Erie Railroad Co. v. Tompkins
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| Erie Railroad Co. v. Tompkins | ||||||||
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| Image:SCOTUS seal.jpg Supreme Court of the United States | ||||||||
| Argued January 31, 1938 Decided April 25, 1938 | ||||||||
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| Holding | ||||||||
| No general federal common law. Rules of Decision Act requires federal district courts to apply law of states in which they sit, including judge-made law of the state as declared by state's highest court, except in matters governed by Federal Constitution or by acts of Congress. Second Circuit reversed. | ||||||||
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| Laws applied | ||||||||
| U.S. Const. Art. III (implied though not cited); Judiciary Act of 1789 § 34 (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), 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.
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Factual and procedural background
Erie began as a simple personal injury case. As explained by the 2nd Circuit in its decision below, Harry Tompkins 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 U.S. 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 tried to a jury which was instructed in accordance with this negligence standard, and which awarded damages. The railroad appealed to the 2nd Circuit, which affirmed. The railroad then petitioned the Supreme Court for certiorari.
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 were not to 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.
Result
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 state supreme 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.
The facts of Erie itself were an example of the kind of clever forum shopping which the Court wished to bring an end to. 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 an unconstitutional extension of its own powers. Swift had stolen powers reserved to the states in violation of the Eleventh Amendment - nothing in the Constitution of the United States permits the U.S. Congress to empower federal courts to create their own common law - and had denied state residents the equal protection of the laws under the Fourteenth Amendment . 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.
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.
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 history
Later developments in the case
The case was remanded to the 2nd 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.
Later developments in the 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. If it is not clear how the state supreme court would deal with a state law claim, federal courts can certify questions to a state supreme court, so long as the state itself has a procedure in place to allow this.
See also
External links
Categories: United States Supreme Court cases | United States federalism case law | Article Three case law | United States civil procedure case law | 1938 in law
