is unclear, however, in a state court action in which the court applies the substantive law of a state whose interpretation of the rule differs from its own.
In Fasanaro v. Mooney Aircraft Corp., plaintiff’s husband was killed while piloting an aircraft designed and manufactured by Mooney. 687 F. Supp. 482, 483 (N.D. Cal. 1988). The estate brought a products liability action in a California state court that was subsequently removed to a California District Court. Evidence emerged that, subsequent to the accident, Mooney had undertaken a number of remedial measures related to the design, manufacture and warnings associated with the aircraft. Mooney moved to exclude such evidence pursuant to Federal Rule of Evidence (FRE) 407.
Pursuant to Ault, California Evidence Code § 1151 would not bar the subsequent remedial measures undertaken by Mooney. Under FRE 407, however, the evidence would be inadmissible. The court, analyzing the conflict under the Erie doctrine, articulated that when, in a diversity case, the court is faced with a question of the applicability of a federal rule over a contrary state provision, the court is to apply the two-part test of Hanna v. Plumer, 380 U.S. 460, 471 (1965), as restated in Walker v. Armco Steel, 446 U.S. 740 (1981). Under the foregoing test, the court first asks whether the federal rule directly covers the situation before it. If not, the court then evaluates the choice of law in light of the policies underlying the Erie doctrine. If, however, the court finds that the situation before it is covered by the federal rule, then the federal rule is followed provided that it was within the power of Congress and the Supreme Court through the Rules Enabling Act.
Finding that the rule can be rationally classified as procedural, the court noted that the advisory committee notes reflect a congressional judgment that juries will make the error of treating subsequent remedial measures as admissions of fault, when “[t]he conduct is not in fact an admission, [but] is equally consistent with injury by mere accident or through contributory negligence.” Id. at 485. The foregoing represents a congressional concern that the admission of certain evidence will unduly emphasize certain evidence for the jury. Id. In addition, the admission of subsequent remedial measures would open the door for a defendant to rebut the evidence, creating a “mini-trial” of tangential issues. Id. Consequently, the court determined, the rule advances the procedural goals of accuracy of the evidence, preventing undue bias, and advancing judicial economy. Id. at 485-86. Having concluded that FRE could rationally be classified as procedural, the court next determined whether plaintiff’s attempt to admit the evidence of subsequent remedial measures was covered by the FRE 407, which it clearly was. Id. In the face of a controlling Federal Rule, the only remaining issue was whether Congress had the power to enact the rule. Id. at 486. Clearly, Congress has the power to regulate the proceedings in Article III courts under the Necessary and Proper Clause of the United States Constitution. Id. Based on the foregoing, the Fasanaro court had little trouble concluding that FRE 407 is procedural and that the federal interpretation of FRE 407 would govern the admissibility of the evidence of subsequent remedial measures. Id.
The Fasanaro court compared the approaches for the 7th Circuit in Flaminio v. Honda Motor Corp., 733 F.2d 463 (7th Cir. 1984), and the 10th Circuit in Moe v. Avions Marcel Dassault-Breguet Aviation, 727 F.2d 917 (10th Cir. 1984). In Flaminio, the plaintiff was injured while riding a motorcycle manufactured by Honda. The rider felt a vibration in the front end of the motorcycle and rose from his seat to attempt to identify the source of the vibration. While doing so, the motorcycle began to wobble uncontrollably resulting in an accident, which left the rider a paraplegic. According to the plaintiffs, Honda subsequently reinforced the struts in an effort to reduce front-end wobble. The plaintiffs sought to introduce blueprints demonstrating the foregoing, an effort the District Court denied. The District Court, sitting in diversity, applied Wisconsin substantive law. The Wisconsin Supreme Court had interpreted its equivalent of FRE 407 to permit evidence of subsequent remedial measures when at least one of the plaintiff’s liability theories is strict liability. Id. at 470 (citing Chart v. General Motors Corp., 258 N.W.2d 680, 684 (1977)). The 7th Circuit concluded, on the other hand, that FRE 407 bars such evidence. Flaminio, 733 F.2d at 469-70. Judge Posner, addressing the “difficult question” of whether the state or federal interpretation should apply, addressed the argument that the application of the federal rule would contravene Erie’s mandate that Congress not invalidate the substantive laws of a state:
Having been enacted by Congress rather than promulgated by the Supreme Court pursuant to the Rules Enabling Act . . . the Federal Rules of Evidence are not subject to the Act’s proviso that rules promulgated under it “shall not abridge, enlarge or modify any substantive right ….” And we have held that Congress intended the Federal Rules of Evidence to apply in [diversity cases]. [internal citation omitted]. But we must not forget that [Erie] held that federal courts were constitutionally obligated to decide diversity cases in accordance with the rules of decision prescribed by state law (statutory or common), though the precise source of this obligation is not clear from the Supreme Court’s opinion. [ . . . ] It is true that, as Erie itself suggests, the obligation is limited to matters of substantive law – “Congress has no power to declare substantive rules of common law applicable in a State,” 304 U.S. at 78. … But the Notes of the Advisory Committee to Proposed Rule 407 indicate that the rule is based primarily (in the Committee’s words) “on a social policy of encouraging people to take, or at least not discouraging them from taking, steps in furtherance of added safety.” See also McCormick, Handbook on the Law of Evidence 666 (Cleary 2d ed. 1972). As is apparent from Chart, Wisconsin has come to a different conclusion on this question, at least with respect to products liability cases; and it might appear that under Erie this judgment – a judgment on a matter of substantive policy rather than trial management – should be controlling in any case, such as this, where Wisconsin law rather than federal law supplies the standard against which the defendant’s conduct is to be judged.
