Harry Tompkins, a Pennsylvania citizen, was injured in Pennsylvania when he was struck by an object from an Erie Railroad train while walking along a path beside the tracks. He sued Erie Railroad, a New York corporation, in federal court in New York based on diversity jurisdiction. Under Pennsylvania law, Tompkins would likely be treated as a trespasser and could recover only for wanton or willful misconduct, but under the federal general common law approach recognized in Swift v. Tyson, the federal court applied a more plaintiff-friendly negligence rule. The jury found for Tompkins, and the question became whether the federal court could apply federal general common law instead of Pennsylvania substantive law.
In a diversity case, must a federal court apply state substantive common law rather than a federal general common law rule?
Except in matters governed by the Federal Constitution or by Acts of Congress, the law to be applied in any case is the law of the state, including state judicial decisions on substantive matters. There is no general federal common law.
Yes. Federal courts sitting in diversity must apply state substantive law, including state common law as declared by the state's highest court, and Swift v. Tyson was overruled.
The Court concluded that Swift v. Tyson had produced unconstitutional and undesirable forum shopping and unequal administration of the laws by allowing different outcomes in state and federal court on the same state-law claim. It read the Rules of Decision Act as requiring application of state law, including state decisional law, not merely state statutes. The Court also reasoned that the Constitution does not grant federal courts power to create a general common law governing ordinary private disputes. Because the federal court should have applied Pennsylvania law, the judgment could not stand.
Justice Butler dissented, objecting to overruling Swift v. Tyson and arguing that the issue had not been properly presented for such a broad decision.
Erie is a foundational federal courts decision that abolished federal general common law in diversity cases and required federal courts to apply state substantive law. It reshaped the relationship between state and federal courts and sought to reduce forum shopping and inequitable administration of the laws. Closely related cases include Swift v. Tyson, 41 U.S. (16 Pet.) 1 (1842), overruled by Erie; Guaranty Trust Co. v. York, 326 U.S. 99 (1945); Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U.S. 525 (1958); Hanna v. Plumer, 380 U.S. 460 (1965); and Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487 (1941).
Guaranty Trust Co. v. York, 326 U.S. 99 (1945) |
Abstain |
Byrd v. Blue Ridge Rural Electric Cooperative, 356 U.S. 525 (1958) |
Abstain |
Hanna v. Plumer, 380 U.S. 460 (1965) |
Abstain |
Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487 (1941) |
Abstain |
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