In the
law of the United StatesThe law of the United States consists of many levels of codified and uncodified forms of law, of which the most important is the United States Constitution, the foundation of the federal government of the United States...
, Erie
doctrine is a fundamental legalLaw is a system of rules, usually enforced through a set of institutions. It shapes politics, economics and society in numerous ways and serves as a primary social mediator of relations between people. Contract law regulates everything from buying a bus ticket to trading on derivatives markets...
doctrine
Doctrine is a codification of beliefs or "a body of teachings" or "instructions", taught principles or positions, as the body of teachings in a branch of knowledge or belief system...
of civil procedureCivil procedure is the body of law that sets out the rules and standards that courts follow when adjudicating civil lawsuits...
mandating that a federal court in diversity jurisdictionIn 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 to hear a civil case because the persons that are parties are "diverse" in citizenship, which generally indicates that they are citizens...
must apply state substantive lawIn the United States, state law is the law of each separate U.S. state, as passed by the state legislature . It exists in parallel, and sometimes in conflict with, United States federal law...
.
The doctrine follows from Supreme CourtThe Supreme Court of the United States is the highest judicial body in the United States, and leads the federal judiciary. It consists of the Chief Justice of the United States and eight Associate Justices, who are nominated by the President and confirmed with the "advice and consent" of the Senate...
landmark decisionLandmark court decisions establish new precedents that establish a significant new legal principal or concept, or otherwise substantially change the interpretation of existing law...
in Erie Railroad Co. v. TompkinsErie Railroad Co. v. Tompkins, 304 U.S. 64 , was a decision by the Supreme Court of the United States in which the Court held that federal courts did not have the power to make up general federal common law when hearing state law claims under diversity jurisdiction...
304 U.S. 64 (1938), written by JusticeAssociate Justices of the Supreme Court of the United States are the members of the Supreme Court of the United States other than the Chief Justice of the United States...
Louis BrandeisLouis D. Brandeis was a United States Supreme Court Justice from 1916 to 1939. He was born in Louisville, Kentucky to Jewish parents who had immigrated from Europe...
. The case overturned Swift v. TysonSwift v. Tyson, , was a case brought in the Circuit Court for the Southern District of New York in which the Supreme Court of the United States determined that United States federal courts hearing cases brought under their diversity jurisdiction must apply the statutory law of the states when the...
, which allowed federal judgesIn the United States, the title of federal judge is usually given to a judge appointed by the President of the United States and confirmed by the United States Senate in accordance with Article III of the United States Constitution....
sitting in a state to ignore the common lawCommon law is law developed by judges through decisions of courts and similar tribunals , rather than through legislative statutes or executive action, and to corresponding legal systems that rely on precedential case law....
local decisions of state courtIn the United States, a state court has jurisdiction over disputes with some connection to a U.S. state. Cases are heard before and evidence is presented in a trial court, which is usually located in a courthouse in the county seat...
s in the same state, in cases based on diversity jurisdictionIn 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 to hear a civil case because the persons that are parties are "diverse" in citizenship, which generally indicates that they are citizens...
.
Scope
The Erie
doctrine today applies regardless of how the federal court may hear a state claim. Whether the federal court decides a state law issue vis-a-vis diversity jurisdiction or bankruptcy jurisdiction, the federal court must honor state common lawCommon law is law developed by judges through decisions of courts and similar tribunals , rather than through legislative statutes or executive action, and to corresponding legal systems that rely on precedential case law....
when deciding state law issues. See, generally, United Mine Workers v. Gibbs
, 383 U.S. 715 (1966) and Butner v. United States
, 440 U.S. 48 (1979).
Origin
The Erie case involved a fundamental question of
federalismFederalism is political philosophy in which a group of members are bound together with a governing representative head. The term federalism is also used to describe a system of the government in which sovereignty is constitutionally divided between a central governing authority and constituent...
and the jurisdiction of federal courts in the
United StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
.
CongressThe United States Congress is the bicameral legislature of the federal government of the United States of America, consisting of two houses, the Senate and the House of Representatives. Both senators and representatives are chosen through direct election....
passed a law still in effect today called the
Rules of Decision ActThe Rules of Decision Act requires that federal courts apply state law in their decisions arising out of diversity jurisdiction, except when in conflict with federal law.This act came from Section 34 of the Judiciary Act of 1789...
, which states that the laws of a state furnish the rules of decision for a federal court sitting in that state. Thus, a federal court in
TexasTexas is the second-largest U.S. state in both area and population, and the largest state in the contiguous United States.The name had wide usage among native Americans, meaning "friends" or "allies"...
, hearing a case based on diversity (as opposed to a federal question), has to follow the laws of Texas in resolving a case before it.
