Erie Railroad Co. v. Tompkins 1938
Erie Railroad Co. v. Tompkins 1938
Petitioner: Erie Railroad Company
Respondent: Harry J. Tompkins
Petitioner's Claim: That state law rather than federal common law should determine the responsibility of a railroad to pay damages to an injured private citizen.
Chief Lawyer for Petitioner: Theodore Kiendl
Chief Lawyer for Respondent: Fred H. Rees
Justices for the Court: Hugo L. Black, Louis D. Brandeis, Charles E. Hughes, Owen J. Roberts, Harlan F. Stone, Stanley F. Reed
Date of Decision: April 25, 1938
Decision: Ruled in favor of Erie Railroad reversing a lower court decision that had awarded damages to Tompkins
Significance: The ruling reversed a previous court decision made almost a century earlier recognizing a federal common law. The Erie decision held that no such law exists. Federal court decisions involving citizens from different states follow state law when neither constitutional issues nor acts of Congress are not involved. The decision also gave state high court rulings the same degree of importance as laws passed by state legislatures.
Common law is a collection of rules and principles that come from longstanding customs or traditions. In the United States, they often come from early English customs, general law, and judicial (court) decisions recognizing a custom. English common law, finally established in written form in England in the eighteenth century, forms the basis for U.S. law and still applies to many cases in modern America.
When the Framers of the Constitution were busy creating a new national governmental system, a major issue receiving considerable debate raged between the Federalists wanting a strong central government and states' rights supporters wanting most power to be held by state governments, not the central federal government. In creating the U.S. legal system, the Framers of the document established a U.S. Supreme Court in Article III and identified federal jurisdiction on specific kinds of cases. Though no other federal courts were established by the Constitution, it did give Congress power to establish federal courts as it saw the need. Quickly, Congress used their authority to establish a federal court system under the Judiciary Act of 1789. Federal district courts were established in each state. According to the act, federal courts must apply state laws, not create its own general law. The "laws of the several states" are to be "regarded as rules of decision" in civil actions in federal courts "in cases where they apply." In regard to civil (private noncriminal disputes) cases, federal courts could only accept cases involving citizens from different states, known as diversity jurisdiction.
An early idea that federal general law did exist for diversity jurisdiction cases was expressed by Supreme Court in Swift v. Tyson (1842). The Court believed that all decisions by state court judges actually did not create law. Therefore, federal judges could ignore state court rulings when making their own rulings. They create federal general law that would take priority over previous state court decisions. The Swift ruling gave federal judges considerable power over state law. The opinion, however, created much confusion within each state rather than uniformity in law that was intended, especially as the list of legal topics created under a new federal general law grew through time.
Tompkins Hit by Train
The Erie Railroad Company, a corporation chartered (an ownership license) in New York state, operated a railroad in northeastern United States. Under law, Erie would be considered a New York "citizen." One day while Harry J. Tompkins, a Pennsylvania citizen, was walking on a footpath alongside Erie railroad tracks in Pennsylvania when he was struck and injured by an open boxcar door on a passing train. Tompkins filed a lawsuit in a Pennsylvania federal district court seeking compensation (money payment) for his personal injuries. He claimed Erie was negligent (careless) in operating the railroad. Because the case involved diversity of citizenship, a Pennsylvania resident and a New York corporation, he filed the suit in federal court.
Because neither federal law nor any acts passed by the Pennsylvania state legislature existed covering such situations, the court had to determine what law should be applied in the case. A Pennsylvania court decision had previously established standard rules to guide courts in such cases. The rules stated that people using paths along railroads not at crossings would be considered trespassers. Railroads would not be liable (responsible) for injuries unless the trespassers were intentionally injured by reckless and deliberate acts of the railroads. Using the Swift decision, the district court judge refused to apply the Pennsylvania rule. Instead, he asked a jury to determine if the railroad was negligent. The jury found Erie negligent and awarded Tompkins $30,000 in damages, a substantial amount at that time. Erie appealed the district court decision to the federal Circuit Court of Appeals and lost again. Erie then appealed to the U.S. Supreme Court which accepted the case.
Erie posed two questions before the Court. First, should the federal judges have used a Pennsylvania state rule created by state judges to determine Erie's liability? Secondly, was not Tompkins to blame since he failed to pay attention to the warnings of a moving train including a horn and its headlight? Tompkins responded by focusing on the long-standing Swift rule that federal judges should not use state court rulings to guide their decisions. Federal law takes priority over state rules.
