559 U.S. 393 | SCOTUS | 2010
Lead Opinion
announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I and II-A, an opinion with respect to Parts II-B and II-D, in
New York law prohibits class actions in suits seeking penalties or statutory minimum damages.
The petitioner’s complaint alleged the following: Shady Grove Orthopedic Associates, P. A., provided medical care to Sonia E. Galvez for injuries she suffered in an automobile accident. As partial payment for that care, Galvez assigned to Shady Grove her rights to insurance benefits under a policy issued in New York by Allstate Insurance Co. Shady Grove tendered a claim for the assigned benefits to Allstate, which under New York law had 30 days to pay the claim or deny it. See N. Y. Ins. Law Ann. § 5106(a) (West 2009). Allstate apparently paid, but not on time, and it refused to pay the statutory interest that accrued on the overdue benefits (at two percent per month), see ibid.
Shady Grove filed this diversity suit in the Eastern District of New York to recover the unpaid statutory interest. Alleging that Allstate routinely refuses to pay interest on overdue benefits, Shady Grove sought relief on behalf of itself and a class of all others to whom Allstate owes interest. The District Court dismissed the suit for lack of jurisdiction. 466 F. Supp. 2d 467 (2006). It reasoned that N. Y. Civ. Prac. Law Ann. § 901(b), which precludes a suit to recover a “penalty” from proceeding as a class action, applies in diversity suits in federal court, despite Federal Rule of Civil Procedure 23. Concluding that statutory interest is a “penalty” under New York law, it held that § 901(b) prohibited the proposed class action. And, since Shady Grove conceded that its individual claim (worth roughly $500) fell far short of the amount-in-controversy requirement for individual suits under 28 U. S. C. § 1332(a), the suit did not belong in federal court.
We granted certiorari. 556 U. S. 1220 (2009).
II
The framework for our decision is familiar. We must first determine whether Rule 23 answers the question in dispute. Burlington Northern R. Co. v. Woods, 480 U. S. 1, 4-5 (1987). If it does, it governs — New York’s law notwithstanding — unless it exceeds statutory authorization or Congress’s rule-making power. Id., at 5; see Hanna v. Plumer, 380 U. S. 460, 463-464 (1965). We do not wade into Erie’s murky waters unless the Federal Rule is inapplicable or invalid. See 380 U. S., at 469-471.
A
The question in dispute is whether Shady Grove’s suit may proceed as a class action. Rule 23 provides an answer. It states that “[a] class action may be maintained” if two conditions are met: The suit must satisfy the criteria set forth in subdivision (a) (i. e., numerosity, commonality, typicality, and adequacy of representation), and it also must fit into one of the three categories described in subdivision (b). Fed. Rule Civ. Proc. 23(b). By its terms this creates a categorical rule entitling a plaintiff whose suit meets the specified criteria to pursue his claim as a class action. (The Federal Rules regularly use “may” to confer categorical permission, see, e. g., Fed. Rules Civ. Proc. 8(d)(2)-(3), 14(a)(1), 18(a)-(b), 20(a)(l)-(2), 27(a)(1), 30(a)(1), as do federal statutes that es
The Second Circuit believed that § 901(b) and Rule 23 do not conflict because they address different issues. Rule 23, it said, concerns only the criteria for determining whether a given class can and should be certified; § 901(b), on the other hand, addresses an antecedent question: whether the particular type of claim is eligible for class treatment in the first place — a question on which Rule 23 is silent. See 549 F. 3d, at 143-144. Allstate embraces this analysis. Brief for Respondent 12-13.
We disagree. To begin with, the line between eligibility and certifiability is entirely artificial. Both are preconditions for maintaining a class action. Allstate suggests that eligibility must depend on the “particular cause of action” asserted, instead of some other attribute of the suit, id., at 12. But that is not so. Congress could, for example, provide that only claims involving more than a certain number of plaintiffs are “eligible” for class treatment in federal court. In other words, relabeling Rule 23(a)’s prerequisites “eligibility criteria” would obviate Allstate’s objection— a sure sign that its eligibility-certifiabihty distinction is made-to-order.
There is no reason, in any event, to read Rule 23 as addressing only whether claims made eligible for class treatment by some other law should be certified as class actions. Allstate asserts that Rule 23 neither explicitly nor implicitly empowers a federal court “to certify a class in each and every case” where the Rule’s criteria are met. Id., at 13-14. But that is exactly what Rule 23 does: It says that if the
Allstate points out that Congress has carved out some federal claims from Rule 23’s reach, see, e. g., 8 U. S. C. § 1252(e)(1)(B) — which shows, Allstate contends, that Rule 23 does not authorize class actions for all claims, but rather leaves room for laws like § 901(b). But Congress, unlike New York, has ultimate authority over the Federal Rules of Civil Procedure; it can create exceptions to an individual rule as it sees fit — either by directly amending the rule or by enacting a separate statute overriding it in certain instances. Cf. Henderson v. United States, 517 U. S. 654, 668 (1996). The fact that Congress has created specific exceptions to Rule 23 hardly proves that the Rule does not apply generally. In fact, it proves the opposite. If Rule 23 did not authorize class actions across the board, the statutory exceptions would be unnecessary.
Allstate next suggests that the structure of §901 shows that Rule 23 addresses only certifiability. Section 901(a), it notes, establishes class-certification criteria roughly analogous to those in Rule 23 (wherefore it agrees that subsection is pre-empted). But § 901(b)’s rule barring class actions for certain claims is set off as its own subsection, and where it applies, § 901(a) does not. This shows, according to Allstate, that § 901(b) concerns a separate subject. Perhaps it does concern a subject separate from the subject of § 901(a). But the question before us is whether it concerns a subject separate from the subject of Rule 23~and for purposes of an
The dissent argues that § 901(b) has nothing to do with whether Shady Grove may maintain its suit as a class action, but affects only the remedy it may obtain if it wins. See post, at 443-451 (opinion of Ginsburg, J.). Whereas “Rule 23 governs procedural aspects of class litigation” by “prescribing] the considerations relevant to class certification and postcertifieation proceedings,” § 901(b) addresses only “the size of a monetary award a class plaintiff may pursue.” Post, at 446-447. Accordingly, the dissent says, Rule 23 and New York’s law may coexist in peace.
We need not decide whether a state law that limits the remedies available in an existing class action would conflict with Rule 23; that is not what § 901(b) does. By its terms, the provision precludes a plaintiff from “maintain[ing]” a class action seeking statutory penalties. Unlike a law that sets a ceiling on damages (or puts other remedies out of reach) in properly filed class actions, § 901(b) says nothing about what remedies a court may award; it prevents the class actions it covers from coming into existence at all.
The dissent asserts that a plaintiff can avoid § 901(b)’s barrier by omitting from his complaint (or removing) a request for statutory penalties. See post, at 449-450. Even assuming all statutory penalties are waivable,
The dissent all but admits that the literal terms of § 901(b) address the same subject as Rule 23 — i e., whether a class action may be maintained — but insists the provision’s purpose is to restrict only remedies. See post, at 447-448; post, at 450 (“[W]hile phrased as responsive to the question whether certain class actions may begin, § 901(b) is unmistakably aimed at controlling how those actions must end”). Unlike Rule 23, designed to further procedural fairness and efficiency, § 901(b) (we are told) “responds to an entirely different concern”: the fear that allowing statutory damages to be awarded on a classwide basis would “produce overkill.” Post, at 447, 444 (internal quotation marks omitted). The
This evidence of the New York Legislature’s purpose is pretty sparse. But even accepting the dissent’s account of the legislature’s objective at face value, it cannot override the statute’s clear text. Even if its aim is to restrict the remedy a plaintiff can obtain, § 901(b) achieves that end by limiting a plaintiff’s power to maintain a class action. The manner in which the law “eould have been written,” post, at 457, has no bearing; what matters is the law the legislature did enact. We cannot rewrite that to reflect our perception of legislative purpose, see Oncale v. Sundowner Offshore Services, Inc., 523 U. S. 75, 79-80 (1998).
The dissent’s approach of determining whether state and federal rules conflict based on the subjective intentions of the state legislature is an enterprise destined to produce “confusion worse confounded,’’ Sibbach v. Wilson & Co., 312 U. S. 1, 14 (1941). It would mean, to begin with, that one State’s statute could survive pre-emption (and accordingly affect the procedures in federal court) while another State’s identical law would not, merely because its authors had different aspirations. It would also mean that district courts would have to discern, in every diversity case, the purpose behind any putatively pre-empted state procedural rule, even if its text squarely conflicts with federal law. That task will often prove arduous. Many laws further more than one aim, and the aim of others may be impossible to discern. Moreover, to the extent the dissent’s purpose-driven approach depends on its characterization of § 901(b)’s aims as substantive, it would apply to many state rules ostensibly addressed to procedure. Pleading standards, for example, often embody policy preferences about the types of claims that should succeed — as do rules governing summary judgment, pretrial discovery, and the admissibility of certain evidence. Hard cases will abound. It is not even clear that a state supreme court’s pronouncement of the law’s purpose would settle the issue, since existence of the factual predi
But while the dissent does indeed artificially narrow the scope of § 901(b) by finding that it pursues only substantive policies, that is not the central difficulty of the dissent’s position. The central difficulty is that even artificial narrowing cannot render § 901(b) compatible with Rule 23. Whatever the policies they pursue, they flatly contradict each other. Allstate asserts (and the dissent implies, see post, at 438, 446) that we can (and must) interpret Rule 23 in a manner that avoids overstepping its authorizing statute.
