The Rules of Decision Act requires that federal courts apply state law in their decisions arising out of diversity jurisdiction, except when in conflict with federal law.
This act came from Section 34 of the Judiciary Act of 1789. It is now codified, in slightly different form, in 28 U.S.C. ยง 1652.
It states that:
The laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply.
Its interpretation, especially the meaning of "the laws of the several states," was central to the issue in Erie Railroad Co. v. Tompkins.
This interpretation has been called into question by Professor Wilfrid J. Ritz. At the time of the drafting of the Rules of Decision Act, modern reporting standards of state opinions did not exist. Reporting of these decisions was not regular until the nineteenth century. Therefore, at the time the Rules of Decision Act was written, there would have been no manner by which federal courts could have ascertained the common law of the states.
Rather, Professor Ritz opined that "Section 34 is a direction to the national courts to apply American law, as distinguished from English law. American law is to be found in the 'laws of the several states' viewed as a group of eleven states in 1789, and not viewed separately and individually. It is not a direction to apply the law of a particular state, for if it had been so intended, the section would have referred to the 'laws of the respective states.'" Wilfrid Ritz, Rewriting the History of the Judiciary Act of 1789 at 51 (Wythe Holt & Lewis H. LaRue eds., 1990)
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