In re Makowka, 754 F.3d 143 (3d Cir. 2014). This opinion by Judge Hardiman, involving as it does an issue of Pennsylvania law with bankruptcy implications, likely would ordinarily be of little interest in New Jersey. But the decision is useful for its discussion of the concept that where state law applies and the highest court of the relevant state has not spoken, the Third Circuit “must attempt to predict how that tribunal would rule.” In doing so, the Third Circuit gives “due deference to the decisions of intermediate state courts,” but such decisions are not controlling. The Third Circuit independently evaluates those decisions for cogency, and may, Judge Hardiman stated, “discount state appellate decisions it finds flawed, if it predicts the state supreme court would reach a contrary result.”
In this case, the district court, in divining Pennsylvania law, gave “binding effect” to a Pennsylvania intermediate court ruling, on the grounds that that ruling was “the latest and most definitive ruling by the intermediate courts” on the question at issue. The court did so despite criticizing the reasoning of that intermediate court opinion. Judge Hardiman did not agree with the district court. Instead, the panel rejected that intermediate court decision in favor of an earlier opinion by a different intermediate appellate court that was better reasoned and more in tune with how the Third Circuit believed the Supreme Court of Pennsylvania would ultimately rule on the legal issue at hand. In short, cogency, not recency, of intermediate state court appellate decisions is the polestar in the Third Circuit’s determination as to what state law is or should be. And intermediate state court appellate decisions are not “binding” on the Third Circuit in making its evaluation.