B
Erie involved the constitutional power of federal courts to supplant state law with judge-made rules. In that context, it made no difference whether the rule was technically one of substance or procedure; the touchstone was whether it “significantly affect[s] the result of a litigation.” Guaranty Trust Co. v. York, 326 U. S. 99, 109 (1945). That is not the test for either the constitutionality or the statutory validity of a Federal Rule of Procedure. Congress has undoubted power to supplant state law, and undoubted power to prescribe rules for the courts it has created, so long as those rules regulate matters “rationally capable of classification” as procedure. Hanna, 380 U. S., at 472. In the Rules En
We have long held that this limitation means that the Rule must “really regulat[e] procedure, — the judicial process for enforcing rights and duties recognized by substantive law and for justly administering remedy and redress for disregard or infraction of them,” Sibbach, 312 U. S., at 14; see Hanna, supra, at 464; Burlington, 480 U. S., at 8. The test is not whether the Rule affects a litigant’s substantive rights; most procedural rules do. Mississippi Publishing Corp. v. Murphree, 326 U. S. 438, 445 (1946). What matters is what the Rule itself regulates: If it governs only “the manner and the means” by which the litigants’ rights are “enforced,” it is valid; if it alters “the rules of decision by which [the] court will adjudicate [those] rights,” it is not. Id., at 446 (internal quotation marks omitted).
Applying that test, we have rejected every statutory challenge to a Federal Rule that has come before us. We have found to be in compliance with § 2072(b) Rules prescribing methods for serving process, see id., at 445-446 (Fed. Rule Civ. Proc. 4(f)); Hanna, supra, at 463-465 (Fed. Rule Civ. Proc. 4(d)(1)), and requiring litigants whose mental or physical condition is in dispute to submit to examinations, see Sibbach, supra, at 14-16 (Fed. Rule Civ. Proc. 35); Schlagenhauf v. Holder, 379 U. S. 104, 113-114 (1964) (same). Likewise, we have upheld Rules authorizing imposition of sanctions upon those who file frivolous appeals, see Burlington, supra, at 8 (Fed. Rule App. Proc. 38), or who sign court papers without a reasonable inquiry into the facts asserted, see Business Guides, Inc. v. Chromatic Communications Enterprises, Inc., 498 U. S. 533, 551-554 (1991) (Fed. Rule Civ. Proc. 11). Each of these Rules had some practical effect on the parties’ rights, but each undeniably regulated only the process for enforcing those rights; none altered the rights
Applying that criterion, we think it obvious that Rules allowing multiple claims (and claims by or against multiple parties) to be litigated together are also valid. See, e.g., Fed. Rules Civ. Proc. 18 (joinder of claims), 20 (joinder of parties), 42(a) (consolidation of actions). Such Rules neither change plaintiffs’ separate entitlements to relief nor abridge defendants’ rights; they alter only how the claims are processed. For the same reason, Rule 23 — at least insofar as it allows willing plaintiffs to join their separate claims against the same defendants in a class action — falls within § 2072(b)’s authorization. A class action, no less than traditional joinder (of which it is a species), merely enables a federal court to adjudicate claims of multiple parties at once, instead of in separate suits. And like traditional joinder, it leaves the parties’ legal rights and duties intact and the rules of decision unchanged.
Allstate contends that the authorization of class actions is not substantively neutral: Allowing Shady Grove to sue on behalf of a class “transform^] [the] dispute over a five hundred dollar penalty into a dispute over a five million dollar penalty.” Brief for Respondent 1. Allstate’s aggregate liability, however, does not depend on whether the suit proceeds as a class action. Each of the 1,000-plus members of the putative class could (as Allstate acknowledges) bring a freestanding suit asserting his individual claim. It is undoubtedly true that some plaintiffs who would not bring individual suits for the relatively small sums involved will choose to join a class action. That has no bearing, however, on Allstate’s or the plaintiffs’ legal rights. The likelihood that some (even many) plaintiffs will be induced to sue by the availability of a class action is just the sort of “incidental effec[t]” we have long held does not violate § 2072(b), Mississippi Publishing, supra, at 445.
Allstate argues that Rule 23 violates § 2072(b) because the state law it displaces, § 901(b), creates a right that the Fed
The fundamental difficulty with both these arguments is that the substantive nature of New York’s law, or its substantive purpose, makes no difference. A Federal Rule of Procedure is not valid in some jurisdictions and invalid in others — or valid in some cases and invalid in others — depending upon whether its effect is to frustrate a state substantive law (or a state procedural law enacted for substantive purposes). That could not be clearer in Sibbach:
“The petitioner says the phrase ['substantive rights’ in the Rules Enabling Act] connotes more; that by its use Congress intended that in regulating procedure this Court should not deal with important and substantial rights theretofore recognized. Recognized where and by whom? The state courts are divided as to the power in the absence of statute to order a physical examination. In a number such an order is authorized by statute or rule....
“The asserted right, moreover, is no more important than many others enjoyed by litigants in District Courts sitting in the several states, before the Federal Rules*410 of Civil Procedure altered and abolished old rights or privileges and created new ones in connection with the conduct of litigation. ... If we were to adopt the suggested criterion of the importance of the alleged right we should invite endless litigation and confusion worse confounded. The test must be whether a rule really regulates procedure . . . .” 312 U. S., at 13-14 (footnote omitted).
Hanna unmistakably expressed the same understanding that compliance of a Federal Rule with the Enabling Act is to be assessed by consulting the Rule itself, and not its effects in individual applications:
“[T]he court has been instructed to apply the Federal Rule, and can refuse to do so only if the Advisory Committee, this Court, and Congress erred in their prima facie judgment that the Rule in question transgresses neither the terms of the Enabling Act nor constitutional restrictions.” 380 U. S., at 471.
In sum, it is not the substantive or procedural nature or purpose of the affected state law that matters, but the substantive or procedural nature of the Federal Rule. We have held since Sibbach, and reaffirmed repeatedly, that the validity of a Federal Rule depends entirely upon whether it regulates procedure. See Sibbach, supra, at 14; Hanna, supra, at 464; Burlington, 480 U. S., at 8. If it does, it is authorized by § 2072 and is valid in all jurisdictions, with respect to all claims, regardless of its incidental effect upon state-created rights.
C
A few words in response to the concurrence. We understand it to accept the framework we apply — which requires first, determining whether the federal and state rules can be reconciled (because they answer different questions), and second, if they cannot, determining whether the Federal Rule runs afoul of § 2072(b). Post, at 421-422 (Stevens, J.,
The concurrence would decide this case on the basis, not that Rule 23 is procedural, but that the state law it displaces is procedural, in the sense that it does not “function as a part of the State’s definition of substantive rights and remedies.” Post, at 416-417. A state procedural rule is not pre-empted, according to the concurrence, so long as it is “so bound up with,” or “sufficiently intertwined with,” a substantive state-law right or remedy “that it defines the scope of that substantive right or remedy,” post, at 420,428.
This analysis squarely conflicts with Sibbach, which established the rule we apply. The concurrence contends that Sibbach did not rule out its approach, but that is not so. Recognizing the impracticability of a test that turns on the idiosyncrasies of state law, Sibbach adopted and applied a rule with a single criterion: whether the Federal Rule “really regulates procedure.” 312 U. S., at 14.
In reality, the concurrence seeks not to apply Sibbach, but to overrule it (or, what is the same, to rewrite it). Its approach, the concurrence insists, gives short shrift to the statutory text prohibiting the Federal Rules from “abridging], enlarging], or modify[ing] any substantive right,” § 2072(b). See post, at 424-425. There is something to that. It is possible to understand how it can be determined whether a Federal Rule “enlarges” substantive rights without consulting state law: If the Rule creates a substantive right, even one that duplicates some state-created rights, it establishes a new federal right. But it is hard to understand how it can be determined whether a Federal Rule “abridges” or “modifies” substantive rights without knowing what state-created rights would obtain if the Federal Rule did not exist. Sib
Sibbach has been settled law, however, for nearly seven decades.
The concurrence also contends that applying Sibbach and assessing whether a Federal Rule regulates substance or procedure is not always easy. See post, at 426, n. 10. Undoubtedly some hard cases will arise (though we have managed to muddle through well enough in the 69 years since
D
We must acknowledge the reality that keeping the federal-court door open to class actions that cannot proceed in state court will produce forum shopping. That is unae
* * *
The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings.
It is so ordered.
New York Civ. Prac. Law Ann. §901 (West 2006) provides:
“(a) One or more members of a class may sue or be sued as representative parties on behalf of all if:
“1. the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable;
“2. there are questions of law or fact common to the class which predominate over any questions affecting only individual members;
“3. the claims or defenses of the representative parties are typical of the claims or defenses of the class;
“4. the representative parties will fairly and adequately protect the interests of the class; and
“5. a class action is superior to other available methods for the fair and efficient adjudication of the controversy.
“(b) Unless a statute creating or imposing a penalty, or a minimum measure of recovery specifically authorizes the recovery thereof in a class action, an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained as a class action.”
Rule 23(a) provides:
“(a) Prerequisites. One or more members of a class may sue or be sued as representative parties on behalf of all members only if:
“(1) the class is so numerous that joinder of all members is impracticable;
“(2) there are questions of law or fact common to the class;
“(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
“(4) the representative parties will fairly and adequately protect the interests of the class.”
Subsection (b) says that “[a] class action may be maintained if Rule 23(a) is satisfied and if” the suit falls into one of three described categories (irrelevant for present purposes).
Shady Grove had asserted jurisdiction under 28 U. S. C. § 1332(d)(2), which relaxes, for class actions seeking at least $5 million, the rule against aggregating separate claims for calculation of the amount in controversy. See Exxon Mobil Corp. v. Allapattah Services, Inc., 545 U. S. 546, 571 (2005).
Contrary to the dissent’s implication, post, at 448, we express no view as to whether state laws that set a ceiling on damages recoverable in a single suit, see App. A to Brief for Respondent, are pre-empted. Whether or not those laws conflict with Rule 23, § 901(b) does conflict because it addresses not the remedy, but the procedural right to maintain a class action. As Allstate and the dissent note, several federal statutes also limit the recovery available in class actions. See, e.g., 12 U. S. C. § 2605(f)(2)(B); 15 U. S. C. § 1640(a)(2)(B); 29 U. S. C. § 1854(c)(1). But Congress has plenary power to override the Federal Rules, so its enactments, unlike those of the States, prevail even in case of a conflict.
