Erie Railroad Co. v. Tompkins
Encyclopedia
Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), was a decision by the Supreme Court of the United States
in which the Court held that federal courts
did not have the judicial power to create general federal common law when hearing state law claims under diversity jurisdiction
. In reaching this holding, the Court overturned almost a century of federal civil procedure
case law, and established the foundation of what remains the modern law of diversity jurisdiction as it applies to United States federal courts
.
. As explained by the Second Circuit in its decision below, Harry Tompkins—a citizen and resident of Pennsylvania
, was walking next to the Erie Railroad
's Erie and Wyoming Valley Railroad tracks
in Hughestown, Pennsylvania
, at 2:30 a.m. on July 27, 1934. A friend of Tompkins had driven him to within a few blocks of his home, which was located on a dead-end street near the tracks. Tompkins chose to walk the remaining distance on a narrow but well-worn footpath adjacent to the tracks. A train approached, and in the darkness an object protruding from one of the cars suddenly struck Tompkins knocking him to the ground. When he fell down, his right arm was crushed beneath the wheels of the train.
The train was owned and operated by the Erie Railroad
company, a New York
corporation
. Tompkins sued this railroad company in a federal district court—the United States District Court for the Southern District of New York
. The district court, following the federal law at that time, applied neither New York nor Pennsylvania common law, but instead applied federal common law
, which applied an ‘ordinary negligence’ standard in determining the duty of care owed to persons not employed by the railroad or otherwise acting in the course of their employment walking along railroad tracks, instead of Pennsylvania’s common law ‘wanton negligence’ standard for the duty of care owed by railroads to trespassers. The case was decided by a jury
which was instructed by Judge Samuel Mandelbaum
in accordance with this negligence standard. It found in favor of Tompkins and awarded him damages
. The railroad appealed to the Second Circuit, which affirmed, then petitioned the Supreme Court for certiorari
, which was granted; Justice Benjamin Cardozo granted the railroad a stay
of its obligation
to pay the judgment in Tompkins' favor until the Court decided the case.
, 41 U.S. 1 (1842), the Supreme Court had held that the federal courts need not also apply the court-made common law
of the states. This had led to forum shopping, a litigation tactic whereby plaintiffs would seek to sue in federal court instead of state court in order to have a different substantive law applied. In light of this inequity, the Supreme Court had to determine whether federal courts should apply state common law.
, examined the manipulations and opportunistic practices of litigants that had resulted from the rule of Swift v. Tyson
and determined that "in attempting to promote uniformity of law throughout the United States, the doctrine had prevented uniformity in the administration of the law of the state." This had the effect of denying litigants equal protection of the law.
In Swift, Justice Joseph Story
had sought to interpret the Rules of Decision Act. This Act, which began as Section 34 of the Judiciary Act of 1789, is now codified at and is as follows:
In the Swift decision, Story had interpreted the words "laws of the several States" narrowly, treating them as referring to only the statutory law of states and not the judge-made law declared by states' appellate courts. Thus, where the state legislature had not passed a statute
that controlled the case, a federal district court was free to make up its own common law. This was enormously significant because nearly all U.S. contract
and tort
law consisted of (and still largely consists of) state judge-made law whose foundations lay in English common law running back to time immemorial
. With Swift, Story gave federal courts the freedom to depart from the existing body of state law if they so desired.
Story apparently hoped that when hearing state law claims in diversity jurisdiction, federal district courts would fashion a uniform "general law." As interstate commerce continued to increase, the common law of the states would converge with such general federal common law because states would recognize it was in their own best interest.
By 1938, as Justice Brandeis acknowledged, "the mischievous results of the doctrine had become apparent." The problem with Swift was that rather than reducing forum shopping, it had only increased it by increasing the opportunities for forum shopping available to litigants. State judge-made law continued to diverge instead of converge. Allowing federal courts to make up their own independent judge-made law only made the problem worse. Parties who felt disadvantaged by a state judge-made rule could create diversity jurisdiction in the federal courts by simply moving to another state or reincorporating there (if a party was a corporation
). In the worst cases a party who had lost in the state supreme court
would simply begin all over again in federal courts; since the federal district court had its own set of common law rules, it could hold it was not bound by the state supreme court ruling. This practice was mentioned in dissent by Justice Holmes in Brown and Yellow Taxicab.
