Erie Railroad Co. v. Tompkins

Under the traditional view of the United States's system of federalism, each U.S. state is a sovereign polity in all aspects other than those the U.S. Constitution commits to the federal government, which has supremacy over the states in those areas. Consequently, each U.S. state has its own courts and legal system governing areas such as property law, contract law, tort law, commercial law, criminal law, and family law. Due to the United States's historical origins in the British Empire, all U.S. states except Louisiana have inherited or adopted the English common law for their legal systems. Shortly after the Constitution's ratification, Congress passed the Judiciary Act of 1789, which created the U.S. federal court system underneath the U.S. Supreme Court. The Act gave U.S. federal courts diversity jurisdiction, allowing them to hear lawsuits between citizens of different states involving disputes over substantial sums of money, even when no questions of federal law are involved. Section 34 of the Judiciary Act—known as the Rules of Decision Act—provided that federal courts would apply state laws when adjudicating lawsuits between citizens of different states. Interpreting the meaning of this statute has been one of the most difficult legal issues in American federal jurisprudence. It provides that U.S. federal courts shall apply state law when hearing cases under diversity jurisdiction. It does not specify, however, whether the phrase "the laws of the several States" means only statutes passed by a state's legislature, or whether it also includes the common law decisions of a state's supreme court. The U.S. Supreme Court addressed the question in its 1842 decision Swift v. Tyson. In Swift, the Court ruled that the Rules of Decision Act's phrase "laws of the several States" referred only to each state's statutory laws passed by their legislatures, and did not include each state supreme court's interpretation and construction of the English common law. The Court concluded that this allowed U.S. federal courts to create a general American "federal common law" for federal courts that would cover areas such as commercial law. But applying the Court's holding in Swift proved difficult, and American lawyers, judges, and legal scholars became increasingly opposed to it during the late 19th and early 20th centuries. ==Case history==

The Erie case involved an incident that took place in the early hours of July 27, 1934, in Hughestown, Pennsylvania. Local resident Harry Tompkins was walking home in the darkness on a pathway that ran alongside a railroad track. An oncoming train approached and, as it passed, an object protruding from one of the train cars—said to be an unlatched door—hit Tompkins and knocked him to the ground. He landed on the railroad tracks, and the train's wheels crushed his right arm beyond repair. An ambulance took him to a local hospital, where doctors amputated most of his arm. The train that hit Tompkins was owned and operated by the Erie Railroad Company. After he recovered, Tompkins sued the company for negligence. Because Tompkins resided in Pennsylvania and Erie Railroad was incorporated in New York, Tompkins invoked diversity jurisdiction and filed his lawsuit in U.S. federal court, rather than in Pennsylvania or New York state court. The case was tried in the U.S. District Court for the Southern District of New York, with U.S. district judge Samuel Mandelbaum presiding. At trial, Erie Railroad's lawyers argued that Pennsylvania law should govern Tompkins's negligence claim. The pathway along which Tompkins had been walking when the train struck him was an Erie Railroad right-of-way. Past decisions of the Supreme Court of Pennsylvania had held that, under Pennsylvania law, a person walking along a railroad company's right-of-way was a trespasser to whom the railroad was not liable for negligence unless its negligence was "wanton" or "wilful". Because Tompkins had not alleged that Erie Railroad had been wantonly or willfully negligent, the railroad's lawyers made a motion to dismiss his claim, citing these Pennsylvania cases. Mandelbaum denied the motion, ruling that under Swift v. Tyson Tompkins's claim was governed by federal common law, not by Pennsylvania law. The case went to trial, where the jury found Erie Railroad liable for Tompkins's injuries and awarded him $30,000 in damages (). Erie Railroad appealed the verdict to the U.S. Court of Appeals for the Second Circuit. A panel consisting of U.S. circuit judges Thomas Walter Swan, Martin Thomas Manton, and Learned Hand heard the appeal and ruled in Tompkins's favor, affirming the trial court's verdict. The railroad then appealed to the U.S. Supreme Court, which agreed to hear the case and granted certiorari. ==Supreme Court decision==

