Shady Grove Orthopedic Assoc. v. Allstate Ins. Co.

Shady Grove (plaintiff), which received an assignment of a patient's insurance benefits, sued Allstate (defendant) in federal diversity court as a class action to recover statutory interest on late-paid benefits, but the district court dismissed for lack of jurisdiction, finding that New York law (CPLR Section 901(b)) barred class actions seeking a 'penalty' like statutory interest, despite Federal Rule 23 generally permitting class actions meeting its requirements; the court of appeals affirmed, reasoning Rule 23 and the New York statute addressed different issues and didn't conflict.