But see, e. g., Asher v. Abbott Labs., 290 App. Div. 2d 208, 737 N. Y. S. 2d 4 (2002) (treble damages under N. Y. Gen. Bus. Law Ann. § 340(5) are nonwaivable, wherefore class actions under that law are barred).
Our decision in Walker v. Armco Steel Corp., 446 U. S. 740 (1980), discussed by the dissent, post, at 441, 448, n. 8, is not to the contrary. There we held that Rule 3 (which provides that a federal civil action is “ 'commenced’ ” by filing a complaint in federal court) did not displace a state law providing that “ ‘[a]n action shall be deemed commenced, within the meaning of this article [the statute of limitations], as to each defendant, at the date of the summons which is served on him ....’” 446 U. S., at 743, n. 4 (quoting Okla. Stat, Tit. 12, §97 (1971); alteration in original; emphasis added). Rule 3, we explained, “governs the date from which various timing requirements of the Federal Rules begin to run, but does not affect state statutes of limitations” or tolling rules, which it did not
The dissent also suggests that we should read the Federal Rules “ 'with sensitivity to important state interests’” and “‘to avoid conflict with important state regulatory policies.’” Post, at 442 (quoting Gasperini v. Center for Humanities, Inc,, 518 U. S. 415, 427, n. 7, 438, n. 22 (1996)). The search for state interests and policies that are “important” is just as standardless as the “important or substantial” criterion we rejected in Sibbach v. Wilson & Co., 312 U. S. 1, 13-14 (1941), to define the state-created rights a Federal Rule may not abridge.
If all the dissent means is that we should read an ambiguous Federal Rule to avoid “substantial variations [in outcomes] between state and federal litigation,” Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U. S. 497, 504 (2001) (internal quotation marks omitted), we entirely agree. We should do so not to avoid doubt as to the Rule’s validity — since a Federal Rule that fails Erie’s forum-shopping test is not ipso facto invalid, see Hanna v. Plumer, 380 U. S. 460, 469-472 (1965) — but because it is reasonable to assume that “Congress is just as concerned as we have been to avoid significant differences between state and federal courts in adjudicating claims,” Stewart Organization, Inc. v. Ricoh Corp., 487 U. S. 22, 37-38 (1988) (Scaua, J., dissenting). The assumption is irrelevant here, however, because there is only one reasonable reading of Rule 23.
The eases chronicled by the dissent, see post, at 439-443, each involved a Federal Rule that we concluded could fairly be read not to “control the issue” addressed by the pertinent state law, thus avoiding a “direct collision” between federal and state law, Walker, supra, at 749 (internal quotation marks omitted). But here, as in Hanna, supra, at 470, a collision is “unavoidable.”
The concurrence claims that in Sibbach “[t]he Court... had no occasion to consider whether the particular application of the Federal Rules in question would offend the Enabling Act.” Post, at 427. Had Sibbach been applying the concurrence’s theory, that is quite true — which demonstrates how inconsistent that theory is with Sibbach. For conformity with the Rules Enabling Act was the very issue Sibbach decided: The petitioner’s position was that Rules 35 and 37 exceeded the Enabling Act’s authorization, 312 U. S., at 9, 13; the Court faced and rejected that argument, id., at 13-16, and proceeded to reverse the lower court for failing to apply Rule 37 correctly, id., at 16. There could not be a clearer rejection of the theory that the concurrence now advocates.
The concurrence responds that “the specific question of ‘the obligation of federal courts to apply the substantive law of a state’” was not before the Court, post, at 427 (quoting Sibbach, supra, at 9). It is clear from the context, however, that this passage referred to the Erie prohibition of court-created rules that displace state law. See Erie R. Co. v. Tompkins,
The concurrence insists that we have misread Sibbach, since surely a Federal Rule that “in most cases” regulates procedure does not do so when it displaces one of those “rare” state substantive laws that are disguised as rules of procedure. Post, at 428, n. 13. This mistakes what the Federal Rule regulates for its incidental effects. As we have explained, supra, at 406-408, most Rules have some effect on litigants’ substantive rights or their ability to obtain a remedy, but that does not mean the Rule itself regulates those rights or remedies.
The concurrence’s approach, however, is itself unfaithful to the statute’s terms. Section 2072(b) bans abridgment or modification only of “substantive rights,” but the concurrence would prohibit pre-emption of “procedural rules that are intimately bound up in the scope of a substantive right or remedy,” post, at 433. This would allow States to force a wide array of parochial procedures on federal courts so long as they are “sufficiently intertwined with a state right or remedy.” Post, at 428.
The concurrence implies that Sibbach has slipped into desuetude, apparently for lack of sufficient citations. See post, at 428-429, n. 14. We are unaware of any rule to the effect that a holding of ours expires if the case setting it forth is not periodically revalidated. In any event, the concurrence’s account of our shunning of Sibbach is greatly exaggerated. Hanna did not merely dte the case, but recognized it as establishing the governing rule. 380 U. S., at 464-465, 470-471. Mississippi Publishing Corp. v. Murphree, 326 U. S. 438, 445-446 (1946), likewise cited Sibbach and applied the same test, examining the Federal Rule, not the state law it displaced. True, Burlington Northern R. Co. v. Woods, 480 U. S. 1 (1987), and for that matter Business Guides, Inc. v. Chromatic Communications Enterprises, Inc., 498 U. S. 533 (1991), did not cite Sibbach. But both cited and followed Hanna — which as noted held out Sibbach as setting forth the governing rule. See Burlington Northern, supra, at 5-6, 8; Business Guides, supra, at 552-554. Thus, while Sibbach itself may appear infrequently in the U. S. Reports, its rule — and in particular its focus on the Federal Rule as the proper unit of analysis — is alive and well.
In contrast, Hanna’s obscure obiter dictum that a court “need not wholly blind itself” to a Federal Rule’s effect on a case’s outcome, 380 U. S., at 473 — which the concurrence invokes twice, post, at 423, 428-429, n. 14 — has never resurfaced in our opinions in the 45 years since its first unfortunate utterance. Nor does it east doubt on Sibbach’s straightforward test: As the concurrence notes, Hanna cited Sibbach for that statement, 380 U. S., at 473, showing it saw no inconsistency between the two.
The concurrence is correct, post, at 425, n. 9, that under our disposition any rule that “really regulates procedure,” Sibbach, 312 U. S., at 14, will pre-empt a conflicting state rule, however “bound up” the latter is with substantive law. The concurrence is wrong, however, that that result proves our interpretation of § 2072(b) implausible, post, at 425-426, n. 9. The result is troubling only if one stretches the term “substantive rights” in § 2072(b) to mean not only state-law rights themselves, but also any state-law procedures closely connected to them. Neither the text nor our precedent supports that expansive interpretation. The examples the concurrence offers — statutes of limitations, burdens of proof, and standards for appellate review of damages awards — do not make its broad definition of substantive rights more persuasive. They merely illustrate that in rare cases it may be difficult to determine whether a rule “really regulates” procedure or substance. If one concludes the latter, there is no pre-emption of the state rule; the Federal Rule itself is invalid.
The concurrence’s concern would make more sense if many Federal Rules that effectively alter state-law rights “bound up with procedures” would survive under Sibbach. But as the concurrence concedes, post, at 426, n. 10, very few would do so. The possible existence of a few outlier instances does not prove Sibbach’s interpretation is absurd. Congress may well have accepted such anomalies as the price of a uniform system of federal procedure.
The concurrence argues that its approach is no more “taxing” than ours because few if any Federal Rules that are “facially valid” under the Enabling Act will fail the concurrence’s test. Post, at 426, and n. 10. But that conclusion will be reached only after federal courts have considered hundreds of state rules applying the concurrence’s inscrutable standard.
The concurrence insists that the task will be easier if courts can “consider the nature and functions of the state law,” post, at 426, n. 10, regardless of the law’s “form,” post, at 419 (emphasis deleted), i. e., what the law actually says. We think that amorphous inquiry into the “nature and functions” of a state law will tend to increase, rather than decrease, the difficulty of classifying Federal Rides as substantive or procedural. Walking through the concurrence's application of its test to § 901(b), post, at 431-436, gives little reason to hope that its approach will lighten the burden for lower courts.
Concurrence Opinion
concurring in part and concurring in the judgment.
The New York law at issue, N. Y. Civ. Prac. Law Ann. (CPLR) § 901(b) (West 2006), is a procedural rule that is not part of New York’s substantive law. Accordingly, I agree with Justice Scalia that Federal Rule of Civil Procedure 23 must apply in this case and join Parts I and II-A of the Court’s opinion. But I also agree with Justice Ginsburg that there are some state procedural rules that federal courts must apply in diversity cases because they function
I
It is a long-recognized principle that federal courts sitting in diversity “apply state substantive law and federal procedural law.” Hanna v. Plumer, 380 U. S. 460, 465 (1965).
That does not mean, however, that the federal rule always governs. Congress has provided for a system of uniform federal rules, see ibid., under which federal courts sitting in diversity operate as “an independent system for administering justice to litigants who properly invoke its jurisdiction,” Byrd v. Blue Ridge Rural Elec. Cooperative, Inc., 356 U. S. 525, 537 (1958), and not as state-court clones that assume all aspects of state tribunals but are managed by Article III judges. See Hanna, 380 U. S., at 473-474. But while Con
Although the Enabling Act and the Rules of Decision Act “say, roughly, that federal courts are to apply state ‘substantive’ law and federal ‘procedural’ law,” the inquiries are not the same. Ibid.; see also id., at 469-470. The Enabling Act does not invite federal courts to engage in the “relatively unguided Erie choice,” id., at 471, but instead instructs only that federal rules cannot “abridge, enlarge or modify any substantive right,” § 2072(b). The Enabling Act’s limitation does not mean that federal rules cannot displace state policy judgments; it means only that federal rules cannot displace a State’s definition of its own rights or remedies. See Sibbach v. Wilson & Co., 812 U. S. 1, 13-14 (1941) (reasoning that “the phrase ‘substantive rights’ ” embraces only those state rights that are sought to be enforced in the judicial proceedings).
