433 U.S. 25, 97 S. Ct. 2490, 53 L. Ed. 2d 557 (1977)
In 1973 a Lear Jet crashed shortly after takeoff from the DeKalb-Peachtree Airport.1 Petitioners comprise the survivors of passengers killed in the crash, the assignee of the aircraft owner, and a burn victim who survived.2
Petitioners filed separate lawsuits against DeKalb County in the United States District Court for the Northern District of Georgia, asserting diversity jurisdiction under 28 U.S.C. § 1332.3 Their complaints advanced three theories of liability: negligence, nuisance, and breach of contract.4 Petitioners also brought a separate action against the United States under the Federal Tort Claims Act.5
The contract claims rested on six grant agreements between DeKalb County and the Federal Aviation Administration.6 Those agreements required the county to restrict land use adjacent to the airport to activities compatible with normal airport operations, including aircraft landings and takeoffs.7 Petitioners alleged that the county breached the agreements by owning and operating a garbage dump next to the airport, from which birds entered the jet engines and caused the crash.8
The District Court dismissed the complaints in their entirety.9 A divided panel of the Fifth Circuit held that Georgia law permitted petitioners to proceed as third-party beneficiaries and that governmental immunity did not bar the suit.10 Sitting en banc, the Fifth Circuit reversed the panel on the contract claims and affirmed the dismissal.11
The Supreme Court granted certiorari to review the Court of Appeals' determination that federal common law rather than state law controlled the third-party-beneficiary issue.12
Whether Georgia law rather than federal common law governs petitioners' standing to sue DeKalb County as third-party beneficiaries of the FAA grant agreements?13
In diversity cases state law governs the rights and obligations of private parties.14 This rule applies unless a significant conflict between some federal policy or interest and the use of state law is specifically shown.15 The Court established this principle in Erie R. Co. v. Tompkins and refined it in Clearfield Trust Co. v. United States, Bank of America Nat. Trust & Sav. Assn. v. Parnell, and Wallis v. Pan American Petroleum Corp.16
Yes. The only basis of federal jurisdiction alleged for petitioners' claim against respondent is diversity of citizenship under 28 U.S.C. § 1332.17 The litigation before the Court raises no question regarding the liability of the United States or the responsibilities of the United States under the contracts.18 The resolution of petitioners' breach-of-contract claim against respondent will have no direct effect upon the United States or its Treasury.19
They filed separate lawsuits against DeKalb County in the United States District Court for the Northern District of Georgia asserting diversity jurisdiction under 28 U.S.C. § 1332.20 The complaints advanced three theories of liability: negligence, nuisance, and breach of contract.21 The contract claims rested on six grant agreements between DeKalb County and the Federal Aviation Administration requiring the county to restrict land use adjacent to the airport to activities compatible with normal airport operations.22
Because the litigation is among private parties and no substantial rights or duties of the United States hinge on its outcome, Georgia law applies to the standing question.23
Georgia law governs the question of whether petitioners may sue DeKalb County as third-party beneficiaries of the FAA grant agreements.24
Related opinions on this issue
Chief Justice Burger concurred in the judgment.25 He wrote separately to emphasize that federal common law is not rigidly limited to situations where the rights and obligations of the Federal Government are at issue.26 He stated that there may be situations where the rights and obligations of private parties are so dependent on a specific exercise of congressional regulatory power that federal law must govern.27
Burger concluded that the cause of action asserted by the plaintiffs is not so intimately related to the purpose of the Airport and Airway Development Act of 1970 as to require the application of federal law in this case.28