Supreme Court Ruling on Class Actions

In a decision that legal experts say could open federal courts to more class actions, the U.S. Supreme Court yesterday ruled that states do not have the authority to limit the right to sue. The Court ruled 5-4 that a federal court rule – Rule 23 – controls when a class action lawsuit may be filed in federal court. According to SCOTUSblog, the real-world effect of the ruling in Shady Grove Orthopedic Associates, P.S. v. Allstate Insurance Co. seems clear: fewer state laws seeking to limit remedies available in federal court will now fall. The decision revives a class action lawsuit alleging Allstate failed to pay statutory interest penalties on overdue payments of insurance claims owed under no-fault auto insurance policies. Allstate won in the lower courts where the suit was dismissed as outside the scope of federal court jurisdiction. Check out our earlier blog post for more on this. A National Law Journal report via law.com notes that in the end, the decision produced splintered voting and unusual alignments of the justices. In her dissent, Supreme Court Justice Ruth Bader Ginsburg wrote: “The Court today approves Shady Grove’s attempt to transform a $500 case into a $5,000,000 award, although the State creating the right to recover has proscribed this alchemy.† Meanwhile, Forbes On the Docket blog’s take on the decision is that this is a victory for the lawyers. Check out I.I.I. facts and stats on litigiousness.

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