IRAC Summary: Erie Railroad Co. v. Tompkins (1938)
The central issue in Erie Railroad Co. v. Tompkins (1938) is whether the federal courts should apply state substantive law or federal general common law when hearing cases under their diversity jurisdiction.
The U.S. Supreme Court held that there is no federal general common law and that federal courts must apply state substantive law in diversity jurisdiction cases. This decision overruled the prior precedent set by Swift v. Tyson (1842), which had allowed federal courts to apply a federal general common law.
In this case, Tompkins, a citizen of Pennsylvania, was struck by a train’s door while walking along the railroad tracks in Pennsylvania, which were owned by Erie Railroad, a New York corporation. Tompkins filed a lawsuit in a federal district court in New York, invoking diversity jurisdiction. Applying federal general common law, as was the practice since Swift v. Tyson, the district court and the court of appeals ruled in favor of Tompkins. When the case reached the Supreme Court, the Court reasoned that the application of federal general common law violated the principle of federalism by creating unequal legal rights in different states and potentially discriminated against citizens of states where federal courts sat. The correct approach, as established by the Court, was to apply Pennsylvania state law to the substantive issues of the case.
The Supreme Court reversed the lower court’s decision, concluding that federal courts sitting in diversity must apply state substantive law, not federal general common law, ensuring uniformity and respect for state sovereignty in the federal system.
Detailed IRAC Outline:
The specific issue before the Supreme Court was whether the federal courts were correct in applying a federal general common law instead of Pennsylvania state law to decide a case involving an injury on state land, under the circumstances where the parties were from different states (diversity jurisdiction).
The Court cited the Constitution, the Judiciary Act of 1789, and subsequent legal developments to establish the precedent that federal courts are bound to follow state law in cases of diversity jurisdiction. The Court concluded that the Swift v. Tyson decision was an incorrect interpretation of the Judiciary Act of 1789 and that it led to inconsistency and unfairness in the application of legal principles.
– The plaintiff, Tompkins, was injured in Pennsylvania and sought relief in federal court based on diversity of citizenship.
– The case was initially decided by applying what was perceived as federal common law, which favored Tompkins’s claim.
– Erie Railroad argued that Pennsylvania tort law, which would not have favored Tompkins to the same extent, should apply.
– The Supreme Court reviewed the history and intent of the Judiciary Act of 1789 and the subsequent legal interpretations that led to the application of federal common law in diversity cases.
– Justice Brandeis, writing for the majority, argued that the use of federal common law by federal courts in cases where state law should apply encroached on the rights of the states and created a dual legal system that was contrary to the principles of federalism.
– The Court applied its ruling to the facts of the case, indicating that Tompkins should have been subject to Pennsylvania state law, which would likely not grant him the same relief as the federal common law did.
The Supreme Court concluded that the federal common law applied by the lower federal courts was not valid and that state law should govern in cases of diversity jurisdiction. The decision in Erie Railroad Co. v. Tompkins fundamentally changed the approach of federal courts to diversity jurisdiction by requiring them to apply state substantive law, thus ensuring that state law governed local matters and maintained the balance of federalism. The case was remanded for further proceedings consistent with this opinion.