Swift v. Tyson, 41 U.S. 1 (1842)[1], was a case in which the United States Supreme Court determined that United States federal courts hearing cases brought under their diversity jurisdiction must apply the statutory law of the states when the state's legislature had spoken on the issue but did not have to apply the state's common law. The Supreme Court's decision essentially said that federal courts, when deciding matters not specifically addressed by the state's legislature, had the authority to develop a federal common law.
This case has been criticized by some as an example of forum shopping because the facts of the case involved the quintessence of the need for a uniform nation wide rule, the handling of negotiable instruments—and the fact that most of the states have subscribed to the Uniform Commercial Code's Article 5 shows us that it did. The problem was that the "rule in Swift" was extended by later judges to cover all of common law and not just that of commercial paper, bank notes, bankers acceptances and other forms of "near money."
This decision resulted in forum shopping, wherein plaintiffs would file their cases in federal as opposed to state courts in order to have a different law applied. This was seen to result in manipulation of the federal court system and was eventually overturned in Erie Railroad v. Tompkins, 304 U.S. 64 (1938).
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