Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co.

130 S.Ct. 1431 (2010)

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Nature of the Case

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Facts

Shady Grove (P) provided medical care to Galvez for her injuries from a car accident. Sonia had an insurance policy from Allstate Insurance (D). Galvez is a Maryland resident, but her car was registered in New York and insured under a “New York Private Passenger Auto Insurance Policy.” As per the policy, D agreed to pay for certain medical costs associated with car accidents. Galvez gave P authority to apply to D for payments on her behalf. P sent Galvez’s claims to D. D failed to pay within 30 days. The New York statute mandates a two percent monthly interest penalty for payment made after the 30-day deadline. Shady Grove (P) and Galvez filed a class action proposing a class of all persons to whom D owes interest payments under New York insurance laws since April of 2000. D filed a motion to dismiss the case in that New York law barred Ps from filing this class action lawsuit. Section 901(b) of the New York Civil Practice Law and Rules states that Ps could not use a class action lawsuit to collect a statutory penalty unless specifically authorized under the statute. Ps argued that CPLR 901(b) was merely a procedural rule and conflicted with Federal Rule of Civil Procedure 23, which governs class action lawsuits in federal court. D’s motion to dismiss was granted. P appealed and the Second Circuit affirmed finding that CPLR 901(b) and Rule 23 did not conflict. It found that federal court should apply CPLR 901(b) because if not class action plaintiffs could recover in federal court even though they could not in state court. It also found that CPLR 901(b) did not undermine the authority of the federal system. The Supreme Court granted certiorari.