                    United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 06-1571
                                    ___________

Schwan’s Sales Enterprises, Inc.,     *
                                      *
            Plaintiff-Appellee,       *
                                      * Appeal from the United States
     v.                               * District Court for the
                                      * District of Minnesota.
SIG Pack, Inc., Doboy Division,       *
                                      *
            Defendant-Appellant.      *
                                 ___________

                           Submitted: October 16, 2006
                               Filed: February 9, 2007
                                  ___________

Before MELLOY, BEAM, and BENTON, Circuit Judges.
                           ___________

MELLOY, Circuit Judge.

       SIG Pack, Inc., Doboy Division (“Doboy”) appeals from an order of the district
     1
court awarding prejudgment interest to Schwan’s Sales Enterprises, Inc.
(“Schwan’s”) on a breach-of-contract counterclaim. Doboy argues that the district
court erred in applying Minnesota law regarding prejudgment interest and should have
applied Wisconsin law pursuant to a choice-of-law provision in the contract at issue
in the lawsuit. We affirm.


         1
      The Honorable Joan N. Ericksen, United States District Judge for the District
of Minnesota.
I. BACKGROUND

      This case arises out of a contract between Doboy and Schwan’s by which
Doboy was to design, manufacture, and install portions of a new frozen-pizza
production line at a Schwan’s facility. That contract included a choice-of-law
provision, which stated that “[t]he validity, interpretation, and performance of this
contract shall be governed by and construed in accordance with the laws of the State
of Wisconsin.”

       The parties had a number of disputes regarding the performance of the new
production line, culminating in Doboy’s decision to sue Schwan’s in the United States
District Court for the District of Minnesota. Schwan’s counterclaimed for breach of
contract. The jury found in favor of Schwan’s on its counterclaim and awarded
$524,746 in damages.

       After the district court entered judgment against Doboy, Schwan’s moved to
amend the judgment to award prejudgment interest under Minnesota law. Minn. Stat.
§ 549.09. Doboy contested this motion, arguing that the court should apply Wisconsin
law governing prejudgment interest pursuant to the choice-of-law provision in the
parties’ contract. Under Wisconsin law, Schwan’s would have had to prove that the
amount of damages was “capable of determination by application of some fixed
standard” at the time of the breach. Anderson v. State Labor & Indus. Review
Comm’n, 330 N.W.2d 594, 601 (Wis. 1983). The Minnesota statute governing
prejudgment interest imposed no similar requirement. Minn. Stat. § 549.09.

       The district court rejected Doboy’s arguments and awarded $97,617 under the
Minnesota statute governing prejudgment interest. On appeal, Doboy argues only that
the district court erred in failing to apply Wisconsin law regarding prejudgment
interest.



                                         -2-
II. DISCUSSION

       In diversity cases, we apply substantive state law. Erie R.R. Co. v. Tompkins,
304 U.S. 64, 78 (1938). Prejudgment interest is a substantive matter of state law for
the purposes of Erie. Emmenegger v. Bull Moose Tube Co., 324 F.3d 616, 624 (8th
Cir. 2003). This does not, however, answer the question of which state’s prejudgment
interest law should apply. To determine that issue, we look to the conflict-of-law
principles of the state where the district court sits. Klaxon Co. v. Stentor Elec. Mfg.
Co., 313 U.S. 487, 496 (1941); Interstate Cleaning Corp. v. Commercial Underwriters
Ins. Co., 325 F.3d 1024, 1027 (8th Cir. 2003). The question of which state’s law to
apply is a legal one, and we review the district court’s determination de novo.
Interstate Cleaning Corp., 325 F.3d at 1027.

       Because this case arises out of the breach of a contract that contained a choice-
of-law provision, we must consider the effect of that provision upon the above
analysis. Minnesota courts are “committed to the rule that parties may agree that the
law of another state shall govern their agreement and will interpret and apply the law
of another state where such an agreement is made.” Milliken & Co. v. Eagle
Packaging Co., 295 N.W.2d 377, 380 n.1 (Minn. 1980) (internal quotation omitted).
This rule is not absolute, however. Even in the face of a general, contractual choice-
of-law provision, Minnesota courts apply Minnesota law regarding matters of
procedure and remedies. U.S. Leasing v. BIBA Info. Processing Servs., Inc., 436
N.W.2d 823, 825-26 (Minn. Ct. App. 1989) (holding that Minnesota procedure and
remedies apply to a breach-of-lease case because, while the lease included a choice-
of-law provision designating Massachusetts law to govern their dispute, that provision
did not expressly state a choice-of-law with regard to procedure and remedies).
Indeed, Minnesota courts generally apply their state’s own procedure and remedies
in all cases involving conflicts of laws, whether the parties’ have a choice-of-law
agreement or not. See Davis v. Furlong, 328 N.W.2d 150, 153 (Minn. 1983) (“We



                                          -3-
hold that when conflicts of procedure arise, the lex fori is to be applied.”).2 If the
parties wish for the application of another state’s law concerning such procedural and
remedial matters, they must expressly state it in their agreement. U.S. Leasing, 436
N.W.2d at 826. The parties did not do so here; the language of their choice-of-law
provision is virtually identical to the provision at issue in U.S. Leasing.3

