U.S. Supreme Court delivers its opinion in Erie Railroad Co. v. Tompkins and overturns a century of federal common law.
Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), was a landmark decision of the U.S. Supreme Court in which the Court held that that there is no general American federal common law and that U.S. federal courts must apply state law, not federal law, to lawsuits between parties from different states that involve no federal questions. In reaching this holding, the Court overturned almost a century of federal civil procedure case law, and established the foundation of what remains the modern law of diversity jurisdiction as it applies to United States federal courts.
Although the decision is not widely known by laypeople, most American lawyers and legal scholars regard Erie as one of the most important decisions in U.S. Supreme Court history. The decision "goes to the heart" of the American system of federalism and the relationship between the U.S. federal government and the states.
The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate and largely discretionary appellate jurisdiction over all federal and state court cases that involve a point of federal law, and original jurisdiction over a narrow range of cases, specifically "all Cases affecting Ambassadors, other public Ministers and Consuls, and those in which a State shall be Party." The Court holds the power of judicial review, the ability to invalidate a statute for violating a provision of the Constitution. It is also able to strike down presidential directives for violating either the Constitution or statutory law. However, it may act only within the context of a case in an area of law over which it has jurisdiction. The Court may decide cases having political overtones but has ruled that it does not have power to decide non-justiciable political questions.
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