Erie Railroad Co. v. Tompkins (1938)
Erie Railroad Co. v. Tompkins (1938) overruled Swift v. Tyson (1842), a decision that construed Section 34 of the Judiciary Act of 1789, the so-called Rules of Decision Act. The statute provided that “the laws of the several states” were to be the “rules of decision” in the federal courts in cases where federal law did not apply. In an opinion written by Justice Joseph Story, Swift held that the word “laws” in the statute referred to state constitutions, statutes, and “long-established local customs” but not to decisions of state courts involving matters of “general” commercial jurisprudence. Thus, under Swift, the federal courts were free to ignore state judicial decisions in “general” law cases and to make their own “independent” judgment as to the properly applicable rule of “state” common law. Rejecting the idea that there could be a “general” common law existing independent of the sovereign power of the states, Erie held that the word “laws” in Section 34 must be construed to include judicial decisions and that the federal courts were required, when adjudicating issues involving state-created rights, to follow state court decisions in determining the law of the different states.
Justice Louis D. Brandeis wrote for a five-justice majority. His opinion criticized Swift for bringing “injustice and confusion” to the law by allowing the federal courts to ignore the common-law rules applied in the courts of the various states and to apply, instead, their own different rules of “general” common law. The result was that state and federal courts frequently followed conflicting sets of common law rules, a situation that encouraged parties to attempt to manipulate jurisdictional rules involving citizenship, party structure, and the amount in controversy in an effort to navigate their case into the specific court—state or federal—that applied the set of common law rules that was most advantageous to them. Because non-citizens of a forum state were able to exploit that opportunity more commonly and effectively than were citizens of the forum state, the opinion maintained that the Swift doctrine “in practice” unfairly discriminated against citizens of forum states and in favor of those who were non-citizens.
From the moment Erie was announced, critics questioned its reasoning. Some charged that its constitutional language was merely dicta because the decision did nothing more than alter the construction of a federal statute. Others argued that the opinion failed to articulate any clear and coherent constitutional theory. Doubt about the opinion’s meaning and foundation was so pervasive that the Court itself did not refer to Erie as a constitutional decision for almost two decades. By the 1950's, however, commentators were beginning to embrace the view that Erie was a constitutional decision and that, by protecting the lawmaking authority of the states, it announced a basic principle of federalism. By the 1980's, after the profession had generally come to accept the idea that Erie was a federalism decision, some commentators—and at least two Supreme Court justices (Lewis F. Powell Jr. and William H. Rehnquist)—were advancing the view that Erie was based on separation-of-powers principles because it limited the lawmaking authority of the federal judiciary and subordinated that power to the lawmaking primacy of Congress. By the beginning of the twenty-first century, most legal writers accepted Erie as a constitutional decision, and a majority seemed to agree that it served the principles of both federalism and the separation of powers.
In spite of continuing disagreements about its constitutional foundation, Erie quickly became, and remained, a foundational case in American law. Its importance lies primarily in three areas. First, it inspired the judicial development of “the Erie doctrine,” a complex set of rules—designed in large part to curb “forum shopping” between state and federal courts—that determine when and to what extent the federal courts must follow state law. One subset of rules, for example, identifies Erie’s reach, establishing that it controls whenever federal courts decide issues of state-created rights. Thus, Erie’s mandate reaches beyond federal diversity jurisdiction but does not apply when the federal courts adjudicate issues of federal law. Another subset distinguishes between the “substantive” rules of state law that the federal courts must follow and the “procedural” rules of state law that they are not required to apply. It is because “the Erie doctrine” does not require federal courts to apply state “procedural” law that they are able to follow the congressionally mandated Federal Rules of Civil Procedure.
Second, in conjunction with Murdock v. City of Memphis (1875), Erie defines the operative scope of state judicial authority in the nation’s federal system. Murdock established the principle that the U.S. Supreme Court has no jurisdiction to review judgments of state courts that are properly based on state law grounds, and Erie requires the federal judiciary—when adjudicating state-created rights—to follow the substantive rulings of those state courts. Thus, the two decisions together define the area in which the federal judiciary as a whole must honor and enforce the legal rules that state courts establish.
Finally, Erie helped underwrite a major reorientation of the federal judiciary. Swift’s “general” law had placed the federal courts in a position of ambiguous equality with state courts and—because “general” law was, in theory, “state” law—prevented them from developing judge-made rules that constituted truly “federal” law, that is, rules that were binding on the states under the Supremacy Clause. Erie changed matters. By identifying state courts with “local” common law issues, it implicitly identified the federal courts with more important “national” law issues; and by eliminating the “general” law, it gradually turned the federal courts toward using truly “federal” sources of lawmaking authority—the Constitution, treaties, and statutes of the United States—to give their judge-made rules the authority of supreme national law. Thus, as a matter of institutional evolution, though not of the Court’s “original intent,” Erie helped to alter the image of the federal courts, expand their power and prestige, and magnify their role vis-à-vis the state courts.
Tony Freyer, Harmony & Dissonance: The Swift & Erie Cases in American Federalism (New York: New York University Press, 1981); Edward A. Purcell Jr., Brandeis and the Progressive Constitution: Erie, the Judicial Power, and the Politics of the Federal Courts in the Twentieth Century (New Haven, CT: Yale University Press, 2000); and Edward A. Purcell Jr., “The Story of Erie: How Litigants, Lawyers, Judges, Politics, and Social Change Reshape the Law,” in Civil Procedure Stories, ed. Kevin M. Clermont (New York: Foundation Press, 2004).
Edward A. Purcell Jr.
Last updated: 2006