Federal Common Law, Civil
FEDERAL COMMON LAW, CIVIL
In the English legal tradition to which this country is heir, judge-made common law—law developed by courts in the absence of applicable legislation—has played a critical role in the determination of rights, duties, and remedies. But because our federal government is one of limited, delegated powers, the questions whether and under what circumstances the federal courts are empowered to formulate federal common law have been the subject of much debate. Although it is now settled that the federal courts do have such authority in civil matters, the debate continues over the sources of that authority and the proper scope of its exercise.
The Supreme Court's decision in erie railroad co. v. tompkins (1938) marks a watershed in the evolution of this problem. Prior to that decision, the federal courts did not strive to develop a federal, or national, common law binding on the states and indeed on occasion denied that it existed (Wheaton v. Peters, 1834; Smith v. Alabama, 1888). Yet the Supreme Court, in swift v. tyson (1842), upheld the authority of the federal courts, in cases within the diversity jurisdiction, to determine certain controversies on the basis of "general principles and doctrines" of jurisprudence and without regard to the common law decisions of the state courts. Thus, during the reign of Swift v. Tyson, the federal courts exercised considerable common law authority over a variety of disputes, ultimately extending well beyond the interstate commercial controversy involved in Swift itself and involving matters apparently not subject to federal legislative power. The decisions rendered in these cases, however, did not purport to bind the state courts, and the result was often the parallel existence of two different rules of law applicable to the same controversy, with the governing rule dependent on the forum in which the controversy was adjudicated.
Historians disagree on the justification—statutory and constitutional—of the Swift decision. In one view, the decision was not rooted in contemporary understanding of the nature of the common law but instead represented the use of judicial power to aid in the redistribution of wealth to promote commercial and industrial growth. A contrasting position is that the decision was fully consistent with the perception of the time that the common law of commercial transactions was not the command of the sovereign but rather was both the embodiment of prevailing customs and a process of applying them to the case at hand.
There is general agreement, however, that the Court expanded Swift well beyond its originally intended scope and that its overruling, in Erie, reflected a very different perception of the proper role of the federal courts. The Court in Erie, speaking through Justice louis d. brandeis, concluded that there was no "general" federal common law—that the Rules of Decision Act, originally section 34 of the judiciary act of 1789, required adherence to state decisional or common law in controversies such as Erie itself, a case that fell within federal jurisdiction solely on the basis of the parties' diversity of citizenship.
But the Erie decision helped bring to the surface the existence of what has been called a "specialized" federal common law, operating in those areas where the application of federal law seems warranted even though no federal constitutional or legislative provision points the way to a governing rule. Indeed, on the very day that Erie was decided, the Court in Hinderlider v. La Plata River & Cherry Creek Ditch Co. (1938), again speaking through Justice Brandeis, said that "whether the water of an interstate stream must be apportioned between the two States is a question of 'federal common law' upon which neither the statutes nor the decisions of either State can be conclusive."
What is the source of the authority to formulate federal common law—law that, unlike decisions rendered pursuant to Swift, binds state and federal courts alike? To some extent, the source may be traced to specific constitutional provisions, such as the grant of admiralty and maritime jurisdiction in Article III, or the prohibition of unreasonable searches and seizures in the fourth amendment. (See bivens v. six unknown named agents, declaring the existence of a damage remedy for a Fourth Amendment violation.) But the line between constitutional interpretation, on the one hand, and the exercise of common law authority, on the other, is indistinct, and there is often disagreement among both judges and commentators about the function the courts are performing. The significance of this disagreement is more than semantic, for the ability of the legislative branch to modify or reject a Supreme Court ruling is plainly more circumscribed if the ruling is seen to be required by the Constitution than if the ruling is a common law one authorized but not compelled by the fundamental law.
In other instances, the source of judicial authority may be found in a particular federal statute. Infrequently, the congressional command is explicit, as in the mandate in Rule 501 of the Federal Rules of Evidence that in certain cases questions of evidentiary privilege "shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience." More often, the legislative direction is, at best, implicit and the judicial role may be viewed as that of implementing federal legislative policy by filling the gaps left by the legislation itself. Once again, the line between statutory construction and the exercise of common law authority is not easily drawn.
