Abstract
This article is written as a hypothetical dissenting opinion from the U.S. Supreme Court's decision in Shady Grove Orthopedic Associates v. Allstate Insurance Co. In that case, the Court held that a federal court sitting in diversity jurisdiction must apply Federal Rule of Civil Procedure 23 -- the federal class action rule -- and not a New York state statute forbidding the use of class actions to enforce statutory penalties, the underlying issue in the Shady Grove litigation. In general, the Supreme Court's so-called "Erie" jurisprudence has been aimed at avoiding "vertical" forum shopping -- i.e., shopping between state and federal court -- while tacitly encouraging "horizontal" forum shopping -- i.e., shopping between courts in different states. In Shady Grove, however, the risk of horizontal forum shopping was small, because there was little chance that a court outside of New York would have applied the New York state statute. Therefore, the Court should have focused here on the risk of vertical forum shopping. By a 5-4 vote, however, the Supreme Court held that the federal rule trumps the state rule, thus creating the risk of divergent results as between state and federal courts. Continuing an unfortunate trend in important procedural areas, the Court did not produce a majority opinion. The plurality opinion written by Justice Scalia gave a nearly conclusive presumption that the Federal Rules of Civil Procedure displace state procedural rules. Justice Stevens's concurrence was more nuanced and did not accept the nearly automatic presumption of application of the Federal Rules of Civil Procedure, but nevertheless concluded that the federal class action rule must win out. Justice Ginsburg's dissent treated the issue as essentially one of election of remedies. Either the plaintiff must choose between the class action procedure in federal court or forgo the statutory penalty. This hypothetical opinion sides with Justice Ginsburg, but for different reasons. It argues that on the particular facts of this conflict between Federal Rule 23 and the state statute, the Court should have found that Federal Rule 23 exceeded the scope of the Rules Enabling Act, which authorizes the creation of the Federal Rules of Civil Procedure.