Keith Mack
The application of federal and common law is a complex topic in the US legal system, with federal law being applied in areas such as admiralty law, antitrust, bankruptcy law, interstate commerce, and civil rights. The US Constitution grants Congress the power to make laws, and while federal courts once had the authority to create common law, this power has shifted towards legislatures over time. State common law is applied in federal court when a case involves diversity jurisdiction, and federal common law is applied in specific circumstances, such as suits between state governments or cases impacting the federal government's rights and obligations.
| Characteristics | Values |
|---|---|
| Federal common law is valid only when | Congress has not repealed the common law |
| Federal common law is applied when | Federal or Constitutional interests are at stake |
| Congress has inadequately addressed the situation | |
| Application of individual state laws would create unacceptable levels of diversity or uncertainty | |
| Federal common law is fashioned by federal courts when | There is no controlling federal statute |
| Federal common law is applied in | Admiralty cases |
| Suits between one state government and another | |
| Cases affecting the rights and obligations of the federal government | |
| Cases arising under state law that have major implications on international relations and the military | |
| Areas like antitrust and labor relations | |
| Federal common law is applied | When there is a diversity case and there is no conflicting federal law |
| When there are federal question claims and diversity claims that deal with unique federal interests | |
| Federal common law is not applied when | Federal courts are hearing cases under their diversity jurisdiction |
| There is a federal question |
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What You'll Learn
The Erie doctrine
Prior to the Erie doctrine, federal courts followed the precedent set by Swift v. Tyson (1842), which interpreted the "'laws of the several states' to encompass only state statutes and local customs, excluding state common law. This interpretation allowed federal courts to disregard state substantive law established by common law and instead apply their own interpretation of the general common law. The Erie case challenged this practice, arguing that federal courts, when exercising diversity jurisdiction, must include state common law in their application of state laws.
The specific circumstances of Erie Railroad Co. v. Tompkins illustrate the impact of the Erie doctrine. In this case, Tompkins lost his arm due to an accident alongside a railroad track owned by Erie Railroad Co. Under Pennsylvania state common law, Tompkins was considered a trespasser and could not recover damages. However, under the general common law, he would not have been considered a trespasser and could have sought compensation. The Supreme Court, in an opinion drafted by Justice Brandeis, refused to apply the general common law. Instead, they applied the law of the state where the injury occurred, denying Tompkins' recovery.
In summary, the Erie doctrine is a fundamental principle in U.S. law that ensures federal courts exercising diversity jurisdiction apply federal procedural law while adhering to state substantive law, including state common law. This doctrine promotes uniformity, reduces inequality, and ensures equal protection under the law by preventing forum shopping and providing consistent treatment for litigants across different jurisdictions.
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Federal common law and state law
Federal common law is a set of federal rules adopted by federal courts to govern issues not expressly addressed by constitutional or statutory provisions. Federal courts may develop federal common law to protect federal interests, such as resolving conflicts among states, or when Congress authorises them to establish substantive law. Federal common law is valid only to the extent that Congress has not repealed it.
Federal common law can be created in limited circumstances where federal or Constitutional interests are at stake, Congress has inadequately addressed the situation, and the application of individual state laws would create unacceptable levels of diversity or uncertainty. In such cases, the court may adopt a reasonable state law, look to its own precedent, or create a new law.
The Rules Decision Act of 1789, codified as 28 U.S.C. § 1652, laid the foundation for how federal courts should operate when exercising diversity jurisdiction. It states that the "laws of the states" apply in federal court, except where there is an applicable federal law, Constitutional provision, or treaty that addresses the same issue.
The Erie Doctrine, deriving from the 1938 U.S. Supreme Court case Erie Railroad Co. v. Tompkins, held that federal courts exercising diversity jurisdiction must use the same substantive laws as the courts of the states in which they are located. This includes state common law. The Erie decision did not end other types of federal common law, which remain in two basic categories: where Congress has given courts the power to develop substantive law, and where a federal rule of decision is necessary to protect uniquely federal interests.
At the state level, legislatures often codify common law rules from the courts of their state, either to give the rule permanence, modify it, or replace it with legislation.
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Federal common law and federal question claims
Federal common law is a set of rules created and applied by federal courts in the absence of any controlling federal statute. Federal courts primarily create and apply federal common law in two circumstances: firstly, where a federal rule of decision is necessary to protect uniquely federal interests, and secondly, where Congress has given the courts the power to develop substantive law. For example, in the 1943 case of Clearfield Trust Co. v. United States, the Court recognised that federal courts could create federal common law where federal or Constitutional interests were at stake, Congress had inadequately addressed the situation, and the application of individual state laws would create unacceptable levels of diversity or uncertainty.
