Our Class Action Federalism: Erie and the Rules Enabling Act after Shady Grove

By Steinman, Adam N. | Notre Dame Law Review, July 2011 | Go to article overview

Our Class Action Federalism: Erie and the Rules Enabling Act after Shady Grove


Steinman, Adam N., Notre Dame Law Review


INTRODUCTION
  I.   ERIE AND THE RULES ENABLING ACT
  II.  THE SHADY GROVE DECISION
       A. Does a Federal Rule Control?
       B. The REA's Substantive-Rights Provision
       C. Forum Shopping and Erie's Twin Aims
  III. CONTROL, CONFLICT, AND COLLISION: CATEGORIZING ERIE
       CHOICES AFTER SHADY GROVE
       A. The Role of State Class Action Law in Applying Federal
          Rule 23
          1. The Lesson of Gasperini
          2. Our Two-Dimensional Federal Rules
       B. The Relevance of State Class Action Law to Post-Certification
          Issues
          1. State Class Action Law and Remedies
          2. State Class Action Law and Preclusion
          3. State Class Action Law and Statutes of
             Limitations
  IV.  THE RULES ENABLING ACT AFTER SHADY GROVE
       A. Class Actions and the REA: Unanswered Questions
       B. Openings in Justice Scalia's Reasoning
       C. Openings in Justice Stevens's Reasoning
  V.   FRAMING THE ISSUES: HOW COURTS SHOULD CONCEPTUALIZE
       THE ROLE OF STATE CLASS ACTION LAW UNDER ERIE/REA
       A. Step One: Identify the Relevant State Law Principles
       B. Step Two: Determine the Preemptive Scope of the Federal
          Rule
       C. Step Three: Determine Whether Following the Federal Rule
          Would Violate the REA
          1. Sparring Justices May Be Closer than They Appear
          2. Rule 23 and the REA
  VI.  CLOSING THOUGHTS: ON IDEOLOGY, POLITICS, AND HEADCOUNTING
CONCLUSION

INTRODUCTION

"Our Federalism," as Justice Black described it, "is a system in which there is sensitivity to the legitimate interests of both State and National Governments." (1) During the first decade of the twenty-first century, class action litigation has been a significant and contentious aspect of Our Federalism. At first, the focus was which forum--state court or federal court--was better suited to adjudicate high-stakes class actions. This was the principal subject of the 2005 Class Action Fairness Act, which expanded federal diversity jurisdiction to encompass a wider range of class actions, even when the class's claims arise exclusively under state law. (2)

With this Term's decision in Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., (3) the Supreme Court began to confront the logical next question: once a putative class action is pending in federal court, what role does state class action law play? Put another way: if state law assesses the propriety of a class action differently than a federal court would, when (if ever) must the federal court follow state law rather than the prevailing federal approach? The answer to this question lies in the so-called Erie doctrine--the thorny patch of jurisprudence that, when the Federal Rules of Civil Procedure are involved, encompasses both the limits on federal rulemaking enshrined in the Rules Enabling Act (REA) (4) and the venerable line of cases that began with Erie Railroad Co. v. Tompkins. (5) In a 5-4 decision authored by Justice Scalia, Shady Grove held that New York's bar on class actions for certain statutory-damages claims does not displace the framework set forth in Federal Rule 23 for determining whether a class action may be maintained in federal court, even when the action arose under New York's substantive law. (6)

Thus Shady Grove begins the next chapter in what one might call "Our Class Action Federalism." (7) Some have read Shady Grove as making state class action law irrelevant to lawsuits pending in federal court. This would be a drastic overreading, however. In fact, many open questions remain about the role of state class action law in federal court. Under several lines of argument that were neither made nor considered in Shady Grove, the Erie doctrine and the REA may require federal courts to apply state class action law, whether state law is more or less tolerant of class actions than the prevailing federal approach. …

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