Common law, federal


Description: Body of decisional, or judge-made, laws applied by federal courts.

Significance: For nearly a century, until a 1938 Supreme Court ruling, federal common law abridged the power of the states to control their internal legal affairs.

The Supreme Court holding, in United States v. Hudson and Goodwin (1812), that no federal common law existed with regard to criminal matters, did not prevent the federal courts from developing a substantial body of civil common law. Federal common law development was abetted by the Court's interpretation of section 34 of the Judiciary Act of 1789. Justice Joseph Story, speaking for a unanimous Court in Swift v. Tyson (1842), held that section 34 required federal courts exercising diversity of citizenship jurisdiction (cases involving citizens of different states) to follow only the statutory law of the states in which they sat; they were not bound by state common law. The decision freed the federal courts from the constraints of state common law, enabling them to develop a coherent body of federal common law that the states in turn were expected to adopt for the sake of uniformity. However, the expected uniformity was never achieved. The failure of the states to adopt the federal models led to competing systems of state and federal common law. Far from promoting uniformity among the states, Swift caused confusion and uncertainty within the states. In Erie Railroad Co. v. Tompkins (1938), a unanimous Court overruled Swift, holding that federal courts exercising diversity jurisdiction must follow both the statutes and common law of the states in which they sit. The decision voided nearly a century of federal common law, returning to the states full control of their internal legal affairs.