       Although we consider prejudgment interest a matter of substantive law for the
purposes of Erie (and thus federal courts must apply some state’s law to the issue), this
does not answer the question of whether prejudgment interest is a matter of
substantive or procedural law for the purposes of determining which state’s law to
apply. As the Supreme Court has stated, there is not “an equivalence between what
is substantive under the Erie doctrine and what is substantive for the purposes of
conflict of laws.” Sun Oil Co. v. Wortman, 486 U.S. 717, 726 (1988). Thus,
Minnesota courts may consider prejudgment interest to be a procedural or remedial
issue to be governed by the law of the forum state, and they have done so. See
Zaretsky v. Molecular Biosystems, Inc., 464 N.W.2d 546, 548-51 (Minn. Ct. App.
1990) (holding, as a matter of first impression, that prejudgment interest is procedural


      2
       Later cases have called this statement in Davis into question, at least with
regard to statute-of-limitations conflicts. See Danielson v. Nat’l Supply Co., 670
N.W.2d 1, 5 (Minn. Ct. App. 2003) (noting that “[t]here is some ambiguity” as to
whether Minnesota courts always apply Minnesota statutes of limitations, even though
they generally view them as procedural). The Minnesota Supreme Court has not
spoken on the issue since Davis, however. To the extent that Danielson and other
Minnesota Court of Appeals cases conflict with Davis, we note that we are bound to
apply state law “as declared by its Legislature in a statute or by its highest court in a
decision.” Erie, 304 U.S. at 78.
      3
       The contractual choice-of-law provision at issue in U.S. Leasing reads as
follows: “the validity, construction and interpretation of this sales agreement and the
rights and duties of the parties hereto shall be governed by the laws of the
Commonwealth of Massachusetts.” U.S. Leasing, 436 N.W.2d at 825 (quotation
omitted).

                                          -4-
for choice-of-law purposes because it “promotes the early settlement of cases between
litigants” and predicting that its characterization “may soon become the majority
rule”). Accordingly, we agree with the district court that the issue of prejudgment
interest—a matter of substantive law for Erie purposes—is a procedural matter for
conflict-of-laws purposes under Minnesota law. Therefore, we also agree that
Minnesota’s prejudgment interest statute applies in the absence of an choice-of-law
provision that expressly governs procedural matters.

       Doboy disagrees, first arguing that Minnesota’s rules regarding conflicts-of-law
are irrelevant to this case because the parties chose Wisconsin law to govern the
interpretation of their contract, including the choice-of-law provision. In essence,
Doboy contends that the district court began its analysis at the wrong starting point.
According to Doboy, the district court should have first given the choice-of-law
provision the effect it would have under Wisconsin law; if it had done so, Doboy
asserts that the district court would have found that Wisconsin law governing
prejudgment interest applies. Doboy claims that Wisconsin courts, like Minnesota
courts, construe general choice-of-law agreements as governing the choice of
substantive law; unlike Minnesota courts, however, Doboy asserts that Wisconsin
courts view prejudgment interest as a matter of substantive state law.4 Doboy’s
argument boils down to the following: the district court should have determined the
scope of the choice-of-law provision under Wisconsin law and, had it done so, it
would have found that Wisconsin law governing prejudgment interest applies to the
breach of contract here.

      The logic of this argument suffers from some circularity. Doboy essentially
argues that the district court should have determined the effect of the choice-of-law
provision under the law of the parties’ chosen state; this would basically give effect


      4
       We assume, without deciding, that Doboy’s statement of Wisconsin law is
accurate.

                                         -5-
to that provision before the court’s analytical determination of what effect it should
have. The Restatement (Second) of Conflict of Laws addresses this issue in a section
addressing contractual choice-of-law provisions:

      The reference, in the absence of a contrary indication of intention, is to
      the “local law”5 of the state of the applicable law and not to that state’s
      “law,” which means the totality of its law including its choice-of-law
      rules. Values of certainty of result and ease of application dictate that
      the forum should apply the local law of the selected state and not concern
      itself with the complications that might arise if the forum were to apply
      that state’s choice-of-law rules. . . . It should be reiterated that in the
      contracts area the forum, in the absence of a contrary indication of
      intention, will not apply the choice-of-law rules of another state.

Restatement (Second) of Conflict of Laws § 186 cmt. b (cross-references omitted); see
Fin. One Pub. Co. Ltd. v. Lehman Bros. Special Fin., Inc., 414 F.3d 325, 333 (2d Cir.
2005) (noting that “courts consider the scope of a contractual choice-of-law clause to
be a threshold question” and “determine a choice-of-law clause’s scope under . . . the
law of the forum”). Here, the parties did not expressly provide that Wisconsin’s
choice-of-law rules would apply in interpreting the scope and effect of their contract.
Thus, the district court did not err in applying Minnesota law to ascertain the effect
of the choice-of-law provision in their contract.

       Doboy also argues that the district court erred in failing to apply Minnesota’s
five-factor test for conflicts of substantive law on the matter of prejudgment interest.
See Jepson v. Gen. Cas. Co. of Wis., 513 N.W.2d 467, 470 (Minn. 1994) (reciting the
five factors). This argument assumes that the district court erred in finding that


      5
       The Restatement defines the “local law” of a state as “the body of standards,
principles and rules, exclusive of its rules of Conflict of Laws, which the courts of that
state apply in the decision of controversies brought before them.” Restatement
(Second) of Conflict of Laws § 4(1).

                                           -6-
Minnesota courts consider prejudgment interest to be a matter of procedural law. It
did not, for the reasons noted above, and therefore this argument lacks merit.

III. CONCLUSION

       The district court’s well-reasoned decision correctly analyzed this issue and
properly applied Minnesota law regarding prejudgment interest. Therefore, we affirm
the judgment of the district court.
                        ______________________________




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