Corporate & Securities Law

Watershed Supreme Court Decision: Rule 23 Requires Class Actions To Go Forward Even Though State Law Mandates Otherwise

By Matthew S. Wild

The Supreme Court held today that district courts must follow Fed.R.Civ. 23 in class actions alleging violations of state law even though the state statute prohibits prosecution of the claim as a class action.  In Shady Grove Orthopedic Assoc. v. Allstate Insurance Co., No. 08-1008, 2010 WL 1222272 (Mar. 31, 2010), the Court held that Rule 23 trumps NY CPLR 901(b), which prohibits class actions under New York statutes authorizing a claim for statutory or multiple damages.  That statute has barred claims under New York’s antitrust statute (the Donnelly Act) as well its Deceptive Trade Practices Act.  Numerous state consumer protection statutes likewise have prohibitions on class actions.  Shady Grove breathes life into class actions in federal court under those statutes.

Full post as published by Antitrust Commentary on March 31, 2010 (boomark / email).