The United States Supreme Court Issues Landmark Class Action Decision in Shady Grove v. Allstate Insurance Holding That Rule 23 of the Federal Rules of Civil Procedure Was Not Limited By State Law Class Action Bar
The Shady Grove v. Allstate Insurance class action law suit was brought by Shady Grove against Allstate under New York state law and reportedly alleged that Allstate failed to pay or dispute claims within the required time frame, entitling Shady Grove to statutory interest, according to a class action news report.
The class action case was brought in federal court under diversity jurisdiction and Allstate reportedly argued that federal courts lacked jurisdiction because New York procedural laws did not permit class action suits to be brought for statutory penalties. The district court agreed with Allstate and the Second Circuit Court of Appeals affirmed the district court’s class action decision.
The Supreme Court reversed, holding that Rule 23 of the Federal Rules of Civil Procedure is exhaustive and Rule 23 class actions cannot be limited by state laws, such as §901(b) of the New York Civil Practice Rules.
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