Editor’s note: This is the final post in a series of posts from the Class Action Lawsuit Defense Blog’s interview with Mary Kay Kane, former Dean and Chancellor and current Emeritus Professor of Law at the University of California’s Hastings College of the Law. Professor Kane is the author of the Nutshell on Civil Procedure, the co-author of the Hornbook on Civil Procedure, the Hornbook on the Law of Federal Courts, as well as the second and third editions of the treatise Federal Practice and Procedure. Professor Kane is also the author of “The Supreme Court’s Most Recent Class Action Jurisprudence: Gazing Into a Crystal Ball,” which will be published in the upcoming issue of the Lewis & Clark Law Review. The views expressed herein are hers alone.
There have been various opinions on what exactly Shady Grove means—what do you think it means?
When I looked at all the cases that have come down since Shady Grove, it has not had much of an impact. In Shady Grove, the majority’s position really did reverse the way in which courts had been carrying out an Erie analysis. Justice Scalia’s approach to interpreting the federal rule, as well as the way he dealt with New York law, in sort of dismissing it, was contrary to the traditional way that the whole Erie doctrine had been played out over time. Justice Ginsberg in her dissent was faithful to that tradition, in which there had been a pattern of deference to the state. If you could make the two laws coexist, you didn’t read the federal rule broadly, as Justice Scalia did in Shady Grove.
As I mentioned, when you look at the lower courts, the case is not really having an impact. It’s very interesting to me because in in some ways, it’s an easy fix. If a state wants to protect certain defendants it can do so—all the state has to do is make it clear that their law is substantive—we are doing this because we have a substantive policy that, say, consumers need to be protected or, with medical malpractice, the doctors need to be protected. But the lower courts are really still just conducting an old Erie analysis and reading the state laws as substantive. They’re clearly looking for a way to distinguish their cases from Shady Grove and to enforce state law.
Holster v. Gatco, Inc. is a Second Circuit case that shows how the lower courts are dealing with Shady Grove. In Holster, the Second Circuit felt constrained by Justice Scalia’s reading of Rule 23 as pre-empting C.P.L.R. 901(b), which does not allow class actions for penalties, but it nevertheless held that because the federal law at issue in Holster, the Telephone Consumer Protection Act, defined its reach to be only as permitted by state law, that Shady Grove’s holding was not determinative. It’s a case in which ultimately there is a federal statute that by its nature incorporates state law. The Second Circuit said Congress really wanted to incorporate state law and the legislature understood that New York had no class actions for penalties, and thus that they should defer to that understanding. So they distinguished it from Shady Grove and applied the state law in this context. It goes to show that the courts are essentially using the test that Justice Ginsburg articulated in her dissent.
You have to remember that Shady Grove was a plurality opinion—with Justice Stevens making a concurrence that would have essentially re-written the law in this area. So I think lower courts understand that Shady Grove was a 4-4-1 decision. When it’s a plurality opinion, the lower courts don’t have to follow the reasoning of the decision—and that’s why I think lower courts feel a little more freedom.