Erie Railroad Co. v. Tompkins
Erie Railroad Co. v. Tompkins is a pivotal Supreme Court case that addresses the complexities of diversity jurisdiction in federal courts. It arose from a lawsuit involving parties from different states, which leads to the question of which state's laws should govern the case. Historically, the Judiciary Act of 1789 mandated that federal courts adhere to state laws in such instances, a principle encapsulated in the Rules of Decision Act. The Court's unanimous decision, delivered in 1938, aimed to clarify the confusion surrounding the application of state law in federal courts, particularly in light of the earlier Swift v. Tyson ruling that had allowed for a broad interpretation of federal common law.
Justice Louis D. Brandeis's opinion declared the existence of a "federal general common law" unconstitutional, emphasizing the importance of state law in these cases. This decision had significant implications for the balance of power between state and federal jurisdictions and raised ongoing questions about the nature of federal common law. While Erie set important precedents, the issues it raised remain partially unresolved, reflecting the enduring challenges in navigating legal principles across different jurisdictions. This case is essential for understanding how the legal landscape has evolved in terms of federalism and jurisdictional law in the United States.
Erie Railroad Co. v. Tompkins
Date: April 25, 1938
Citation: 304 U.S. 64
Issue: Diversity jurisdiction
Significance: In ruling that under the Rules of Decision Act, federal courts were to proceed if multistate lawsuits occurred, the Supreme Court not only overturned one of its previous decisions but also declared it to have been unconstitutional.
The Supreme Court decided Erie by an 8-0 vote (Benjamin N. Cardozo did not participate), but the three separate concurrences by Justices Pierce Butler, James C. McReynolds, and Stanley F. Reed weakened the impact of this decision. The issue in this case is complicated and still partially unresolved. The Court has diversity jurisdiction if it is faced by lawsuits in which the parties are citizens of different states and often subject to different laws. Because it would be unfair to choose one state’s law over another arbitrarily, the Judiciary Act of 1789 provided that “the laws of the several states…shall be regarded as rules of decision in trials at common law” in federal courts. This provision, known as the Rules of Decision Act in contemporary law, indicates that federal courts should follow state “substantive” law in cases where diversity jurisdiction occurs but does not establish clearly the appropriate sources of state law.
Erie is one of a number of attempts to resolve the matter, which remains the subject of some confusion. An earlier attempt can be found in Justice Joseph Story’s opinion in Swift v. Tyson (1842), in which he held that the federal courts should use the various statutes and real property laws but should rely on general doctrines or principles of commercial law for contracts and commercial transactions. This in effect created a federal common law, but this was problematic. After the middle of the nineteenth century, this common law expanded dramatically as did the power of the federal courts. When coupled with substantive due process and freedom of contract, the Swift decision was often used to nullify federal and state attempts to regulate corporations.
In this politically and economically charged atmosphere, Justice Louis D. Brandeis asserted in his opinion for the Court that there was no “federal general common law,” thereby declaring the Swift ruling unconstitutional. However, this did not end the matter, as even Brandeis found it necessary to recognize the necessity of some types of specialized federal common law. Several attempts to establish guidelines have failed to fully resolve this matter.