In the case of Salve Regina College v. Sharon L. Russell (1990), the Supreme Court ruled that federal courts hearing civil cases under diversity jurisdiction must review de novo, or anew, a state law determination by a district court. The respondent, Sharon L. Russell had sued Salve Regina College after she was injured during her participation in an overseas study program sponsored by the college. A jury awarded damages to Russell based on negligence and misrepresentation claims against the college but did not find it liable for breach of contract or intentional infliction of emotional distress as alleged by Russell's complaint. The First Circuit Court affirmed this decision stating that Rhode Island law governed whether there was any duty owed to Ms.Russell and found none existed; hence no breach could have occurred.The Supreme Court disagreed with this approach and held that when federal courts are interpreting state laws in diversity suits they should independently examine those laws rather than deferring to lower court interpretations.This ruling established precedent for how federal courts interpret state laws.

In the dissenting opinion for Salve Regina College v. Sharon L. Russell, Justice Stevens argued that federal courts should give deference to state court interpretations of state law in order to maintain a harmonious relationship between federal and state judicial systems. He believed that the majority's decision undermined this principle by allowing federal courts to freely interpret state laws without considering previous rulings from relevant state courts. This, according to Justice Stevens, could lead to inconsistencies and conflicts in legal interpretation across different jurisdictions which would ultimately undermine public confidence in the justice system as a whole.