The Rules of Decision Act mandates the application of substantive state law in cases heard in U.S. federal courts sitting in diversity, except where state law is preempted by federal law. The U.S. Supreme Court in Swift v. Tyson (1842) originally read this Act of Congress as limited to state statutory law, but later overturned Swift in Erie Railroad Co. v. Tompkins (1938) and instead held that the Rules of Decision Act requires the application of state law including case law originating from state courts.
The Act originated as Section 34 of the Judiciary Act of 1789. [1] It is now codified, in slightly different form, in 28 U.S.C. § 1652, as follows:
The laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply.
The interpretation of this language, especially the meaning of the phrase "the laws of the several states", was the central issue in Erie Railroad Co. v. Tompkins.
The Australian Judiciary Act 1903 borrowed verbiage from the Rules of Decision Act. [2]
Article Three of the United States Constitution establishes the judicial branch of the U.S. federal government. Under Article Three, the judicial branch consists of the Supreme Court of the United States, as well as lower courts created by Congress. Article Three empowers the courts to handle cases or controversies arising under federal law, as well as other enumerated areas. Article Three also defines treason.
The United States courts of appeals are the intermediate appellate courts of the United States federal judiciary. The courts of appeals are divided into 13 "Circuits". Eleven of the circuits are numbered "First" through "Eleventh" and cover geographic areas of the United States and hear appeals from the U.S. district courts within their borders. The District of Columbia Circuit covers only Washington, DC. The Federal Circuit hears appeals from federal courts across the United States in cases involving certain specialized areas of law. The courts of appeals also hear appeals from some administrative agency decisions and rulemaking, with by far the largest share of these cases heard by the D.C. Circuit. Appeals from decisions of the courts of appeals can be taken to the U.S. Supreme Court.
The Judiciary Act of 1789 was a United States federal statute enacted on September 24, 1789, during the first session of the First United States Congress. It established the federal judiciary of the United States. Article III, Section 1 of the Constitution prescribed that the "judicial power of the United States, shall be vested in one Supreme Court, and such inferior Courts" as Congress saw fit to establish. It made no provision for the composition or procedures of any of the courts, leaving this to Congress to decide.
In the law of the United States, diversity jurisdiction is a form of subject-matter jurisdiction that gives United States federal courts the power to hear lawsuits that do not involve a federal question. For a federal court to have diversity jurisdiction over a lawsuit, two conditions must be met. First, there must be "diversity of citizenship" between the parties, meaning the plaintiffs must be citizens of different U.S. states than the defendants. Second, the lawsuit's "amount in controversy" must be more than $75,000. If a lawsuit does not meet these two conditions, federal courts will normally lack the jurisdiction to hear it unless it involves a federal question, and the lawsuit would need to be heard in state court instead.
Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), was a landmark U.S. Supreme Court decision in which the Court held that the United States does not have a general federal common law and that U.S. federal courts must apply state law, not federal law, to lawsuits between parties from different states that do not involve federal questions. In reaching this holding, the Court overturned almost a century of federal civil procedure case law, and established the foundation of the modern law of diversity jurisdiction.
The federal judiciary of the United States is one of the three branches of the federal government of the United States organized under the United States Constitution and laws of the federal government. The U.S. federal judiciary consists primarily of the U.S. Supreme Court, the U.S. Courts of Appeals, and the U.S. District Courts. It also includes a variety of other lesser federal tribunals.
Federal common law is a term of United States law used to describe common law that is developed by the federal courts, instead of by the courts of the various states. The United States is the only country to combine the creation of common law doctrines with a complete federalism, wherein the national supreme court has virtually no power to review state court decisions to determine whether the state courts have followed state laws, unless a federal question is involved and there was a lack of opportunity to bring the claim in the state courts. The High Court of Australia is sometimes said to have federal common law, but because all state and territorial courts are directly appealable to the High Court, this is indistinguishable from a general common law. In contrast, the United States Supreme Court has effectively barred the creation of federal common law in areas traditionally under the authority of state courts. Nevertheless, there are several areas where federal common law continues to govern.
The Erie doctrine is a fundamental legal doctrine of civil procedure in the United States which mandates that a federal court called upon to resolve a dispute not directly implicating a federal question must apply state substantive law.
Swift v. Tyson, 41 U.S. 1 (1842), was a case brought in diversity in the Circuit Court for the Southern District of New York on a bill of exchange accepted in New York in which the Supreme Court of the United States determined that United States federal courts that heard cases brought under their diversity jurisdiction under the Judiciary Act of 1789 must apply statutory state laws when the state legislatures in question had spoken on the issue, but did not have to apply the state's common law if the state legislatures had not spoken on the issue.
Clearfield Trust Co. v. United States, 318 U.S. 363 (1943), was a case in which the Supreme Court of the United States held that federal negotiable instruments were governed by federal law, and thus the federal court had the authority to fashion a common law rule.
Hanna v. Plumer, 380 U.S. 460 (1965), was a decision by the Supreme Court of the United States, in which the Court further refined the Erie doctrine regarding when and by what means federal courts are obliged to apply state law in cases brought under diversity jurisdiction. The question in the instant case was whether Federal Rules of Civil Procedure governing service of process should yield to state rules governing the service of process in diversity cases. The Court ruled that under the facts of this case, federal courts shall apply the federal rule. The decision was drafted by John Hart Ely, who was then a law clerk for Earl Warren.
Southern Pacific Company v. Jensen, 244 U.S. 205 (1917), was a United States Supreme Court case concerning the geographical extent of state workers' compensation laws. The Court held that the New York Workmen's Compensation Act, as applied to laborers in the New York Harbor, intruded on federal admiralty jurisdiction, and that civil suits arising within this jurisdiction were subject to the common law of the sea. The compensation statute passed by the state interfered with federal power and was therefore unconstitutional.
The Taney Court heard thirty criminal law cases, approximately one per year. Notable cases include Prigg v. Pennsylvania (1842), United States v. Rogers (1846), Ableman v. Booth (1858), Ex parte Vallandigham (1861), and United States v. Jackalow (1862).