Monday, November 3, 2014

Shady Grove v. Allstate Insurance co. case brief

Shady Grove v. Allstate Insurance co. case brief
– 2010 scotus

Posture: District court in E.D.N.Y dismissed case for lack of jurisdiction under N.U Civ. Prac Law Ann 901 (b) which precludes suits that recover penalties from proceeding as class actions. District court said it applies to diversity suits in federal court despite Fed Rules of Civil Procedure. The case left federal court; appeals affirmed. SCOTUS reviews. Scotus decided to: allow federal rules to override the NY statute disallowing penalties for class actions in diversity. Shady Grove gets to go to court; NY statute cannot apply.

Facts: Shady grove provided medical care to Galvez for injuries suffered during a car accident. As partial payment, she assigned to Shady groove her rights to insurance benefits under policy issued by allstate. Shady groove tendered a claim which under NY law, allstate had to pay in 30 days. Allstate paid but late and refused to pay for interest accrued under the overdue benefits. Shady groove filed a diversity suit in fed court representing itself and a class of others that also were not paid their interest. Court threw case out; decided that cannot bring class action suit to recover money under the NY rules in diversity.

Reasoning: Justice Scalia majority for parts I and II-A: Says that the rule is same as in Hanna: 1. which is to check if the statute / rule applies, and 2. if the rule does apply check to see if it exceeds statutory authorization or Congress’s rulemaking power.

Rule 23: states that class actions can be maintained provided that certain criteria set forth in the next two sections are met. It creates a categorical rule that provides a one size fits all formula for determining class actions. 901 (b) answers the same question and does not allow shady grooves suit to be maintained as a class action. Court decides logic does not work. Looks at the word maintained and understands it to mean that a class action can be brought by plaintiff. Courts do not maintain actions; only plaintiffs maintain actions. (Scalia is a textualist. It’s obvious here.) Scalia argues against the purpose of the statute; dissent argued that purpose of congress’s statute was to govern remedies available while NY law disallowed remedies for class action penalties in diversity. Scalia rejected this argument and said that purpose cannot override statutes clear text. 


Also rejected the argument that you can decide cases based on legislatures intent. He struck it down as silly because you can strike down a law in one state based on purpose but in another state leave the same law up just because it had a different intent and purpose of legislature. He rejects this argument as silly and does not do anything. This was the dissents argument.

B C and D: Disregarded the substantive rights argument. Thinks that it does not matter that plaintiffs would not have originally brought a claim like this in court for little amounts. They could have brought individual claims and that is all that mattered. Court rejects this argument as attacking the states substantive rights and litigant’s substantive rights. In D says that this application will lead to forum shopping but decides that it is necessary to allow federal rules to overcome state rules otherwise a uniform system of federal procedure is useless and should not be done. He does not want to ever say that.

Justice Stevens Concurrence: Agrees in this decision but thinks that there are some rules that the court must apply; even if they are at odds with the federal rules of civil procedure. There are some rules that are part of a states definition of substantive rights and remedies. Thinks that in those situations it should apply. (Scalia said that Sibbach exclusively overrules this concurrence.) Thinks that NY created 901 (b) to speak about procedural rules in NY, and to limit certain lawsuits from proceeding. The decision was a policy judgment about which lawsuits should proceed in a class form and which should not. This was important to NY and the court should have considered this.

Dissent; Justice Ginsberg: -Basically wants to continue the Erie doctrine of trying to figure out if state regulatory practices are at issue and to protect the states. Ginsberg wants the court to decide the case on whether the failure to apply rule would likely cause a plaintiff to choose the federal court under Hanna’s modified outcome determinative test. She looked at the intent of Congress which was to decrease the amount of class action suits in court because state court were certifying all class actions. She does not like that intent of congress was to limit class actions and court just allowed a class action through that otherwise would not have gone through. Said that the court hurt congress’s intent with this decision.

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