United States v. Standard Oil Co. of California Case Brief Summary | Law Case Explained

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United States v. Standard Oil Co. of California | 332 U.S. 301 (1947)

In Erie Railroad Company versus Tompkins, the United States Supreme Court held that in diversity cases, federal courts must apply state substantive law, whether statutory or common law. Less than ten years later, in United States versus Standard Oil Company of California, the Court addressed whether Erie completely abolished federal common law, preventing federal courts from judicially creating substantive law.

While in Los Angeles, soldier John Etzel was struck by a truck owned by Standard Oil Company. Etzel suffered injuries and was hospitalized. The government paid Etzel’s medical expenses and continued to cover his wages during his disability. Etzel reached an agreement with Standard Oil and its driver whereby Etzel agreed to release any claims against either party in exchange for three hundred dollars. But the government subsequently sued Standard Oil and its driver seeking to recover its expenditures for Etzel’s treatment and wages, as well as damages for the loss of Etzel’s services.

No existing law rendered a tortfeasor liable to the government for a soldier’s injuries. But the government asked for judicial recognition of a new substantive liability, alleging that the government-soldier relationship was akin to various other special relationships recognized in tort law, such as the relationship between a master and servant, husband and wife, and parent and child. In those contexts, the party with a special relationship to an injured party was permitted to recover for loss of services and relationship interference. The government argued that the same rule should apply in the government-soldier context.

The district court held in favor of the government, but the Ninth Circuit reversed. The United States Supreme Court granted cert.

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