Legal Question in Business Law in California

That is called a precedent.

It is a more-or-less distinctive feature of the English common-law system, adopted and used in 49 of the 50 states of the U.S., that cases decided by higher courts are more-or-less binding on the lower courts as to the principles used by the higer courts to decide the cases. Therefore, a U.S. lawyer, when writing a brief for example, will research decisions of the Court of Appeal and Supreme Court to find out what the combination of Fact A, Fact B and Fact C in view of Statute X and Statute Y means to the judges of the higher courts. The lawyer will then cite the appellate decision as "authority" for the proposition he's arguing in the brief. Other legal systems elsewhere in the world rely more upon statutes and codes than upon precedent.