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

Erie Railroad Company v. Tompkins, 304 U.S. 64 (1938). The Judiciary Act of 1789 provides that in diversity-of-citizenship cases (those cases concerned with citizens of different states, and not with federal statutes or the Constitution) federal courts must apply "the laws of the several states, except where the Constitution, treaties, or statutes of the United States shall otherwise require." In 1842, in Swift v. Tyson, the Supreme Court held that the word "laws" meant only state statutory law; and therefore federal courts were free to ignore state common law and to fashion and apply their own, at least with regard to commercial matters. Nearly a century later, in Erie v. Tompkins, on dubious historical evidence, and perhaps without understanding that Swift's scope was limited to the kind of commerce that was interstate in nature, the Court overruled Swift as both a misinterpretation of the Judiciary Act and an unconstitutional assumption of power by federal courts.

Erie now generally requires that federal courts exercising jurisdiction in diversity-of-citizenship cases apply both applicable state statutory law and common law. Justice Louis Brandeis, in his majority opinion for the Court in Erie, ruled as he did because of a fear of over-reaching federal courts, but recent scholarship has suggested that, in overruling Swift, the Court may have deprived the nation of some benefits of the development of federal commercial jurisprudence.

Bibliography

Freyer, Tony A. Harmony and Dissonance: The Swift and Erie Cases in American Federalism. New York: New York University Press, 1981.

Purcell, Edward A., Jr. Brandeis and the Progressive Constitution: Erie, the Judicial Power, and the Politics of the Federal Courts in Twentieth-Century America. New Haven, Conn.: Yale University Press, 2000.

—Eric L. Chase Harold W. Chase Stephen B. Presser

A 1938 landmark decision by the Supreme Court, Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188, that held that in an action in a federal court, except as to matters governed by the U.S. Constitution and acts of Congress, the law to be applied in any case is the law of the state in which the federal court is situated.

Harry J. Tompkins was walking on a footpath alongside railroad tracks on land owned by the Erie Railroad Company when he was struck and injured by a passing train. He claimed that his injuries resulted from the negligence of the railroad in operating the train.

Tompkins wanted to sue the railroad and recover monetary damages for his injuries. He was a citizen of Pennsylvania, and the Erie Railroad Company was a New York corporation. He instituted an action in federal court, which was empowered, by virtue of its diversity jurisdiction, to hear the case because the plaintiff and the defendant were citizens of different states.

The issue before the court was what law to apply in deciding the case. The court would have applied a federal statute to decide whether Tompkins was entitled to damages, but none existed. The court would have applied a state statute since there was no federal statute, but Pennsylvania did not have one.

The highest court of Pennsylvania had established a rule to be followed in state courts whenever a case like this occurred. The Pennsylvania rule was that people who use pathways along railroad right-of-ways, not railroad crossings, are trespassers to whom railroads were not to be held liable unless the trespassers were intentionally injured by the reckless and wanton acts of the railroads.

The trial judge refused to apply the Pennsylvania rule. He found that Swift v. Tyson, 41 U.S. (16 Pet.) 1, 10 L. Ed. 865 (1842), which held that there was a body of federal common law to be applied in such cases, gave federal judges the right to ignore state rules that were not enacted as statutes by their state legislatures. He held that it was more important for all federal courts to follow a uniform rule, rather than for each federal court to apply local state rules when there was no statute to resolve the case. He allowed a jury to decide whether the railroad company was negligent, and the jury returned a verdict of $30,000 for Tompkins.

The Supreme Court reversed the decision and struck down the rule that allowed federal judges to ignore state court decisions in diversity cases. Although this rule had been followed since Swift v. Tyson was decided in 1842, the Supreme Court ruled that it was inequitable. According to the old rule, Tompkins could obtain monetary damages if he sued in federal court, but not if he initiated his lawsuit a few blocks away in the Pennsylvania state court. If the plaintiff and defendant were citizens of different states, the plaintiff could take advantage of the right to sue in federal court. There the plaintiff might win, even if he or she had been trespassing on railroad property. If the plaintiff and defendant were both citizens of Pennsylvania, the plaintiff could not sue in federal court. Pennsylvania courts would all be bound to follow the rule that prevented recoveries for those who used paths alongside railroad tracks. The Supreme Court held that it was unjust for the plaintiff's chances of winning to depend on the fact that the railroad was a Pennsylvania corporation.

The new rule of Erie Railroad Co. v. Tompkins provided that federal courts do not have the power to formulate their own rules of law. The federal courts must apply appropriate federal statutes in diversity cases. When there is no federal law to resolve the question in a lawsuit, they must follow the law of the state that is involved. That includes state statutes and controlling decisions made by the highest court of that state.

As a result of this case, the decisions of federal courts are truly uniform only when a question of federal law is involved. Otherwise, the states are free to develop their own law and have it applied to state questions that come into federal court because the parties are from different states.

See: Diversity of Citizenship; Swift v. Tyson.

