Also known as: federal-common-law
Written by attorneys · grounded in primary & secondary sources — see below
A body of judge-made rules developed by federal courts to resolve issues that implicate unique federal interests when no controlling federal statute applies. Federal courts create such rules only where a dominant federal policy requires national uniformity rather than incorporation of state law. The doctrine operates as an exception to the Erie principle that federal courts sitting in diversity must apply state substantive law.
Fernando Farrell, a citizen of State A, sued Fusion Power, a State B corporation, in federal court in State A over a supply agreement. The court applied State A contract law and its choice-of-law rules to the claim rather than any uniform federal standard. Because the dispute involved only state-created rights, the court rejected any attempt to invoke federal common law.
Felicia Fuentes, a police officer, sought counseling from a licensed social worker after a shooting. When a third party later subpoenaed the session notes in federal litigation, the court held the communications privileged under federal common law. The privilege protected the confidential exchanges made during diagnosis and treatment.
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Foxfire Biotech deposited federal rebate checks at a state-chartered bank. When the United States later sought recredit for alleged forgeries, the court applied a uniform federal common-law standard to determine good faith and notice. The need for consistent treatment of government commercial paper required a single nationwide rule.
A Native American tribe sued a state in federal court to enforce a gaming compact. The court applied federal common law to determine whether Congress had abrogated the state's Eleventh Amendment immunity. The analysis turned on whether a federal statute clearly expressed an intent to override sovereign immunity.
A union sued an employer over enforcement of a labor contract containing an arbitration clause. The federal court developed federal common law under section 301 to determine whether the agreement was specifically enforceable. The resulting rule supplied a uniform national standard for interpreting collective-bargaining obligations.
A plaintiff obtained a large jury verdict in a diversity case and the defendant moved for remittitur. The federal court applied federal common law to decide whether the verdict was excessive rather than the stricter state standard. The choice preserved the federal interest in uniform appellate review of jury awards.
Federal courts may create federal common law only when a dominant federal interest requires a uniform national rule and Congress has not supplied a statute. The doctrine applies in areas such as government commercial paper, certain privileges, and enforcement of collective-bargaining agreements. In ordinary diversity cases involving state-created rights, federal courts must apply state substantive law.
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Yes. Federal common law recognizes a psychotherapist-client privilege that protects confidential communications made during diagnosis or treatment by a licensed social worker. The privilege applies in federal-question cases and functions similarly to the attorney-client privilege.
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Erie prohibits federal courts from creating general federal common law to govern state-law claims in diversity. Federal common law remains available only in the narrow set of cases that implicate uniquely federal interests requiring national uniformity.
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…Id. , at 78. The decision in that case was not “intended to assert a vast power of the federal courts to create a general federal common law.” Id. , at 82 (Reed, J., concurring). Rather, Erie was a decision that “was rendered to promote the goal of uniformity of result in litigation in State and federal courts.” Hanna v.…