Erie Railroad v. Tompkins
Headline: Federal courts must follow state law in diversity cases, overturning the federal 'general common law' doctrine and limiting forum‑shopping by out‑of‑state parties so state decisions control local matters.
Holding: In Erie v. Tompkins, the Supreme Court held that federal courts must apply state law, including state court decisions, in diversity cases and that there is no federal general common law.
- Requires federal courts to follow state court decisions in diversity cases.
- Reduces forum shopping by nonresidents and corporations seeking favorable federal rules.
- Shifts many common‑law disputes to state law and state courts' authority.
Summary
Background
Tompkins, a Pennsylvania resident, was seriously injured while walking on a beaten footpath beside Erie Railroad tracks in Pennsylvania and struck by something projecting from a passing freight car. He sued the Erie Railroad, a New York corporation, in federal court in New York under diversity-of-citizenship jurisdiction. A jury awarded him $30,000 and the court of appeals upheld the verdict after applying a federal ‘‘general law’’ rule that allowed federal courts to follow their own judgment on common-law questions when no state statute governed.
Reasoning
The Court considered whether to disapprove the long-standing Swift v. Tyson rule that let federal courts make their own general common-law rules. Justice Brandeis concluded federal courts have no power to create a federal general common law and that, except where the Constitution or federal statutes control, federal courts must apply the law of the State, including decisions of the State’s highest court. The opinion criticizes the old doctrine for causing discrimination, forum shopping, and confusion, and says applying state decisions preserves state autonomy. The Court reversed the appeals court’s decision and sent the case back to apply Pennsylvania law.
Real world impact
The decision removes the federal courts’ authority to fashion a separate national common law in diversity cases. State court decisions now govern local common-law questions in federal suits based on diversity, reducing opportunities for plaintiffs or corporations to choose federal forums to gain different rules. The judgment was not a final merits ruling on Tompkins’ negligence but requires the lower courts to apply Pennsylvania law.
Dissents or concurrances
A dissent argued the Court should have decided the negligence issues instead and criticized the constitutional reasoning and procedure; a concurrence agreed with overruling Swift but not with calling the prior course unconstitutional.
Opinions in this case:
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