Federal Common Law, Civil

• Author: David L. Shapiro
• Pages: 977-979

Page 977

In the English legal tradition to which this country is heir, judge-made COMMON LAW?law developed by courts in the absence of applicable LEGISLATION?has played a critical role in the determination of rights, duties, and remedies. But because our federal government is one of limited, delegated powers, the questions whether and under what circumstances the federal courts are empowered to formulate federal common law have been the subject of much debate. Although it is now settled that the federal courts do have such authority in civil matters, the debate continues over the sources of that authority and the proper scope of its exercise.

The Supreme Court's decision in ERIE RAILROAD CO. V. TOMPKINS (1938) marks a watershed in the evolution of this problem. Prior to that decision, the federal courts did not strive to develop a federal, or national, common law binding on the states and indeed on occasion denied that it existed (Wheaton v. Peters, 1834; Smith v. Alabama, 1888). Yet the Supreme Court, in SWIFT V. TYSON (1842), upheld the authority of the federal courts, in cases within the DIVERSITY JURISDICTION, to determine certain controversies on the basis of "general principles and doctrines" of jurisprudence and without regard to the common law decisions of the state courts. Thus, during the reign of Swift v. Tyson, the federal courts exercised considerable common law authority over a variety of disputes, ultimately extending well beyond the interstate commercial controversy involved in Swift itself and involving matters apparently not subject to federal legislative power. The decisions rendered in these cases, however, did not purport to bind the state courts, and the result was often the parallel existence of two different rules of law applicable to the same controversy, with the governing rule dependent on the forum in which the controversy was adjudicated.

Historians disagree on the justification?statutory and constitutional?of the Swift decision. In one view, the decision was not rooted in contemporary understanding of the nature of the common law but instead represented the use of judicial power to aid in the redistribution of wealth to promote commercial and industrial growth. A contrasting position is that the decision was fully consistent with the perception of the time that the common law of commercial transactions was not the command of the sovereign but rather was both the embodiment of prevailing customs and a process of applying them to the case at hand.

There is general agreement, however, that the Court expanded Swift well beyond its originally intended scope and that its OVERRULING, in Erie, reflected a very different perception of the proper role of the federal courts. The Court in Erie, speaking through Justice LOUIS D. BRANDEIS, concluded that there was no "general" federal common law?that the Rules of Decision Act, originally section 34 of the JUDICIARY ACT OF 1789, required adherence to state decisional or common law in controversies such as Erie itself, a case that fell within federal JURISDICTION solely on the basis of the parties' diversity of citizenship.

But the Erie decision helped bring to the surface the existence of what has been called a "specialized" federal common law, operating in those areas where the application of...