Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Company
Issues
Whether a state legislature may prohibit federal courts from using the class action device for state law claims?
Shady Grove Orthopedic Associates filed a class action lawsuit in federal court, arguing that Allstate Insurance Companyviolated New York law in failing to pay interest to policyholders. The district court dismissed the case on the grounds that New York law prevented a class action lawsuit in this context, and the Second Circuit affirmed. This case concerns the application of state law in federal court under the Erie Doctrine, particularly whether New York class action law applies in federal court and whether it conflicts with Rule 23 of the Federal Rules of Civil Procedure. Shady Grove argues that Rule 23 is the comprehensive class action rule for federal courts, and that New York law cannot undermine federal court procedure. Allstate claims that state law applies because plaintiffs would have different rights in state and federal court. The case will address Rule 23 and the ability of states to restrict class action lawsuits.
Questions as Framed for the Court by the Parties
1. Can a state legislature properly prohibit the federal courts from using the class action device for state law claims?
2. Can state legislatures dictate procedure in the federal courts?
3. Could state-law class actions eventually disappear altogether, as more state legislatures declare them off limits to the federal courts?
Shady Grove Orthopedic Associates (“Shady Grove”) provided medical care to Sonia Galvez for her injuries as a result of a car accident in May, 2005. See Shady Grove Orthopedic Assocs. v. Allstate Ins. Co. (“Shady Grove I”), 466 F. Supp. 2d 467, 469 (E.D.N.Y.