Resolving Separation Of Powers And Federalism Problems Raised By ERIE, The Rules Of Decision Act, And The Rules Enabling

• Author: Robert P. Wasson, Jr.
• Position: Harvard College, A.B.
• Pages: 523-669

Robert P. Wasson, Jr.: Harvard College, A.B. 1976, cum laude; Harvard University Law School, J.D. 1979. Mr. Wasson taught Civil Procedure, Federal Courts, Jurisprudence, and Sexual Orientation & the Law as a tenured Professor of Law at Suffolk University from 1983 through 2001. He is currently in private practice. The author expresses his sincere appreciation for the invaluable research assistance provided by Ms. Jessica Claire Dean and Mr. Keith S. Hanson, who were students in his Civil Procedure class, and to Mr. Robert P. Wasson, Sr. The Article benefited greatly from their insightful comments to previous drafts.

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I Introduction

This Article proposes a solution to resolving separation of powers¹ and federalism² problems raised by Erie Railroad Co. v. Tompkins³ in the context of the Rules of Decision Act of 1789⁴ and the Rules Enabling Act of 1934.⁵ It argues that the Supreme Court's 1938 decision in Erie was significant and seminal in completely overturning the near 100-year vision Page 524 of separation of powers and federalism announced in Swift v. Tyson⁶ for interpreting and applying the Rules of Decision Act.⁷

Separation of powers represents the search for the proper role of an unelected judiciary with life tenure in a democracy.⁸ Federalism represents the search for the proper balance of power between the federal government and the states.⁹ American constitutionalism is premised on a separation of powers between an unelected federal judiciary with life tenure and the politically accountable executive and legislative branches.¹⁰ American constitutionalism is also premised on a federal system in which the states are not mere satraps of the national government.¹¹ Instead, federalism seeks to preserve the states as equal and effective to the national government.¹²

Unfortunately, it is impossible to set the separation of powers and federalism balances forever for all times and all purposes. This is true for at least two reasons. First, neither separation of powers nor federalism is set within fixed boundaries in the Constitution.¹³ Second, the Constitution Page 525 imposes minimum standards-it is not a detailed code.¹⁴ And federal statutory law generally operates "interstitially."¹⁵ That is, it operates against a background of state law and is intended only to fill in gaps or inadequacies in state law.¹⁶ Thus, on almost a daily basis, the federal judge Page 526 must ask whether she is upholding constitutional and statutory ideals because she is not subject to political expediency, or whether she is imposing her ad hoc, subjective, and idiosyncratic views on the majority because she is appointed and has life tenure.

One early statute raising uncertain separation of powers and federalism concern was the Rules of Decision Act of 1789.¹⁷ It provided: "The laws of the several states, except where the Constitution, treaties or statutes of the United States shall otherwise require or provide, shall be regarded as rules of decision in trials at common law in the courts of the United States in cases where they apply."¹⁸

It reflects separation of powers concerns in that Congress enjoined federal judges from creating and applying federal, judge-made common Page 527 law in the absence of a federal constitutional or statutory provision that implicated any federal interest in the matter. It also reflects federalism concerns in that Congress directed federal judges to respect and enforce state law in the absence of a federal constitutional or statutory provision that implicated any federal interest in the matter.

The Supreme Court's decision in Swift v. Tyson, however, altered this dynamic by holding that a state's judge-made common law was not included within "the laws."¹⁹ This meant that federal judges were given carte blanche authority to disregard a state's judge-made common law and substitute their own federal judge-made common law. Swift v. Tyson controlled for nearly 100 years until overridden by the Supreme Court's decision in Erie Railroad Co. v. Tompkins.²⁰

It is the position of the Article that the Court's opinion in Erie had two prongs, a separation of powers prong and a federalism prong. The separation of powers prong contained three holdings. First, Congress did not intend for federal courts to disregard a state's judge-made common law as "the laws" of a state to which they should defer under the Rules of Decision Act.²¹ Second, even had Swift expressed what Congress intended, the Constitution did not permit Congress to confer upon the federal courts a carte blanche power to promulgate federal general common law.²² Third, the Constitution did not confer upon the federal courts any carte blanche power to promulgate federal general common law on their own even had Congress been silent on the matter.²³ The federalism prong of Erie was that a state's substantive law could be overridden only through the command of federal law under the Supremacy Clause and not through a federal judge's determination of what the "better" law was or should be as a matter of federal general common law.

The Rules Enabling Act of 1934, a separate statute, permits the Supreme Court "to prescribe general rules of practice and procedure and rules of evidence for cases in the United States district courts (including proceedings before magistrates thereof) and courts of appeals."²⁴ The critical provision of the Rules Enabling Act is found in section 2072(b), Page 528 which provides: "Such rules shall not abridge, enlarge or modify any substantive right. All laws in conflict with such rules shall be of no further force or effect after such rules have taken effect."²⁵

Although the Rules Enabling Act was not addressed at all in Erie, there is a relationship between Erie and the Rules of Decision Act, on the one hand, and Erie and the Rules Enabling Act, on the other hand.

The Rules of Decision Act, since Erie, provides that federal courts should respect a state's "substantive" law (statutory or judge-made) unless a federal constitutional or statutory provision overrides it.²⁶ Because the Rules Enabling Act itself provides that no Federal Rule may "abridge, enlarge or modify" any "substantive" state right,²⁷ there should not be any context in which a federal judge would permit a Federal Rule to override a state's "substantive" law (statutory or judge-made).

The analysis currently applied by the Court for resolving Erie problems in the context of the Rules of Decision Act and the Rules Enabling Act may be stated as follows:

The first step of the analysis is to determine whether state and federal law conflict with respect to the disputed issue before the district court. If no conflict exists, then the analysis need proceed no further, for the court can apply state and federal law harmoniously to the issue at hand. However, if the applicable state and federal law conflict, the district court must ask whether a congressional statute or Federal Rule of Civil Procedure covers the disputed issue. If a federal statute...