The opinion of the court was delivered by: LORD, III
In this diversity case plaintiff won a judgment against defendant in the amount of $ 201,792.40 under the Pennsylvania Wrongful Death and Survival statutes. Pennsylvania law governs the substantive rights of the parties. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938).
Plaintiff now moves to amend the judgment to add prejudgment interest as provided by Pennsylvania Rule of Civil Procedure 238.
Rule 238 provides:
(a) Except as provided in subdivision (e), in an action seeking monetary relief for ... death ... the court ... shall
(1) add to the amount of compensatory damages in the ... verdict ... damages for delay at ten (10) percent per annum, not compounded, which shall become part of the award, verdict or decision
(e) If a defendant at any time prior to trial makes a written offer of settlement in a specified sum with prompt cash payment to the plaintiff, and continues that offer in effect until the commencement of trial, but the offer is not accepted and the plaintiff does not recover by ... verdict ... exclusive of damages for delay, more than 125 percent of the offer, the court ... shall not award damages for delay for the period after the date the offer was made.
(f) If an action is pending on the effective date of this rule ... damages for delay shall be computed from the date plaintiff files the initial complaint or from a date one year after the accrual of the cause of action, or from a date six (6) months after the effective date of this rule whichever date is later.
Pa.R.Civ.P. 238. Both parties agree that, if the rule applies, plaintiff is entitled to the amendment he seeks.
However, defendant argues that rule 238 does not apply in federal court because it is procedural not substantive.
The general rubric is that although state law governs substantive matters in diversity cases, under Erie, federal law governs procedural matters. "It was decided in (Erie) that the federal courts in diversity cases must respect the definition of state-created rights and obligations by the state courts." Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U.S. 525, 535, 78 S. Ct. 893, 899, 2 L. Ed. 2d 953 (1958). However, where a requirement is merely a form and mode of enforcing a right or obligation and is not bound up with the definition of the right or obligation, federal rules control. Id. at 536, 78 S. Ct. at 900. The issue here is whether rule 238 is in every sense simply a procedural device to decongest Pennsylvania court dockets, as defendant argues, or, as plaintiff contends, is part of a remedy created to enforce the rights of parties under the substantive law of Pennsylvania in death cases.
The terms "substance" and "procedure" are common shorthand for lawyers and the courts, but
C. A. Wright, Law of Federal Courts 272 (3d ed. 1976). At a glance, it appears that rule 238 is bound up with the definition of the substantive rights of the parties. Indeed, a vast number of cases from federal district courts and circuit courts of appeals apply state prejudgment interest rules in diversity cases under the Erie doctrine. See, e.g., Clissold v. St. Louis-S. F. Ry., 600 F.2d 35 (6th Cir. 1979); Plantation Key Developers, Inc. v. Colonial Mortgage Co., 589 F.2d 164 (5th Cir. 1979); In re Air Crash Disaster Near Chicago, Illinois on May 25, 1979, 480 F. Supp. 1280 (N.D.Ill.1979), aff'd, 644 F.2d 633 (7th Cir. 1981); Continental Federal Savings & Loan Association v. Delta Corp. of America, 425 F. Supp. 371 (W.D.Okl.1976).
The Third Circuit has upheld application of a virtually identical New Jersey rule of civil procedure to diversity actions. Huddell v. Levin, 395 F. Supp. 64 (D.N.J.1975), rev'd on other grounds, 537 F.2d 726 (3d Cir. 1976). See also Glick v. White Motor Co., 458 F.2d 1287 (3d Cir. 1972). The purpose of the New Jersey rule was held to be compensatory, to provide plaintiffs with damages for delay as part of their substantive rights. That the rule was also intended to encourage settlements and increase the efficiency of the court system did not make it procedural for the purposes of Erie. An increased efficiency and expedition in the disposition of lawsuits alone is not really an ...