Sunday, February 11, 2007
Another Erie exam question brought to you by the Eighth Circuit:: Parties contract for installation of a pizza machine. Parties dispute installation. Pizza company sues manufacturer in Minnesota and wins judgment of $500K plus prejudgment interest. Defendant claims Wisconsin law applied according to their agreement, and Wisconsin would not have allowed prejudgment interest. Who wins? Schwan's Sales v. SIG Pack, Inc. U.S. Court of Appeals Case No: 061571P.pdf 02/09/2007 U.S. District Court for the District of Minnesota Plaintiff wins Minnesota prejudgment interest. Although interest is an Erie (304 U.S. 64, 78 (1938)) substantive issue (Emmenegger v. Bull Moose Tube Co., 324 F.3d 616, 624 (8th Cir. 2003)), so are conflicts of laws issues Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). Here Minnesota conflicts applied because the parties contract limited application of Wisconsin law to performance and interpretation. Minnesota made judgment interest procedural, therefore for the forum state to apply. Plaintiff claiming forum state prejudgment interest wins over party claiming Wisconsin contract interpretation but not procedural enforcement.the issue of prejudgment interest--a matter of substantive law for Erie purposes--is a procedural matter for conflict-of-laws purposes under Minnesota law. Therefore, we also agree that Minnesota's prejudgment interest statute applies in the absence of an choice-of-law provision that expressly governs procedural matters.