Does a federal court exercising diversity jurisdiction have the power to apply its own independent 'general' common law rather than the substantive law of the state, as declared by the state's highest court, when no federal statute or constitutional provision controls?

Harry Tompkins, a citizen of Pennsylvania, was walking along a commonly used beaten footpath beside the tracks of the Erie Railroad Company's right of way in Hughestown, Pennsylvania, on a dark night. A passing freight train struck him with something resembling a door projecting from a moving car. Tompkins claimed the accident resulted from negligence in the operation or maintenance of the train and that he was rightfully on the premises as a licensee because the path was commonly used.

Erie Railroad, a New York corporation, argued that under Pennsylvania law, as declared by its highest court, persons using a longitudinal pathway along a railroad right of way were trespassers, to whom the railroad owed no duty except to refrain from wanton or wilful injury. Tompkins denied that Pennsylvania law was so established and argued that, absent a state statute, the railroad's duty was governed by federal general law. Tompkins sued in federal court in the Southern District of New York, which had diversity jurisdiction because Erie was a New York corporation.

Tompkins filed suit against Erie Railroad in the United States District Court for the Southern District of New York, invoking diversity of citizenship jurisdiction. The trial judge refused to rule that the applicable law precluded recovery, and the case was tried to a jury, which returned a verdict of $30,000 for Tompkins. The United States Circuit Court of Appeals for the Second Circuit affirmed, holding it unnecessary to decide whether Pennsylvania law was as Erie contended because the question of a railroad's responsibility was one of general law on which federal courts could exercise independent judgment absent a local statute. 90 F.2d 603. The Supreme Court of the United States granted certiorari.

(Brandeis, J.)

No, a federal court has no such power. The Court reversed and remanded, disapproving the doctrine of Swift v. Tyson, 16 Pet. 1 (1842).

Except in matters governed by the Federal Constitution or Acts of Congress, the law to be applied in any case is the law of the State. Whether that law is declared by a state 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. Congress has no power to declare substantive rules of common law applicable in a State, and no constitutional clause confers such power on the federal courts.

The doctrine of Swift v. Tyson rested on the fallacy that there exists a transcendental body of general law outside any particular State but obligatory within it. As Justice Holmes explained, law does not exist without some definite authority behind it; the common law enforced in a State is the law of that State, existing by the authority of that State, and the voice adopted by the State as its own, whether of its Legislature or its Supreme Court, should utter the last word. Swift's rule was therefore an unconstitutional assumption of power by federal courts.

The doctrine also produced harmful practical results. It failed to achieve uniformity, because state courts persisted in their own views, and it created uncertainty over the boundary between general and local law. It discriminated against citizens in favor of non-citizens, who could choose between state and federal courts to obtain a more favorable rule, as in the Black & White Taxicab case where a corporation reincorporated in another State to gain access to the federal rule. This frustrated equal protection of the law.

The Court did not hold § 34 of the Judiciary Act of 1789 unconstitutional; it held that the Swift construction led federal courts to invade rights reserved to the States by the Constitution. The Second Circuit erred by treating liability as a question of general law and declining to decide the Pennsylvania law question.

Dissent (Butler, J.) The Court should not reach the constitutional question, which no party raised or argued below or in the petition. The case could be decided on the ground that Tompkins was contributorily negligent as a matter of law, since he had warning and time to step aside. The Swift doctrine has been applied in an unbroken line of decisions for nearly a century, and Congress has left § 34 unchanged. Declaring the established rule unconstitutional effectively strikes down § 34 as construed and divests Congress of power to prescribe rules of decision for federal courts, with consequences that are hard to foresee. The majority answered that it did not hold § 34 or any Act of Congress unconstitutional, only that federal courts applying Swift had invaded rights reserved to the States. Such a step demands caution: reargument, assistance of counsel, and notice to Congress and the Attorney General under the Act of August 24, 1937, which requires certification and opportunity for the United States to intervene whenever the constitutionality of an Act of Congress is drawn in question. Mr. Warren's historical research was merely suggestive and was never argued at the bar. Justice McReynolds joined this opinion.

Concurrence in part (Reed, J.) Swift v. Tyson should be disapproved, but the decision need not rest on unconstitutionality. The doctrine merely held that the words 'the laws' in § 34 exclude judicial decisions of local tribunals; disapproving it requires only holding that 'the laws' include those decisions, making the prior course erroneous rather than unconstitutional. It is doubtful that Congress lacks power to declare substantive rules governing federal courts, given its power over procedure and the Necessary and Proper Clause. It is preferable to overturn an established statutory construction than to decide a constitutional question.