A Pennsylvania man is injured by a New York railroad company while walking along train tracks. Plaintiff believes federal law should apply because it would require Defendant to have higher duty of care, while the Defendant thinks Pennsylvania law should apply because it would lower their duty to Plaintiff and help their case.
A federal court sitting in diversity must apply state substantive law, whether statutory or common law.
Plaintiff Tompkins, a citizen of Pennsylvania, was injured by a train operated by Defendant Erie, a New York company while walking along train tracks. Plaintiff Tompkins sued Defendant Erie in New York federal court. Defendant Erie argued that the company was not liable under Pennsylvania state law because Plaintiff Tompkins was a trespasser and they would only be liable if their actions were wantonly negligent. Plaintiff Tompkins argued that federal general law should apply. The trial judge relied on Swift v. Tyson in holding that federal courts are only bound to apply state statutory and customary law but not common law, and therefore federal general law applied. The majority rule under federal law was that railroad companies like Defendant Erie owed a duty of ordinary care to travelers like Plaintiff Tompkins, therefore the district court entered judgement for Plaintiff Tompkins. The court of appeals affirmed, holding that federal courts could use their discretion on matters of general law. The Supreme Court of the United States granted certiorari.
Must a federal court sitting in diversity apply state common law?
Yes, a federal court sitting in diversity must apply state common law. The holding below is reversed.
Justice Justice Cardozo did not participate in the consideration or decision.
Justice Cardozo did not participate in the consideration or decision.
1. Under Swift v. Tyson federal trial courts exercising diversity jurisdiction could disregard state law and utilize their independent judgment on matters of general jurisprudence.
2. The rule from Swift has been controversial and has created uncertainty, prevented uniformity, and has resulted in unequal treatment under the law.
3. To avoid this injustice, state law should be applied in diversity cases regardless of whether the law was made by the courts or the legislature.
4. A federal trial court’s refusal to apply state law is an unconstitutional invasion of state sovereignty.
5. The Constitution also does not give federal courts the power to create “general federal common law.”
6. Swift is overturned and the holding is reversed.