The facts of Erie itself were an example of the kind of clever forum shopping practices which the Court wished to end. Pennsylvania clearly had personal jurisdiction over the railroad because of its operations there; also, the accident happened there, and Tompkins was a Pennsylvania resident. But Tompkins chose to sue in a New York federal court to take advantage of its favorable rule — knowing that he had a much lower probability of obtaining a judgment in his favor under Pennsylvania's rule.
Therefore, the Court felt it was time to overrule the doctrine of Swift as an unconstitutional extension of its own powers. Nothing in the Constitution of the United States permits the U.S. Congress to empower federal courts to create their own common law for cases that do not involve an issue of federal law. As Justice Brandeis wrote:
Thus, although the Erie decision itself does not identify specific provisions of the Constitution violated by Swift, the language of the decision implies that Swift had stolen powers reserved to the states, in violation of the Tenth Amendment
. Justice Brandeis also noted problems for equal protection of the laws, but the Equal Protection Clause
of the Fourteenth Amendment applies only to states, and the Fifth Amendment's Due Process Clause was not read to include an equal protection component until the 1954 decision in Bolling v. Sharpe
.
As a result of Erie, each federal district court was required to apply the law of whichever state it was sitting in, as though it was a state court of that state. Of course, this was a very difficult decision for the Court, since overruling Swift meant that a huge number of decisions by the Court and all lower federal courts were no longer valid law.
However, the Court did not declare the Rules of Decision Act itself unconstitutional. Instead, it reinterpreted the Act so federal district courts hearing cases in diversity jurisdiction had to apply the entire law, both statutory and judge-made, of the states in which they sit.
filed a concurrence in which he agreed Swift had to be reversed, but argued Swift was merely an erroneous interpretation of the Rules of Decision Act, not an unconstitutional one.
filed a dissenting opinion
, joined by Associate 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.
while hearing state law claims.
It can be a problem for federal courts to know what a state court would decide on an issue of first impression (i.e., one not previously considered by state courts). In such circumstances, federal courts engage in what is informally called an "Erie guess." This "guess," actually a carefully reasoned attempt to anticipate what the state's courts would decide, is not binding on state courts themselves, which may adopt the federal court's reasoning if and when the issue reaches them in some other case, or may decide the issue differently. In the latter case, future federal courts would be required to follow the state's precedents, although a final judgment in the "guessed" case would not be reopened.
Alternatively, federal courts can certify questions to a state supreme court, so long as the state itself has a procedure in place to allow this. For example, some federal district (trial) courts can certify questions to state supreme courts, but other states allow only federal courts of appeal (circuit) courts to do so. In the latter situation, an Erie guess would be the only option available for the federal court attempting to apply state law.
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
in which the Court held that federal courts
United States federal courts
The United States federal courts make up the judiciary branch of federal government of the United States organized under the United States Constitution and laws of the federal government.-Categories:...
did not have the judicial power to create general federal common law when hearing state law claims under diversity jurisdiction
Diversity jurisdiction
In the law of the United States, diversity jurisdiction is a form of subject-matter jurisdiction in civil procedure in which a United States district court has the power to hear a civil case where the persons that are parties are "diverse" in citizenship, which generally indicates that they are...
. In reaching this holding, the Court overturned almost a century of federal civil procedure
Civil procedure
Civil procedure is the body of law that sets out the rules and standards that courts follow when adjudicating civil lawsuits...
case law, and established the foundation of what remains the modern law of diversity jurisdiction as it applies to United States federal courts
United States federal courts
The United States federal courts make up the judiciary branch of federal government of the United States organized under the United States Constitution and laws of the federal government.-Categories:...
.
Background of the case
Erie began as a simple personal injury case when the plaintiff filed his complaint in diversity in the United States District Court for the Southern District of New YorkUnited States District Court for the Southern District of New York
The United States District Court for the Southern District of New York is a federal district court. Appeals from the Southern District of New York are taken to the United States Court of Appeals for the Second Circuit The United States District Court for the Southern District of New York (in case...
. As explained by the Second Circuit in its decision below, Harry Tompkins—a citizen and resident of Pennsylvania
Pennsylvania
The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...
, was walking next to the Erie Railroad
Erie Railroad
The Erie Railroad was a railroad that operated in New York State, New Jersey, Pennsylvania, Ohio, Indiana, and Illinois, originally connecting New York City with Lake Erie...
