WI: SCOTUS maintains federal common law

Swift v Tyson held that that federal government has to apply state statutory law when dealing with diversity jurisdiction cases, though state common law didn't have to apply. This paved the way for the federal judiciary to establish a federal common law, something that Justice Story hoped would make states converge with their own common laws and thus having a general common law for all levels of government. But in Erie, the Court overturned Swift and required federal courts to use also state common law in diversity jurisdiction.

What if Swift wasn't overturned, and how would that impact the federal judiciary, or the judicial system at all levels?

Canada and Australia have generalized common law at their national and sub-national levels. How do they compare to the current federal judiciary strongly limiting or outright banning a federal common law?
 
Would there be a need for a UCC?

There are all sorts of reasons why Swift v. Tyson couldn't guarantee uniformity in commercial law. The most obvious is that it only applied to common law, and a great deal of state commercial law was statutory. Indeed, the movement for uniform statues in the field of commercial law predated Erie v. Tompkins. E.g., "The Uniform Sales Act, based on the British Sales of Goods Act of 1894, was drafted in 1906 and adopted by 34 states..." (and served as the basis for Article 2 of the UCC). https://legacy.lib.utexas.edu/taro/utlaw/00040/law-00040p192.html
 
Swift v Tyson held that that federal government has to apply state statutory law when dealing with diversity jurisdiction cases, though state common law didn't have to apply. This paved the way for the federal judiciary to establish a federal common law, something that Justice Story hoped would make states converge with their own common laws and thus having a general common law for all levels of government. But in Erie, the Court overturned Swift and required federal courts to use also state common law in diversity jurisdiction.

What if Swift wasn't overturned, and how would that impact the federal judiciary, or the judicial system at all levels?

Canada and Australia have generalized common law at their national and sub-national levels. How do they compare to the current federal judiciary strongly limiting or outright banning a federal common law?

IMO to not have Swift v. Tyson overruled by Erie R. Co. v. Tompkins two things would be helpful: (1) Charles Warren doesn't come up with his research "proving" that Swift v. Tyson misinterpreted section 34 of the Judiciary Act of 1789 (the famous "Rules of Decision Act"). (2) A different outcome to the Black and White Taxicab case.

(1) See https://www.jstor.org/stable/pdf/1328407.pdf for Warren's 1923 Harvard Law Review article "New Light on the History of the Federal Judiciary Act of 1789." Warren, a distinguished legal historian, uncovered evidence of an earlier draft of the Rules of Decision Act, which had said that “the Statute law of the several States in force for the time being and their unwritten or common law now in use, whether by adoption from the common law of England, the ancient statutes of the same or otherwise" should be the rules of decision in federal courts.

As Charles Alan Wright (Law of Federal Courts, 1970 ed., p. 221) noted "From this Professor Warren deduced that the phrase "laws of the several states," which was substituted by Oliver Ellsworth, in place of the quoted language, before the Act was adopted, was simply a shorthand expression of the same concept, and included decisions of state courts. Other commentators have been less confident that this is the inevitable conclusion from the facts found by Professor Warren." One of these commentators, William Crosskey indeed argued that Warren's research supported rather than undermined Story's interpretation of the Act in *Swift v. Tyson.* As a critic of *Erie* notes, "Professor Crosskey calls sharp attention to the use of the word "now" in the draft and argues...that the words "now in use" were intended to confine the application of state law in federal courts to the time, namely 1789. This means, says Professor Crosskey, that "state-court innovations made in the common law, if made after 1789," were not to be 'regarded as rules of decision' by the national courts, as the section was originally drafted. .." https://scholar.smu.edu/cgi/viewcontent.cgi?article=2780&context=jalc

Nevertheless, it was Warren's interpretation of his discovery that prevailed in Erie. Brandeis wrote, "...it was the more recent research of a competent scholar, who examined the original document, which established that the construction given to it by the Court was erroneous, and that the purpose of the section was merely to make certain that, in all matters except those in which some federal law is controlling, [p73] the federal courts exercising jurisdiction in diversity of citizenship cases would apply as their rules of decision the law of the State, unwritten as well as written...." https://www.law.cornell.edu/supremecourt/text/304/64/