Id. at 470-71. Yet, Judge Posner rejected this argument, finding instead the FRE 407 is “entwined with procedural considerations” such as ensuring that jurors do not draw incorrect inferences from evidence. Id. at 471-72. Said Judge Posner:
Although Rule 407 has substantive consequences by virtue of affecting incentives to take safety measures after an accident occurs, this just puts the rule in that borderland where procedure and substance are interwoven. The necessary-and-proper clause of Article I extends into the borderland, where are found “matters which, though falling within the uncertain area between substance and procedure, are rationally capable of classification as either.”
. . .
[FRE 407] has substantive consequences, but that is true of many procedural and evidentiary rules. A notable example is Rule 35 of the Federal Rules of Civil Procedure, which authorizes compulsory physical and mental examinations of parties to federal diversity (as to other federal) cases. Rule 35 was held valid in Sibbach v. Wilson & Co., 312 U.S. 1 (1941), despite the fact that it both infringes on personal privacy and makes it harder for plaintiffs to get sizable damage awards in personal-injury cases. And the rule has only the authority of the Rules Enabling Act behind it.
. . .
We are reluctant to cast a cloud over the whole federal rulemaking enterprise and open a new chapter in constitutional jurisprudence by holding that a procedural rule is beyond even the power of Congress to enact for application to diversity cases, because the rule affects substantive questions that the Erie doctrine reserves to the states.
Id. at 472.
Both Flaminio and Fasanaro rejected as dicta the 10th Circuit’s discussion in Moe, supra. In Moe, a diversity action arising out of an airplane crash near Denver, Colo., the District Court had determined that the Colorado state court interpretation of Rule 407 (which allowed the admission of subsequent remedial measures in a strict liability action) was not binding on it and excluded the evidence pursuant to FRE 407 and 403. Id. at 930-31. The court affirmed the District Court’s decision with respect to its FRE 403 analysis but concluded that, when state law is clear with respect to the Rule 407 analysis, the state interpretation must govern:
[W]hen state courts have interpreted Rule 407 or its equivalent state counterpart, the question whether subsequent remedial measures are excluded from evidence is a matter of state policy. [internal citation omitted]. The purpose of Rule 407 is not to seek the truth or to expedite trial proceedings; rather, in our view, it is one designed to promote state policy in a substantive law area. See, comments of Professor Schwartz, Vol. 2, Weinstein’s Evidence, Rule 407, 407-1, 2 (1982). . . . We hold that when such conflicts arise, because Rule 407 is based primarily on policy considerations rather than relevancy or truth seeking, the state rule controls because (a) there is no federal products liability law, (b) the elements and proof of a products liability action are governed by the law of the state where the injury occurred and these may, and do, for policy reasons, vary from state to state, and (c) an announced state rule in variance with Rule 407 is so closely tied to the substantive law to which it relates (product liability) that it must be applied in a diversity action in order to effect uniformity and to prevent forum shopping. [internal citation omitted].
Id. at 932. The court rejected the argument that Erie/Hanna required the application of the federal interpretation:
We are not unmindful of the rule laid down in [Hanna] that where the federal and state rules both govern the issue in dispute and are in direct conflict, the federal rule applies in a diversity based case if the federal rule is arguably procedural in nature. However, we observe that while the sufficiency of the evidence is tested against the federal standard in a diversity case . . . the underlying cause of action, with its attendant elements and requirement of proof in a diversity case, is governed by state law. [internal citation omitted]. The ground for exclusion of remedial measures under Rule 407 rests on the social policy of encouraging people to take steps in furtherance of safety. The decision is necessarily a state policy matter. Product liability is not a federal cause of action but, rather, a state cause of action with varying degrees of proof and exclusion from state to state. If a state has not announced controlling rules . . . the federal district court, sitting as a state court in a product liability diversity case, must determine whether Rule 407 applies. Where the state law is expressed in product liability cases, these expressions control the application of Rule 407.
The majority of federal courts faced with the question whether to apply the state or federal interpretation of the exclusionary rule opted for the federal, finding that the federal rule is procedural. Pursuant to the Erie/Hanna analysis, the rule may rationally be classified as procedural and governs because it was within Congress’s power to enact such a rule. The courts do not (and need not) address the issue of whether the rule is substantive or procedural in light of the policies underlying the Erie analysis. One must question, therefore, whether the interpretation of Rule 407 would be substantive or procedural if not presented in the context of the Erie/Hanna analysis. For example, a claim may pend in a jurisdiction that does not follow the exclusionary rule but the court, pursuant to its choice of law determination, has chosen to apply the substantive law of a jurisdiction that does follow the exclusionary rule. In this context, the determination of whether the interpretation of the rule is substantive or procedural does not hinge upon the Erie/Hanna analysis but rather may implicate the discussion set forth in Moe.•
Mr. Palmison is an associate with Rothberg Logan & Warsco in Fort Wayne and is a member of the DTCI Product Liability Section. The opinions expressed in this article are those of the author.