In a plurality opinion authored by Justice Scalia, the U.S. Supreme Court held that a suit against Allstate for statutory interest properly filed in Federal Court could be certified under Federal Rule 23, despite the language of New York Civil Practice Law 901(b), which precludes a class action to recover civil penalties. The majority rejected the argument that the provision was “substantive” under either Erie or the Rules Enabling Act because it transformed a $500 dispute into a $5 million case. “Allstate’s aggregate liability” the Court said, “does not depend on whether the suit proceeds as a class action. Each of the 1,000-plus members of the putative class could bring a freestanding suit asserting his individual claim. It is undoubtedly true that some plaintiffs who would not bring suits for the relatively small sums involved will choose to join a class action. That has no bearing, however, on Allstate’s or the plaintiffs’ legal rights.” Interestingly, Justice Scalia also rejected Allstate’s argument that Rule 23 neither explicitly nor implicitly empowers a Federal Court to certify a class action in each and every case where the Rule’s criteria are met. “That is exactly what Rule 23 does: It says that if the prescribed preconditions are satisfied, ‘a class action may be maintained’ – not ‘a class action may be permitted.’ Courts do not maintain actions; litigants do. The discretion suggested by Rule 23’s ‘may’ is discretion residing with the plaintiff.” While opening Federal Courts to class actions that cannot proceed in State Court may produce forum shopping, that is the inevitable result of the uniform system of Federal Procedure created by Congress. Shady Grove v. Allstate, 130 S.Ct. 1431 (2010).
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