(2) And so we come to the famous (well, at least to lawyers...) case of Black & White Taxicab Co. v. Brown & Yellow Taxicab Co. I'll let Wright (Law of Federal Courts) summarize it and its impact:

"The hardest blow to Swift v. Tyson came with the 1928 decision in Black & White Taxicab Co. v. Brown & Yellow Taxicab Co.21 A Kentucky corporation had contracted with a railroad for the exclusive right to provide taxi service at a particular station. Subsequently it wished to enjoin another Kentucky corporation from operating taxis at the station in violation of its exclusive right. For 35 years, however, the law had been settled in the Kentucky state courts that such exclusive contracts were contrary to public policy and thus unenforcible. The Kentucky corporation was, therefore, dissolved, a new corporation with the same name formed in Tennessee and the contract assigned to it, and suit for an injunction brought against the second taxi company in the federal court on the basis of diversity of citizenship. The Supreme Court upheld grant of the injunction, ruling that this was a question of general law on which Kentucky decisions were not binding, and that the common law permitted such an exclusive contract.

"The result could easily have been avoided. The reincorporation in Tennessee in order to create diversity verged on fraud, and it was not necessary to hold that diversity jurisdiction could be so readily abused.22 Even if jurisdiction were thought present, it would have been easy to classify the question of whether exclusive use may be granted for a particular piece of land as a question of "local" law on which the state could have the final say. The Court did not choose to follow either of these courses, and its decision upholding grant of the injunction provoked a famous dissent from Justice Holmes, in which he was joined by Justices Brandeis and Stone. In this dissent Holmes argued that the rule of Swift v. Tyson was "an unconstitutional assumption of powers by the Courts of the United States," insofar as it permitted the federal courts to declare rules of law in areas beyond the delegated powers of the federal government. Justice Holmes said that Swift v. Tyson should be left undisturbed, but that its doctrine should not be allowed to spread into new fields.

"The Black & White Taxicab case was greeted with widespread criticism, and during the next ten years the Supreme Court showed some tendency to retreat from the farthest extensions of the Swift v. Tyson rule. It deferred to state law under circum-stances where earlier it would have taken a different view, and as a matter of comity said that state law should be followed where a question was balanced with doubt." Thus the Swift doctrine was narrowed, but the end did not come until 1938 [with Erie] ..."

You can see the case, including Holmes' dissent at https://supreme.justia.com/cases/federal/us/276/518/ (BTW, I am told that the late Jo Desha Lucas, introducing the case to his Civil Procedure class at the University of Chicago Law School, would say, "Now this next case is called Brown and Yellow v. Black and White...which by coincidence are also the lyrics to Jesus Loves The Little Children of the World...")

Holmes in his dissent rejected the idea that there was one set of rules called the "common law" of which individual court decisions in different jurisdictions were merely attempts to discover:

"Books written about any branch of the common law treat it as a unit, cite cases from this Court, from the circuit courts of appeal, from the state courts, from England and the Colonies of England indiscriminately, and criticize them as right or wrong according to the writer's notions of a single theory. It is very hard to resist the impression that there is one august corpus, to understand which clearly is the only task of any court concerned. If there were such a transcendental body of law outside of any particular state but obligatory within it unless and until changed by statute, the courts of the United States might be right in using their independent judgment as to what it was. But there is no such body of law. The fallacy and illusion that I think exist consist in supposing that there is this outside thing to be found. Law is a word used with different meanings, but *law in the sense in which courts speak of it today* [my emphasis--DT] does not exist without some definite authority behind it. The common law, so far as it is enforced in a state, whether called common law or not, is not the common law generally, but the law of that state existing by the authority of that state without regard to what it may have been in England or anywhere else.."

(Holmes's analysis can certainly be questioned from an originalist perspective, as it was by William Crosskey. However eccentric some of Crosskey's ideas of the original meaning of the Constitution may seem, he had a point when he argued that in interpreting the Constitution and the Judiciary Act, we are dealing with documents from the 1780's and that "law in the sense in which courts speak of it today" is simply irrelevant. He argues that in the 1780's it was indeed believed that there was such a thing s "the common law" of which the decisions of courts of particular jurisdictions were simply attempts-with greater or lesser success--to ascertain.)

