Also known as: federal common law
Written by attorneys · grounded in primary & secondary sources — see below
A body of judge-made federal law that governs discrete issues implicating uniquely federal interests. It operates only where no federal statute directly controls and where the need for national uniformity or protection of federal functions outweighs the ordinary preference for state substantive rules. The doctrine supplies uniform standards in matters such as the negotiability of United States commercial paper and certain evidentiary privileges in federal-question cases.
Natalie Norris, a Virginia resident, sued Nordic Ventures in federal court in Maryland for breach of a property-management contract. The court applied Maryland substantive law and its choice-of-law rules rather than any uniform federal contract doctrine. Because the claim rested on state law, the federal court replicated the result a Maryland state court would reach.
Nora Nash, a police officer, met with licensed social worker Naomi Norton for trauma counseling after a shooting. When a civil plaintiff later sought the session notes in federal court, the court held the communications privileged under federal common law. The privilege shielded the records even though no statute expressly created it.
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The Federal Reserve Board sued Dusk Market and Frontier Merchandise over forged endorsements on rebate checks drawn on the United States Treasury. The district court applied a uniform federal standard of good faith and notice rather than varying state banking rules. The federal interest in protecting treasury funds required a single judge-made rule.
Nestor Navarro sued a foreign official in federal court under the Alien Tort Statute for an alleged international-law violation. The court considered whether to recognize a new federal common-law cause of action. It weighed the need for judicial caution against the limited set of norms that already enjoy universal acceptance.
Shareholder Nathan Nguyen brought a derivative action under the Investment Company Act against Kemper Financial Services. The court declined to create a federal common-law rule requiring demand on the board even when state law excused it. State corporate law therefore continued to govern the futility exception.
Semtek International sued Lockheed Martin in federal court. The case was later transferred. The transferee court applied the claim-preclusive effect that the original federal judgment would receive under the law of the state where the first action was filed. Federal common law supplied the rule for determining that effect.
A federal court may create new federal common law only when the issue implicates uniquely federal interests and no statute directly controls. The need for national uniformity in matters such as United States commercial paper or certain privileges can justify a uniform federal rule. In ordinary diversity cases involving state-law claims, however, the court must apply the substantive law of the state in which it sits.
Supporting sources
Yes. Federal common law recognizes a psychotherapist-client privilege that protects confidential communications made to licensed social workers during diagnosis or treatment. The privilege applies in federal-question cases and operates like the attorney-client privilege even though no statute expressly creates it.
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New federal common law is limited to discrete areas of distinctively federal concern and does not supply a general body of rules for state-law claims. Erie eliminated the old general federal common law that federal courts once applied in diversity cases. The modern doctrine therefore operates only where federal interests require uniformity or protection of federal functions.
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…of its own judgments only because reference to state law was the federal rule that this Court deemed appropriate . In short, federal common law governs the claim-preclusive effect of a dismissal by a federal court sitting in diversity. See generally R. Fallon, D. Meltzer, & D. Shapiro, Hart and Wechsler’s The Federal Courts and the…