In a significant number of cases, the exercise of authority to formulate federal common law is difficult to trace to a specific provision in the Constitution or in a statute. In such cases, the authority may be attributed more broadly to the nature of the judicial process, to the structure of our federal constitutional system, and to the relationships created by it. The authority, in other words, may be rooted in necessity. As Justice robert h. jackson put it, concurring in D'Oench Duhme Co. v. F.D.I.C. (1942): "Were we bereft of the common law, our federal system would be impotent. This follows from the recognized futility of attempting all-complete statutory codes and is apparent from the terms of the Constitution itself."
Some examples of the exercise of this authority may help to clarify its scope. Perhaps most important is the category of those interstate or international disputes that, in the words of the Supreme Court, "implicate conflicting rights of States or our foreign relations" (Texas Industries, Inc. v. Radcliff Materials, Inc., 1981). Such disputes do not always fall within the specific jurisdictional grants of Article III applicable to certain interstate or international controversies. In any event, the existence of a conflict between the interests of two states may make it inappropriate for the law of either to govern of its own force. And controversies affecting our relations as sovereign with foreign nations may require a single federal response rather than a cacophony of responses rooted in varying state laws. (See act of state doctrine.)
Another leading instance of the exercise of common law authority embraces controversies involving the rights, obligations, or proprietary interests of the United States. In such controversies, especially those arising in the administration of nationwide programs, formulation of federal common law may be warranted by the need for uniform treatment of the activities of the federal government or, more modestly, for some degree of federal supervision of the application of state law to those activities.
The amorphous origins and uncertain scope of the federal common law power underscore the need to recognize certain limitations that are anchored in the concerns of federalism and of separation of powers. The first of these concerns focuses on the interests of the states in preserving a measure of autonomy on matters properly within their sphere—interests reflected in the tenth amendment. Because federal law is often interstitial in character—written against a background of state laws governing basic human affairs—the concern for federalism supports a presumption that state law ought not to be displaced in the absence of a clear legislative direction, a sharp conflict between the state law and federal program, or the existence of a uniquely federal interest requiring protection. To some extent, this presumption is supported by and reflected in the provision of the Rules of Decision Act that state laws shall constitute the rules of decision except where otherwise required by the Constitution or by federal treaty or statute. But the last phrase of that act—limiting its command to "cases where they (the rules of decision) apply"—gives the provision a circularity that affords little guidance to the resolution of particular problems of potential conflict between federal and state authority.
Even when the exercise of federal authority is warranted, a careful balancing of state and federal interests may lead to the adoption of state laws rather than to the imposition of a uniform federal rule, so long as the state laws in question are compatible with federal interests. Such results were reached, for example, in De Sylva v. Ballentine (1955), involving a definition of "children" under the Federal Copyright Act, and United States v. Kimbell Foods, Inc. (1979), dealing with the priority of federal government liens arising from federal lending programs.
The second concern—that of separation of powers—springs from the belief that the primary responsibility for lawmaking should rest with the democratically elected representatives in the legislative branch. At a time when the common law function was seen in terms primarily of the application of established customs and usages, the concern for the proper separation and allocation of federal powers had less force than it does today, when there is more emphasis on the creative potential of the common law. Moreover, the separation of powers question is not unrelated to the regard for state interests, since the bicameral federal legislature is structured in such a way as to protect the states against action that might be taken by a legislature apportioned solely on the basis of population.
Concern that the courts not usurp a function that is properly legislative has led to an emphasis on legislative intent in many instances in which the federal courts have been asked to articulate new rights or develop new remedies not specifically provided for by statute. Moreover, the Supreme Court has stressed the ability of Congress to displace federal common law with statutory regulations, even in some instances in which the source of authority is the Constitution itself.
The problems inherent in the exercise of common law power have been highlighted in the Supreme Court's struggle with the question of implied remedies for federal constitutional or statutory violations. Since Bivens v. Six Unknown Named Agents (1971), the Court has generally been willing to allow a person harmed by unconstitutional action to sue for damages, despite the lack of any constitutional or statutory provision for suit. But persons harmed by violations of federal statutes have frequently been held unable to obtain relief in the absence of an express statutory remedy or strong evidence of legislative intent to permit such a remedy.
In both types of cases the Supreme Court has perhaps too readily yielded its authority to exercise a principled discretion in determining whether traditional common law remedies should be available to implement federal policy. The tendency toward formalistic insistence on a remedy for every wrong in cases involving constitutional violations, and toward ritualistic invocation of legislative intent in order to deny a remedy in cases of statutory infractions, suggests a relinquishment of the judicial responsibility that lies at the heart of our common law heritage.
David L. Shapiro
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