Brandeis and the Progressive Constitution: Erie, the Judicial Power, and the Politics of the Federal Courts in Twentieth-Century America.

• Author: Freyer, Tony A.

BRANDEIS AND THE PROGRESSIVE CONSTITUTION: ERIE, THE JUDICIAL POWER, AND THE POLITICS OF THE FEDERAL COURTS IN TWENTIETH-CENTURY AMERICA. By Edward A. Purcell, Jr. (1) Yale University Press. 2000. Pp. 417. $40.00.

The federal judiciary's role in American constitutional governance is a useful reference point at the new millennium. Early in the nation's life Alexis de Tocqueville commented that the interdependency between unelected federal judges and an aggressively active democracy reflected the distinctiveness of American institutions. (3) During the twentieth century, the impact of the Supreme Court and the federal judiciary on American society and government seemed to grow apace. Following the Second World War, the historic promotion of civil rights and liberties under the leadership of Chief Justice Earl Warren and the Supreme Court highlighted the irony that attaining greater democratic inclusiveness depended on a nonelected judiciary. Since the 1970s growing numbers of commentators questioned the propriety of this constitutional interdependency, while others defended it as an appropriate expression of institutional checks and balances. (4)

Through the changing image of the prominent Progressive figure, Louis D. Brandeis and his landmark opinion in Erie Railroad v. Tompkins (1938), Edward A. Purcell's new book locates this institutional transformation within the sweep of twentieth-century American social and political conflict. Lawyers recall Erie as a "great case" and "jurisprudential landmark" which nonetheless remains controversial because it establishes a constitutionally contentious procedural boundary between state and federal court jurisdiction. Most historians, by contrast, find the decision of interest because it is associated with legalistic maneuvering which has been especially favorable to corporate litigants, including the practice known as forum shopping by which corporate defendants escaped less friendly state courts by removing cases to federal courts. (5)

An historian who wrote a prize-winning study of democratic theory in late nineteenth- and early twentieth-century America, Purcell has been for some years a practicing lawyer and law professor. Thus, in the language of history and law Purcell is fluently bilingual. He has drawn together the two disciplines in a growing body of scholarship, including a thoughtful and extensive social and legal history of federal diversity jurisdiction in industrial America, 1870-1958. (6) His new book gives historians a deeper understanding of the federal judiciary--and the legal profession, which are its chief agents--as central institutional channels for ordering social conflict within American constitutional governance and the corporate market economy. It provides members of the legal profession insight into the procedural and constitutional issues associated with the origins, decision, and subsequent evolution of one of the most important precedents in American law.

Section I of this review considers the origins of what Purcell calls the Progressive constitution. The second section examines Brandeis's Erie opinion as part of the general transition from a Progressive to a liberal regulatory state. The third section suggests how the splintered Court deciding Erie was indicative of tensions and unintended consequences influencing the course of judicial activism throughout the rest of the twentieth century. The fourth section raises two questions followed by a conclusion.

I

The Progressive constitution emerged from a reaction against the constitutional order that preceded it. The period following the Civil War and Reconstruction to World War I, one of the most economically and socially significant in U.S. history, receives very little attention from constitutional law scholars. Even so, American social and political struggle centered on the response to industrialization, particularly increasing social-class conflict associated with the growth of wage labor, greater dependence on big business--what business historian Alfred Chandler called managerial capitalism--and the gradual development of state and federal governmental institutions to match the scale of exploitive corporate power. (7) The established view of the turn-of-the-century constitutional order undergoing this same transformation focuses on the Supreme Court's deployment of constitutional doctrines derived primarily from the due process and commerce clauses to emasculate labor and government in favor of corporate capitalism. Protest movements, especially the Populists and the Progressives, fought back. But not until the Great Depression did Franklin Roosevelt's New Deal liberalism finally institute a constitutional regime in which government became as big as business.

