a matter of procedure rather than of substantive law").
The Third Circuit has also rejected the argument that N.J. Rule 4:42-9(a)(6) is anything more than a rule of procedure governing the administration of New Jersey state courts. In First State Underwriters Agency of New England Reinsurance Corp. v. Travelers Ins. Co., 803 F.2d 1308 (3d Cir. 1986), the court reviewed a district court decision applying Pennsylvania state substantive law and the New Jersey rule on attorneys' fees under N.J. Rule 4:42(a)(6). The Travelers court stated:
In considering the question whether to apply Pennsylvania or New Jersey law to the issue of attorney's fees, the district court concluded that a court rule relating to counsel fees is a hybrid of procedural and substantive law. In view of the hybrid nature of this rule and, more significantly, because of the policy considerations underlying its adoption, the district court concluded that New Jersey law should apply to the counsel fee issue "even though Pennsylvania law was rightly applied on the more substantive contractual issues involved in the case.
We find the district court erred as matter of law in (1) applying New Jersey law to the issue of counsel fees and (2) awarding those fees to Travelers and Certain-Teed. The district court's hybrid rationale is untenable; there is simply no case law to support the proposition that, while some issues raised in a diversity action to resolve the rights and liabilities of parties under an insurance policy are subject to the substantive law of one state, the counsel fee issue may be properly decided on the basis of the procedural law of another state. Thus, it is the law of Pennsylvania and not the law of New Jersey, that governs the award of attorney's fees in this case.
Id. at 1315-16 (emphasis added).
That N.J. Rule 4:42-9(a)(6) is a procedural rule rather than a separate, substantive cause of action is further supported by the very provisions which establish and govern the Rule. For instance, N.J. Rule 4:1 specifically provides that the Rules contained in Part IV of the New Jersey Court Rules, including N.J. Rule 4:42-9(a)(6), are designed to be procedural in nature. N.J. Rule 4:1 provides: "The Rules in Part IV, insofar as applicable, govern the practice and procedure of civil actions in the Superior Court, Law and Chancery Divisions, and the surrogate's courts and Tax Court . . ." N.J. Rule 4:1.
More significantly, the New Jersey Supreme Court has long held that its power to create rules governing the courts of New Jersey, as provided by Article IV, section 2, paragraph 6 of the New Jersey State Constitution,
is limited to matters of court practice and procedure, and does not empower it to create substantive law or rights. Sattelberger v. Telep, 14 N.J. 353, 363, 102 A.2d 577 (1954); George Siegler Co. v. Norton, 8 N.J. 374, 381, 86 A.2d 8 (1951); see also Winberry v. Salisbury, 5 N.J. 240, 247-48, 74 A.2d 406, cert. denied, 340 U.S. 877, 95 L. Ed. 638, 71 S. Ct. 123 (1950) ("The distinction between substantive law, which defines our rights and duties, and the law of pleading and practice, through which such rights and duties are enforced in the courts, is a fundamental one. . . . [Courts] are not to make substantive law wholesale through the exercise of their rule-making power.").
For instance, in Busik v. Levine, 63 N.J. 351, 307 A.2d 571, the New Jersey Supreme Court stated:
Defendants point out that the rule-making power granted the [New Jersey] Supreme Court in Art. VI, § 2, P 3, relates to "practice and procedure," and from this grant defendants would infer that this constitutional provision inferentially dictates the mode whereby the Supreme court may make "substantive" law. But the constitutional provision is what it purports to be -- a grant of power with respect to "practice and procedure." It does not purport to deal with substantive law or to prescribe a format for the discharge of the Court's responsibility as to that topic.
Id. at 361-62; see also State v. Leonardis, 73 N.J. 360, 374, 375 A.2d 607 (1977) (recognizing "long-standing rule that the Court is not to invade the Legislature's domain" by making substantive law through its rule-making power) (citing Winberry, 5 N.J. at 248).
Despite the fact that N.J. Rule 4:42-9(a)(6) cannot, by itself, provide a substantive cause of action subject to supplemental federal jurisdiction, courts have indicated that occasions exist when the rule can be applied in federal court. In McAdam v. Dean Witter Reynolds, Inc., 896 F.2d 750 (3d Cir. 1990), the court stated that "state rules concerning the award or denial of attorney's fees are to be applied in cases where federal jurisdiction is based on diversity or if the court is exercising pendent (now supplemental] jurisdiction."
Id. at 775 n.47; see also Transamerica Ins. Co. v. Keown, 472 F.Supp. 306, 312 (D.N.J. 1979) (applying N.J. Rule 4:42-9(a)(6) in diversity action).
In the case at bar, neither of these conditions are met. Jurisdiction in this case is founded upon federal question jurisdiction under 42 U.S.C. § 1331 and the specific statutory grant of jurisdiction provided by Section 301 of the LMRA, 29 U.S.C. § 185(a). Because Leonardis, Zecca and Burns are all residents of New Jersey, see supra at p.2, no diversity jurisdiction is even possible. Cf. Transamerica Ins. Co. v. Keown, 85 F.R.D. 120, 128 (D.N.J. 1980) (applying N.J. Rule 4:42-9(a)(6) in diversity action but only as to fees incurred in federal court action to recover indemnity policy; not allowing fees incurred in separate state court litigation).
Similarly, there is no basis for the exercise of supplemental jurisdiction in this case. Because both of Plaintiffs' state law claims -- the Independent Contract Claim and the Promissory Estoppel Claim -- have been found to be preempted by Section 301, the sole remaining claim in the Complaint is Plaintiffs' Section 301 Claim, a federal cause of action. As the Circuit suggested in Travelers, it is an error of law to apply N.J. Rule 4:42-9(a)(6) -- a New Jersey state procedural rule -- to a non-New Jersey cause of action.
Travelers, 803 F.2d at 1316.
Because Plaintiffs' state law claims have been preempted and because, as stated above, N.J. Rule 4:42-9(a)(6) does not create a substantive cause of action or its own basis for supplemental jurisdiction,
the rule cannot be applied in this federal question cause of action. Accordingly, Plaintiffs' Rule 4 claim must be dismissed.
For the reasons set forth above, the Burns motion for partial summary judgment is granted in its entirety.
Dated: 18 November 1992