One type is case law or, as it is sometimes referred to in American courts, “common law.” This is law created by a court for the purpose of deciding a specific dispute. Case law is announced by a court in the written opinion in which it decides the dispute. Under the doctrine of stare decisis, discussed at length in chapter 2, a judicial decision is binding on future courts deciding similar cases. That is, later cases must be decided in a way that is consistent with earlier cases, which are known as precedents.

The other type is enacted law. This consists of laws adopted, usually by a legislature or other elected body, not to decide a single dispute but to create general rules of conduct. Enacted law governs all persons subject to the power of the government in all future situations in which the rule by its terms applies. Enacted law includes, for example, constitutions, statutes, treaties, executive orders, and administrative regulations. For the sake of brevity, the different forms of enacted law are often referred to collectively here as statutes.

Two differences between case law and enacted law are of particular importance to the process of legal reasoning. First, enacted law binds the courts. Case law, however, may be changed by a court with sufficient justification. ¹ Second, enacted law is cast in authoritative language; that is, the precise words of an enacted law rule are clear and fixed until such time as the enacting body modifies them. Case law, by contrast, often cannot be captured by a single authoritative and uncontroversial formulation. Rather, lawyers sometimes disagree among themselves concerning the law that was established by a particular case. The result of these differences is that the application of case law is considerably more flexible than the application of enacted law. As will be seen, a court frequently can manipulate the language of a rule from a case or even overrule the case entirely, whereas the language of enacted law is subject to judicial interpretation but cannot itself be manipulated or modified by the court. This means that the application of enacted law tends to involve principally the interpretation of the text of the statute, whereas the application of case law may involve subtle refinements of prior articulations of the law, the introduction of new qualifications or exceptions, or the outright rejection of a well-established rule of law.

As is discussed in this and later chapters, the method by which the lawyer identifies, analyzes, synthesizes, and applies both case law and enacted law depends upon which governmental entity creates the law. This chapter thus begins with a very brief introduction to the sources of American law, focusing on the role of each governmental entity in producing a particular type of law, with special emphasis on the judicial branch. Following that introduction, the discussion turns to its principal concern—the process of identifying potentially applicable rules of law.

Administrative agencies often have the authority not only to issue administrative regulations but also to enforce those regulations through procedures that resemble the judicial process and, like judicial proceedings, result in case law.² The results of these proceedings are also subject to judicial review. Courts, however, generally hold that they will defer to the interpretation of a statute by the agency responsible for administering the statute, on the ground of the agency’s greater expertise.

The courts resolve disputes concerning the application of law to particular factual situations. In many instances, the law to be applied is enacted law. Courts, however, also have the authority to create law, known as common law, to decide disputes.

Under the English legal system, on which the American system is based, courts were empowered to create rules of law in order to decide the disputes brought before them. For example, originally, the law governing contracts and torts was not enacted by statute but was created by the courts. The law was called common law because it was common to the entire realm and was distinguished from local law.

Following the American Revolution, the individual states incorporated English common law into state law, either by a provision in the state constitution, by a statute known as a reception statute, or by judicial declaration. State courts deciding disputes thus apply the common law as well as statutory law. Under the doctrine of separation of powers, mentioned previously, a state legislature has the power to modify the common law of that state at any time. State courts may also modify the common law of their state. Thus, the common law continues to evolve, and its substance varies from state to state.

Congress did not enact the equivalent of a federal reception statute. It did, however, pass the Rules Decision Act, which provides that federal courts shall apply state law, except where the Constitution, treaties, or federal statutes otherwise require.³ Moreover, the Supreme Court held in 1938 in the famous case of Erie R.R. Co. v. Tompkins that the federal courts do not have the constitutional authority to create a general federal common law.⁴

As a result of the Rules Decision Act and the Erie decision, there is no general federal common law, although federal courts do create federal common law in two situations. First, federal courts create federal common law on a few subjects, such as foreign affairs, which are the responsibility of the federal government under the Constitution. Second, federal courts create what is sometimes called “interstitial common law,” which is a body of judicial decisions interpreting and applying federal statutes.

Federal courts also create common law rules in cases where they are applying state law. In such instances, however, they are creating state common law, not federal common law. When a federal court does apply state law, it is expected to apply it in the same way that a state court would.

Because so much of the legal reasoning process entails a careful analysis of judicial decisions, a somewhat detailed description of the operation of the judicial branch is necessary. To avoid needless complexity, the focus here is on the federal court system. State courts generally operate in the same way, although state courts maybe named differently than federal courts.

In a civil case, a dispute is initiated by the plaintiff by the filing of a complaint against the defendant.⁵ Before filing a complaint, the plaintiff must ascertain in which court to file the complaint. The complaint may be filed only in a court that meets three criteria. First, the court must have subject-matter jurisdiction, that is, the court must have been authorized to hear that type of claim.⁶ The federal district courts, for example, are authorized to hear principally two types of claims: those arising under federal law and those involving disputes between citizens of different states. Second, the court must have personal jurisdiction over the defendant. In very general terms, this means that the defendant must have some kind of contact with the territory in which the court sits.⁷ Third, venue must be proper in the district where the court sits. The rules of venue are adopted by court systems to ensure that cases are tried in a geographically appropriate location, if one exists. For example, if a litigation involves land, the venue rules typically require that the case be tried in the district where the land is situated.

The complaint alleges facts that the plaintiff believes to be true and that the plaintiff believes entitle her to some remedy from the court, usually either an order that the defendant pay compensation to the plaintiff, that the defendant take some action, or that the defendant refrain from taking some action. For example, the plaintiff may allege that the defendant breached a contract with the plaintiff. The plaintiff may demand compensation or may demand an order that the defendant be required to perform the contract as promised. A copy of the complaint must be delivered to (in legal terminology, “served upon”) the defendant by the plaintiff.

The defendant responds by motion or by filing an answer.⁸ The defendant generally responds by motion if the plaintiff has chosen the wrong court, in which case the defendant files a motion to dismiss for lack of jurisdiction or improper venue. The defendant also may respond by motion if the defendant believes that the plaintiff has no legal claim, even assuming that all of the plaintiff’s factual allegations are true. In that situation, the defendant files a motion for failure to state a claim upon which relief can be granted.

Assuming that the defendant does not file a motion or that the motion is denied by the court, the defendant must file an answer. The answer must respond to each allegation in the complaint in one of three ways: admit the allegation, deny the allegation, or state that the defendant has insufficient information to admit or deny the allegation. The answer also includes affirmative defenses, that is, defenses based on some fact other than a denial of the plaintiff’s allegations. For example, if the plaintiff is alleging a breach of contract, the defendant may assert as an affirmative defense that the contract is void because it was induced by fraud. The defendant may believe that the plaintiff is liable to him and, if so, may include with his answer one or more counterclaims against the plaintiff. If the defendant does file counterclaims against the plaintiff, the plaintiff must file with the court a reply, essentially the plaintiff’s answer to the counterclaims.

Of course, the plaintiff may have sued more than one defendant. Perhaps the plaintiff’s contract was with multiple parties and the plaintiff believes that all of them breached the contract. If so, these defendants may have claims against each other, known as cross-claims. These cross-claims similarly may be included in the answer and, if so, require a reply from the other defendants. In some cases, other parties may be added to the litigation, although the rules governing which additional persons and which additional claims may be included in a single case are too complex for summary here.