Ever since Louis Brandeis, writing for the Supreme Court of the United States in Erie Railroad v. Tompkins (1938), overturned Joseph Story's decision in Swift v. Tyson, federal courts exercising diversity jurisdiction have applied state law as the substantive laws, with few exceptions.
This hope was not fulfilled, however, as the principles of the common law of the several states continued to dramatically diverge in subsequent decades.
Congress often lays down broad mandates with vague standards, which are then left to the courts to interpret, and these interpretations eventually give rise to complex understandings of the original intent of Congress, informed by the courts' understanding of what is just and reasonable.
Furthermore, in the 1943 case of Clearfield Trust Co. v. United States,[5] the Court recognized that federal courts could still create federal common law, albeit in limited circumstances where federal or Constitutional interests were at stake, Congress had inadequately addressed the situation sub judice, and the application of individual state laws in various jurisdictions would create unacceptable levels of diversity or uncertainty.
This principle finds expression in the first sentence of the Constitution: "All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives."
Statutes enacted by the deliberative legislative process are the preferred source of American criminal law.
[11] Although there is no Supreme Court decision prohibiting state courts from defining common law offenses, they have been rare, and the Model Penal Code and most states have abolished common law offenses.