Erie Railroad Co v Tompkins Decision Established Modern Diversity Jurisdiction

In Erie Railroad Co v Tompkins, 304 U.S. 64 (1938), the U.S. Supreme Court held that 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. In so ruling, it overturned nearly 100 years of precedent created under Swift v. Tyson, 41 U.S. 1 (1842).

Legal Background in Erie Railroad Co v Tompkins

Section 34 of the Federal Judiciary Act of 1789 provides: “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.”

In the Swift case, the Court held that the federal courts were authorized to create their own body of common law when hearing cases based on diversity jurisdiction and were not bound by the decisions of the state courts in which the suit arose. As explained by Justice Joseph Story, the federal courts were not bound by the decisions of the state courts, but rather were free to ascertain and declare the common law independently, “upon general reasoning and legal analogies,” even if their decisions directly contradicted relevant state decisions. The goal was for the federal courts to create a body of federal commercial law that could be applied uniformly throughout the country. Unfortunately, the decision only resulted in more forum-shopping by litigants.

Facts of Erie Railroad Co v Tompkins

Harry Tompkins, a citizen of Pennsylvania, was injured on a dark night by a passing freight train of the Erie Railroad Company while walking along its right of way at Hughestown, Pennsylvania. Tompkins filed suit, alleging that he was rightfully on the premises as licensee because on a commonly used beaten footpath which ran for a short distance alongside the tracks. He further maintained that he was struck by something that looked like a door projecting from one of the moving cars. He brought his claim in the federal court for southern New York, which had jurisdiction because Erie was a corporation of that State.

Erie denied liability and argued that application of Pennsylvania law was required. Under a rule established by its highest court, persons who use pathways along the railroad right of way are to be deemed trespassers; and that the railroad is not liable for injuries to undiscovered trespassers resulting from its negligence, unless it be wanton or willful.

The federal court refused to apply Pennsylvania law, citing the Supreme Court’s decision in Swift. The jury subsequently awarded Tompkins damages, and Erie appealed.

The Court’s Decision in Erie Railroad Co v Tompkins

The Court overruled Swift. “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, Justice Louis Brandeis wrote in the majority opinion. “And whether the law of the State shall be declared by its Legislature in a statute or by its highest court in a decision is not a matter of federal concern. There is no federal general common law.”

As Justice Brandeis noted, “the mischievous results of the doctrine had become apparent” in the near century following Swift. He further explained:

“Diversity of citizenship jurisdiction was conferred in order to prevent apprehended discrimination in state courts against those not citizens of the State. Swift v. Tyson introduced grave discrimination by non-citizens against citizens. It made rights enjoyed under the unwritten “general law” vary according to whether enforcement was sought in the state or in the federal court; and the privilege of selecting the court in which the right should be determined was conferred upon the non-citizen. Thus, the doctrine rendered impossible equal protection of the law. 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.”

The Court not only found the Swift doctrine confusing, it also found it unconstitutional because it usurped powers given to the states. As Justice Brandeis explained:

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.