I would add that even without the Black and White Taxicab fiasco and even without Professor Warren's arguably false conclusions from the earlier draft of the Judiciary Act, Swift v. Tyson was probably living on borrowed time. The distinction between "general" law (on which federal courts were free to decide themselves) and "local" law (where they were supposed to defer to state courts) proved difficult in practice. A younger generation of lawyers, brought up on the teachings of Holmes, Frankfurter, etc. ridiculed the idea that judge merely "discovered" law rather than "making" it. Indeed, the court seemed to reach out in Erie to overrule Swift v. Tyson; the railroad's brief had specifically stated, "We do not question the finality of the holding of this Court in Swift v. Tyson.."

An interesting what-if is what if the Court's decision had simply been based on statutory interpretation ("we think Swift v. Tyson misinterpreted the statute, and anyway it hasn't worked out well, hadn't developed the hoped-for uniformity" etc.) This was certainly a plausible way of doing it but Brandeis explicitly ruled it out: "If only a question of statutory construction were involved, we should not be prepared to abandon a doctrine so widely applied throughout nearly a century. [n22] But the unconstitutionality [p78] of the course pursued has now been made clear, and compels us to do so". https://www.law.cornell.edu/supremecourt/text/304/64/ Yet the constitutional basis of Erie has always seemed a bit dubious to me. As one author put it,

"Aside from general criticism of states rights,67 the “right” alleged in Erie is so anomalous that it raises questions of whether Swift-era common law affected constitutionally significant state prerogatives. For example, federal general common law did not “commandeer” state officials, nor did it even preempt state law as applied in state court.68 On the contrary, all Swift did was prescribe substantive law in federal court for a category of cases (e.g., those under diversity jurisdiction) that the Constitution and congressional statutes explicitly assigned for federal decision.

"Although the Tenth Amendment reserves to states and the people all residual powers that are not delegated to the federal government, Article III seems explicitly to remove diversity cases from any sphere of protected state autonomy—just like cases arising under federal law, affecting ambassadors, or concerning admiralty and maritime jurisdiction. States might have deep practical interests in the substantive law applied in any or all of these cases, but such interests find no shelter in the Constitution’s structural allocation of judicial responsibilities..."

"Of course, it is theoretically possible that the Constitution’s grant of general federal authority over diversity cases includes only issues of forum, and silently reserves for states all control over substantive law. With creativity, for example, one could imagine an affront to states’ “dignity” when federal courts resolve diversity suits one way and state courts decide similar issues differently. If federal and state courts differ in resolving identical contract disputes, for example, doesn’t the federal court intrinsically disrespect the state’s system of justice?

"All of these arguments seem difficult, however, given diversity jurisdiction’s function. Since the First Judiciary Act, the federal government has undertaken to resolve diversity cases without resort to state courthouses, procedures, docket control, judges, or juries. Such differences could all be read as implicit affronts to state adjudicative systems, yet diversity jurisdiction exists so that federal courts may decide cases differently from state courts, e.g., without “bias.”70 Against this background, it seems unlikely that—even as diversity cases are whisked out of inapt state courts—the Tenth Amendment or some unstated constitutional norm of federalism requires federal courts to follow state substantive law..." https://poseidon01.ssrn.com/deliver...7025027024008102101120071004099091113&EXT=pdf

(BTW, whatever else Erie means, it does not mean that there is no federal common law. What Brandeis wrote was that there is no general federal common law. On the very day Erie was decided, Brandeis wrote for the Court that "whether the water of an interstate stream must be apportioned between the two States is a question of 'federal common law' upon which neither the statutes nor the decisions of either State can be conclusive." As Wright put it, "Neither the Constitution nor any statute provides the answer to controversies between states about interstate streams, or similar interstate conflicts, nor do these sources indicate where the governing law is to be found. Yet the Court, of necessity, has developed its own body of law to govern such questions, because of the obvious unsuitability of looking to the law of a particular state when the two states are in dispute." After reviewing other areas where federal courts have had to develop their own body of law because there is no dispositive federal statute and too strong a federal interest to warrant following state law, Wright concludes that there may be no federal general common law "but there remains a substantial area for the application of federal common law." Law of Federal Courts, pp. 247-253. Indeed, Henry J. Friendly wrote a famous article called "In Praise of Erie--And The New Federal Common Law.")
 
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