Swift v. Tyson
The Supreme Court's decision in Swift had defined the laws of the state as meaning only laws passed by legislatures of that state (though Justice
Joseph StoryJoseph 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.-Early life:Story was born at Marblehead, Massachusetts. His father was Dr...
writing for the court suggested that federal courts should pay special attention to how the "local tribunals" of a state would resolve a dispute). Thus, on issues of "general common law," a federal court was free to ignore decisions by a state's highest court.
Aftermath of Swift
The decision in
SwiftSwift v. Tyson, , was a case brought in the Circuit Court for the Southern District of New York in which the Supreme Court of the United States determined that United States federal courts hearing cases brought under their diversity jurisdiction must apply the statutory law of the states when the...
resulted in inconsistent judicial rulings in the same state on the same legal issue depending on whether a plaintiff brought a case in state or federal court. In one case, for example, Black and White Taxicab Co. v. Brown and Yellow Taxicab Co.Black & White Taxicab Co. v. Brown & Yellow Taxicab Co. , 276 U.S. 518 , was a decision by the Supreme Court of the United States in which the Court refused to overturn Swift v. Tyson and hold that federal courts sitting in diversity jurisdiction must apply state common law. Ten years later, in...
276 U.S. 518 (1928), the Brown and Yellow Cab Company, a
KentuckyThe Commonwealth of Kentucky is a state located in the East Central United States of America. Kentucky is a Southern state situated in the Upland South, although the state is infrequently placed, geographically and culturally, in the Midwest. Kentucky is one of four U.S. states constituted as a...
corporationA corporation is a legal entity separate from the shareholders and employees. In British tradition it is the term designating a body corporate, where it can be either a corporation sole or a corporation aggregate...
, sought to create a business association with the
Louisville and Nashville RailroadThe Louisville and Nashville Railroad was a Class I railroad that operated freight and passenger services in the southeast United States.Chartered by the state of Kentucky in 1850, the L&N, as it was generally known, grew into one of the great success stories of American business...
, where Brown and Yellow would have a monopoly on soliciting passengers of the railroad, effectively eliminating the competition, the Black and White Cab Co. Such an agreement was illegal under Kentucky
common lawCommon law is law developed by judges through decisions of courts and similar tribunals , rather than through legislative statutes or executive action, and to corresponding legal systems that rely on precedential case law....
, as interpreted by Kentucky's highest court. Brown and Yellow dissolved itself, reincorporated in
TennesseeTennessee is a state located in the Southeastern United States. According to the 2008 census, it has a population of 6,214,888, an increase of nearly 9.5% since 2000. Tennessee is the 14th fastest growing state in the US and is ranked 17th by population. It is ranked 36th by total land area. In...
, and executed the agreement there, where such an agreement was legal, bringing suit against Black and White in a Kentucky federal court to prevent them from soliciting passengers. The federal court upheld the agreement, citing Swift
, and arguing that under general federal common law, the agreement was valid. If Brown and Yellow had brought suit in a Kentucky state court, the agreement would not have been upheld.
Erie
The decision in Erie involved a railroad accident. The
plaintiffA plaintiff , also known as a claimant or complainant, is the party who initiates a lawsuit before a court...
, Tompkins, was walking alongside Erie's railroad tracks in
PennsylvaniaThe Commonwealth of Pennsylvania , often colloquially referred to as PA by natives and Northeasterners, is a state located in the Northeastern and Middle Atlantic regions of the United States...
when a train passed. An open door struck him and knocked him under the train, severing his arm. In most states, Tompkins could sue for
negligenceNegligence is a legal concept in the common law legal systems usually used to achieve compensation for injuries . Negligence is a type of tort or delict . However, the concept is sometimes used in criminal law as well...
of the railroad and recover monetary damages for his loss. In Pennsylvania, however, Tompkins would have been considered a
trespassTrespass is a legal concept, which refers to intrusion into another person's property. Trespass to land is a type of trespass, which can cause criminal or a tort liability...
er. He was not to recover for an ordinary negligence claim in the state court of Pennsylvania, because under the law of that state, a claimant had to show "wanton" negligence to recover.
Thus, Tompkins brought his case in federal court to avoid the unfavorable state law. He subsequently won. However, on appeal the Supreme Court held, in an opinion drafted by Justice Brandeis, that such decisions and inconsistent rulings based on a general federal common law were
unconstitutionalConstitutionality is the condition of acting in accordance with an applicable constitution; the status of a law, a procedure, or an act's accordance with the laws or guidelines set forth in the applicable constitution. When one of these directly violates the constitution it is unconstitutional...
