RecyclerView: Inner classes cannot have static declaration

Straight to your questions:

1. Inner classes cannot have static declaration

   That's completely true. This is not a bug, and the error message is not even misleading.

2. I hear its better to use nested class as a static so you are not wasting a reference

   You are absolutely correct.

3. Solution for you:

   Create a new class(File) in your project for ItemsViewAdapter and there won't be such an error.

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General Discussion

Java and Android both supports that you can declare static inner classes/members/functions, BUT that class should be a parent class. You cannot do that inside an inner class.

I.e., class Main can have static class Adapter but if the Adapter class is an inner class of Main is not static then it can't have its own static inner class/member.

What You Can Have?

class Main 
    static class Adapter
        static class Holder

Or

class Adapter
    static class Holder

If you want to declare any member of class as static then the immediate parent class must be the top-level, main class in that file.

Why?

Quoting another answer, It's because an inner class is implicitly associated with an instance of its outer class, it cannot define any static methods itself. Since a static nested class cannot refer directly to instance variables or methods defined in its enclosing class, it can use them only through an object reference, it's safe to declare static methods in a static nested class.

Further Reading on the Topic

1 http://www.geeksforgeeks.org/inner-class-java/

2 http://www.javaworld.com/article/2077372/learn-java/static-class-declarations.html

3 http://viralpatel.net/blogs/inner-classes-in-java/