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To Cost an Arm and a Case; or, How a Railroad Giant Played with the Law | Marek Kobryń
from Issue 9 Games
History Engine
Marek Kobryń
To Cost an Arm and a Case; or, How a Railroad Giant Played with the Law
Around 2:30 am on a July morning in 1934, Mr. Tompkins was on his way back home via a path alongside the railway tracks when a badly secured door protruding from a train car severely injured his arm to the point of amputation. Mr. Tompkins decided to sue the proprietor of the railway, Erie Railroad from the state of New York, because, as he claimed, the area where he was injured was open to public use. That would make him a licensee, and therefore, liable for damages on account of the railway tracks not being properly secured. And so, the game began.
As one might have guessed, the Erie Railroad did not see eye to eye with Mr. Tompkins on the issue of his accident. The company instead argued that according to the ruling of the highest court of Pennsylvania “persons who use pathways along the railroad right of way […] are to be deemed trespassers.” What then is the difference between a licensee and a trespasser? Essentially, the former has a right to use the railway-adjacent pathways and the latter does not. In practice, it means that if a trespasser on the railway path is struck with a protruding door and loses their arm, they have to prove that the railway was consciously neglectful, acting without a care for the wellbeing of the passersby. In Mr. Tompkins’s case, that was very difficult to prove. Additionally, no state statute obliged the railroad company to a duty of care to those who use railway pathways.
It had then become abundantly clear that, if Mr. Tompkins were to sue in a Pennsylvania court, it would have inevitably led to the complete loss of compensation. The only way for him to secure the money would be to somehow make use of the laws of other states. Here’s where things got interesting.
In the United States, each state has its own judicial system. Beyond that, there are also federal courts, which have the power to hear cases from distinctive branches of law, such as copyright or patent law. However, that’s not the sole circumstance in which federal courts may hold jurisdiction over a particular case. The other is the so-called diversity jurisdiction. If the two opposing parties of the judicial proceedings originate from different states, and the plaintiff seeks more than $75,000 in a lawsuit, the litigant can decide to sue in a federal instead of state court, as a way to avoid local bias. In most of the US, the state court judges are chosen in popular elections rather than being nominated by the government, which in theory makes them more objective. Still, in the 1930s, there was yet another incentive to sue in federal courts. Not only did they have different judges elected in a different procedure, but also – most crucially – there were different laws in play.
Originating in the 1842 Swift vs Tyson Supreme Court decision, state judicial rulings – the most basic element of the common law system – were not to be considered law and were not binding in federal proceedings. Consequently, if there were no clearly defined rules written in statutes on a given issue, the federal court was creating its own common law from the rulings of federal judges instead of using already existing precedents established by state courts.
As a result, the decision of the highest court of Pennsylvania would be void – or invalid – and because there was no specific statute on the matter, the federal court would be free to use federal common law to decide the case. In other words, the court would either cite other federal judicial decisions or decide the case at its own discretion.
Because Mr. Tompkins had been a citizen of Pennsylvania, and the Erie Railroad had been based in the state of New York, the basic requirements for the diversity jurisdiction were met, and the case was filed by Mr. Tompkins’s lawyer to the federal trial court in New York.
The Erie Railroad unsuccessfully argued that the case was a matter of local law, and therefore, should be decided by the common law of Pennsylvania. The federal trial court ruled otherwise. Ultimately, the verdict was reached by a jury, and Mr. Tompkins was awarded $30,000 in damages – today, roughly $600,000 adjusted for inflation. After the defeat, the company even approached Mr. Tompkins with an offer of $7,500 to settle the case, which he denied.
Despite riding high, Mr. Tompkins yielded to the further suggestions of his lawyer who claimed that, according to federal common law, appealing to a higher instance of federal courts would most likely grant Mr. Tompkins an even greater compensation. The district court, which is the higher instance of the federal judicial system, affirmed the ruling. The Erie Railroad, refusing to accept the decision of federal courts, decided that two can play that game and appealed to the Supreme Court of the United States. Yet again, the Erie Railroad argued that the plaintiff was not playing by the rules, and that the case should be decided by the Pennsylvania state common law as a clear example of a local law matter. The Supreme Court, however, was an entirely new ball game neither side expected.
The binding precedent established back in the Swift vs Tyson case was ruled unconstitutional. Moreover, the phrase “laws of the several states,” quoted from the Judiciary Act of 1789, was incorrectly interpreted as referring only to statutory and customary laws. In fact, common law rulings of the state courts should be cited when pleading a case in front of a federal court.
The Supreme Court concluded that according to the previous interpretation, a thread of forum shopping unraveled: Mr. Tompkins had an option of choosing a different court and – along with it a different type of law – therefore giving him an unfair advantage. After this ruling, such loopholes were no longer viable because when deciding on a diversity case, the federal court was now supposed to use the law of the state where the court resides.
In the end, Mr. Tompkins’s strategic decision to appeal the case in federal court was for naught. The Supreme Court remanded the case to the court of the first instance, which, in turn, ruled according to the verdict of Pennsylvania’s Supreme Court. Mr. Tompkins was, in fact, a trespasser. Because he couldn’t prove wanton negligence on the part of the railway, he was left with nothing but a bittersweet feeling of a spectacular victory, and, perhaps, an even more spectacular failure. The Erie Railroad came out victorious and ultimately won their tug-ofwar.