Federal question jurisdiction is one of the two ways for a federal court to gain subject-matter jurisdiction over a case, the other being through diversity jurisdiction. Federal question jurisdiction is often the basis for constitutional claims brought in federal court. Federal question cases may involve claims of an actual or threatened invasion of the plaintiff's constitutional rights by some act of public authority. For federal question jurisdiction to exist, the plaintiff's complaint must be well-pleaded, meaning that the initial complaint must contain references to the federal question and the federal issue evoked. The federal question and issue cannot arise in an anticipated defense but must be presented from the initial complaint.
The "arising under" clause provides the main textual basis for the implied power of federal courts to review the constitutionality of legislation and other government actions. Federal courts can hear any case in which there is a federal ingredient, and federal question jurisdiction is created when the cause of action arises under federal law. Federal question cases may also arise under treaties to which the United States is a party. Some treaties are "self-executing" and are directly enforceable as domestic law in US courts, while others require implementing legislation from Congress before they can be enforced.
While federal common law exists, it is well-settled that federal courts do not have the authority to formulate it. This principle is enshrined in the first sentence of the US Constitution: "All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives." This means that even when a federal court has the authority to make common law, that law is subject to alteration by Congress.
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Federal common law and diversity claims
In the United States, federal common law is a set of rules created and applied by federal courts in the absence of a controlling federal statute. Federal common law is valid only to the extent that Congress has not repealed it. While federal courts have the power to hear cases under their diversity jurisdiction, allowing them to hear cases between parties from different states, they must apply the statutory law of the states, not the common law developed by state courts.
The Erie doctrine, which stems from the 1938 US Supreme Court case Erie Railroad Co. v. Tompkins, established that federal courts exercising diversity jurisdiction must apply the "'laws of the several states,'" including state common law. This overturned previous precedents, such as Swift v. Tyson, which held that federal courts could create their own common law.
To achieve diversity jurisdiction, all parties on one side of a lawsuit must be citizens of different states, a concept known as "complete diversity." Additionally, the amount in controversy must exceed $75,000, as stipulated by 28 U.S.C. § 1332(a). This requirement ensures that the dispute is significant enough to warrant federal court involvement.
The concept of diversity jurisdiction originated from concerns that state courts might be biased towards parties from their own state when a case involves participants from multiple states. By allowing parties sued in a foreign state to petition a federal court to take jurisdiction, diversity jurisdiction aims to reduce potential prejudice and ensure a more neutral legal environment.
In summary, while federal common law allows federal courts to create and apply their own rules in certain circumstances, diversity jurisdiction enables these courts to hear cases involving citizens from different states. Diversity jurisdiction is based on the principles of complete diversity and a minimum amount in controversy, ensuring that federal courts play a crucial role in resolving disputes across state lines.
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Federal common law and federal preemption
Federal common law refers to a body of non-statutory federal law developed by federal courts. It applies primarily in areas of national concern, such as federal programs, interstate disputes, and international issues. One of the key features of federal common law is its applicability in cases involving the US government as a party, where there is a need for uniform rules and standards across the nation. For instance, federal common law governs disputes relating to patents, copyrights, and other areas of intellectual property.
In contrast, federal preemption refers to the principle that federal law takes precedence over state law in certain areas. This occurs when Congress expressly or implicitly intends to occupy a specific field of legislation, or when compliance with both federal and state law is impossible. Federal preemption ensures that federal law remains supreme and consistent throughout the country, preventing a patchwork of conflicting state laws on the same subject.
The relationship between federal common law and federal preemption is intricate. Federal common law can be preempted by federal statutes when Congress intends to displace it. This means that federal statutes take priority over any federal common law rules that may exist in the same area. However, in certain instances, federal common law may fill gaps left by federal statutes, providing supplementary rules and standards.
It is worth noting that the scope of federal common law has evolved with the expansion of federal legislation. While federal common law once played a broader role, the increasing comprehensiveness of federal statutes has led to a reduction in its application. Nonetheless, federal common law remains significant in areas where federal statutes are silent or where uniform national standards are required.
In conclusion, federal common law and federal preemption are distinct but interconnected concepts. Federal common law provides a framework for addressing issues of national concern, while federal preemption establishes the primacy of federal law. Understanding their interplay is crucial for interpreting the hierarchy and application of laws within the American legal system.
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Frequently asked questions
The Erie Doctrine is derived from the landmark 1938 U.S. Supreme Court case, Erie Railroad Co. v. Tompkins, which held that federal courts when exercising diversity jurisdiction shall apply the "laws of the several states", which includes state common law.
Federal common law is valid only in limited circumstances where federal or Constitutional interests are at stake, Congress has inadequately addressed the situation, and the application of individual state laws would create unacceptable levels of diversity or uncertainty. The classic "enclaves" of federal common law include admiralty, suits between state governments, and cases affecting the rights and obligations of the federal government.
When creating federal common law, the Court may adopt a reasonable state law, refer to its own precedent, or create a new law. Federal common law is subject to alteration by Congress and is only valid to the extent that Congress has not repealed it.
