Erie Railroad Co. v. Tompkins

Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), argued 31 Jan. 1938, decided 25 Apr. 1938 by vote of 8 to 0; Brandeis for the Court; Butler, McReynolds, and Reed concurring; Cardozo not participating. 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 (sec. 34). This provision, which in modern times is known as the Rules of Decision Act, requires federal courts to follow state substantive law in cases where the federal courts have jurisdiction because the parties are citizens of different states, but does not define the sources of state law. In Swift v. Tyson (1842), Justice Joseph Story construed the phrase “laws of the several states” to include statutes and the law of real property but to exclude “contracts and other instruments of a commercial nature,” which federal courts could construe in the light shed by the “general principles and doctrines of commercial jurisprudence” (p. 19). Story thus called into being a general federal common law in the field of commercial law. His words transformed what had merely been an ambiguity into an enigma.

Standing alone, Swift would not have severely distorted the federal system. But after the Civil War, the notion of a general federal common law underwent a seemingly limitless expansion beyond the commercial law ambit of Swift, extending to municipal bonds, civil procedure, corporations, torts, real property, and workers' compensation. At the same time, the power of the federal courts was expanding exponentially, and federal courts were using doctrines of substantive due process and liberty of contract (see Contract, Freedom of) to annul federal and state economic regulation. Conservatives extolled these substantive developments and the concomitant expansion of federal courts' diversity jurisdiction as vital to the protection of eastern investors' interests in the southern and western states, whereas progressives denounced the resort to federal courts by large corporations seeking to avoid state regulatory policies (see Progressivism). A particularly notorious example of this occurred in the Black & White Taxicab case of 1928, in which federal courts invoked a Swift‐derived “general law” to enable a corporation to avoid state antitrust legislation. Disturbed by such use of federal judicial power, progressives determined to eradicate Swift.

Their opportunity came in Erie, which overruled Swift. Writing for the Court, Justice Louis D. Brandeis declared that “there is no federal general common law” (p. 78). He found Swift to be inconsistent with the intentions of the legislators who drafted the Rules of Decision Act. In an action unique in the history of the Court, Brandeis held one of its decisions, Swift, unconstitutional, presumably as an intrusion on rights reserved to the states by the Tenth Amendment.

Erie did not eliminate the notion of a federal common law, however. On the same day that he handed down his Erie opinion, Brandeis also acknowledged the existence of specialized bodies of federal common law. Nor did Erie resolve the enigma of Swift. Since 1938, the Court has attempted without much success to articulate guidelines that would achieve “the twin aims of the Erie rule: discouragement of forum‐shopping and avoidance of inequitable administration of the laws” (Hanna v. Plummer, 1963, p. 468). Justice William J. Brennan suggested an approach that balances state and federal policy interests (Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 1958), while Chief Justice Earl Warren in Hanna sought to protect the Federal Rules of Civil Procedure from being overridden by state law through use of an analytical algorithm that traces the rules' validity to their statutory source, the Rules Enabling Act of 1934, and then to the Constitution itself. The debate engendered by Swift and Erie will persist as the Court continues to define the contours of judicial federalism in the United States.

See also Federal Common Law; Federalism; Judicial Power and Jurisdiction.

Bibliography

John H. Ely , “The Irrepressible Myth of Erie”, Harvard Law Review 87 (1974): 693–740.
Edward A. Purcell , Brandeis and the Progressive Constitution: Erie, the Judicial Power, and the Politics of the Federal Courts in Twentieth‐century America (2000).

William M. Wiecek