The U.S. Supreme Court has ruled that class actions barred by many state laws may proceed in federal court.
The case in question dealt with a New York state law that limited claims in certain class-action cases. The case, Shady Grove Orthopedic Associates v. Allstate, dealt with a medical practice’s allegation that an insurer owed them interest on overdue benefits. Shady Grove Orthopedic Associates sought class-action status for all similarly situated medical providers.
New York state law limited its ability to file class-action lawsuits, so the practice attempted to file in federal court. The insurance company, Allstate, argued that the amount in question, $500, was too small for federal court jurisdiction.
Shady Grove countered that the amount owed all similarly situated practices was certainly large enough. In a 5-4 decision, the Supreme Court sided with the doctors.
The pivotal vote on the court was that of retiring Justice John Paul Stevens, who narrowly concurred with the majority opinion. As a result, Stevens’ opinion will control the issue moving forward.
Stevens agreed with Justice Ruth Bader Ginsburg’s dissent “that there are some state procedural rules that federal courts must apply in diversity cases” because they are part of the state-defined substantive rights and remedies.
As a result, groups filing class-action lawsuits in the 22 states that have limiting laws now have a better shot than ever at getting their cases before a federal court.