Congress has thus struck a balance: “ [Housekeeping rules for federal courts” will generally apply in diversity cases, notwithstanding that some federal rules “will inevitably differ” from state rules. Hanna, 380 U. S., at 473. But not every federal “rul[e] of practice or procedure,” § 2072(a), will displace state law. To the contrary, federal rules must be interpreted with some degree of “sensitivity to important state interests and regulatory policies,” Gasperini v. Center for Humanities, Inc., 518 U. S. 415, 427, n. 7 (1996), and applied to diversity cases against the background of Congress’
It is important to observe that the balance Congress has struck turns, in part, on the nature of the state law that is being displaced by a federal rule. And in my view, the application of that balance does not necessarily turn on whether the state law at issue takes the form of what is traditionally described as substantive or procedural. Rather, it turns on whether the state law actually is part of a State's framework of substantive rights or remedies. See § 2072(b); cf. Hanna, 380 U. S., at 471 (“The line between ‘substance’ and ‘procedure’ shifts as the legal context changes”); Guaranty Trust Co. v. York, 326 U. S. 99, 108 (1945) (noting that the words “‘substance’” and “‘procedure’” “[e]ach impl[y] different variables depending upon the particular problem for which [they] are used”).
Applying this balance, therefore, requires careful interpretation of the state and federal provisions at issue. “The line between procedural and substantive law is hazy,” Erie R. Co. v. Tompkins, 304 U. S. 64, 92 (1938) (Reed, J., concurring in result), and matters of procedure and matters of substance are not “mutually exclusive categories with easily ascertainable contents,” Sibbach, 312 U. S., at 17 (Frankfurter, J., dissenting). Rather, “[r]ules which lawyers call procedural do not always exhaust their effect by regulating procedure,” Cohen v. Beneficial Industrial Loan Corp., 337 U. S. 541, 555 (1949), and in some situations, “procedure and substance are so interwoven that rational separation becomes well-nigh impossible,” id., at 559 (Rutledge, J., dissenting). A “state procedural rule, though undeniably ‘procedural’ in the ordinary
In our federalist system, Congress has not mandated that federal courts dictate to state legislatures the form that their substantive law must take. And were federal courts to ignore those portions of substantive state law that operate as procedural devices, it could in many instances limit the ways that sovereign States may define their rights and remedies. When a State chooses to use a traditionally procedural vehicle as a means of defining the scope of substantive rights or remedies, federal courts must recognize and respect that choice. Cf. Ragan v. Merchants Transfer & Warehouse Co., 337 U. S. 530, 533 (1949) (“Since th[e] cause of action is cre
II
When both a federal rule and a state law appear to govern a question before a federal court sitting in diversity, our precedents have set out a two-step framework for federal courts to negotiate this thorny area. At both steps of the inquiry, there is a critical question about what the state law and the federal rule mean.
The court must first determine whether the scope of the federal rule is “‘sufficiently broad’” to “‘control the issue’” before the court, “thereby leaving no room for the operation” of seemingly conflicting state law. See Burlington Northern R. Co. v. Woods, 480 U. S. 1, 4-5 (1987); Walker v. Armco Steel Corp., 446 U. S. 740, 749-750, and n. 9 (1980). If the federal rule does not apply or can operate alongside the state rule, then there is no “Ac[t] of Congress” governing that particular question, 28 U. S. C. § 1652, and the court must engage in the traditional Rules of Decision Act inquiry under Erie and its progeny. In some instances, the “plain meaning” of a federal rule will not come into “ ‘direct collision’ ” with the state law, and both can operate. Walker, 446 U. S., at 750, n. 9, 749. In other instances, the rule “when fairly construed,” Burlington Northern R. Co., 480 U. S., at 4, with “sensitivity to important state interests and regulatory policies,” Gasperini, 518 U. S., at 427, n. 7, will not collide with the state law.
Thus, the second step of the inquiry may well bleed back into the first. When a federal rule appears to abridge, en
Justice Scalia believes that the sole Enabling Act question is whether the federal rule “really regulates procedure,” ante, at 407, 410, 411, 414, n. 13 (plurality opinion) (internal quotation marks omitted), which means, apparently, whether it regulates “the manner and the means by which the litigants’ rights are enforced,” ante, at 407 (internal quotation marks omitted). I respectfully disagree.
Justice Ginsburg views the basic issue in this case as whether and how to apply a federal rule that dictates an answer to a traditionally procedural question (whether to join plaintiffs together as a class), when a state law that “defines the dimensions” of a state-created claim dictates the opposite answer. Post, at 447. As explained above, I readily acknowledge that if a federal rule displaces a state rule that is “ ‘procedural’ in the ordinary sense of the term,” S. A. Healy Co., 60 F. 3d, at 310, but sufficiently interwoven with the scope of a substantive right or remedy, there would be an Enabling Act problem, and the federal rule would have to give way. In my view, however, this is not such a case.
Rule 23 Controls Class Certification
When the District Court in the case before us was asked to certify a class action, Federal Rule of Civil Procedure 23 squarely governed the determination whether the court
Notwithstanding the plain language of Rule 23, I understand the dissent to find that Rule 23 does not govern the question of class certification in this matter because New York has made a substantive judgment that such a class should not be certified, as a means of proscribing damages. Although, as discussed infra, at 432-435,1 do not accept the dissent’s view of § 901(b), I also do not see how the dissent’s interpretation of Rule 23 follows from that view.
At bottom, the dissent’s interpretation of Rule 23 seems to be that Rule 23 covers only those cases in which its application would create no Erie problem. The dissent would apply the Rules of Decision Act inquiry under Erie even to cases in which there is a governing federal rule, and thus the Act, by its own terms, does not apply. But “[w]hen a situation is covered by one of the Federal Rules, the question facing the court is a far cry from the typical, relatively unguided Erie choice.” Hanna, 380 U. S., at 471. The question is only whether the Enabling Act is satisfied. Although it reflects a laudable concern to protect “state regulatory policies,” post, at 441 (internal quotation marks omitted), Justice Ginsburg’s approach would, in my view, work an end run around Congress’ system of uniform federal rules, see 28 U. S. C. § 2072, and our decision in Hanna. Federal courts can and should interpret federal rules with sensitivity to “state prerogatives,” post, at 439; but even when “state interests . . . warrant our respectful consideration,” post, at 443, federal courts cannot rewrite the rules. If my dissenting colleagues feel strongly that § 901(b) is substantive and that class certification should be denied, then they should argue within the Enabling Act’s framework. Otherwise, “the Federal Rule applies regardless of contrary state law.” Gasperini, 518 U. S., at 427, n. 7; accord, Hanna, 380 U. S., at 471.
Applying Rule 23 Does Not Violate the Enabling Act
As I have explained, in considering whether to certify a class action such as this one, a federal court must inquire whether doing so would abridge, enlarge, or modify New York’s rights or remedies, and thereby violate the Enabling Act. This inquiry is not always a simple one because “[i]t is difficult to conceive of any rule of procedure that cannot have
In my view, however, the bar for finding an Enabling Act problem is a high one. The mere fact that a state law is designed as a procedural rule suggests it reflects a judgment about how state courts ought to operate and not a judgment about the scope of state-created rights and remedies. And for the purposes of operating a federal court system, there are costs involved in attempting to discover the true nature of a state procedural rule and allowing such a rule to operate alongside a federal rule that appears to govern the same question. The mere possibility that a federal rule would alter a state-created right is not sufficient. There must be little doubt.
The text of CPLR § 901(b) expressly and unambiguously applies not only to claims based on New York law but also to claims based on federal law or the law of any other State. And there is no interpretation from New York courts to the contrary. It is therefore hard to see how § 901(b) could be understood as a rule that, though procedural in form, serves the function of defining New York’s rights or remedies. This is all the more apparent because lawsuits under New York law could be joined in federal class actions well before New York passed § 901(b) in 1975, and New York had done nothing to prevent that. It is true, as the dissent points out, that there is a limited amount of legislative history that can be read to suggest that the New York officials who supported § 901(b) wished to create a “limitation” on New York’s “statutory damages.” Post, at 443. But, as Justice Scalia
The legislative history, moreover, does not clearly describe a judgment that § 901(b) would operate as a limitation on New York’s statutory damages. In evaluating that legislative history, it is necessary to distinguish between procedural rules adopted for some policy reason and seemingly procedural rules that are intimately bound up in the scope of a substantive right or remedy. Although almost every rule is adopted for some reason and has some effect on the outcome of litigation, not every state rule “defines the di
In addition to the fear of excessive recoveries, some opponents of a broad class-action device “argued that there was no need to permit class actions in order to encourage litigation . . . when statutory penalties . . . provided an aggrieved party with a sufficient economic incentive to pursue a claim.” Id., at 211,863 N. E. 2d, at 1015 (emphasis added). But those opponents may have felt merely that, for any number of reasons, New York courts should not conduct trials in the class format when that format is unnecessary to motivate litigation.
The legislative history of §901 thus reveals a classically procedural calibration of making it easier to litigate claims in New York courts (under any source of law) only when it is necessary to do so, and not making it too easy when the class tool is not required. This is the same sort of calculation that might go into setting filing fees or deadlines for briefs. There is of course a difference of degree between those examples and class certification, but not a difference of kind; the class vehicle may have a greater practical effect on who brings lawsuits than do low filing fees, but that does not transform it into a damages “proscription,” post, at 447, n. 6, 456, or “limitation,” post, at 443, and n. 2, 444, 447, 459.
The difference of degree is relevant to the forum shopping considerations that are part of the Rules of Decision Act or Erie inquiry. If the applicable federal rule did not govern the particular question at issue (or could be fairly read not to do so), then those considerations would matter, for precisely the reasons given by the dissent. See post, at 452-458.
