I have often said that class actions make strange bedfellows. I had my first personal experience of this phenomenon 11 years ago, when I appeared at a six-day, evidentiary fairness hearing involving a proposed limited fund class settlement (months before the Supreme Court decided Ortiz v. Fibreboard). I was there on behalf of a group of defendants to present objections to the settlement that would have allowed a co-defendant to avoid any third-party contribution claims. One group of plaintiffs' lawyers also objected to the settlement negotiated by a different plaintiff group, and led the charge throughout the hearings. Although I cross-examined one witness, I mostly watched the evidence come in and saved my piece for closing argument. The hearing had not gone very well for either group of plaintiffs, but it seemed likely that the judge would approve the settlement that was being proposed. After the evidence was in, the court heard oral argument, and I argued last. My clients happened to have a very strong case for opposing the settlement, and my argument went well. When I was done, the court adjourned, and I stepped out of the courtroom into the corridor, only to be greeted by some jubilant, back-slapping lawyers from the plaintiff objector group. They pulled me into their circle as if I had just hit the game winning home run for their baseball team, smiling, shaking my hand, and thanking me profusely. I thought I had stepped into another dimension, or was having a bizarre dream, but I enjoyed the moment and accepted the accolades from my new friends, and ultimately the settlement that we all had objected to was disapproved.
I was reminded of the "strange bedfellows" paradigm today when I re-read the Supreme Court's March 31st decision in Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co. In that case, a five-justice majority held that a claim under New York state law that could not be brought as a class action in a New York state court could be maintained as a class action in federal court. Justice Scalia, who authored the majority opinion, found that New York's class action statute, which precludes the maintenance of a class action for statutory penalties, conflicts with the requirements of Federal Rule of Civil Procedure 23 for the maintenance of a class action, and that the federal procedural rule trumps the state law. Justice Ginsburg authored a dissenting opinion joined by three other Justices, in which she concluded that the federal rule does not conflict with the state law because the two provisions address different issues. Citing the legislative history for the state enactment, Justice Ginsburg found that the New York legislature's intent in enacting the limitation on class actions was to avoid severely magnifying defendants' exposure and creating a risk of annihilating damages in cases in which penalties had been established for individual claims. Justice Scalia was not convinced by the legislative history, and concluded, in any event, that the text of the statute controls. Justice Ginsburg also pointed out the irony that the case was in federal court, and was therefore able to proceed as a class action under the majority's ruling, only because of the expansion of diversity jurisdiction under the Class Action Fairness Act, an Act that Congress intended "to check what it considered to be the overreadiness of some state courts to certify class actions."
Now here is where the "strange bedfellows" part comes in. The two parts of Justice Scalia's opinion that became the decision of the Court were joined by Chief Justice Roberts and Justices Stevens, Thomas and Sotomayor. (Justice Stevens also authored a separate concurring opinion.) Justice Ginsburg's dissent was joined by Justices Kennedy, Breyer and Alito. This is not your ordinary Supreme Court split, as Justices Stevens and Sotomayor lined up with three conservative Justices, and Justice Alito lined up with two liberal Justices and Justice Kennedy. In addition, three conservatives voted against the enforcement of a state law and for the maintenance of a class action, and three liberals voted to enforce the state law and against the maintenance of a class action.
This is just one of many reasons I love what I do as a class action defense lawyer. Just when I think I've seen it all, something new happens to amaze. The last chapter on this issue might not be written, as the make-up of the Court is about to change, but for now Shady Grove stands as further evidence of the shifting alliances that can form in the wonderful world of class actions.
I was reminded of the "strange bedfellows" paradigm today when I re-read the Supreme Court's March 31st decision in Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co. In that case, a five-justice majority held that a claim under New York state law that could not be brought as a class action in a New York state court could be maintained as a class action in federal court. Justice Scalia, who authored the majority opinion, found that New York's class action statute, which precludes the maintenance of a class action for statutory penalties, conflicts with the requirements of Federal Rule of Civil Procedure 23 for the maintenance of a class action, and that the federal procedural rule trumps the state law. Justice Ginsburg authored a dissenting opinion joined by three other Justices, in which she concluded that the federal rule does not conflict with the state law because the two provisions address different issues. Citing the legislative history for the state enactment, Justice Ginsburg found that the New York legislature's intent in enacting the limitation on class actions was to avoid severely magnifying defendants' exposure and creating a risk of annihilating damages in cases in which penalties had been established for individual claims. Justice Scalia was not convinced by the legislative history, and concluded, in any event, that the text of the statute controls. Justice Ginsburg also pointed out the irony that the case was in federal court, and was therefore able to proceed as a class action under the majority's ruling, only because of the expansion of diversity jurisdiction under the Class Action Fairness Act, an Act that Congress intended "to check what it considered to be the overreadiness of some state courts to certify class actions."
Now here is where the "strange bedfellows" part comes in. The two parts of Justice Scalia's opinion that became the decision of the Court were joined by Chief Justice Roberts and Justices Stevens, Thomas and Sotomayor. (Justice Stevens also authored a separate concurring opinion.) Justice Ginsburg's dissent was joined by Justices Kennedy, Breyer and Alito. This is not your ordinary Supreme Court split, as Justices Stevens and Sotomayor lined up with three conservative Justices, and Justice Alito lined up with two liberal Justices and Justice Kennedy. In addition, three conservatives voted against the enforcement of a state law and for the maintenance of a class action, and three liberals voted to enforce the state law and against the maintenance of a class action.
This is just one of many reasons I love what I do as a class action defense lawyer. Just when I think I've seen it all, something new happens to amaze. The last chapter on this issue might not be written, as the make-up of the Court is about to change, but for now Shady Grove stands as further evidence of the shifting alliances that can form in the wonderful world of class actions.
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