Supreme Court Decision Alert - March 31, 2010

Originally published March 31, 2010

Keywords: Erie Doctrine, class action, state laws, Shady Grove, Allstate

Today the Supreme Court issued one decision, described below, of interest to the business community.

Erie Doctrine—Class Actions

Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., No. 08-1008 (previously discussed in the May 4, 2009 Docket Report).

Under the well-known rule of Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), federal courts exercising diversity jurisdiction apply state substantive law and federal procedural law. Sometimes, however, it is difficult to determine whether a particular rule is substantive or procedural, and thus whether state or federal law controls a particular question. For example, it is not necessarily clear whether state laws prohibiting certain class actions are substantive or procedural in nature, and thus it is not clear whether federal courts exercising diversity jurisdiction are bound by such laws.