• The Erie Doctrine is based on the seminal U.S. Supreme Court case, Erie R.R. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938). Holds that the federal courts cannot establish the common law themselves and must therefore apply the common law of the state in which they sit. Therefore, a federal court in California must follow the decisions of a California court, a federal court in New York must follow a New York state court, and so on. For coverage issues, this means that federal courts must apply state court decisions in interpreting the language of insurance policies and cannot develop their own contrary interpretations.