Erie Railroad Co. v. Tompkins
304 U.S. 64 (1938), required federal courts to apply state law in diversity cases (i.e., cases in which the litigants are from different jurisdictions). Prior to Erie diversity cases were decided on the basis of what was held to be a kind of federal common law, which consisted of the “laws of the several states” plus federal courts'—not states'—interpretations of those laws (Swift v. Tyson, 41 U.S. 1 (1842)). Supporters of this earlier position believed that a federal common law was conducive to national development, while opponents claimed that it rode roughshod over states' rights. In an unprecedented ruling, Justice Louis D. Brandeis declared the earlier Supreme Court decision (Swift) unconstitutional, thus changing the course of diversity proceedings. Henceforth there would be no federal “common law” in diversity cases but only federal application of state laws.
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