You might recall the Shady Grove case, Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co. The issue there was whether a class action to collect overdue interest (a penalty) could be maintained in Federal Court under FRCP 23, when CPLR 901(b) prohibits a class action to “recover a penalty.” The District Court said no, the 2nd Circuit affirmed. Now, the Supreme Court reverses.
It was argued not too long ago, and now, we have a decision (5-4) (2010 WL 1222272): It’s fine, the class action can proceed in federal court.