Purcell refines this accepted version of pro-capitalist constitutionalism, arguing that a fundamental issue underlying private versus public ordering concerned the "primacy" of legislative or judicial authority. Opponents of big business envisioned a constitutional order in which popular politics channeled through democratically elected state and federal legislatures predominated; contrariwise, business interests represented by elite lawyers asserted that unelected federal judges with appointments based on good behavior should exercise dominant control. Purcell's reformulation suggests that due process and commerce clause jurisprudence--which always involved exceptional cases in which the legislature was more often than not upheld--had less immediate impact on the daily lives of individual Americans than the exercise of the federal court's ordinary jurisdictional power. (8)

Purcell's focus on federal court jurisdiction begins with a doctrine the Supreme Court established in Swift v. Tyson (1842). (9) That case raised the narrow issue of the interpretation of section 34 of the Judiciary Act of 1789, which stated that except for matters involving federal law and the Constitution itself, federal courts were bound by state law in all cases where it applied. The case arose from a series of speculative investments transacted through the medium of commercial credit contracts, which unraveled during the depression of 1839-43. The question before the Court was what source of law to apply in relation to section 34: did the law of New York or Maine, the residences of the debtor and creditor, respectively, control, or did federal judges possess a discretionary power to look beyond the state's local law to a body of internationally recognized commercial jurisprudence based on the practices of mercantile custom?

Although lower federal court and Supreme Court cases had raised these issues indirectly, Swift was the first to present squarely the construction of section 34. In a unanimous decision written by Justice Joseph Story, the Court interpreted the section to mean that the obligation to follow local law where it "applied" implied that there existed other sources of law--particularly international commercial custom--that federal judges could draw upon for rules of decision to determine the rights and obligations of commercial litigants who, because they resided in different states or foreign nations, were qualified to enter federal court on the basis of the diversity of citizenship jurisdiction the Constitution and the Judiciary Act sanctioned. At the time, the decision was a non-controversial extension of diversity jurisdiction that Whigs such as Story, Democrats such as Chief Justice Roger B. Taney, and even the rigidly states rights Virginia Democrat Peter V. Daniel agreed was a legitimate use of federal judicial discretion. Thus the decision did not interfere with state power, since it pertained only to parties who qualified for federal diversity jurisdiction. Rather, the jurisdictional theory underlying Swift was consistent with the principle of dual sovereignty the Taney Court was developing in response to mounting popular discontent over American slavery and freedom.

During the late nineteenth and early twentieth centuries the federal judiciary greatly extended the discretionary authority identified with the Swift doctrine. This expansion occurred, however, primarily after the Civil War and its accompanying industrialization transformed the United States into a global economic player. What had been an abstract question of choice of law suddenly assumed real significance in a radically revamped economy. Thus, from the Civil War on, federal judges progressively enlarged the doctrine to enable corporations doing interstate business to employ federal diversity of citizenship jurisdiction to circumvent unfriendly state courts and juries. (10) In addition, the Supreme Court built up around the Swift doctrine constitutional protections of property and contract rights transcending the limits of congressional legislation. In 1875 Congress for the first time granted federal courts the full authority to assert claims under federal law--federal question jurisdiction--as well as the Constitution itself.

Disagreement among lower federal courts and a shifting majority on the Supreme Court nonetheless persisted concerning the relationship between the Swift doctrine, the expanded federal question jurisdiction, and their application to insurance, personal injury, and municipal bond debt litigation. In about 300 bond cases the Court applied the transformed Swift doctrine in favor of foreign creditors. (11) The insurance and personal injury litigation presented a more complicated picture: corporate defendants initially used the threat of removing suits from state to federal court to force smaller settlements upon plaintiffs. By the 1890s, however, plaintiffs' lawyers won decisions from the Supreme Court that were more favorable, instituting a dual market for legal services in which defense attorneys in the pay of corporations confronted plaintiffs' lawyers relying on contingent fees. (12) Although the picture remained ambiguous, the...