, and that decisions by a state supreme court were "laws" that federal courts were bound to follow under the Rule of Decision Act
. Brandeis noted that the Court felt that Swift
allowed federal courts to make unconstitutional modifications of the substantive law of a state. He noted that it violated the right to equal protection under the law, although he did not mean it in the sense of the Fourteenth AmendmentThe Fourteenth Amendment to the United States Constitution, along with the Thirteenth and Fifteenth Amendments, was adopted after the Civil War as one of the Reconstruction Amendments. It was adopted on July 9, 1868....
. The Court reversed Swift
on its own initiative, since the parties in Erie
did not ask the Court to do so.
Development
Several later casesA legal case is a dispute between opposing parties resolved by a court, or by some equivalent legal process. A legal case may be either civil or criminal...
have added to the vague ErieErie Railroad Co. v. Tompkins, 304 U.S. 64 , was a decision by the Supreme Court of the United States in which the Court held that federal courts did not have the power to make up general federal common law when hearing state law claims under diversity jurisdiction...
decision (Brandeis cited no provision of the Constitution that SwiftSwift v. Tyson, , was a case brought in the Circuit Court for the Southern District of New York in which the Supreme Court of the United States determined that United States federal courts hearing cases brought under their diversity jurisdiction must apply the statutory law of the states when the...
violated, although theoretically it might have violated the Tenth Amendment'sThe Tenth Amendment of the United States Constitution, which is part of the Bill of Rights, was ratified on December 15, 1791...
reservation of powers to the state). Speaking generally, there are two approaches in determining whether a federal court will apply a state law: (1) the HannaHanna v. Plumer, 380 U.S. 460 , was a decision by the Supreme Court of the United States, in which the Court further refined the doctrine set forth in Erie Railroad Co. v. Tompkins regarding when and how federal courts were to apply state law in cases brought under diversity jurisdiction...
& Rules Enabling ActThe Rules Enabling Act is an Act of Congress that gave the judicial branch the power to promulgate the Federal Rules of Civil Procedure. Amendments to the Act allowed for the creation of the Federal Rules of Criminal Procedure and other procedural court rules...
approach, per when there is a Federal Rule of Civil ProcedureThe Federal Rules of Civil Procedure are rules governing civil procedure in United States district courts, that is, court procedures for civil suits. The FRCP are promulgated by the United States Supreme Court pursuant to the Rules Enabling Act, and then approved by the United States Congress...
and statuteA statute is a formal written enactment of a legislative authority that governs a country, 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 and the regulations issued by...
that conflicts with a state lawIn the United States, state law is the law of each separate U.S. state, as passed by the state legislature . It exists in parallel, and sometimes in conflict with, United States federal law...
; and (2) the Byrd
-Erie
approach when there is not a conflict between a state and federal practice.
Byrd
-Erie
This approach suggests that unless there is a major countervailing federal policy that trumps the state practice, if ignoring the state law would lead to forum shopping by plaintiffs and unequal administration of the laws (like in Yellow Cab
above), the court should apply the state law. The main goal of the Erie decision was to prevent "forum-shopping," a practice where plaintiffs choose a
legal forumVenue is the location where a case is heard. In the United States, the venue is either a county or a district or division . Venue deals with locality of a lawsuit, that is, with questions of which court or courts with proper jurisdiction may hear a specific suit. A case can only be brought in a...
simply because of the probability of a more favorable ruling. The main problem with the decision is that sometimes there is simply no state law or practice on which a federal court may defer. Federal judges are left to guess how a state court would rule on a given legal question, and a state court is in no way bound by a federal decision interpreting their own state law.
Justice Frankfurter in
Guaranty Trust Co. v. YorkGuaranty Trust Co. v. York, 326 U.S. 99 , was a United States Supreme Court case that described how federal courts were to follow state law. Justice Frankfurter delivered the majority opinion further refining the doctrine set forth in Erie Railroad Co. v...
, summarizes the main point of Erie differently... "In essence, the intent of that decision was to ensure that, in all cases where a federal court is exercising jurisdiction solely because of the diversity of citizenship of the parties, the outcome of the litigation in the federal court should be substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in a State court...." This suggests that Erie's main goal was to achieve equal protection under the law. One way that equal protection is intentionally disregarded would be through "
forum shoppingForum shopping is the informal name given to the practice adopted by some litigants to get their legal case heard in the court thought most likely to provide a favorable judgment...
," but the reduction of inequality was the main target of the doctrine.
Hanna
Under this approach under
Hanna v. PlumerHanna v. Plumer, 380 U.S. 460 , was a decision by the Supreme Court of the United States, in which the Court further refined the doctrine set forth in Erie Railroad Co. v. Tompkins regarding when and how federal courts were to apply state law in cases brought under diversity jurisdiction...
