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Erie v. Tompkins is one of the most spectacular legal phenomena of this generation; Judge Friendly, linking Clearfield TrustTM with Erie, celebrates the dual arrangement as "so beautifully simple, and so simply beautiful."" The prototypal illustration of the new federal common law is Section 301(a) of the Taft-Hartley Act" which, as construed in Lincoln Mills," empowers federal courts to work out decisional federal law to govern cases concerning breach of collective bargaining agreements. In spelling out that law, courts rely on the congressional principles encased in the various provisions of the federal labor law. While these general propositions do not decide cases, they nevertheless serve to organize and channel judicial reasoning.

It is my submission that Congress could constitutionally set the courts on an even more daringly independent course. I suggest that Congress could invest courts with jurisdiction to decide and fashion federal rules of decision for all cases falling within one specially defined federal concern, for example, interstate airline disasters, even if the enabling legislation were shorn of any general policies which the courts are to appropriate as basic precepts." If this is legitimate, courts could go on, under Congress' mandate, to formulate federal law for all cases affecting commerce, or otherwise reasonably related to federal Article I authority. By definition, Erie's constitutional premises concerning the limitations on federal lawmaking competency would form no barrier to these practices. That courts will apply a genuine federal common law should be federal law enough for federal-question jurisdiction. And Lincoln Mills provides at least a partial answer to the question of delegation or separation of powers inherent in the transfer of parcels of Article I congressional authority to the courts. The express congressional determination that federal law should govern and the courts should invent it would, I think, complete the answer.

These are heady, nearly intoxicating speculations, and history in all its heralded whimsy may choose to bear few of them out. Indeed I propose them not so much to prophesy their eventuality, but in a spirit of loosening our conventional perspectives and opening our eyes to lines of development which could possibly ensue. It is my suspicion, however, that the pressure of circumstances, of the kind I have diagrammed, will by the end of the 1980's lead the courts to apply federal law in a large fraction of the cases for which, under diversity and Erie,

72. Clearfield Trust Co. v. United States, 318 US. 363 (1943).

73. Friendly, supra note 55, at 422.

74. 29 US.C. § 185(a) (1964).

75. Textile Workers v. Lincoln Mills, 353 US. 448 (1957).

76. Compare Note, Federal Common Law and Article III: A Jurisdictional Approach to Erie, 74 Yale L.J. 325 (1964).

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they must now hasten willy-nilly to the law of the states; and that in a sizeable subclass of this litigation the courts will authentically develop their own law, with Congress' permission, pursuant to familiar common law techniques.

Some may view this destiny as a full-circle return to Swift v. Tyson. If so, it is Swift v. Tyson with one major conceptual variation, and one vital practical bonus. Conceptually, these cases when in federal court would now fall within federal-question, rather than diversity, jurisdiction. Practically, this judicially developed federal common law, since it would carry the force of supersession, would help stave off the vice of forum-shopping, in all its incarnations.

[From 73 Yale L.J. 7 (1963), copyright 1963 by the Yale Law Journal Company, Inc.]

FOR MAINTAINING DIVERSITY JURISDICTION

JOHN P. FRANK†

THIS article is dedicated to "The Judge"-Charles Clark. Whether by daily contact or occasional correspondence, I have felt Judge Clark's strength and guidance for nearly all of the twenty-five years we commemorate today. In the world of academics or judges in which I have known him, almost everyone has integrity, but his is the ultimate. Here is a man who has never once consulted his self-interest about anything. Association with him is a continuing postgraduate course in absolute honesty and flawless courage. He is huge in all he does, and a giant in his special interests-federal procedure and federal courts. I am proud to be able to write in his honor on a topic in which he has deep interest, and to know that he shares the conclusions I have reached.*

The American Law Institute proposals on federal jurisdiction recommend revision of the Judicial Code to eliminate between fifty and sixty per cent of the present diversity cases.1 These would be transferred from the federal to the state courts. I would eliminate substantially none of these cases, and so present an opposing point of view.

The principal devices suggested for cutting the diversity jurisdiction are, first, the elimination of all cases brought by residents of the state in which they sue regardless of the diversity of the defendant; and second, a bar against suits by foreign corporations which have operated in a state sufficiently to have become “permanently established” there. The details of the proposals, and of the attendant revisions of process and venue are put outside this discussion. Assume the point of view, and the execution is admirable; the issue is the point of view.

tMr. Frank is a member of Lewis, Roca, Scoville, Beauchamp & Linton, Phoenix, Arizona.

*I am authorized to state that in addition to Judge Clark, Judge J. Skelly Wright, of the Court of Appeals for the District of Columbia; Professor James W. Moore, author of MOORE'S FEDERAL PRACTICE (1960) and Professor of Law at Yale University; and Professor Charles A. Wright, author of the current edition of BARRON & HOLTZOFF, FEDERAL PRACTICE AND PROCEDURE (1961) and Professor of Law at the University of Texas, concur generally in the conclusion here reached.

1. The ALI has been requested by the Chief Justice of the United States to prepare extensive proposals for a possible revision of the Judicial Code. These proposals have been prepared by an able committee with Professor Richard Field of Harvard as Reporter. The introductory two or three sections of that Code were favorably considered at the May, 1963 meeting of the ALI. While, insofar as the Institute itself is concerned, the work is just beginning, one of the provisions approved did involve the principle of a substantial cut in the jurisdiction.

