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Federal Issue in State Court: Is the 4th Circuit Binding or Persuasive?

Suppose you are preparing for a big trial you have in state court and one of the key issues in the case revolves around a federal issue (Federal constitution, FAA, etc.). You just found a perfect case that is right on point. The facts are similar, the result is clear, and it is very recent. The only problem is that it is from the Fourth Circuit. Does that matter? After all, you are in a state that is within the Fourth Circuit. And on top of that, you are discussing a federal issue.

However, it appears that that case will only be persuasive, even though it might be more persuasive than others.

In Limehouse v. Hulsey, our supreme court held:

Based on the foregoing, we conclude that Judge Young and, in turn, the Court of Appeals erred in finding the state court had jurisdiction to conduct the proceedings as the absence of the certified order precluded jurisdiction from resuming in the state court. Although this Court often defers to Fourth Circuit decisions interpreting federal law, which in the instant case would be Lowe, it is not obligated to do so in view of the lack of uniformity amongst the federal circuits. See State Bank of Cherry v. CGB Enters., 368 Ill.Dec. 503, 984 N.E.2d 449, 459 (2013) (“While we are bound only by the United States Supreme Court, if the lower federal courts are uniform on their interpretation of a federal statute, this court, in the interest of preserving unity, will give considerable weight to those courts' interpretations of federal law and find them to be highly persuasive. However, if the federal courts are split, we may elect to follow those decisions we believe to be better reasoned.” (citation omitted)); Cash Distrib. Co. v. Neely, 947 So.2d 286, 294–95 (Miss.2007) (declining to follow Fifth Circuit's minority position and stating, “While this Court often defers to Fifth Circuit decisions interpreting federal law, we are under no obligation to do so”).

Limehouse v. Hulsey, 404 S.C. 93, 108–09, 744 S.E.2d 566, 575 (2013)

Still, Green Tree contends this Court must follow the federal precedent established by the Seventh Circuit in Champ. Green Tree argues that this Court is obligated to follow Champ, as a matter of federal substantive law, mandated by section 4 of the FAA. We disagree. The United States Supreme Court has not addressed this issue and the precedent set by the federal circuit courts is not binding on this Court. Although Green Tree asserts that the Fourth Circuit recognizes that the FAA requires non-class arbitration, we believe Green Tree is incorrect. The Fourth Circuit has not addressed the issue directly; the Fourth Circuit has cited Champ, but only in dicta, and the question of class-wide arbitration resolved in Champ has not been before the Fourth Circuit. See **360 Deiulemar Compagnia Di Navigazione S.p.A. v. M/V Allegra, 198 F.3d 473 (4th Cir.1999).19

Bazzle v. Green Tree Fin. Corp., 351 S.C. 244, 264, 569 S.E.2d 349, 359–60 (2002), vacated, 539 U.S. 444, 123 S. Ct. 2402, 156 L. Ed. 2d 414 (2003) (overturned on separate grounds)

There are some federal circuit that have held that all state courts are bound by their decisions on federal issues within their jurisdiction. However, the Fourth Circuit has held the opposite:

Though state courts may for policy reasons follow the decisions of the Court of Appeals whose circuit includes their state, see Commonwealth v. Negri, 213 A.2d 670 (Pa. 9/29/65), they are not obliged to do so.

Owsley v. Peyton, 352 F.2d 804, 805 (4th Cir. 1965)

For an in depth view on this issue, read this Vanderbilt Law Review article that goes through the split jurisdictions on this issue.


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