The statute of limitations period applied by a federal court will depend on the manner in which it has acquired subject matter jurisdiction over a case or controversy. In general, the U.S. Constitution grants federal courts jurisdiction to decide cases that raise issues of federal law (federal question jurisdiction) or to resolve disputes between citizens of different states (diversity jurisdiction).
Statute of Limitations
The statute of limitations is a rule of law that precludes a plaintiff from filing a lawsuit after a specified period of time has elapsed from the date the controversy occurred. A plaintiff must file his lawsuit in court before the limitations period or his suit will be dismissed as "time-barred." Statute of limitations periods are established by each state for various legal causes of actions such as breach of contract or negligence, as well as by the express provisions of state or federal statutes.
Federal Question Jurisdiction
Federal question jurisdiction is conferred whenever a plaintiff alleges a violation of the U.S. Constitution or a specific federal law. In federal question cases, the issue of the statute of limitations is relatively simple. The federal court will apply the specific statute of limitations period established by the federal statute under which the plaintiff is seeking relief.
In a case where a plaintiff files suit against a defendant corporation for violations of the anti-fraud provisions of the federal securities laws, a federal court will apply the statute of limitations period specified by that particular statute.
In the 1938 landmark case of Erie Railroad Co. vs. Tompkins, the U.S. Supreme Court ruled that federal courts hearing diversity cases must apply the law of the state (forum) in which the action was filed. Prior to the Erie decision, many federal courts hearing diversity cases ignored state common law and applied instead what was construed as "federal general common law." The Erie court ended this practice of developing a body of federal common law to supplant the substantive law of the forum state.
Since the Erie doctrine is settled law, federal courts that are hearing a controversy based on diversity of citizenship of the parties must apply the applicable state law of the forum state. Thus a federal district court situated in Kansas that has diversity jurisdiction would apply the applicable Kansas statute of limitations period for a case it is hearing.
When federal courts exercise diversity jurisdiction over the parties, the law of the forum state controls. For example, a Kansas plaintiff files suit in a Kansas federal court against a defendant (a Nebraska resident) for injuries sustained in an automobile accident as a result of the defendant's negligence. For purposes of determining whether the plaintiff's suit is barred by the statute of limitations, the federal court will apply the Kansas statute of limitations period for negligence actions.