Rules of Decision Act

The Rules of Decision Act, (28 U.S.C.A. § 1652 [1948]) provides that where the Constitution, treaties, or acts of Congress are inapplicable, the law of the state in which the federal court is sitting should apply to civil actions.

First enacted in 1789, the act is designed to discourage forum-shopping and to avoid the unfair administration of laws in cases heard by federal courts because of the DIVERSITY OF CITIZENSHIP of the parties. The landmark decision in ERIE RAILROAD CO. V. TOMPKINS, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938), interpreted the Rules of Decision Act to include not only state statutes, but also controlling judicial decisions or state COMMON LAW as constituting the laws of the state. Erie overruled SWIFT V. TYSON, 41 U.S. (16 Pet.) 1, 10 L. Ed. 865 (1842), which construed the Rules of Decision Act as not requiring federal courts to apply state common law in diversity cases.