Erie Railroad v. Tompkins
The Supreme Court overturned nearly a century of precedent, ruling that federal courts hearing cases between citizens of different states must apply the substantive law of the relevant state, including that state's own court decisions, rather than an independent 'federal general common law.'
The decision scrapped the rule from Swift v. Tyson, ending decades of practice in which the outcome of a lawsuit could shift depending on whether it landed in state or federal court, and permanently reshaped how federal courts handle disputes governed by state law.
“There is no federal general common law.”
The Court's central holding rejecting an independent body of federal common law in diversity cases.
How it got here: A federal trial court in New York entered judgment for the injured man; the Second Circuit affirmed without deciding whether Pennsylvania law applied; the railroad asked the Supreme Court to review that decision.
The Case in Depth
What happened
A Pennsylvania man was struck and badly injured by a passing freight train while walking along a railroad's right of way on a footpath near the tracks. He sued the railroad, a New York corporation, in federal court in New York because the two came from different states. The railroad argued Pennsylvania law limited its duty toward him as a trespasser; he argued federal courts could instead apply their own general legal principles.
The question before the Court
Should federal courts hearing lawsuits between citizens of different states apply their own general common law, or must they follow the substantive law of the state where the case arose?
The Court's answer
No -- the Court ruled that federal courts hearing diversity cases cannot create or apply their own general common law. They must instead apply the substantive law of the relevant state, including the decisions of that state's highest court, whenever the Constitution or a federal statute does not control the question.
The Court reasoned that there is no such thing as federal general common law: letting federal courts fashion their own rules on ordinary contract and tort questions allowed people to manipulate which court decided their case to get a more favorable outcome, and it intruded on authority the Constitution reserves to the states. The case was sent back so the lower court could apply Pennsylvania law to decide the railroad's duty to the injured man.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
The ruling changed how nearly every lawsuit between citizens of different states is decided in federal court: judges must apply the same law a state court would apply, rather than an independent federal version of common law. This ended a longstanding practice that let companies and individuals steer disputes toward whichever court's rules favored them, and it remains the foundation for how federal courts handle state-law claims today.
What changes now
Because the lower court had refused to decide the case under Pennsylvania law, the Supreme Court reversed and sent the case back so the Pennsylvania rule on a railroad's duty to pedestrians could actually be applied on remand. Beyond this one case, every federal court hearing a diversity case was now required to identify and apply the correct state law going forward, a change with lasting effects on federal civil procedure.
What this does not decide
The Court did not decide whether Pennsylvania law actually barred the injured man's recovery; it left that question, including a disputed issue about exactly where he was struck, for the lower court to resolve on remand. Justice Reed's concurrence also cautioned that the majority's constitutional reasoning, as opposed to its statutory result, was not necessary to decide the case.
Concurrences and dissents
Dissent — Justice Butler
“Here it does not decide either of the questions presented but, changing the rule of decision in force since the foundation of the Government, remands the case to be adjudged according to a standard never before deemed permissible.”Butler's objection that the majority reshaped the law without deciding the actual issues the parties raised.
Justice Butler objected that no constitutional question had been raised or argued by either side, yet the majority used the case to overturn a century-old rule of decision on constitutional grounds without giving Congress or counsel a chance to be heard. He argued the Court should have simply decided the case on the negligence and contributory-negligence evidence, which he believed required reversal without touching Swift v. Tyson's constitutionality at all.
Concurrence — Justice Reed
Justice Reed agreed with abandoning Swift v. Tyson and with most of the majority's reasoning, but disagreed that the old approach had been 'unconstitutional.' He argued it was enough to say the word 'laws' in the 1789 statute had been misread to exclude state court decisions, calling this a correction of statutory error rather than a constitutional violation, and questioned whether Congress truly lacked power to set such rules.
How the Court got there
The legal reasoning, step by step
- The Court examined the doctrine from Swift v. Tyson, which had let federal courts decide 'general law' questions -- contract and tort disputes not covered by a specific state statute -- using their own independent judgment instead of following state court decisions.
- The Court found this approach unfair in practice: it let people choose between state and federal court to obtain different legal outcomes on the very same facts, defeating the purpose of letting out-of-state parties sue in federal court to avoid local bias.
- Relying on newly uncovered historical research into the original 1789 statute, the Court concluded that Congress had always meant federal courts to follow state court decisions on matters of state law, not just written state statutes, and that the earlier interpretation had been mistaken from the start.
- The Court then reasoned that Congress has no constitutional power to create general common-law rules for private disputes otherwise governed by state law, because doing so intrudes on authority the Constitution reserves to the states.
- Because no free-standing federal common law exists for these cases, the Court held that federal courts must apply the substantive law of the state -- as declared by its highest court -- whenever no federal constitutional provision or statute controls the dispute.
Doctrinal impact
Cases affected by this decision
Overrules Swift v. Tyson (16 Pet. 1)
The Court disapproved this 1842 ruling, ending the practice of federal courts making their own general common law in diversity cases.