, , the
federal courtThe 94 United States district courts are the general trial courts of the United States federal court system. Both civil and criminal cases are filed in the district court, which is a court of law, equity, and admiralty. There is a United States bankruptcy court associated with each United States...
of a
stateA U.S. state is any one of 50 federated states of the United States of America that share sovereignty with the federal government . Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile...
hearing a case based on
diversity jurisdictionIn 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 to hear a civil case because the persons that are parties are "diverse" in citizenship, which generally indicates that they are citizens...
should apply
state lawIn the United States, state law is the law of each separate U.S. state, as passed by the state legislature . It exists in parallel, and sometimes in conflict with, United States federal law...
in the event of conflict between state and federal law if the state law deals with substantive rights of state citizens. The
Supreme CourtThe Supreme Court of the United States is the highest judicial body in the United States, and leads the federal judiciary. It consists of the Chief Justice of the United States and eight Associate Justices, who are nominated by the President and confirmed with the "advice and consent" of the Senate...
has defined substantive rights as, "rights conferred by the law to be protected and enforced by the adjective law of judicial procedure."
Sibbach v. WilsonSibbach v. Wilson, 312 U.S. 1 , was a decision by the United States Supreme Court in which the Court held that important and substantial procedures are not substantive, rather they are still considered procedural, and federal law applies....
312 U.S. 1 (1941). An example of a substantive right would be a state law on
fraudIn the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and is also a civil law violation....
, which may vary widely in composition depending on the jurisdiction. If the state law is merely procedural, or relating merely to the form and mode of judicial operations, then the federal court does not have to apply the conflicting state law. However, the substance-procedure distinction is a generality as the Court rejected any test based upon "litmus paper criterion." Thus, a choice between state and federal law must be made with reference to the underlying policy of the Erie
decision. The Court announced a modification of the "outcome-determinative" test in York,
whereby the test must be applied in light of the twin aims of Erie,
which are the discouragement of forum-shopping and avoidance of inequitable administration of the laws. Under this rule, state procedural law would not supplant federal procedural law if the differences in the outcome are nonsubstantial or trivial, fail to raise Equal Protection concerns, and are unlikely to influence the choice of forum.
Gasperini
A recent Supreme Court case that addressed the Erie
problem is Gasperini v. Center for HumanitiesGasperini v. Center for Humanities, 518 U.S. 415 , was a decision by the Supreme Court of the United States, in which the Court further refined the doctrine set forth in Erie Railroad Co. v. Tompkins regarding when and how federal courts were to apply state law in cases brought under diversity...
, . Gasperini is a post-Hanna decision addressing a conflict between state and federal law for review of jury verdicts. The plaintiff, a well-known artist and photographer from New York, sued a New York museum in federal court in New York, for damages caused by the loss of some photographs and slides he had loaned the museum. A jury found in his favor and awarded damages. The defendant appealed, and the U.S. Court of Appeals for the 2nd Circuit reduced the damages award on appeal. Gasperini appealed to the U.S. Supreme Court.
The New York state provision, a
"tort reform"Tort reform refers to proposed changes in the civil justice system that would reduce tort litigation or damages. Tort is a system for compensating wrongs and harm done by one party to another's person, property or other protected interests . Tort reform advocates focus on personal injury in...
measure, allowed reviewing appellate courts to overturn a jury verdict if it "deviates materially from what would be reasonable compensation." Pursuant to this law, the 2nd Circuit applied the state's appellate standard of review. However, the Supreme Court stated that federal courts, bound by the reexamination clause of the
Seventh AmendmentThe Seventh Amendment of the United States Constitution, which is part of the Bill of Rights, codifies the right to a jury trial in certain civil trials...
, could overturn a jury's finding of fact only if it "shocked the conscience."
The Supreme Court could have resolved the case by reading the 7th Amendment broadly, and treating it as controlling in federal court. However, instead, the Court opted for what can be described as a compromise, holding that the federal court should apply the state's lower standard review, but in a way that would not run afoul of the 7th Amendment: instead of the federal appeals court reviewing the jury finding, the trial judge would assume the role.
Gasperini
, and another recent Erie
-area case, Semtek International Inc. v. Lockheed Martin Corp.
, have shown Erie has gone in a newer and even more complicated direction than the previous controlling cases, and that instead of selecting either federal or state law for a case, the federal court may be required to somehow blend federal and state law, depending on the issue. This is quite frustrating for those who wish to have a black-letter rule that will point them at the answer. However, the possibility of blending in Erie
does not open up an infinitude of possibilities. In both Gasperini and Semtek, the common thread is that the blending is done in a way that is calculated to advance the aims of Erie
(and York): non-discrimination between litigants, and non-encouragement of
forum shoppingForum shopping is the informal name given to the practice adopted by some litigants to get their legal case heard in the court thought most likely to provide a favorable judgment...
. (Source: Allan Ides & Christopher May, Civil Procedure, 3d Edition).