It has been suggested that Erie doctrine be merged into this article or section. (Discuss)

Erie Railroad Co. v. Tompkins
Supreme Court of the United States
Argued January 31, 1938 Decided April 25, 1938
Full case name	Erie Railroad Company v. Harry J. Tompkins
Citations	304 U.S. 64 (more) 58 S. Ct. 817; 82 L. Ed. 1188; 1938 U.S. LEXIS 984; 11 Ohio Op. 246; 114 A.L.R. 1487
Prior history	Judgment for plaintiff, S.D.N.Y.; affirmed, 90 F.2d 603 (2nd. Cir. 1937); cert. granted, 302 U.S. 671 (1937)
Subsequent history	On remand, reversed, judgment directed for defendant, 98 F.2d 49 (2nd Cir. 1938)
Holding
Under the Rules of Decision Act, federal district courts in diversity jurisdiction cases must apply the law of the states in which they sit, including the judicial doctrine of the state's highest court, where it does not conflict with federal law. There is no general federal common law. Second Circuit Court of Appeals reversed and remanded.
Court membership
Chief Justice Charles E. Hughes Associate Justices James C. McReynolds · Louis Brandeis Pierce Butler · Harlan F. Stone Owen J. Roberts · Benjamin N. Cardozo Hugo Black · Stanley F. Reed
Case opinions
Majority	Brandeis, joined by Hughes, Black, Stone, Roberts
Concurrence	Reed
Dissent	Butler, joined by McReynolds
Cardozo took no part in the consideration or decision of the case.
Laws applied
U.S. Const. art. III (implied); Judiciary Act of 1789 § 34 (now 28 U.S.C. § 725); Rules of Decision Act (now 28 U.S.C. § 1652)

Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938),^[1] was a decision by the Supreme Court of the United States in which the Court held that federal courts did not have the power to make up general federal common law when hearing state law claims under diversity jurisdiction. In reaching this holding, the Court overturned almost a century of federal civil procedure law, and established what remains the modern law of diversity jurisdiction for United States federal courts.

Contents 1 Background of the case 2 Issue 3 The Court's decision 3.1 Reed's concurrence 3.2 Butler's dissent 4 Subsequent developments 4.1 On remand 4.2 Subsequent jurisprudence 5 See also 6 External links

Background of the case

Erie began as a simple personal injury case. As explained by the Second Circuit in its decision below, Harry Tompkins - a citizen of Pennsylvania, was walking next to the Erie Railroad's Erie and Wyoming Valley Railroad tracks in Hughestown, Pennsylvania, at 2:30 a.m. on July 27, 1934. A friend of Tompkins had driven him to within a few blocks of his home, which was located on a dead-end street near the tracks. Tompkins chose to walk the remaining distance on a narrow but well-worn footpath adjacent to the tracks. A train approached, and in the darkness an object protruding from one of the cars suddenly struck Tompkins. When he fell down, his right arm was crushed beneath the wheels of the train.

The train was owned by the Erie Railroad company, a New York corporation. Tompkins sued this railroad company in a federal district court - the United States District Court for the Southern District of New York. The district court, following the federal law at that time, applied neither New York nor Pennsylvania common law, but instead applied federal common law, which used an ‘ordinary negligence’ standard for the duty of care owed to persons walking along railroad tracks, instead of Pennsylvania ’s common law ‘wanton negligence’ standard for the duty of care to trespassers. The case was decided by a jury which was instructed by Judge Samuel Mandelbaum in accordance with this negligence standard. The jury found in favor of the plaintiff and awarded him damages. The railroad appealed to the Second Circuit, which affirmed. The railroad then petitioned the Supreme Court for certiorari, which was granted, and Justice Benjamin Cardozo granted the railroad a stay of its obligation to pay the judgment in Tompkins' favor until the Supreme Court decided the case.

Issue

It had long been settled that when a federal court hears a state cause of action brought in diversity, the statutory law of the state would be applied. However, in the case of Swift v. Tyson, 41 U.S. 1 (1842), the Supreme Court had held that the federal courts need not also apply the court-made common law of the states. This had led to forum shopping, where plaintiffs would seek to sue in federal court instead of state court in order to have a different substantive law applied. In light of this inequity, the Supreme Court had to determine whether federal courts should apply state common law.

The Court's decision

The Court, in an opinion by Associate Justice Brandeis, examined the manipulations that had resulted from the rule of Swift v. Tyson and determined that "in attempting to promote uniformity of law throughout the United States, the doctrine had prevented uniformity in the administration of the law of the state." This had the effect of denying litigants equal protection of the law.

In Swift, Justice Joseph Story had sought to interpret the Rules of Decision Act. This Act, which began as Section 34 of the Judiciary Act of 1789, is now codified at 28 U.S.C. § 1652 and is as follows:

The laws of the several States, except where the Constitution, treaties, or statutes of the United States otherwise require or provide, shall be regarded as rules of decision in trials at common law, in the courts of the United States, in cases where they apply.

Story interpreted the words "laws of the several States" narrowly, treating them as referring to only the statutory law of states and not the judge-made law declared by states' appellate courts. Thus, where the state legislature had not passed a statute that controlled the case, a federal district court was free to make up its own common law.