's Erie and Wyoming Valley Railroad tracks
Rail tracks
The track on a railway or railroad, also known as the permanent way, is the structure consisting of the rails, fasteners, sleepers and ballast , plus the underlying subgrade...
in Hughestown, Pennsylvania
Hughestown, Pennsylvania
Hughestown is a borough in the Greater Pittston area of Luzerne County, Pennsylvania, United States. The population was 1,541 at the 2000 census....
, at 2:30 a.m. on July 27, 1934. A friend of Tompkins had driven him to within a few blocks of his home, which was located on a dead-end street near the tracks. Tompkins chose to walk the remaining distance on a narrow but well-worn footpath adjacent to the tracks. A train approached, and in the darkness an object protruding from one of the cars suddenly struck Tompkins knocking him to the ground. When he fell down, his right arm was crushed beneath the wheels of the train.
The train was owned and operated by the Erie Railroad
Erie Railroad
The Erie Railroad was a railroad that operated in New York State, New Jersey, Pennsylvania, Ohio, Indiana, and Illinois, originally connecting New York City with Lake Erie...
company, a New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
. Tompkins sued this railroad company in a federal district court—the United States District Court for the Southern District of New York
United States District Court for the Southern District of New York
The United States District Court for the Southern District of New York is a federal district court. Appeals from the Southern District of New York are taken to the United States Court of Appeals for the Second Circuit The United States District Court for the Southern District of New York (in case...
. The district court, following the federal law at that time, applied neither New York nor Pennsylvania common law, but instead applied federal common law
Federal common law
Federal common law is a term of United States law used to describe common law that is developed by the federal courts, instead of by the courts of the various states...
, which applied an ‘ordinary negligence’ standard in determining the duty of care owed to persons not employed by the railroad or otherwise acting in the course of their employment walking along railroad tracks, instead of Pennsylvania’s common law ‘wanton negligence’ standard for the duty of care owed by railroads to trespassers. The case was decided by a jury
Jury
A jury is a sworn body of people convened to render an impartial verdict officially submitted to them by a court, or to set a penalty or judgment. Modern juries tend to be found in courts to ascertain the guilt, or lack thereof, in a crime. In Anglophone jurisdictions, the verdict may be guilty,...
which was instructed by Judge Samuel Mandelbaum
Samuel Mandelbaum
Samuel Mandelbaum was a New York lawyer and politician who served for ten years as a federal district judge....
in accordance with this negligence standard. It found in favor of Tompkins and awarded him damages
Damages
In law, damages is an award, typically of money, to be paid to a person as compensation for loss or injury; grammatically, it is a singular noun, not plural.- Compensatory damages :...
. The railroad appealed to the Second Circuit, which affirmed, then petitioned the Supreme Court for certiorari
Certiorari
Certiorari is a type of writ seeking judicial review, recognized in U.S., Roman, English, Philippine, and other law. Certiorari is the present passive infinitive of the Latin certiorare...
, which was granted; Justice Benjamin Cardozo granted the railroad a stay
Stay of proceedings
A stay of proceedings is a ruling by the court in civil and criminal procedure, halting further legal process in a trial. The court can subsequently lift the stay and resume proceedings. However, a stay is sometimes used as a device to postpone proceedings indefinitely.-United Kingdom:In United...
of its obligation
Obligation
An obligation is a requirement to take some course of action, whether legal or moral. There are also obligations in other normative contexts, such as obligations of etiquette, social obligations, and possibly...
to pay the judgment in Tompkins' favor until the Court decided the case.
Issue
By the time the Supreme Court's decision in Erie was handed down, it had long been settled that when a federal court hears a state cause of action brought in federal district court in diversity, the statutory law of the state would be applied. However, in the case of Swift v. TysonSwift v. Tyson
Swift v. Tyson, , was a case brought in diversity in the Circuit Court for the Southern District of New York on a bill of Exchange accepted in New York in which the Supreme Court of the United States determined that United States federal courts hearing cases brought under their diversity...
, 41 U.S. 1 (1842), the Supreme Court had held that the federal courts need not also apply the court-made common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
of the states. This had led to forum shopping, a litigation tactic whereby plaintiffs would seek to sue in federal court instead of state court in order to have a different substantive law applied. In light of this inequity, the Supreme Court had to determine whether federal courts should apply state common law.
The court's decision
The Court, in an opinion by Associate Justice BrandeisLouis Brandeis
Louis Dembitz Brandeis ; November 13, 1856 – October 5, 1941) was an Associate Justice on the Supreme Court of the United States from 1916 to 1939.He was born in Louisville, Kentucky, to Jewish immigrant parents who raised him in a secular mode...