No Federal General Law
Justice Louis D. Brandeis, writing for the Court's 6-2 majority, declared that the doctrine established in the Swift ruling ninety-six years earlier was "an unconstitutional assumption of powers by the Courts of the United States." The earlier Court had mistakenly interpreted the act, according to Brandeis. Brandeis bluntly wrote, "There is no federal general common law." Referring to numerous legal studies critical of the Swift decision, Brandeis held that the Judiciary Act actually intended for federal courts to follow all laws of the state "unwritten as well as written," including those rules made by state courts. Brandeis contended that the Swift decision basically violated equal protection of the law since citizens could win some civil cases in a federal court that they could not have won in state courts. They could do this simply by moving to another state and filing the suit in a federal court as a diversity case. Corporations could even reestablish in a new state without actually moving. People or corporations could "shop around" for a federal court that would likely give the best ruling. As a result, plaintiffs (those filing a lawsuit) held a legal advantage over defendants (those the target of lawsuits). Brandeis noted that under the Swift rule, Tompkins' chances of winning an award depended on whether the railroad was a New York company or a Pennsylvania company, and that was not just. If Tompkins had filed suit in a Pennsylvania state court, he could not have received an award as he did from a federal court since the state court must follow the state rule. Brandeis also ruled that the Swift interpretation of the Judiciary Act was an unconstitutional invasion of state sovereignty. He wrote, the doctrine of federal general law "is an invasion of the authority of the state, and, to that extent, a denial of its independence."
In conclusion, Brandeis held that for diversity cases the proper law to apply is the law of the state. Whether that law was made by a state legislature or by a state court decision "is not a matter of federal concern." He could find nowhere in the Constitution that the federal government, Congress or the federal courts, can create rules of common law in states. Quoting from Justice Oliver Wendell Holmes' dissent in an earlier case, Brandeis wrote that the "authority and only authority is the State, and . . . the voice adopted by the State as its own . . . should utter the last word."
With the Swift precedent removed, Brandeis sent the case back to the lower court for review again. The lower court's ruling was not automatically overturned because the issue of negligence under state rule was to be resolved.
No Federal General Rules of Law
The Erie ruling significantly cut back the legal authority of federal judges in diversity jurisdiction cases. No longer could they create and apply a general common law at the federal level. Instead, federal judges must apply the state laws in which the federal court is located except when dealing with constitutional issues or matters specifically governed by acts of Congress. Federal courts in a sense became yet another level of state court in diversity cases not involving federal law.
T he Framers of the U.S. Constitution believed that for civil cases involving citizens from different states, some neutral means must be available to resolve disputes. As a result, Article III reads that "The [federal] Judicial Power shall extend . . . between Citizens of different States . . . " Section 34 of the act, which later became known as the Rules of Decision Act, established what cases the courts could hear and how law should generally be applied. The Judiciary Act of 1789 gave the newly established federal courts authority to hear such cases. The Judiciary Act considers corporations as citizens of the states in which they are chartered.
Though some believe the need for such protection no longer existed toward the end of the twentieth century, diversity jurisdiction for federal courts persisted. To keep the number of potential cases under control for federal courts, Congress sets minimum dollar figures for civil disputes to qualify for federal courts. In 1789 the amount was $500. By 1988 it was raised to $50,000.
In diversity cases, the federal courts must first look to apply the appropriate federal law. If no federal law for the particular situation exists, then the court must apply the law or principle of the state that is involved, whether established by the state legislature or the state's highest court of law. As a result, national uniformity only exists for situations where federal law applies. Otherwise, state's are free to develop their own rules federal courts must use in diversity cases. If no clear state law or rule exists, then the federal court must consider the way the state's highest court might decide the case.
The decision also put state court rulings on an equal footing as laws passed by state legislatures. The power of state courts was, therefore, substantially raised. The decision discouraged citizens from shopping around for a federal court in various states to file suit in that would likely give a more favorable ruling.
Suggestions for further reading
Elazar, Daniel J. American Federalism: A View from the States. New York: Harper & Row, 1984.
Hogue, Arthur R. Origins of the Common Law. Indianapolis: Liberty Press, 1986.
Levy, Leonard W., ed. The Framing and Ratification of the Constitution. New York: Macmillan Publishing Company, 1971.