what makes a precedent 
a unique case with hardly any past reference material may become a precedent when the judge makes a ruling on it also the new ruling on a similar present case replaces any precedent that has been overruled in a current case under the rule of stare decisis courts are obligated to uphold their previous rulings or the rulings made by higher courts within the same court system 2for example the kansas state appellate courts will follow their precedent the kansas supreme court precedent and the u s supreme court precedent kansas is not obligated to follow precedents from the appellate courts of other states say california however when faced with a unique case kansas may refer to the precedent of california or any other state that has an established ruling as a guide in setting its precedent in effect all courts are bound to follow the rulings of the supreme court as the highest court in the country 3 therefore decisions that the highest court makes become binding precedent or obligatory stare decisis for the lower courts in the system when the supreme court overturns a precedent made by courts below it in the legal hierarchy the new ruling will become stare decisis on similar court hearings if a case ruled in a kansas court which has abided by a certain precedent for decades is taken to the u s supreme court and is then overturned by that court the supreme court s overrule replaces the former precedent and kansas courts would need to adapt to the new rule as precedent overturning a precedentin rare cases the supreme court has reversed its own previous rulings david schultz professor of law at the university of minnesota and professor of political science at hamline university reports that between1 789 to 2020 the court did so 145 times out of 25 544 supreme court opinions and judgments after oral arguments this amounts to barely one half of one percent 4the most famous reversal to date schultz notes is 1954 s brown v board of education that decision reversed the separate but equal doctrine ruling of plessy v ferguson in 1896 which supported segregation 4the most recent and controversial overturning of a precedent occurred on june 24 2022 when the court reversed roe v wade the 1973 ruling that legalized abortion making the dobbs v jackson women s health organization the next major case to depart from stare decesis 567real world examplesinsider trading in the securities industry is the misuse of material nonpublic information for financial gain the insider can trade the information for their portfolio or sell the information to an outsider for a cost the precedent looked to by courts when dealing with insider trading is the 1983 case of dirks v sec in this case the u s supreme court ruled that insiders are guilty if they directly or indirectly received material benefits from disclosing the information to someone who acts on it 8 in addition exploiting confidential information exists when the information is gifted to a relative or friend this decision became precedent and is upheld by courts dealing with financial crimes that are similar in nature in the 2016 ruling of salman v the united states the supreme court used stare decisis to make the ruling bassam salman made an estimated 1 5 million from insider information that he received indirectly from his brother in law maher kara then a citigroup investment banker while salman s counsel believed that he should be convicted only if he compensated his brother in law in cash or kind the supreme court judge ruled that insiders do not have to get something in return for divulging company secrets based on stare decisis the confidential information given to salman was considered a gift as dirks v sec makes it clear that fiduciary duty is breached when a tipper gives confidential information as a gift salman was therefore found guilty of insider trading 9in 2014 the u s court of appeals for the second circuit in new york overturned the insider trading conviction of two hedge fund managers todd newman and anthony chiasson stating an insider can be convicted only if the misappropriated information produced a real personal benefit 10 when bassam salam appealed his 2013 conviction using the second circuit s ruling as precedent the u s court of appeals for the ninth circuit based in san francisco did not abide by the second circuit s precedent which it was not obligated to uphold the appeals court upheld the conviction ruling on salman 11as noted above salman appealed that decision to the u s supreme court stating that the second circuit s ruling was inconsistent with the supreme court precedent set about by dirks v sec and the appeals court had therefore not adhered to the principle of stare decisis the supreme court disagreed and also upheld the conviction salman s conduct is in the heartland of dirks s rule concerning gifts justice alito wrote 12