, examined the manipulations and opportunistic practices of litigants that had resulted from the rule of Swift v. Tyson
Swift v. Tyson
Swift v. Tyson, , was a case brought in diversity in the Circuit Court for the Southern District of New York on a bill of Exchange accepted in New York in which the Supreme Court of the United States determined that United States federal courts hearing cases brought under their diversity...
and determined that "in attempting to promote uniformity of law throughout the United States, the doctrine had prevented uniformity in the administration of the law of the state." This had the effect of denying litigants equal protection of the law.
In Swift, Justice Joseph Story
Joseph Story
Joseph Story was an American lawyer and jurist who served on the Supreme Court of the United States from 1811 to 1845. He is most remembered today for his opinions in Martin v. Hunter's Lessee and The Amistad, along with his magisterial Commentaries on the Constitution of the United States, first...
had sought to interpret the Rules of Decision Act. This Act, which began as Section 34 of the Judiciary Act of 1789, is now codified at and is as follows:
- The laws of the several States, except where the Constitution, treatiesTreatyA treaty is an express agreement under international law entered into by actors in international law, namely sovereign states and international organizations. A treaty may also be known as an agreement, protocol, covenant, convention or exchange of letters, among other terms...
, or statutes of the United States otherwise require or provide, shall be regarded as rules of decision in trials at common law, in the courts of the United States, in cases where they apply.
In the Swift decision, Story had interpreted the words "laws of the several States" narrowly, treating them as referring to only the statutory law of states and not the judge-made law declared by states' appellate courts. Thus, where the state legislature had not passed a statute
Statute
A statute is a formal written enactment of a legislative authority that governs a state, city, or county. Typically, statutes command or prohibit something, or declare policy. The word is often used to distinguish law made by legislative bodies from case law, decided by courts, and regulations...
that controlled the case, a federal district court was free to make up its own common law. This was enormously significant because nearly all U.S. contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
and tort
Tort
A tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
law consisted of (and still largely consists of) state judge-made law whose foundations lay in English common law running back to time immemorial
Time immemorial
Time immemorial is a phrase meaning time extending beyond the reach of memory, record, or tradition, indefinitely ancient, "ancient beyond memory or record"...
. With Swift, Story gave federal courts the freedom to depart from the existing body of state law if they so desired.
Story apparently hoped that when hearing state law claims in diversity jurisdiction, federal district courts would fashion a uniform "general law." As interstate commerce continued to increase, the common law of the states would converge with such general federal common law because states would recognize it was in their own best interest.
By 1938, as Justice Brandeis acknowledged, "the mischievous results of the doctrine had become apparent." The problem with Swift was that rather than reducing forum shopping, it had only increased it by increasing the opportunities for forum shopping available to litigants. State judge-made law continued to diverge instead of converge. Allowing federal courts to make up their own independent judge-made law only made the problem worse. Parties who felt disadvantaged by a state judge-made rule could create diversity jurisdiction in the federal courts by simply moving to another state or reincorporating there (if a party was a corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
). In the worst cases a party who had lost in the state supreme court
State supreme court
In the United States, the state supreme court is the highest state court in the state court system ....
would simply begin all over again in federal courts; since the federal district court had its own set of common law rules, it could hold it was not bound by the state supreme court ruling. This practice was mentioned in dissent by Justice Holmes in Brown and Yellow Taxicab.
The facts of Erie itself were an example of the kind of clever forum shopping practices which the Court wished to end. Pennsylvania clearly had personal jurisdiction over the railroad because of its operations there; also, the accident happened there, and Tompkins was a Pennsylvania resident. But Tompkins chose to sue in a New York federal court to take advantage of its favorable rule — knowing that he had a much lower probability of obtaining a judgment in his favor under Pennsylvania's rule.
Therefore, the Court felt it was time to overrule the doctrine of Swift as an unconstitutional extension of its own powers. Nothing in the Constitution of the United States permits the U.S. Congress to empower federal courts to create their own common law for cases that do not involve an issue of federal law. As Justice Brandeis wrote:
- Congress has no power to declare substantive rules of common law applicable in a state whether they be local in their nature or "general," be they commercial law or a part of the law of torts. And no clause in the Constitution purports to confer such a power upon the federal courts.