Because Rule 23 governs class certification, the only decision is whether certifying a class in this diversity case would “abridge, enlarge or modify” New York’s substantive rights or remedies. § 2072(b). Although one can argue that class certification would enlarge New York’s “limited” damages remedy, see post, at 443, and n. 2, 444, 447, 459, such arguments rest on extensive speculation about what the New York Legislature had in mind when it created § 901(b). But given that there are two plausible competing narratives, it seems obvious to me that we should respect the plain textual reading of § 901(b), a rule in New York’s procedural code about when to certify class actions brought under any source of law, and respect Congress’ decision that Rule 23 governs class certification in federal courts. In order to displace a federal rule, there must be more than just a possibility that the state rule is different than it appears.
Accordingly, I concur in part and concur in the judgment.
See also Gasperini v. Center for Humanities, Inc., 518 U. S. 415, 427 (1996); E. Chemerinsky, Federal Jurisdiction § 5.3, p. 327 (5th ed. 2007) (hereinafter Chemerinsky); 17A J. Moore et al., Moore’s Federal Practice § 124.01[1] (3d ed. 2009) (hereinafter Moore).
The choice in Erie R. Co. v. Tompkins, 304 U. S, 64 (1938), requires that the court consider “the twin aims of the Erie rule: discouragement of forum-shopping and avoidance of inequitable administration of the laws.” Hanna v. Plumer, 380 U. S. 460, 468 (1965); see also Gasperini, 518 U. S., at 427-428 (describing Erie inquiry).
See Chemerinsky § 5.3.5, at 321 (observing that courts “have struggled to develop an approach that permits uniform procedural rules to be applied in federal court while still allowing state substantive law to govern”).
Cf. Milam v. State Farm Mut. Auto. Ins. Co., 972 F. 2d 166, 170 (CA7 1992) (Posner, J.) (holding that “where a state in furtherance of its substantive policy makes it more difficult to prove a particular type of state-law claim, the rule by which it does this, even if denominated a rule of evidence or cast in evidentiary terms, -will be given effect in a diversity suit as an expression of state substantive policy”); Moore § 124.09[2] (listing examples of federal courts that apply state evidentiary rules to diversity suits). Other examples include state-imposed burdens of proof.
I thus agree with Justice Ginsbubg, post, at 438-442 (dissenting opinion), that a federal rule, like any federal law, must be interpreted in light of many different considerations, including “sensitivity to important state interests,” post, at 442 (internal quotation marks omitted), and “regulatory policies,” post, at 437. See Stewart Organization, Inc. v. Ricoh Corp., 487 U. S. 22, 37-38 (1988) (Scalia, J., dissenting) (“We should assume ... when it is fair to do so, that Congress is just as concerned as we have been to avoid significant differences between state and federal courts in adjudicat
See also Ortiz v. Fibreboard Corp., 527 U. S. 815, 842, 845 (1999) (adopting “limiting construction” of Federal Rule of Civil Procedure 23 that, inter alia, “minimizes potential conflict with the Rules Enabling Act”); Amchem Products, Inc. v. Windsor, 521 U. S. 591, 612-613 (1997) (observing that federal rules “must be interpreted in keeping with the Rules Enabling Act, which instructs that rules of procedure ‘shall not abridge, enlarge or modify any substantive right’ ”).
This understanding of the Enabling Act has been the subject of substantial academic criticism, and rightfully so. See, e. g., Wright § 4509, at 264, 269-270, 272; Ely, The Irrepressible Myth of Erie, 87 Harv. L. Rev. 693, 719 (1974) (hereinafter Ely); see also R. Fallon, J. Manning, D. Meltzer, & D. Shapiro, Hart and Wechsler’s The Federal Courts and the Federal System 593, n. 6 (6th ed. 2009) (discussing Ely).
Justice Scalia concedes as much, see ante, at 412-413, but argues that insofar as I allow for the possibility that a federal rule might violate the Enabling Act when it displaces a seemingly procedural state rule, my approach is itself “unfaithful to the statute’s terms,” which cover “substantive rights” but not “procedural rules,” ante, at 413, n. 11 (internal quotation marks omitted). This is not an objection to my interpretation of the Enabling Act — that courts must look to whether a federal rule alters substantive rights in a given case — but simply to the way I would apply it, allowing for the possibility that a state rule that regulates something traditionally considered to be procedural might actually define a substantive right. Justice Scalia's objection, moreover, misses the key point: In some instances, a state rule that appears procedural really is not. A rule about how damages are reviewed on appeal may really be a damages cap. See Gasperini, 518 U. S., at 427. A rule that a plaintiff can bring a claim
The plurality’s interpretation of the Enabling Act appears to mean that no matter how bound up a state provision is with the State’s own rights or remedies, any contrary federal rule that happens to regulate “the manner and the means by which the litigants’ rights are enforced,” ante, at 407 (internal quotation marks omitted), must govern. There are many ways in which seemingly procedural rules may displace a State’s formulation of its substantive law. For example, statutes of limitations, although in some sense procedural rules, can also be understood as a temporal limitation on legally created rights; if this Court were to promulgate a federal limitations period, federal courts would still, in some instances, be required to apply state limitations periods. Similarly, if the federal rules altered the burden of proof in a case, this could eviscerate a critical aspect — albeit one that deals with how a right is enforced — of a State’s framework of rights and remedies. Or if a federal rule about appellate review displaced a state rule about how damages are reviewed on appeal, the federal rule might be pre-empting a state damages cap. Cf. Gasperini, 518 U. S., at 427.
Justice Scalia responds that some of these federal rules might be invalid under his view of the Enabling Act because they may not “really regulat[e] procedure.” Ante, at 414, n. 13 (internal quotation marks omitted). This response, of course, highlights how empty the plurality’s test really is. See n. 10, infra. The response is also limited to those rules that can be described as “regulatfing]” substance, ante, at 407; it does not address those federal rules that alter the right at issue in the litigation, see Sibbach v. Wilson & Co., 312 U. S. 1, 13-14 (1941), only when they displace particular state laws. Justice Scalia speculates that “Congress may well have accepted” the occasional alteration of substantive rights “as the price of a uniform system of federal procedure.” Ante, at 414, n. 13. Were we forced to speculate about the balance that Con-
It will be rare that a federal rule that is facially valid under 28 U. S. C. §2072 will displace a State’s definition of its own substantive rights. See Wright §4509, at 272 (observing that “unusual cases occasionally might arise in which... because of an unorthodox state rule of law, application of a Civil Rule ... would intrude upon state substantive rights”). Justice Scaxia’s interpretation, moreover, is not much more determinate than mine. Although it avoids courts’ having to evaluate state law, it tasks them with figuring out whether a federal rule is really “procedural.” It is hard to know the answer to that question and especially hard to resolve it without considering the nature and functions of the state law that the federal rule will displace. The plurality’s “‘test’ is no test at all — in a sense, it is little more than the statement that a matter is procedural if, by revelation, it is procedural.” Id., at 264.
The petitioner in Sibbach argued only that federal rules could not validly address subjects involving “important questions of policy,” Supp. Brief for Petitioner, O. T. 1940, No. 28, p. 7; see also Reply to Brief for Respondent, O. T. 1940, No. 28, p. 2 (summarizing that the petitioner argued only that “[t]he right not to be compelled to submit to a physical examination” is “a ‘substantive’ right forbidden by Congress” to be addressed by the Federal Rules of Civil Procedure, “even though in theory the right is not of the character determinative of litigation”). In the petitioner’s own words, “[t]his contention . . . [did] not in itself involve the [applicable] law of Illinois,” ibid., and the petitioner in her briefing referenced the otherwise applicable state law only “to show that [she] was in a position to make the contention,” ibid., that is, to show that the federal court was applying a federal rule and not, under the Rules of Decision Act, applying state law, see id., at 3.
The plurality defends its view by including a long quote from two paragraphs of Sibbach. Ante, at 409-410. But the quoted passage of Sibbach describes only a facial inquiry into whether federal rules may “deal with” particular subject matter. 312 U. S., at 13. The plurality’s block quote, moreover, omits half of one of the quoted paragraphs, in which the Court explained that the term “substantive rights” in the Enabling Act “certainly embraces such rights” as “rights conferred by law to be protected and enforced,” such as “the right not to be injured in one’s per
Put another way, even if a federal rule in most cases “really regulates procedure,” Sibbach, 312 U. S., at 14, it does not “really regulatfe] procedure” when it displaces those rare state rules that, although “procedural” in the ordinary sense of the term, operate to define the rights and remedies available in a case. This is so because what is procedural in one context may be substantive in another. See Hanna, 380 U. S., at 471; Guaranty Trust Co. v. York, 326 U. S. 99, 108 (1945).
Although this Court’s decision in Hanna cited Sibbach, that is of little significance. Hanna did not hold that any seemingly procedural federal rule will always govern, even when it alters a substantive state right; nor, as in Sibbach, was the argument that I now make before the Court. Indeed, in Hanna we cited Sibbach’s statement that the Enabling Act pro
Justice Scalia notes that in Mississippi Publishing Corp. v. Murphree, 326 U. S. 438 (1946), we used language that supported his view. See ante, at 407. . But in that case, we contemplated only that the Federal Rule in question might have “incidental effects . . . upon the rights of litigants,” explaining that “[t]he fact that the application of Rule 4(f) will operate to subject petitioner’s rights to adjudication by the district court for northern Mississippi” rather than southern Mississippi “will undoubtedly affect those rights.” 326 U. S., at 445-446. There was no suggestion that by affecting the method of enforcing the rights in that case, the federal rules could plausibly abridge, enlarge, or modify the rights themselves.
