You will have to read to the end to get to why this is pertinent to the folly of federal tort reform.
The bookend cases of Swift v. Tyson (1842) and Erie v. Tompkins (1938) say all there is to say about interaction between state law and federal law.
The opinion in Swift was written by Supreme Court Justice Joseph Story, a Harvard educated elitist. Swift was a commercial case and was in federal court because of the diversity of citizenship – the plaintiff and the defendant were from different states. You can go read the facts yourself but I guarantee they are not interesting.
The big picture is this. Under the Judiciary Act of 1789, the common law to be applied was the common law of the state. The federal courts were bound by state law. Story did not like the federal court’s outcome under state law. He decided, more or less, that the Judiciary Act of 1789, did not require the application of state law for issues of “general” law.
Here is a long quote seething with elitism:
If there is any question of law, not local, but widely general in its nature and effects, it is the present question. It is one in which foreigners, the citizens of different states, in their contests with each other, nay, every nation of the civilized commercial world, are deeply interested. By all without the United States, this court is looked to as the judiciary of the whole nation, known as the United States, whose commerce and transactions are as widely diffused as is the use of bills of exchange. The obvious and admitted wisdom of the 34th section of the judiciary act, in reference to our excellent, but delicate and complex system of government, if the section does not receive the construction contended for, and which it is believed, the framers of that act designed, will lose its nature and become folly; and the section will, as it seems, be productive of mischiefs, in the experience and remembrance of which its benefits will be lost sight of, if the principle urged on the part of the defendant shall prevail. How can this court preserve its control over the reason and affections of the people of the United States; that control in which its usefulness consists, and which its own untrammelled learning and judgment would enable it naturally to maintain; if its records show that it has decided (as it may be compelled to decide, if the construction of the section referred to, advocated on the part of the defendant, be established) the same identical question, arising on a bill of exchange, first one way, and then the other, with vacillating inconsistency?
Did you get that? Federal judges by virtue of their being federal judges have the “untrammelled learning and judgment” apparently lacking in the state court judges. Of course, Justice Story assured us that state law was to be applied to local matters.
In the years between 1842 (Swift) and 1938 (Erie), what was general law expanded. What was “general” was subject to the taste of the individual federal judge. If he saw a rule or result dictated by state law he didn’t like, he found it to be a principle of general law. Since there was no definition of general law, there was no way to appeal a finding that the issue was one of general law. On that count, consider Supreme Court Justice Field’s confessions:
I am aware that what has been termed the general law of the country-which is often little less than what the judge advancing the doctrine thinks at the time should be the general law on a particular subject-has been often advanced in judicial opinions of this court to control a conflicting law of a state. I admit that learned judges have fallen into the habit of repeating this doctrine as a convenient mode of brushing aside the law of a state in conflict with their views. And I confess that, moved and governed by the authority of the great names of those judges, I have, myself, in many instances, unhesitatingly and confidently, but I think now erroneously, repeated the same doctrine….
Over the years, things spun out of control. In 1938, the Supreme Court took up the case of Erie RR v. Tompkins. The facts in this case are interesting. Tompkins, a citizen of Pennsylvania, was walking along railroad tracks in Pennsylvania owned and operated By Erie Railroad. A piece of debris fell of the train and struck Tompkins. Under Pennsylvania law, a person walking along the track was a trespasser and not entitled to recovery.
The federal rule was the opposite – a person walking along the track was not a trespasser and was entitled to recovery. Tompkins’ lawyer understood that the case would be lost in a state court. Since Erie was a New York corporation, Tompkins sued in federal court in New York and won.
Erie appealed insisting the Judiciary Act of 1789 was unconstitutional because it denied was discriminatory. But the Supreme Court positively affirmed the constitutionality of the Judiciary Act.
What was unconstitutional was the actions of the federal judiciary itself. First, the fact that there was no definition of “general” allowed federal judges to behave arbitrarily: ”the impossibility of discovering a satisfactory line of demarcation between the province of general law and that of local law developed a new well of uncertainties”
Second, it made equal protection of the law impossible:
”Diversity of citizenship jurisdiction was conferred in order to prevent apprehended discrimination in state courts against those not citizens of the state. Swift v. Tyson introduced grave discrimination by noncitizens against citizens. It made rights enjoyed under the unwritten ‘general law’ vary according to whether enforcement was sought in the state or in the federal court; and the privilege of selecting the court in which the right should be determined was conferred upon the noncitizen. Thus, the doctrine rendered impossible equal protection of the law. In attempting to promote uniformity of law throughout the United States, the doctrine had prevented uniformity in the administration of the law of the state”
The Court was saying that a law intended to protect non-citizens from discrimination in favor of citizens was actually having the opposite effect. Swift gave the non-citizens the power to select what law applied to the facts after the fact!
When you mention Erie to most educated in American law schools, their immediate reaction will be: there is no federal common law and state substantive law and federal procedural law in federal courts. As you can see with your own eyes, that is wrong. What Erie says is that there can only be one law applicable to a fact situation. If there were two or more, one of the parties would have the power to select after the fact.
Try this thought experiment. Even I might concede that Congress has the power under the interstate commerce clause to regulate the goings on of railroad track that cross state boundaries. Suppose Congress passed a law that said if the suit is brought in federal court, federal law applies, otherwise, if the suit is brought in state court, state law applies. This statute would not violate Erie’s prohibition on federal common law. But doesn’t it still violate equal protection? Is not that the fact situation in Erie?
In my opinion, Erie is one of the most important cases in American legal history. It is applied every day in bankruptcy cases, tax cases, and property cases. Outside of territories and conclaves there is no federal property law.
Erie is pertinent to federal tort reform. The federal congress cannot pass a law subjecting medical malpractice cases to federal law if the case is brought in federal court and allowing state law to be applied to cases brought in state court.
Moreover, I don’t believe a federal statute can be passed without it being a federal question which raises federal jurisdiction even in non-diversity cases. I don’t believe the federal congress can pass a law which says you are subject to this federal law but you can’t go to federal court.
I wonder how federal judges feel about using their “untrammelled learning and judgment” on dogbite cases? It’s coming.
P.S. A good discussion of Swift and Erie: Gilmore, Grant. The Ages of American Law. Yale University Press, 1977. ISBN 0-300-01951-3