Story apparently hoped that when hearing state law claims in diversity jurisdiction, federal district courts would fashion a uniform "general law." As interstate commerce continued to increase, the common law of the states would converge with such general federal common law because states would recognize it was in their own best interest.

By 1938, as Brandeis acknowledged, "the mischievous results of the doctrine had become apparent." The problem with Swift was that rather than reducing forum shopping, it had only increased it. State judge-made law continued to diverge instead of converge. Allowing federal courts to make up their own independent judge-made law only made the problem worse. Parties who felt disadvantaged by a state judge-made rule could create diversity jurisdiction in the federal courts by simply moving to another state or reincorporating there (if a party was a corporation). In the worst cases a party who had lost in the state supreme court would simply begin all over again in the federal courts; since the federal district court had its own set of common law rules, it could hold that it was not bound by the state supreme court ruling. This practice was mentioned in dissent by Brandeis' friend on the court, Holmes, in the Kentucky Brown and Yellow Taxicab case.

The facts of Erie itself were an example of the kind of clever forum shopping which the Court wished to end. Pennsylvania clearly had personal jurisdiction over the railroad because of its operations there; also, the accident happened there, and Tompkins was a Pennsylvania resident. But Tompkins chose to sue in a New York federal court to take advantage of its favorable rule — knowing that he would lose under Pennsylvania's rule.

Therefore, the Court felt it was time to overrule the doctrine of Swift as being an unconstitutional extension of its own powers. Nothing in the Constitution of the United States permits the U.S. Congress to empower federal courts to create their own common law for cases that do not involve an issue of federal law. As Justice Brandeis wrote:

Congress has no power to declare substantive rules of common law applicable in a state whether they be local in their nature or "general," be they commercial law or a part of the law of torts. And no clause in the Constitution purports to confer such a power upon the federal courts.

Thus, although the Erie decision itself does not identify specific provisions of the Constitution violated by Swift, the language of the decision implies that Swift had stolen powers reserved to the states, in violation of the Tenth Amendment. Justice Brandeis also noted problems for equal protection of the laws, but the Equal Protection Clause of the Fourteenth Amendment applies only to states, and the Fifth Amendment Due Process Clause was not read to include an equal protection component until the 1954 case Bolling v. Sharpe.

Therefore, the federal court was required to apply the law of whichever state it was sitting in, as though it were a state court of that state. Of course, this was a very difficult decision for the Court because overruling Swift meant that a huge number of opinions by the lower federal courts were no longer valid law.

However, the Court did not declare that the Rules of Decision Act itself was unconstitutional. Instead, it reinterpreted the Act so that federal district courts hearing cases in diversity jurisdiction had to apply the entire law, both statutory and judge-made, of the states in which they sit.

Reed's concurrence

Associate Justice Stanley Reed filed a concurrence in which he agreed that Swift had to be reversed, but argued that Swift was merely an erroneous interpretation of the Rules of Decision Act, not an unconstitutional one.

Butler's dissent

Associate Justice Pierce Butler filed a dissent, joined by Associate Justice James McReynolds, in which he argued that the majority had engaged in judicial activism. The majority had completely rewritten the two questions presented in the petition for certiorari as a constitutional question, when there really was no constitutional issue. He pointed out that no one in this case had directly challenged the Swift regime, which the Court had adhered to for so long in so many cases.

Subsequent developments

On remand

The case was remanded to the Second Circuit for a ruling on the merits of Pennsylvania law. Rather than applying New York law, the Court of Appeals applied the law of Pennsylvania as required by the choice-of-law rules of the time — under which the law of the place of the accident was determinative — and threw out Tompkins' case.

Subsequent jurisprudence

Main article: Erie doctrine

Later opinions limited the application of Erie to substantive state law; federal courts can generally use the Federal Rules of Civil Procedure while hearing state law claims.

It can be a problem for federal courts to know what a state court would decide on an issue of first impression (i.e., one not previously considered by state courts). In such circumstances, federal courts engage in what is informally called an "Erie guess." This "guess," actually a carefully reasoned attempt to anticipate what the state's courts would decide, is not binding on state courts themselves, which may adopt the federal court's reasoning if and when the issue reaches them in some other case, or may decide the issue differently. In the latter case, future federal courts would be required to follow the state's precedents, although a final judgment in the "guessed" case would not be reopened.

Alternatively, federal courts can certify questions to a state supreme court, so long as the state itself has a procedure in place to allow this. For example, some federal district (trial) courts can certify questions to state supreme courts, but other states allow only federal courts of appeal (circuit) courts to do so. In the latter situation, an Erie guess would be the only option available for the federal court attempting to apply state law.

Important later cases refining the application of Erie include the following: Ragan v. Merchants Transfer & Warehouse Co.[2], Guaranty Trust Co. v. York, Hanna v. Plumer, Byrd v. Blue Ridge Rural Electric Cooperative, Inc., and Gasperini v. Center for Humanities.

See also

• List of United States Supreme Court cases, volume 304

External links

• Text of Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938) is available from:  · Enfacto · Findlaw

• Younger, Irving, What Happened in Erie, 56 Texas L. Rev. 1011 (1978) (law review article giving background to the case, also available as a videotaped or audiotaped lecture by Younger)

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)