On April 25, 1938, the Supreme Court issued a 6–2 decision in favor of Erie Railroad, overruling Swift v. Tyson and holding that, when sitting in diversity, U.S. federal courts must apply state law instead of "general federal common law". Opinion of the Court For the purposes of the decision's core holding, six justices formed the majority and joined an opinion written by justice Louis Brandeis. The Court began by framing the case around the question of "whether the oft-challenged doctrine of Swift v. Tyson shall now be disapproved." The Court first reviewed the history of the Swift doctrine. It referenced the research of American legal scholar Charles Warren, who in a 1923 Harvard Law Review article had published evidence of an earlier draft of the Rules of Decision Act that explicitly included states' common laws in its definition of "the laws of the several states". The Court concluded that Warren's discovery proved that the Swift Court's interpretation of the Act had been "erroneous". The Court next explained that the Swift doctrine had not produced the legal uniformity the Court had hoped it would, but had instead allowed litigants from other states to discriminate against other litigants in their home states. The Court said that because the Swift doctrine dictated that a lawsuit between two in-state parties would be decided under state law while an identical lawsuit between an in-state party and an out-of-state party would be decided under federal common law, the Swift doctrine was allowing plaintiffs to manipulate which law would be applied to their lawsuits by strategically filing them in specific state or federal courtsa practice now known as "forum shopping". The Court decried this practice, saying that it allowed plaintiffs to introduce "grave discrimination" against parties from other states. Furthermore, the Court held that the Swift doctrine had not only been a "social and political" failure, but had also been unconstitutional. Having determined that the Swift doctrine was unconstitutional, the opinion's third section declared that there is no general U.S. federal common law, and that U.S. federal courts hearing cases under diversity-of-citizenship jurisdiction must apply state laws as construed by state supreme courts. The Court emphasized that its ruling was not meant to strike down any federal laws, but was only intended to "declare that in applying the [Swift] doctrine this Court and the lower courts have invaded rights which in our opinion are reserved by the Constitution to the several States." Applying its holding to the facts of Tompkins's case, the Court held that both the district court and the Second Circuit had erred by not applying Pennsylvania law to Tompkins's claim against Erie Railroad. The Court reversed the Second Circuit's decision and remanded the case, instructing the court to determine whether the railroad company's interpretation of Pennsylvania law had been correct. Reed's concurrence in the judgment Justice Stanley F. Reed concurred only in the judgment. Reed agreed with the Court's core holding that Swift v. Tyson should be overruled and that federal courts should apply state law when deciding cases under diversity jurisdiction. Reed disagreed with the Court's conclusion that the Swift doctrine was unconstitutional, however, saying instead it had been merely an erroneous interpretation of the Rules of Decision Act. Butler's dissent Justice Pierce Butler filed a dissenting opinion, joined by Justice James McReynolds, in which he argued the majority had engaged in judicial activism. He asserted the majority had completely rewritten the two questions presented in the petition for certiorari as a constitutional question, when there really was no constitutional issue. He pointed out that no one in this case had directly challenged the Swift regime, which the Court had adhered to for so long in so many cases. ==Aftermath==

On remand, the three Second Circuit judges determined that Erie Railroad's characterization of Pennsylvania lawthat a person walking along a railroad right of way was a trespasser to whom the railroad was not liable for negligence unless the negligence was "wanton" or "wilful"had been correct. The judges concluded that Tompkins had neither alleged nor shown any evidence that Erie Railroad's negligence had been "wanton", and they therefore held that Erie Railroad was entitled to a directed verdict. This forced the district court to enter a new judgment in favor of Erie Railroad. Tompkins lost his $30,000 damages award and received nothing. ==Subsequent jurisprudence==

and verbiage in the Australian Judiciary Act 1903 borrowed from the Rules of Decision Act. In rejecting Erie, Australian jurists have noted the Privy Council's historic authority to hear appeals from Australian state courts on questions of common law. ==See also==