Nevel A. Walters and Mrs. Delphia Walters (nevel A. Walters,et al., Survivors of Mrs. Delphia Walters,deceased), Plaintiffs-appellants, v. Inexco Oil Company, a Delaware Corporation, Defendant-appellee, 725 F.2d 1014 (5th Cir. 1984)

We must decide whether Section 11-3-23, Mississippi Code Annotated,¹  which imposes a penalty on an unsuccessful appellant, applies in a federal diversity case, and if so, whether the penalty should be applied in this case at the old 5% rate or at the revised 15% rate. Because we found no clear controlling precedent in decisions of the Supreme Court of Mississippi as to the intended reach of the penalty statute or the nature of the policies it furthers, we certified²  the case to the Mississippi Supreme Court.³  Walters v. Inexco Oil Co., 670 F.2d 476 (5th Cir. 1982).

The Supreme Court of Mississippi has now answered these questions, indicating that nothing in the legislative intent or policies underlying the appeal penalty statute is inconsistent with a federal court applying the statute in a diversity case. The Mississippi Court also held that the old 5% penalty rate would apply in this case. Walters v. Inexco Oil Co., 440 So. 2d 268. Thus, the Mississippi Court gave us what sightings it could. Nevertheless, it reminded us that in plying the Erie waters, the federal Rules of Decision Act, 28 U.S.C. § 1652, ultimately governs our voyage; we are masters of our ship and must, despite the oscillating readings of the Erie doctrine compass and the distractions from the sirens of "substance" and "procedure," navigate our own course. Accepting the challenge with this help from Mississippi, we blend the no longer muddy waters of the Mississippi statutory policy with our own Erie policies to achieve, we hope, a marriage of waters.

Because the answers to certification by the Mississippi Supreme Court foreclose any construction of the Mississippi statute that would distinguish it from the analogous Alabama statute that this Court applied in Proctor v. Gissendaner, 587 F.2d 182 (5th Cir. 1979), we hold that the Mississippi statutory penalty for unsuccessful appeals is applicable to this diversity suit in federal court.

Nevel A. Walters and his wife brought an action for personal injuries and loss of consortium against Inexco Oil Company in federal court, invoking diversity of citizenship jurisdiction, 28 U.S.C. § 1332. The District Court gave judgment in favor of the Walters for $534,116.54 and $50,000, plus interest, respectively. Walters v. Inexco Oil Company, 511 F. Supp. 21 (S.D. Miss. 1979). This Court affirmed. Walters v. Inexco Oil Company, 632 F.2d 891 (5th Cir. 1980), cert. denied, 450 U.S. 999, 101 S. Ct. 1704, 68 L. Ed. 2d 200 (1981).

The District Court denied a motion by the Walters to assess a statutory penalty pursuant to Section 11-3-23, Mississippi Code Annotated, against Inexco for subjecting them to an unsuccessful appeal. The District Court cited Proctor v. Gissendaner, supra, wherein this Court held that a similar Alabama statute⁴  providing a penalty against unsuccessful appellants constituted a "substantive" rule that would be applied in federal diversity cases. The District Court pointed out that the Alabama statute provided a 10% penalty for unsuccessful appeals in "the appellate court," whereas the Mississippi statute referred to appeals to the "Supreme Court." Thus, the District Court distinguished the Mississippi statute, holding that it applies only to appeals to the state supreme court and "cannot be construed to be general in nature."

In response to our certification, the Mississippi Supreme Court explained that the penalty also applies to appeals taken to Mississippi circuit courts from county courts, Miss.Code Ann. Sec. 11-51-79 (Supp.1982); Johnson Limited, Inc. v. Signa, 410 So. 2d 1320 (Miss.1982), and that when a case fits within the statute, the assessment of the penalty is mandatory, not discretionary. Lowicki v. Lowicki, 429 So. 2d 917 (Miss.1983); Hart v. Catoe, 393 So. 2d 1346, 1347 (Miss.1981). Moreover, the Mississippi Court explained that "in the present context, the United States Court of Appeals for the Fifth Circuit and this Court occupy equivalent positions--we are the appellate courts charged to hear direct appeals as of right." This answers our initial concern by establishing that the language of the statute referring to appeals decided by the "Supreme Court" was not intended to exclude appeals to other courts.

Although disparaging the "substantive-procedural" distinction as a means of parting the Erie waters, the Mississippi Court explained the policies underlying Section 11-3-23 in a manner helpful to us both in assessing the impact of Section 11-3-23 on the policies of this Court and in our own use of the "substantive-procedural" shibboleths. The penalty statute, the Mississippi Court explained, expresses the State's interest in discouraging unfounded appeals. This, we are told, protects potential appellees and also the caseload of the Mississippi appellate courts. Our own Federal Rule of Appellate Procedure 38 expresses a similar policy of discouraging frivolous appeals,⁵  albeit one that is not so mechanically enforced. Moreover, this Court has an interest in preventing the frivolous appeals that Section 11-3-23 shoos from the doorways of the Mississippi courts from freeloading onto our own docket as an alternative.

The Mississippi Supreme Court has also expressly asserted that Section 11-3-23 provides "a measure of compensation for the successful appellee, compensation for his having endured the slings and arrows of successful appellate litigation." Thus, the ordeal of defending an appeal is viewed by Mississippi law as an injury to the appellee. Following this reasoning, application of the statute in this Court as redress for that injury is merely recognizing and applying a Mississippi cause of action. Thus, if it is necessary to categorize the statute, as a prelude to either spurning or embracing it in diversity, we can confidently say that Section 11-3-23 bears the proper "substantive" credentials and may accordingly enter the sanctuary of this forum. Proctor v. Gissendaner, 587 F.2d 182, 183 (5th Cir. 1979).

We regard the question of which appeals are within the new increase of the penalty from 5% to 15% to be a question of purely state law. The Mississippi Supreme Court has answered that the 15% rate, which took effect on July 1, 1980, applies to appeals of judgments rendered on or after that date. Because the judgments in this case were rendered on May 2, 1979, and the decision to appeal or not appeal could have been made at that time, the 5% penalty applies to both judgments. Accordingly, the case is remanded to the District Court for entry of judgment in accordance with this opinion.⁶ 

REVERSED AND REMANDED.