Nor do I see how it follows from the dissent’s premises that a class cannot be certified. The dissent contends that § 901(b) is a damages “limitation,” post, at 443, and n. 2,444, 447, 459, or “proscription,” post, at 447, n. 6, 456, whereas Rule 23 “does not command that a particular remedy be available when a party sues in a representative capacity,” post, at 446, and that consequently both provisions can apply. Yet even if the dissent’s premises were correct, Rule 23 would still control the question whether petitioner may certify a class, and § 901(b) would be relevant only to determine whether petitioner, at the conclusion of a class-action lawsuit, may collect statutory damages.
It may be that if the dissent’s interpretation of § 901(b) were correct, this class could not (or has not) alleged sufficient damages for the federal court to have jurisdiction, see 28 U. S. C. § 1332(d)(6). But that issue was not raised in respondent’s motion to dismiss (from which the case comes to this Court), and it was not squarely presented to the Court. In any event, although the lead plaintiff has “acknowledged that its individual claim” is for less than the required amount in controversy, see 549 F. 3d 137,140 (CA2 2008), we do not know what actual damages the entire class can allege. Thus, even if the Court were to adopt all of the dissent’s premises, I believe the correct disposition would be to vacate and remand for further consideration of whether the required amount in controversy has or can be met.
In its Erie analysis, the dissent observes that when sovereigns create laws, the enacting legislatures sometimes assume those laws will apply only within their territory. See post, at 453-454. That is a true fact, but it does not do very much work for the dissent’s position. For one thing, as the dissent observes, this Erie analysis is relevant only if there is no conflict between Rule 23 and § 901(b), and the court can thus apply both. Post, at 451. But because, in my view, Rule 23 applies, the only question is whether it would violate the Enabling Act. See Hanna, 380 U. S., at 471. And that inquiry is different from the Rules of Decision Act, or Erie, inquiry. See 380 U. S., at 469-471.
The dissent’s citations, moreover, highlight simply that when interpreting statutes, context matters. Thus, we sometimes presume that laws cover only domestic conduct and sometimes do not, depending upon, inter alia, whether it makes sense in a given situation to assume that “the character of an act as lawful or unlawful must be determined wholly by the law of the [place] where the act is done,” American Banana Co. v. United Fruit Co., 213 U. S. 347, 356 (1909). But in the context of § 901(b), a presumption against extraterritoriality makes little sense. That presumption applies almost only to laws governing what people can or cannot do. Section 901(b), however, is not directed to the conduct of persons but is instead directed to New York courts. Thus, § 901(b) is, by its own terms, not extraterritorial insofar as it states that it governs New York courts. It is possible that the New York Legislature simply did not realize that New York courts hear claims under other sources of law and that other courts hear claims under New York law, and therefore mistakenly believed that they had written a limit on New York remedies. But because New York set up § 901(b) as a general rule about how its courts operate, my strong presumption is to the contrary.
To be sure, one could imagine the converse story, that a legislature would create statutory penalties but dictate that such penalties apply only when necessary to overcome the costs and inconvenience of filing a lawsuit, and thus are not necessary in a class action. But it is hard to see how that narrative applies to New York, given that New York’s penalty provisions, on their face, apply to all plaintiffs, be they class or individual, and
Justice Ginsburg asserts that class certification in this matter would “transform a $500 case into a $5 million award.” Post, at 436. But in fact, class certification would transform 10,000 $500 cases into one $5 million case. It may be that without class certification, not all of the potential plaintiffs would bring their cases. But that is true of any procedural vehicle; without a lower filing fee, a conveniently located courthouse, easy-to-use federal procedural rules, or many other features of the federal courts, many plaintiffs would not sue.
Dissenting Opinion
with whom Justice Kennedy, Justice Breyer, and Justice Alito join, dissenting.
The Court today approves Shady Grove’s attempt to transform a $500 case into a $5 million award, although the State creating the right to recover has proscribed this alchemy. If Shady Grove had filed suit in New York state court, the 2% interest payment authorized by New York Ins. Law Ann. § 5106(a) (West 2009) as a penalty for overdue benefits would, by Shady Grove’s own measure, amount to no more than
The Court reads Rule 23 relentlessly to override New York’s restriction on the availability of statutory damages. Our decisions, however, caution us to ask, before undermining state legislation: Is this conflict really necessary? Cf. Traynor, Is This Conflict Really Necessary? 37 Texas L. Rev. 657 (1959). Had the Court engaged in that inquiry, it would not have read Rule 23 to collide with New York’s legitimate interest in keeping certain monetary awards reasonably bounded. I would continue to interpret Federal Rules with awareness of, and sensitivity to, important state regulatory policies. Because today's judgment radically departs from that course, I dissent.
I
A
“Under the Erie doctrine,” it is long settled, “federal courts sitting in diversity apply state substantive law and federal procedural law.” Gasperini v. Center for Humanities, Inc., 518 U. S. 415, 427 (1996); see Erie B. Co. v. Tompkins, 304 U. S. 64 (1938). Justice Harlan aptly conveyed the importance of the doctrine; he described Erie as “one of the modern cornerstones of our federalism, expressing policies that profoundly touch the allocation of judicial power between the state and federal systems.” Hanna v. Plumer,
The first, the Rules of Decision Act,
The second, the Rules Enabling Act, enacted in 1934, authorizes us to “prescribe general rules of practice and procedure” for the federal courts, but with a crucial restriction: “Such rules shall not abridge, enlarge or modify any substantive right.” 28 U. S. C. § 2072. Pursuant to this statute, we have adopted the Federal Rules of Civil Procedure. In interpreting the scope of the Rules, including, in particular, Rule 23, we have been mindful of the limits on our authority. See, e. g., Ortiz v. Fibreboard Corp., 527 U. S. 815, 845 (1999) (The Rules Enabling Act counsels against “adventurous application” of Rule 23; any tension with the Act “is best kept within tolerable limits.”); Amchem Products, Inc. v. Windor, 521 U. S. 591, 612-613 (1997). See also Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U. S. 497, 503-504 (2001).
If a Federal Rule controls an issue and directly conflicts with state law, the Rule, so long as it is consonant with the Rules Enabling Act, applies in diversity suits. See Hanna, 380 U. S., at 469-474. If, however, no Federal Rule or statute governs the issue, the Rules of Decision Act, as inter
B
In our prior decisions in point, many of them not mentioned in the Court’s opinion, we have avoided immoderate interpretations of the Federal Rules that would trench on state prerogatives without serving any countervailing federal interest. “Application of the Hanna analysis,” we have said, “is premised on a ‘direct collision’ between the Federal Rule and the state law.” Walker v. Armco Steel Corp., 446 U. S. 740, 749-750 (1980) (quoting Hanna, 380 U. S., at 472). To displace state law, a Federal Rule, “when fairly construed,” must be “‘sufficiently broad’” so as “to ‘control the issue’ before the court, thereby leaving no room for the operation of that law.” Burlington Northern R. Co. v. Woods, 480 U. S. 1, 4-5 (1987) (quoting Walker, 446 U. S., at 749-750, and n. 9; emphasis added); cf. Stewart Organization, Inc. v. Ricoh Corp., 487 U. S. 22, 37-38 (1988) (Scalia, J., dissenting) (“[I]n deciding whether a federal... Rule of Procedure encompasses a particular issue, a broad reading that would create significant disuniformity between state and federal courts should be avoided if the text permits.”).
In pre-Hanna decisions, the Court vigilantly read the Federal Rules to avoid conflict with state laws. In Palmer v. Hoffman, 318 U. S. 109, 117 (1943), for example, the Court read Federal Rule 8(c), which lists affirmative defenses, to control only the manner of pleading the listed defenses in diversity cases; as to the burden of proof in such cases, Palmer held, state law controls.
Similarly in Cohen v. Beneficial Industrial Loan Corp., 337 U. S. 541 (1949), the Court held applicable in a diversity action a state statute requiring plaintiffs, as a prerequisite to pursuit of a stockholder’s derivative action, to post a bond as security for costs. At the time of the litigation, Rule 23, now Rule 23.1, addressed a plaintiff’s institution of a derivative action in federal court. Although the Federal Rule specified prerequisites to a stockholder’s maintenance of a derivative action, the Court found no conflict between the Rule and the state statute in question; the requirements of both could be enforced, the Court observed. See id., at 556. Burdensome as the security-for-costs requirement may be, Cohen made plain, suitors could not escape the upfront outlay by resorting to the federal court’s diversity jurisdiction.
In all of these cases, the Court stated in Hanna, “the scope of the Federal Rule was not as broad as the losing party urged, and therefore, there being no Federal Rule which covered the point in dispute, Erie commanded the enforcement of state law.” 380 U. S., at 470. In Hanna itself, the Court found the clash “unavoidable,” ibid.) the petitioner had effected service of process as prescribed by Federal Rule 4(d)(1), but that “how-to” method did not satisfy the special Massachusetts law applicable to service on an executor or administrator. Even as it rejected the Massachusetts prescription in favor of the federal procedure, however, “[t]he majority in Hanna recognized... that federal rules ... must
Following Hanna, we continued to “interpre[t] the federal rules to avoid conflict with important state regulatory policies.” Hart & Wechsler 593. In Walker, the Court took up the question whether Ragan should be overruled; we held, once again, that Federal Rule 3 does not directly conflict with state rules governing the time when an action commences for purposes of tolling a limitations period. 446 U. S., at 749-752. Rule 3, we said, addresses only “the date from which various timing requirements of the Federal Rules begin to run,” id., at 751, and does not “purpor[t] to displace state tolling rules,” id., at 750-751. Significant state policy interests would be frustrated, we observed, were we to read Rule 3 as superseding the state rule, which required actual service on the defendant to stop the clock on the statute of limitations. Id., at 750-752.
