American Civil Litigation
and Dispute Resolution
University of Insubria, Como, Italy
Jeffrey W. Stempel
William S. Boyd School of Law
University of Nevada, Las Vegas
Segment 2
The Erie Doctrine
A Review of American
Federalism
• State law is the “baseline” governing law
• Although it can often be supplanted by
applicable federal law under the “Supremacy
Clause” of the Constitution
• If there is a sufficient link to interstate
commerce or something else that conveys
federal power
• In the absence of federal law, state law is the
default
Still More on Federalism
• The concept is captured in the Rules of Decision
Act, 28 U.S.C. § 1652
• The laws of the states should be the “rule of
decision” unless the case is governed by federal
law
• Despite this ethos in America, there was
established in the 1800s the practice of applying
“federal common law” to disputes between
citizens of different states in cases that were in
federal court because of diversity jurisdiction
A Little More Federalism
• This practice of using federal common law was
established in Swift v. Tyson (1842)
• The thought behind it was the application of
federal common law in commercial matters
would be efficient – but it proved not to make
much difference
• And it led to the divergent results and unequal
outcomes alluded to in Erie v. Tompkins
Just a Bit More Federalism
• The ramifications of Swift v. Tyson were exacerbated
because courts also did not treat state judicial
precedent as the “laws” of the states for purposes of
the Rules of Decision Act.
• Consequently, state law displaced federal common law
in diversity cases only where there was state legislation
– even if state court decisions established state law
counter to the federal common law
• In federal question cases, of course, federal law
governs – but even here there are some complexities
that we must skip over for this short course
Erie Railroad v. Tompkins
• Tompkins lives in Eastern Pennsylvania
• One night, after several drinks with his
mother-in-law (no kidding), he is walking back
home – alongside the railroad track.
• Not as weird as it seems; the paths along the
track were often used as trails as this was
often shorter (and probably usually safer) than
walking along the road.
Erie v. Tompkins
• As Tompkins is walking along the tracks, he is
struck hard by something protruding from
the train (his story)
• Railroad suspects he may have fallen near the
track or been sleeping and the train ran over
his arm
• What was beyond dispute was that Tompkins
lost an arm.
Erie v. Tompkins
• Tompkins gets a lawyer in lower Manhattan (New York City)
• The lawyer does some research
• If Tompkins sues in Pennsylvania state court, Pennsylvania
state law is applicable (Tompkins a Pa resident; accident in
Pa; evidence in Pa; Government interest in Pa)
• Under Pennsylvania law, Tompkins is a “trespasser”
because he was not expressly invited to use the Railroad
property
• And the property owner owes no duty of care to a
trespasser. Even if the Railroad maintained a dangerous
path or tracks or train – no liability – as a matter of law
(jury would not even hear the case).
Erie v. Tompkins
• Seeing the limits of Pennsylvania law, Tompkins
counsel goes forum shopping
• Sues in federal court in New York
• Diversity of citizenship: Tompkins in
Pennsylvania; Erie corporate offices in New York
• Once in federal court, Tompkins gets the benefit
of Swift v. Tyson and federal common law, which
makes him a permissive user of the path rather
than a trespasser.
Erie v. Tompkins
• Federal Common Law
• Under federal common law, Tompkins is not a
trespasser but a licensee who has informally
been granted the right to use the pathway by the
railroad tracks because of longstanding custom
and practice
• Tomkins was not an express invitee, in which case
the Railroad would owe him a high standard of
care
• But as a licensee, Tompkins was owed a duty of
reasonable care by the Railroad
Erie v. Tompkins
• Because the federal court in New York applies
federal common law rather than Pennsylvania
state law, the Railroad cannot win as a matter
of law
• A jury trial is required to assess the respective
reasonableness of the conduct of the Railroad
and Tompkins
• Jury finds Railroad negligent, awards Tompkins
$30,000 (substantial verdict at that time)
Erie v. Tompkins
• Railroad challenges the verdict by attacking
the Swift v. Tyson line of cases and the rule
of federal common law in diversity cases
• Case reaches the U.S. Supreme Court
• Famed Justice Louis Brandeis authors the
opinion.
–
–
–
–
First Jewish Supreme Court Justice
Highest Grades in History of Harvard Law
A prominent Boston lawyer for the wealthy
But a progressive reformer (the “Brandeis
Brief” supporting better working conditions
for women is famous for use of social science
research but now seems a bit sexist in
supporting limited work hours to “protect”
women)
Erie v. Tompkins
• If in state court, Pennsylvania law applies and
Tompkins is a trespasser who cannot recover
• But if in federal court, Tompkins the licensee is
owed duty of due care and case goes to jury
• But this sort of different treatment for the
same issue in federal and state court bothers
Brandeis and the court
Erie v. Tompkins
• Example of the mischief of using federal
common law of torts, contracts, etc. in federal
cases (which are in federal court only because of
the citizenship of the parties, not because of any
important federal policy)
• The Black & White/Brown & Yellow Cab
company scam
– One company reincorporates in another
state to create federal “diversity” subject
matter jurisdiction
– So that it can avoid a Kentucky law
forbidding exclusive dealing contracts
Erie v. Tompkins
• Court has become dissatisfied with policy of
federal common law in diversity cases
• Court must address the precedent of Swift v.