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The most striking deficiency of the proposal for change is the total absence of any major functional reason for making it. Substantial jurisdictional changes normally originate in a felt and usually acute social need. The major jurisdictional changes in the country's history have always originated because someone was dissatisfied with a practical situation. They did not stem just from an intellectual conviction that the system, if changed, would be more logical, more reasonable in its structure. I do not decry either reason or logic; but neither is enough by itself. There must be reason plus genuine, felt need. The Federalists extended jurisdiction in 1801 to make jobs for the faithful and to control the policies of the Republicans. The Jeffersonians in 1802 abolished that same jurisdiction for the reverse reasons. Chief Justice Marshall first extended jurisdiction to corporations in order to aid expanding commerce, and a subsequent Court completed the job because Marshall had not sufficiently anticipated how much protection this commerce would come to need. The anti-expansionists opposed this development because on the merits they were against banks and other corporations and did not want to aid them. Chief Justice Taney extended the admiralty jurisdiction to inland streams because of a felt need to aid transportation. The least understood change is the most important of all, the extension of the federal question jurisdiction by the Act of 1875. The act slipped through Congress without significant discussion; and we can only assume that it was intended to meet the need created by the great simultaneous expansion of state regulation of business. A jurisdictional change may not always be designed to effect results external to the court system. It may also be designed for reasons of judicial administration. For example, the Certiorari Act of 1925, giving the United States Supreme Court a largely discretionary jurisdiction. was intended to relieve that Court of quantitative burdens it could not carry. Now it is proposed to cut the federal diversity jurisdiction by more than half. We have utilized this jurisdiction since 1789. If now it should go. let it go. We do not shrink from warranted change because it is drastic, and habit must not be elevated to principle. But surely if we are to make this change there should be some affirmative, solid, practical reasons for doing so. Something about the present system ought to be working badly before it is cured; the doctors should diagnose an illness before prescribing a remedy.

In the two hundred page ALI "Study of the Division of Jurisdiction Between State and Federal Courts." I find only one paragraph asserting a social or practical reason for restricting the jurisdiction-a highly general statement that federal justice is being delayed by an expanding workload which leads to purportedly undesirable pressure for expanding the federal court system. Just how and where the diversity cases are causing this result and just why an expansion to take care of it is undesirable is left to unarticulated major premises.

2. In the Senate, the bill was introduced on January 5, 1875, reported from the Judiciary Committee two weeks later, and passed on January 26th without relevant discussion. It passed the House a few days later with irrelevant discussion. FRANKFURTER & Landis, THE BUSINESS OF THE SUPReme Court (1927).

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So nearly as this writer knows, the system is working well throughout the country. Procedures are generally satisfactory, results good. If there is anywhere a complaint against the operation of the diversity system based on an assertion that injustice is being done through its working, I have not heard it. In my own jurisdiction, Arizona, I took an informal poll of leading trial lawyers throughout the state, largely restricted to practitioners who are in some court or working on some litigation, state or federal, almost every week and usually every day of their lives. More than eighty per cent report a desire to keep the federal jurisdiction intact, and of the minority, not one complains of any injustice under the present system. This, in a jurisdiction which can usually justly claim to be alert to need for change, and which on matters of procedure is one of the most progressive in the country.

A. Historical Considerations

It must be freely conceded that the diversity jurisdiction originated in premises of dubious validity and that it has survived a series of gross abuses, now largely corrected. The original federal court jurisdiction was almost entirely permissive: the Congress was under no obligation to create federal trial courts at all, and could have left all original matters except those in the Supreme Court to the States. And yet the Constitution did permit the creation of federal courts and the grant to them both of diversity and federal question jurisdiction, and the first Congress did choose to take up the option. It granted jurisdiction for private, civil cases in diversity only.

Why? The need arose from a fear of prejudice against out-of-staters engaged in regional business. I have developed in some detail elsewhere, based on a study of all generally available pre-1787 reports, that this was largely a gloomy anticipation of things to come rather than an experienced evil; but nonetheless, there it was.

The diversity jurisdiction in the first 150 years of its life had its successes and its abuses. The successes were substantial-the disposition of a good amount of important commercial business; the furnishing of the Supreme Court with enough to do to keep it busy and finally more than busy, thus permitting it to develop as a national institution; the nationalizing effect of the entire judicial operation which, to a degree at least, helped unify the country. But the abuses were serious. First, jurisdictional manipulations furnished an easy device for depriving states of initial opportunities to pass on matters of their own policy. Second, the class biases of federal judges led to gross abuses both to the growing labor movement as an institution and to the rights of injured workers in an expanding industrial economy. Third, the great error of Swift v. Tyson and the federal choice of law permitted the gross abuse of jurisdiction shopping. It invited the manipulation of cases to put them where the results would be controlled by the choice of court.

3. Frank, Historical Basis of the Federal Judicial System, 13 Law & CONTEMP. Pиов. 3, 14-28 and particularly 22-28 (1948).

4. 16 Pet. (41 U.S.) 1 (1842).