Federal common law is the body of rules that federal judges make themselves, without a statute telling them what the rule should be, in a small number of areas where the Constitution or the structure of the federal system requires a uniform national answer. It is narrow by design. Since 1938, there has been no general federal common law of contracts, torts, or property; those subjects belong to the states. What survives are targeted pockets — the federal government’s own legal affairs, admiralty, disputes between states, foreign relations, and a few statutory schemes where Congress has invited courts to fill in the details.
Why Federal Common Law Is So Limited
The starting point is a statute from the First Congress. The Rules of Decision Act, now 28 U.S.C. § 1652, directs federal courts to treat state laws as “rules of decision in civil actions in the courts of the United States, in cases where they apply,” unless the Constitution or a federal statute says otherwise.1Office of the Law Revision Counsel. 28 USC 1652 – Rules of Decision Act
For nearly a century after Swift v. Tyson in 1842, federal courts read that command narrowly and developed their own “general” common law on commercial matters even in ordinary diversity cases.2Justia. Swift v Tyson, 41 US 1 (1842) That system produced a persistent problem: identical cases could come out differently depending on whether a plaintiff chose state or federal court, and lawyers learned to shop forums accordingly.
The Supreme Court ended that arrangement in Erie Railroad Co. v. Tompkins. Justice Brandeis wrote plainly: “There is no federal general common law.”3Library of Congress. Erie Railroad Co v Tompkins, 304 US 64 (1938) No clause of the Constitution gives federal courts authority to make substantive rules in areas that belong to the states. When a federal court hears a case only because the parties are from different states, it applies the substantive law of the state where it sits.4Justia. Erie Railroad Co v Tompkins, 304 US 64 (1938)
Substantive Versus Procedural
Erie left one important line for judges to draw. Federal courts must apply state substantive law in diversity cases but can follow their own procedural rules. Substance defines rights and obligations; procedure governs the mechanics of a lawsuit.
The line is not always clean. In Guaranty Trust Co. v. York, the Court asked whether applying a different rule would change the outcome. In Hanna v. Plumer, the Court refined that inquiry, focusing instead on whether ignoring the state rule would encourage forum shopping or produce inequitable differences between courts.5Justia. Hanna v Plumer, 380 US 460 (1965) When a valid Federal Rule of Civil Procedure directly covers the issue, that rule applies as long as it “really regulates procedure.”
In practice, a federal court hearing a car accident case will apply the state’s negligence standards, damage caps, and comparative fault rules, but will follow federal rules on document exchange, motion practice, and deadlines. Which category a rule falls into can decide who wins.
Where Federal Common Law Still Governs
Erie killed the general version and preserved the specific ones. The surviving pockets share a common feature: applying fifty different state rules would frustrate a function that has to work nationally.
Uniquely Federal Interests
Five years after Erie, the Court decided Clearfield Trust Co. v. United States, a dispute over a forged government check. It held that the rights and duties of the United States on commercial paper it issues “are governed by federal rather than local law,” and that where Congress has not written a specific rule, federal courts must “fashion the governing rule of federal law according to their own standards.”6Justia. Clearfield Trust Co v United States, 318 US 363 (1943) The reasoning was practical. The same Treasury check cannot carry different legal rights depending on which state cashes it.
The uniquely federal interest category reaches beyond checks. In Boyle v. United Technologies Corp., the Court created a federal common law defense for military contractors: when the government approves reasonably precise equipment specifications, the contractor follows them, and the contractor discloses known dangers, state tort law is displaced.7Justia. Boyle v United Technologies Corp, 487 US 500 (1988) Conflicting state design-defect rules could interfere with federal discretion over military procurement, and that interference justified a judge-made rule.
Admiralty and Maritime Law
Maritime law is one of the oldest domains of federal common law. Article III extends the judicial power to “all Cases of admiralty and maritime Jurisdiction,” and federal courts have exercised that authority since the founding.8Constitution Annotated. Overview of Admiralty and Maritime Jurisdiction Shipping needs rules that do not change every time a vessel crosses from one state’s waters into another’s.
Judges built most of that framework case by case. Maritime liens let creditors secure debts against a vessel itself, and the doctrine of maintenance and cure requires ship owners to cover daily living expenses and medical costs for sailors injured in service.9Legal Information Institute. Maintenance and Cure Congress has legislated in specific areas, but the underlying structure of admiralty remains judge-made.
Disputes Between States
When two states clash over a shared river or a boundary, neither state’s law can fairly resolve the fight. The Constitution gives the Supreme Court original jurisdiction over controversies between states, meaning the Court acts as trial court rather than appellate court.10Office of the Law Revision Counsel. 28 US Code 1251 – Original Jurisdiction
To decide these cases, the Court applies federal common law. The main tool is equitable apportionment, which the Court has called “the doctrine of federal common law that governs disputes between States concerning their rights to use the water of an interstate stream.”11Legal Information Institute. Virginia v Maryland Boundary disputes, including a long-running Virginia–Maryland conflict over the Potomac, have been resolved on the same basis. These cases arise rarely but carry heavy consequences for irrigation, drinking water, and river ecosystems.