Thus, although the Erie decision itself does not identify specific provisions of the Constitution violated by Swift, the language of the decision implies that Swift had stolen powers reserved to the states, in violation of the Tenth Amendment
Tenth Amendment to the United States Constitution
The Tenth Amendment to the United States Constitution, which is part of the Bill of Rights, was ratified on December 15, 1791...
. Justice Brandeis also noted problems for equal protection of the laws, but the Equal Protection Clause
Equal Protection Clause
The Equal Protection Clause, part of the Fourteenth Amendment to the United States Constitution, provides that "no state shall ... deny to any person within its jurisdiction the equal protection of the laws"...
of the Fourteenth Amendment applies only to states, and the Fifth Amendment's Due Process Clause was not read to include an equal protection component until the 1954 decision in Bolling v. Sharpe
Bolling v. Sharpe
Bolling v. Sharpe, 347 U.S. 497 , is a landmark United States Supreme Court case which deals with civil rights, specifically, segregation in the District of Columbia's public schools. Originally argued on December 10–11, 1952, a year before Brown v. Board of Education, 347 U.S...
.
As a result of Erie, each federal district court was required to apply the law of whichever state it was sitting in, as though it was a state court of that state. Of course, this was a very difficult decision for the Court, since overruling Swift meant that a huge number of decisions by the Court and all lower federal courts were no longer valid law.
However, the Court did not declare the Rules of Decision Act itself unconstitutional. Instead, it reinterpreted the Act so federal district courts hearing cases in diversity jurisdiction had to apply the entire law, both statutory and judge-made, of the states in which they sit.
Reed's concurrence
Associate Justice Stanley ReedStanley Forman Reed
Stanley Forman Reed was a noted American attorney who served as United States Solicitor General from 1935 to 1938 and as an Associate Justice of the U.S. Supreme Court from 1938 to 1957. He was the last Supreme Court Justice who did not graduate from law school Stanley Forman Reed (December 31,...
filed a concurrence in which he agreed Swift had to be reversed, but argued Swift was merely an erroneous interpretation of the Rules of Decision Act, not an unconstitutional one.
Butler's dissent
Associate Justice Pierce ButlerPierce Butler (justice)
Pierce Butler was an American jurist who served as an Associate Justice of the Supreme Court of the United States from 1923 until his death in 1939...
filed a dissenting opinion
Dissenting opinion
A dissenting opinion is an opinion in a legal case written by one or more judges expressing disagreement with the majority opinion of the court which gives rise to its judgment....
, joined by Associate Justice James McReynolds, in which he argued the majority had engaged in judicial activism
Judicial activism
Judicial activism describes judicial ruling suspected of being based on personal or political considerations rather than on existing law. It is sometimes used as an antonym of judicial restraint. The definition of judicial activism, and which specific decisions are activist, is a controversial...
. 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.
On remand
The case was remanded to the Second Circuit for a ruling on the merits of Pennsylvania law. Rather than applying New York law, the Court of Appeals applied the law of Pennsylvania as required by the choice-of-law rules of the time — under which the law of the place of the accident was determinative — and threw out Tompkins' case.Subsequent jurisprudence
Later opinions limited the application of Erie to substantive state law; federal courts can generally use the Federal Rules of Civil ProcedureFederal Rules of Civil Procedure
The Federal Rules of Civil Procedure govern civil procedure in United States district courts. The FRCP are promulgated by the United States Supreme Court pursuant to the Rules Enabling Act, and then the United States Congress has 7 months to veto the rules promulgated or they become part of the...
while hearing state law claims.
It can be a problem for federal courts to know what a state court would decide on an issue of first impression (i.e., one not previously considered by state courts). In such circumstances, federal courts engage in what is informally called an "Erie guess." This "guess," actually a carefully reasoned attempt to anticipate what the state's courts would decide, is not binding on state courts themselves, which may adopt the federal court's reasoning if and when the issue reaches them in some other case, or may decide the issue differently. In the latter case, future federal courts would be required to follow the state's precedents, although a final judgment in the "guessed" case would not be reopened.
Alternatively, federal courts can certify questions to a state supreme court, so long as the state itself has a procedure in place to allow this. For example, some federal district (trial) courts can certify questions to state supreme courts, but other states allow only federal courts of appeal (circuit) courts to do so. In the latter situation, an Erie guess would be the only option available for the federal court attempting to apply state law.