Justice Frankfurter delivered the majority opinion further refining the doctrine set forth in Erie Railroad Co. v. Tompkins.

The defendant in Guaranty Trust argued that the plaintiff's action was time-barred under a New York statute of limitations.

The plaintiff countered that the relevant statute of limitations was "procedural," was not "substantive" law, and therefore was not within the ambit of the doctrine established in the Erie case.

Thus, the Court set forth an "outcome determinative test" for deciding whether a piece of state law must be obeyed in federal courts—if the outcome is substantively the same then the federal court can apply its own rules instead of state rules.

This rule was refined first in Byrd v. Blue Ridge Rural Electric Cooperative, Inc. and subsequently defined more specifically in a related series of cases over the next few decades.