In a diversity jurisdiction case filed in federal court, the plaintiff alleges breach of contract, and the specific issue involves calculating damages for emotional distress. The defendant moves to dismiss the claim for emotional distress damages, arguing that such damages are not recoverable under the relevant state law. How should the federal court determine whether emotional distress damages are available in this case?
By applying the relevant state law governing the availability of emotional distress damages in contract cases.
By applying general principles of federal common law on damages.
By making a discretionary choice based on the interests of justice and fairness.
By determining whether the Federal Rules of Civil Procedure explicitly allow for emotional distress damages.
The correct answer aligns with the principle established under the Erie doctrine, which requires applying state substantive law in diversity cases while federal courts follow their own procedural rules. This ensures consistency between decisions in state and federal courts. The damages available in contract cases are substantive issues governed by state law. It is important to understand that procedural rules, such as how evidence is presented, remain governed by federal law.
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