We were similarly attentive to a State’s regulatory policy in Gasperini. That diversity case concerned the standard for determining when the large size of a jury verdict warrants a new trial. Federal and state courts alike had generally employed a “shock the conscience” test in reviewing jury awards for excessiveness. See 518 U. S., at 422. Federal courts did so pursuant to Federal Rule 59(a) which, as worded at the time of Gasperini, instructed that a trial court could grant a new trial “for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States.” Fed. Rule Civ. Proc. 59(a) (West 1995). In an effort to provide greater control, New York prescribed procedures under which jury verdicts would be examined to determine whether they “deviate[d] materially from what would be reasonable compensation.” See
Most recently, in Semtek, we addressed the claimpreclusive effect of a federal-court judgment dismissing a diversity action on the basis of a California statute of limitations. The case came to us after the same plaintiff renewed the same fray against the same defendant in a Maryland state court. (Plaintiff chose Maryland because that State’s limitations period had not yet run.) We held that Federal Rule 41(b), which provided that an involuntary dismissal “operate[d] as an adjudication on the merits,” did not bar maintenance of the renewed action in Maryland. To hold that Rule 41(b) precluded the Maryland courts from entertaining the case, we said, “would arguably violate the jurisdictional limitation of the Rules Enabling Act,” 531 U. S., at 503, and “would in many cases violate [Erie’s] federalism principle,” id., at 504.
In sum, both before and after Hanna, the above-described decisions show, federal courts have been cautioned by this Court to “interpre[t] the Federal Rules .. . with sensitivity to important state interests,” Gasperini, 518 U. S., at 427, n. 7, and a will “to avoid conflict with important state regulatory policies,” id., at 438, n. 22 (internal quotation marks omitted).
C
Our decisions instruct over and over again that, in the adjudication of diversity cases, state interests — whether advanced in a statute, e. g., Cohen, or a procedural rule, e. g., Gasperini — warrant our respectful consideration. Yet today, the Court gives no quarter to New York’s limitation on statutory. damages and requires the lower courts to thwart the regulatory policy at stake: To prevent excessive damages, New York’s law controls the penalty to which a defendant may be exposed in a single suit. The story behind § 901(b)’s enactment deserves telling.
In 1975, the Judicial Conference of the State of New York proposed a new class-action statute designed “to set up a flexible, functional scheme” that would provide “an effective, but controlled group remedy.” Judicial Conference Report on CPLR, reprinted in 1975 N. Y. Laws pp. 1477, 1493 (McKinney). As originally drafted, the legislation addressed only the procedural aspects of class actions; it specified, for example, five prerequisites for certification, eventually codified at § 901(a), that closely tracked those listed in Rule 23. See CPLR § 901(a) (requiring, for class certification, numer
While the Judicial Conference proposal was in the New York Legislature’s hopper, “various groups advocated for the addition of a provision that would prohibit class action plaintiffs from being awarded a statutorily-created penalty . . . except when expressly authorized in the pertinent statute.” Sperry v. Crompton Corp., 8 N. Y. 3d 204, 211, 863 N. E. 2d 1012, 1015 (2007). These constituents “feared that recoveries beyond actual damages could lead to excessively harsh results.” Ibid. “They also argued that there was no need to permit class actions ... [because] statutory penalties .. . provided an aggrieved party with a sufficient economic incentive to pursue a claim.” Ibid. Such penalties, constituents observed, often far exceed a plaintiff’s actual damages. “When lumped together,” they argued, “penalties and class actions produce overkill.” Attachment to Letter from G. Perkinson, New York State Council of Retail Merchants, Inc., to J. Gribetz, Executive Chamber (June 4, 1975) (Legislative Report), Bill Jacket, L. 1975, Ch. 207.
Aiming to avoid “annihilating punishment of the defendant,” the New York Legislature amended the proposed statute to bar the recovery of statutory damages in class actions. Y. Alexander, Practice Commentaries, C901:ll, reprinted in 7B McKinney's Consolidated Laws of New York Ann., p. 104 (2006) (internal quotation marks omitted). In his signing statement, Governor Hugh Carey stated that the new statute “empowers the court to prevent abuse of the class action device and provides a contro lied remedy. ” Memorandum on Approving L. 1975, Ch. 207, reprinted in 1975 N. Y. Laws, at 1748 (emphasis added).
“[T]he final bill... was the result of a compromise among competing interests.” Sperry, 8 N. Y. 3d, at 211, 863 N. E. 2d, at 1015. Section 901(a) allows courts leeway in deciding whether to certify a class, but § 901(b) rejects the use of the class mechanism to pursue the particular remedy of statu
D
Shady Grove contends — and the Court today agrees — that Rule 23 unavoidably preempts New York’s prohibition on the recovery of statutory damages in class actions. The Federal Rule, the Court emphasizes, states that Shady Grove’s suit “may be” maintained as a class action, which conflicts with § 901(b)’s instruction that it “may not” so proceed. Ante, at 399 (internal quotation marks omitted; emphasis deleted). Accordingly, the Court insists, § 901(b) “cannot apply in diversity suits unless Rule 23 is ultra vires.” Ibid. Concluding that Rule 23 does not violate the Rules Enabling Act, the Court holds that the federal provision controls Shady Grove’s ability to seek, on behalf of a class, a statutory penalty of over $5 million. Ante, at 406-410 (plurality opinion);
The Court, I am convinced, finds conflict where none is necessary. Mindful of the history behind § 901(b)’s enactment, the thrust of our precedent, and the substantive-rights limitation in the Rules Enabling Act, I conclude, as did the Second Circuit and every District Court to have considered the question in any detail,
In other words, Rule 23 describes a method of enforcing a claim for relief, while § 901(b) defines the dimensions of the claim itself. In this regard, it is immaterial that § 901(b) bars statutory penalties in wholesale, rather than retail, fashion. The New York Legislature could have embedded the limitation in every provision creating a cause of action for which a penalty is authorized; § 901(b) operates as shorthand to the same effect. It is as much a part of the delineation of the claim for relief as it would be were it included claim by claim in the New York Code.
The Court single-mindedly focuses on whether a suit “may” or “may not” be maintained as a class action. See ante, at 398-401. Putting the question that way, the Court does not home in on the reason why. Rule 23 authorizes class treatment for suits satisfying its prerequisites because the class mechanism generally affords a fair and efficient way to aggregate claims for adjudication. Section 901(b) responds to an entirely different concern; it does not allow class members to recover statutory damages because the New York Legislature considered the result of adjudicating such claims en masse to be exorbitant.
Suppose, for example, that a State, wishing to cap damages in class actions at $1 million, enacted a statute providing that “a suit to recover more than $1 million may not be maintained as a class action.” Under the Court’s reasoning— which attributes dispositive significance to the words “may not be maintained” — Rule 23 would preempt this provision, never mind that Congress, by authorizing the promulgation of rules of procedure for federal courts, surely did not intend to displace state-created ceilings on damages.
Any doubt whether Rule 23 leaves § 901(b) in control of the remedial issue at the core of this ease should be dispelled by our Erie jurisprudence, including Hanna, which counsels us to read Federal Rules moderately and cautions against stretching a Rule to cover every situation it could conceivably reach.
Notably, New York is not alone in its effort to contain penalties and minimum recoveries by disallowing class relief; Congress, too, has precluded class treatment for certain claims seeking a statutorily designated minimum recovery. See, e. g., 15 U. S. C. § 1640(a)(2)(B) (Truth in Lending Act) (“[I]n the case of a class action ... no minimum recovery shall be applicable.”); § 1693m(a)(2)(B) (Electronic Fund
By finding a conflict without considering whether Rule 23 rationally should be read to avoid any collision, the Court unwisely and unnecessarily retreats from the federalism principles undergirding Erie. Had the Court reflected on the respect for state regulatory interests endorsed in our decisions, it would have found no cause to interpret Rule 23 so woodenly — and every reason not to do so. Cf. Traynor, 37 Texas L. Rev., at 669 (“It is bad enough for courts to prattle unintelligibly about choice of law, but unforgiveable when inquiry might have revealed that there was no real conflict.”).
Because I perceive no unavoidable conflict between Rule 23 and § 901(b), I would decide this case by inquiring “whether application of the [state] rule would have so important an effect upon the fortunes of one or both of the litigants that failure to [apply] it would be likely to cause a plaintiff to choose the federal court.” Hanna, 380 U. S., at 468, n. 9. See Gasperini, 518 U. S., at 428.
Seeking to pretermit that inquiry, Shady Grove urges that the class-action bar in § 901(b) must be regarded as “procedural” because it is contained in the CPLR, which “govern[s] the procedure in civil judicial proceedings in all courts of the state.” Brief for Petitioner 34 (quoting CPLR § 101; emphasis in original). Placement in the CPLR is hardly dispositive. The provision held “substantive” for Erie purposes in Gasperini is also contained in the CPLR (§ 5501(e)), as are limitations periods, §201 et seq., prescriptions plainly “substantive” for Erie purposes however they may be characterized for other purposes, see York, 326 U. S., at 109-112. See also, e. g., 1 Restatement (Second) of Conflict of Laws § 133, Reporter’s Note, p. 369 (1969) (hereinafter Restatement) (“Under the rule of Erie... the federal courts have classified the burden of persuasion as to contributory negligence as a matter of substantive law that is governed by the rule of the State in which they sit even though the courts of that State have characterized their rule as procedural for choice-of-law purposes.”); Cook, “Substance” and “Procedure” in the Conflict of Laws, 42 Yale L. J. 333 (1933).
Shady Grove also ranks § 901(b) as “procedural” because “nothing in [the statute] suggests that it is limited to rights of action based on New York state law, as opposed to federal law or the law of other states”; instead it “applies to actions seeking penalties under any statute.” Brief for Petitioner 35-36. See also ante, at 432 (Stevens, J., concurring in part and concurring in judgment) (Section 901(b) cannot “be
It is true that § 901(b) is not specifically limited to claims arising under New York law. But neither is it expressly extended to claims arising under foreign law The rule prescribes, without elaboration either way, that “an action to recover a penalty . . . may not be maintained as a class action.” We have often recognized that “general words” appearing in a statute may, in fact, have limited application; “[t]he words 'any person or persons,’” for example, “are broad enough to comprehend every human being. But general words must not only be limited to cases within the jurisdiction of the state, but also to those objects to which the legislature intended to apply them.” United States v. Palmer, 3 Wheat. 610, 631 (1818) (opinion for the Court by Marshall, C. J.). See also Small v. United States, 544 U. S. 385, 388 (2005) (“In law, a legislature that uses the statutory . phrase 'any person’ may or may not mean to include 'persons’ outside the jurisdiction of the state.” (some internal quotation marks omitted)); Flora v. United States, 362 U. S. 145, 149 (1960) (The term ‘"any sum’ is a catchall [phrase,] . . . but to say this is not to define what it catches.”).
