Except in matters governed by the U.S. Constitution or by acts of Congress, the law to be applied in any case is the law of the state. Whether the law of the state shall be declared by its legislature in a statute or by its highest court in a decision is not a matter of federal concern. There is no federal general common law. Congress has no power to declare substantive rules of common law applicable in a state, whether they be local in their nature or general, be they commercial law or a part of the law of torts.
Tompkins, a citizen of Pennsylvania, was injured on a dark night by a passing freight train of the Erie Railroad Company ("Erie") while walking along its right of way at Hughestown in that state. He claimed that the accident occurred through negligence in the operation, or maintenance, of the train. He further claimed that he was rightfully on the premises as a licensee on a commonly used beaten footpath, which ran for a short distance alongside the tracks, and that he was struck by something that looked like a door projecting from one of the moving cars. Tompkins brought an action in the federal court for southern New York, which had jurisdiction because the company was a corporation of that state. The circuit court affirmed the judgment in favor of Tompkins, refusing to consider Erie's claim that it was not liable for Tompkins' injuries under state common law. It held instead that liability was a question of general law about which federal courts were free to render independent decisions.
Should the law of the state be applied instead of federal common law?
The Supreme Court of the United States held that there was no federal general common law, and that except in matters governed by the U.S. Constitution or by acts of Congress, the law to be applied by federal courts in any diversity case was the law of the state. In so holding, the Court disapproved the contrary doctrine of Swift v. Tyson, 16 Pet. 1 (1842), finding it an unconstitutional assumption of powers by federal courts that invaded state autonomy and prevented uniformity in administering state law. The Court also held that § 34 of the Federal Judiciary Act of 1789 was not declarative of the Swift doctrine.