Foreign Relations
Foreign affairs is another area the Court has reserved for federal common law. In Banco Nacional de Cuba v. Sabbatino, the Court held that American courts will not sit in judgment of the official acts of a foreign government carried out within its own territory.12Justia. Banco Nacional de Cuba v Sabbatino, 376 US 398 (1964) This act of state doctrine is a rule of federal common law, but it binds both federal and state courts.
The reasoning is separation of powers. Decisions about how to respond to a foreign sovereign’s actions belong to the President and Congress. If state courts could reach independent conclusions about whether a foreign expropriation was lawful, the resulting patchwork could undermine American foreign policy. Questions about “the competence and function of the Judiciary and the National Executive in ordering our relationships with other members of the international community must be treated exclusively as an aspect of federal law.”12Justia. Banco Nacional de Cuba v Sabbatino, 376 US 398 (1964)
When Congress Invites Judicial Lawmaking
Sometimes Congress writes a statute that opens the door for federal common law and then walks away, leaving the substantive rules for courts to develop.
Labor Contracts
Section 301 of the Labor Management Relations Act gives federal courts jurisdiction over suits for violation of labor contracts but says almost nothing about the substantive rules to apply.13Office of the Law Revision Counsel. 29 USC Chapter 7, Subchapter IV – Section 185 In Textile Workers v. Lincoln Mills, the Supreme Court treated that silence as an invitation. The substantive law “is federal law, which the courts must fashion from the policy of our national labor laws.”14Justia. Textile Workers v Lincoln Mills, 353 US 448 (1957) Courts can borrow from state law when it fits federal policy, but the borrowed rule becomes federal law. Without this uniform body of rules, the same collective bargaining agreement could mean different things in different states.
Employee Benefit Plans
ERISA follows the same pattern. The statute preempts state law broadly but does not spell out rules for every situation. The Supreme Court has directed courts to develop “a federal common law of rights and obligations under ERISA-regulated plans,” drawing on trust law principles to fill gaps.15Legal Information Institute. Firestone Tire and Rubber Company v Bruch, 489 US 101 (1989) Basic questions, such as what standard of review applies when a plan administrator denies a claim, have been answered through judicial decisions rather than statutory text.
Borrowed Statutes of Limitations
When a federal statute creates a right to sue but sets no deadline, courts typically borrow the most analogous statute of limitations from the state where the case is filed. The borrowing itself is federal common law: a court picks the closest state deadline and applies it as federal law. Occasionally the federal interest in uniformity calls for a single national deadline instead, but borrowing remains the default.
How Federal Common Law Gets Shut Down
Federal common law is not permanent. When Congress legislates in an area where courts have been making rules, the statute can displace the judge-made law. The test is whether the statute “speaks directly” to the question at issue. If Congress has occupied the field, courts step aside.
The recent example involves climate change. Several states sued power companies under federal common law nuisance theories, arguing that greenhouse gas emissions harmed their residents. In American Electric Power Co. v. Connecticut, the Supreme Court held that the Clean Air Act displaced those federal common law claims. Congress had delegated regulatory authority over emissions to the EPA, and that delegation filled the space federal common law had occupied. Whether the EPA had used its authority aggressively or timidly did not matter.
Displacement is not the same as preemption. Preemption is when a federal statute overrides state law. Displacement is when a federal statute replaces federal common law. A displaced federal common law claim simply ceases to exist once Congress acts.
Bivens and Constitutional Damages
In 1971, the Supreme Court recognized that federal courts could create a damages remedy for constitutional violations by federal officers, even without a statute. In Bivens v. Six Unknown Named Agents, a person whose Fourth Amendment rights were violated by federal narcotics agents was allowed to sue for money damages directly under the Constitution.16Justia. Bivens v Six Unknown Fed Narcotics Agents, 403 US 388 (1971) The Court later extended Bivens to a Fifth Amendment employment discrimination claim and an Eighth Amendment inadequate-medical-care claim, and then stopped.
The current standard, set out in Egbert v. Boule, makes new claims almost impossible to bring. A court may not create a Bivens remedy if there is “even a single reason to pause before applying Bivens in a new context.”17Supreme Court of the United States. Egbert v Boule, 596 US 482 (2022) If Congress has provided any alternative structure — an administrative complaint process, an inspector general, a grievance procedure — that alone blocks a judicial remedy. The Court has said judges are “comparatively ill suited” to weigh whether damages remedies are appropriate, and that such decisions belong to Congress. The three original contexts survive; the doctrine has otherwise been frozen.
The Through Line
The pattern across every surviving pocket of federal common law is restraint. Judges do not have a general license to write rules they think are wise. Federal common law exists where the structure of the federal system creates a specific need — the government’s own financial dealings, navigation across state boundaries, disputes between sovereigns, foreign affairs — and Congress can always replace judge-made rules with legislation.
The Supreme Court has grown more skeptical of federal common law over recent decades, as the Bivens retreat and the displacement cases show. The trend favors legislative solutions, even when Congress moves slowly. When Congress does not fill the gaps that courts are no longer willing to address, the result can be areas of law where no rule governs at all, which is the problem Erie itself was designed to prevent.