Rules of Decision Act Law and Legal Definition

Rules of Decision Act is a federal statute that provides that a federal court, when exercising diversity jurisdiction, must apply the substantive law of the state in which the court sits. This was first enacted in 1789, and was designed to discourage forum-shopping and to avoid the unfair administration of laws. The rule is now codified at 28 U.S.C.S § 1652. The ambit of the statute was increased by the case Erie R.R. v. Tompkins, 304 U.S. 64 (U.S. 1938), which interpreted the Rules of Decision Act to include not only state statutes, but also controlling judicial decisions or state common law as constituting the laws of the state.