304 U.S. 64 (1938)
Facts & Procedural History
Plaintiff, a Pennsylvania citizen, was walking along the railroad tracks of the Erie Railroad in Pennsylvania when a train passed and an open door on a car struck him resulting in injury. He sued the railroad, a New York corporation, in federal district court in New York. Under Pennsylvania law, plaintiff was a trespasser and the railroad was therefore only liable for wanton negligence. The judge, relying on Swift v. Tyson, instructed the jury according to “general law” under which the railroad was liable even for ordinary negligence. The jury returned a verdict for plaintiff, which was upheld by the Second Circuit.
Is a federal district court exercising diversity jurisdiction over a state law-based cause of action required to apply the common law of the state?
Holding / Rule
(Brandeis) Yes. Reversed and remanded. Federal district courts sitting in diversity jurisdiction must apply both statutory and judge-man common law of the states where it does not conflict with federal law.
The Court overruled Swift v. Tyson, which held that federal courts exercising diversity jurisdiction over a state law action were under no obligation to apply the non-statutory or judge-made law of that state, but instead had the power to apply federal common law or “general law.” The Swift doctrine encouraged forum shopping by litigants to have different substantive law applied. It actually prevented uniformity and caused discrimination by non-citizens against citizens, as non-citizens had the privilege of deciding whether to have the case heard in state or federal court and thus whether federal common law would apply. Moreover, except in matters of federal law, the law to be applied in any case is the law of the state, and it is irrelevant whether that law is declared by the state’s legislature or high court. There is no federal general common law that exists outside of any particular state, yet is applicable to the states unless changed by statute. Neither Congress nor federal courts have authority to declare substantive rules of common law applicable to the states, which interferes with the rights reserved to the states by the Constitution.
Reed concurred in the judgment, stating that Swift should be overturned not because of the unconstitutionality of the federal common law approach, but because that case misinterpreted the term “the laws” in the Rules of Decision Act as excluding state court decisions.
Butler (joined by McReynolds) dissented, arguing that the constitutional validity of the Swift doctrine was not raised by the parties nor necessary to resolving the case and should not have been considered.