This question asks you to pick the answer choice which is most supported by the passage. Essentially, you are looking for the answer choice which must be true based on the information provided.
Answer (C) is incorrect because it is too general. The passage tells us that a legal decision is made when you apply a rule to a particular case- aka when you see if the facts of that case fall within the categories mentioned in the rule. Thus, a legal decision does "involve" facts. The wording here is too broad to be supported by the passage.
Answer (E) on the other hand is fully supported by the passage. The passage states that applying a rule to the facts of the case results in a legal decision and that this decision establishes a legal effect rather than any fact establishing that effect. So, invoking a rule is not a matter of fact.
This question is very oddly worded and is thus tricky. One thing to remember with questions like this is that you are looking for the answer choice which must be true because of the information provided. That does not necessarily mean the answer choice will make logical sense to you or that it would make sense in the real world, you need to limit your thinking to the words of the passage.