Previous business/academic article Next business/academic article
Business Articles Awards > Procedure

Looking for Sunlight in Shady Grove: The Fate of State Law in Federal Diversity Cases Remains Unclear

Rachel Feldman and Jack Pace, Antitrust (Spring), 2016

See Rachel Feldman's resume See Jack Pace's resume

Click here to read the full article online

We first wrote about Shady Grove in 2011, one year after the Supreme Court held that, even though the State of New York prohibited class actions seeking statutory penalties, and even though under Erie New York’s law applied to a federal court sitting in diversity, a Maryland medical clinic nonetheless could pursue a class action seeking statutory penalties in federal court.1 At the time of our earlier article, written after a year’s worth of cases applying Shady Grove, we could forecast only that Shady Grove had the potential to create confusion and inconsistency in the lower courts, particularly because no Justice’s opinion commanded a majority vote and the plurality (Scalia) and concurring (Stevens) opinions applied different standards to reach the same result. We now have over five years of lower and appellate court applications of Shady Grove. In fact, over 390 lower court decisions have cited Shady Grove since the publication of our 2011 article. Those decisions involve not only class action restrictions of the sort at issue in Shady Grove but also state laws, such as anti-SLAPP statutes and evidentiary rules. And those decisions confirm that our forecast of confusion and inconsistency was correct: five years later, practitioners remain uncertain about whether state laws affecting their disputes will apply in federal court when an arguably inconsistent federal rule exists. Courts have applied Shady Grove to both follow and ignore state laws, and have relied on the approaches of both Justice Scalia and Justice Stevens, as well as new approaches, to reach their conclusions.

Download our brochure