Tyson – now 100 years old – and give a reason for
overruling it
• The bad policy impact (different outcomes of the
same case depending on whether in federal or
state court) would be enough for many common
law judges – but not all
• Some judges would say precedent that old should
only be changed by the legislature
Erie v. Tompkins
• Court has additional reasons to overrule Swift v.
Tyson
• Swift was interpreting the Rules of Decision Act
(28 U.S.C. § 1652)
• Act speaks of “laws” of the states controlling
• Swift saw only statutes as “laws” and not state
supreme court decisions – now seems incorrect
for a common law country
• Also seems incorrect because of Legal Realism
movement (a court decision is just as binding as a
law on the books – maybe more)
Erie v. Tompkins
• So – Erie Court attacks Swift on construction of
the word “laws” in the statute
• Also looks at “new” historical evidence (Harvard
Professor Charles Warren’s article on the
Judiciary Act of 1789)
• Warren concluded that intent of the Act (which
included the Rules of Decision Statute) was to
treat state supreme court decisions as “laws”
• So Erie Court concludes Swift was wrong on
history as well as interpretation
Erie v. Tompkins
• Erie Court majority now has grounds to
overrule Swift and change the law
• Incorrect construction of statutory word
• Incorrect view of legislative intent and
purpose
• Bad social policy outcomes resulting from
Swift
Erie v. Tompkins
• What replaces Swift?
• The Erie Doctrine
• Where a case is in federal court because of
diversity of citizenship (rather than because of
questions of federal substantive law), state
law governs
• But because the case is in federal court,
Federal Rules of Civil Procedure control the
processing of the case
Erie v. Tompkins
• Brandeis opinion treats the Court’s decision as
constitutionally mandated
• Application of different rules of substantive
law to the same case violates the “Equal
Protection” Clause of the Constitution (found
in Amendment XIV) and denies Due Process
(right found in Amendments V and XIV) to
litigants
Erie v. Tompkins
• But concurring Justices not so sure that the
inequality occasioned by Swift v. Tyson was
unconstitutional
• But this difference between majority and
concurrence only matters if Congress were to
attempt to change the Erie Doctrine
• If Erie is constitutionally based (and most in U.S.
think it is), Congress does not have power to
change the Erie Rule and go back to Swift v. Tyson
Erie v. Tompkins Continues to
Be Good Law in the U.S.
• But in further application it can become complicated,
with more disagreement about the correct application
• First, some fine-tuning of Erie
• There still may be times when federal courts will use
federal common law
– When construing aspects of federal law not set forth in
statute
– When dealing with federal officials
– When dealing with federal property, lands, intergovernment disputes (e.g., City of Milwaukee [Wisconsin])
v. State of Illinois case over pollution problem)
More Erie Issues
• Choice of Law
– Even if state law applies, there may be conflict over which
state law to apply
– e.g., Pennsylvania v. New York for Erie case itself if the case
was in state court;
– easy answer is Pennsylvania
– But question can be harder in other cases
• Under Erie, federal court facing choice-of-law dispute
uses the choice-of-law rules of the state in which the
federal court is located
– This should make the choice-of-law decision come out the
same way in both state court and federal court
Erie Continues to
Vex on Occasion
• Guaranty Trust v. York (1945) holds that where
application of a state law would be “outcome
determinative” it is substantive (rather than
procedural) for purposes of Erie and must be
applied in federal court
• But Hanna v. Plumer (1965) reminds us that Fed.
Rules of Civil Procedure govern as long as the rule
really regulates procedure and is not a
substantive law dressed as procedure
The Latest on Erie in the U.S
• Gasperini v. Center for Humanities (1996) decides
(in a 5-4 Supreme Court vote) that a New York
rule (contained in the state’s procedure code)
governing excessive verdicts is sufficiently
substantive that it applies because Fed. R. Civ. P.
59 is not in conflict
• Shady Grove Orthopedic v. Allstate Insurance
(2010), however (in another 5-4 vote) refuses to
apply New York’s class action rule more restrictive
than Fed. R. Civ. P. 23.
Erie Made Easy?
• Although the Erie Doctrine can get horribly messy and
contentious at the edges, the premise is relatively
simple and reflects the prevailing U.S. view most see as
different than the European view
• Strong preference or presumption for applying state
substantive law absent other factors such as “purely”
or primarily procedural matter or clearly applicable
federal substantive law
– Example of the latter: Byrd v. Blue Ridge Electric (1958)
finds Const. Amendment VII to prevent application of a
South Carolina law (at issue in a diversity jurisdiction case)
mandating bench trials (trials by judge rather than jury)
Erie in Brief
• Apply state substantive law to proceedings in
federal court where only basis for subject matter
jurisdiction is diversity of plaintiff and defendant
• But apply federal procedural law to any case in
federal court – so long as the Federal Rule of Civil
Procedure at issue really regulates procedure
(rather than being a subterfuge for regulating
substance) and was properly promulgated.