Moreover, Shady Grove overlooks the most likely explanation for the absence of limiting language: New York legislators make law with New York plaintiffs and defendants in mind, i. e., as if New York were the universe. See Baxter, Choice of Law and the Federal System, 16 Stan. L. Rev. 1, 11 (1963) (“[L]awmakers often speak in universal terms but must be understood to speak with reference to their constituents.”); ef. Smith v. United States, 507 U. S. 197, 204, n. 5 (1993) (presumption against extraterritoriality rooted in part in “the commonsense notion that Congress generally legislates with domestic concerns in mind”).
“When the Massachusetts legislature addresses itself to the problem of married women as sureties, the undeveloped image in its mind is that of Massachusetts married women, husbands, creditors, transactions, courts, and judgments. In the history of Anglo-American law the domestic case has been normal, the conflict-of-laws case marginal.” Married Women’s Contracts: A Study in Conflict-of-Laws Method, 25 U. Chi. L. Rev. 227, 231 (1958) (emphasis added).
Shady Grove’s suggestion that States must specifically limit their laws to domestic rights of action if they wish their enactments to apply in federal diversity litigation misses the obvious point: State legislators generally do not focus on an interstate setting when drafting statutes.
Moreover, statutes qualify as “substantive” for Erie purposes even when they have “procedural” thrusts as well. See, e. g., Cohen, 337 U. S., at 555; cf. Woods v. Interstate Realty Co., 337 U. S. 535, 536-538, and n. 1 (1949) (holding diversity ease must be dismissed based on state statute that, by its terms, governed only proceedings in state court). Statutes of limitations are, again, exemplary. They supply “substantive” law in diversity suits, see York, 326 U. S., at 109-112, even though, as Shady Grove acknowledges, state courts often apply the forum’s limitations period as a “procedural” bar to claims arising under the law of another State, see Reply Brief 24, n. 16; Tr. of Oral Arg. 16-17. See also
In short, Shady Grove’s effort to characterize § 901(b) as simply “procedural” cannot successfully elide this fundamental norm: When no federal law or rule is dispositive of an issue, and a state statute is outcome affective in the sense our cases on Erie (pre- and post-Hanna) develop, the Rules of Decision Act commands application of the State’s law in diversity suits. Gasperini, 518 U. S., at 428; Hanna, 380 U. S., at 468, n. 9; York, 326 U. S., at 109. As this case starkly demonstrates, if federal courts exercising diversity jurisdiction are compelled by Rule 23 to award statutory penalties in class actions while New York courts are bound by §901(b)’s proscription, “substantial variations between state and federal [money judgments] may be expected.” Gasperini, 518 U. S., at 430 (quoting Hanna, 380 U. S., at 467-468 (internal quotation marks omitted)). The “variation” here is indeed “substantial.” Shady Grove seeks class relief that is ten thousand times greater than the individual remedy available to it in state court. As the plurality acknowledges, ante, at 415, forum shopping will undoubtedly result if a plaintiff need only file in federal instead of state court to seek a massive monetary award explicitly barred by state law. See Gasperini, 518 U. S., at 431 (“Erie precludes a recovery in federal court significantly larger than the recovery that would have been tolerated in state court.”).
It is beyond debate that “a statutory cap on damages would supply substantive law for Erie purposes.” Gasperini, 518 U. S., at 428. See also id., at 439-440 (Stevens, J., dissenting) (“A state-law ceiling on allowable damages ... is a substantive rule of decision that federal courts must apply in diversity cases governed by New York law.”); id., at 464 (Scalia, J., dissenting) (“State substantive law controls what injuries are compensable and in what amount.”). In Gasperini, we determined that New York’s standard for measuring the alleged excessiveness of a jury verdict was designed to provide a control analogous to a damages cap. Id., at 429. The statute was framed as “a procedural instruction,” we noted, “but the State’s objective [wa]s manifestly substantive.” Ibid.
Gasperini’s observations apply with full force in this case. By barring the recovery of statutory damages in a class action, § 901(b) controls a defendant’s maximum liability in a suit seeking such a remedy. The remedial provision could have been written as an explicit cap: “In any class action seeking statutory damages, relief is limited to the amount the named plaintiff would have recovered in an individual suit.” That New York’s Legislature used other words to express the very same meaning should be inconsequential.
We have long recognized the impropriety of displacing, in a diversity action, state-law limitations on state-created rem
III
The Court’s erosion of Erie’s federalism grounding impels me to point out the large irony in today’s judgment. Shady Grove is able to pursue its claim in federal court only by virtue of the recent enactment of the Class Action Fairness Act of 2005 (CAFA), 28 U. S. C. § 1332(d). In CAFA, Congress opened federal-court doors to state-law-based class actions so long as there is minimal diversity, at least 100 class
* * *
I would continue to approach Erie questions in a manner mindful of the purposes underlying the Rules of Decision Act and the Rules Enabling Act, faithful to precedent, and respectful of important state interests. I would therefore hold that the New York Legislature’s limitation on the recovery of statutory damages applies in this case, and would affirm the Second Circuit’s judgment.
The Rules of Decision Act directs that “[t]he laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply.” 28 U. S. C. § 1652.
Justice Stevens stakes out common ground on this point: “[FJederal rules,” he observes, “must be interpreted with some degree of ‘sensitivity to important state interests and regulatory policies,’ . . . and applied to diversity cases against the background of Congress’ command that such rules not alter substantive rights and with consideration of ‘the degree to which the Rule makes the character and result of the federal litigation stray from the course it would follow in state courts,' Hanna [v. Plumer], 380 U. S. [460, 473 (1965)].” Ante, at 418-419 (opinion concurring in part and concurring in judgment). See also ante, at 419-420 (“A ‘state procedural rule, though undeniably procedural in the ordinary sense of the term,’ may exist ‘to influence substantive outcomes,’... and may in some instances become so bound up with the state-created right or remedy that
Even in the mine-run case, a class action can result in “potentially ruinous liability.” Advisory Committee’s Notes on Fed. Rule Civ. Proc. 23, 28 U. S. C. App., p. 143. A court’s decision to certify a class accordingly places pressure on the defendant to settle even unmeritorious claims. See, e. g., Coopers & Lybrand v. Livesay, 437 U. S. 463, 476 (1978). When representative plaintiffs seek statutory damages, pressure to settle may be heightened because a class action poses the risk of massive liability unmoored to actual injury. See, e. g., Ratner v. Chemical Bank New York Trust Co., 54 F. R. D. 412, 416 (SDNY 1972) (exercising “considerable discretion of a pragmatic nature” to refuse to certify a class because the plaintiffs suffered negligible actual damages but sought statutory damages of $13 million).
See, e. g., In re Automotive Refinishing Paint Antitrust Litigation, 515 F. Supp. 2d 544, 549-551 (ED Pa. 2007); Leider v. Ralfe, 387 F. Supp. 2d 283, 289-292 (SDNY 2005); Dornberger v. Metropolitan Life Ins. Co., 182 F. R. D. 72, 84 (SDNY 1999). See also Weber v. U. S. Sterling Securities, Inc., 282 Conn. 722, 738-739, 924 A. 2d 816, 827-828 (2007) (§ 901(b) applied in Connecticut state court to action governed by New York substantive law).
Shady Grove projects that a dispensation in favor of Allstate would require “courts in all diversity class actions ... [to] look to state rules and decisional law rather than to Rule 23 ... in making their class certification decisions.” Brief for Petitioner 55. This slippery-slope projection is both familiar and false. Cf. R. Bork, The Tempting of America 169 (1990) (“Judges and lawyers live on the slippery slope of analogies; they are not supposed to ski it to the bottom.”). In this case, CPLR § 901(a) lists the state-law prerequisites for class certification, but Allstate does not contend that § 901(a) overrides Rule 23. Brief for Respondent 18 (“There is no dispute that the criteria for class certification under state law do not apply in federal court; that is the ground squarely occupied by Rule 23.”). Federal courts sitting in diversity have routinely applied Rule 23’s certification standards, rather than comparable state provisions. See, e.g., In re New Motor Vehicles Canadian Export Antitrust Litigation, 522 F. 3d 6, 18-24 (CA1 2008); Order and Reasons in In re Katrina Canal Breaches Consol. Litigation, Civ. Action No. 05-4182 (ED La., Aug. 6, 2009).
The Court disputes the strength of the evidence of legislative intent, see ante, at 403, but offers no alternative account of §901(b)’s purpose. Perhaps this silence indicates how very hard it would be to ascribe to § 901(b) any purpose bound up with the fairness and efficiency of processing eases. On its face, the proscription is concerned with remedies, i. e., the availability of statutory damages in a lawsuit. Legislative history confirms this objective, but is not essential to revealing it.
There is, of course, a difference between “justly administering [a] remedy,” Sibbach v. Wilson & Co., 312 U. S. 1, 14 (1941), and prescribing the content of that remedy; if Rule 23 can be read to increase a plaintiff’s recovery from $1 million to some greater amount, the Rule has arguably “enlarge[d] ... [a] substantive right” in violation of the Rules Enabling Act. 28 U. S. C. § 2072(b). The plurality appears to acknowledge this point, stating that the Federal Rules we have found to be in compliance with the Act have not “altered ... available remedies.” Ante, at 407-408. But the Court’s relentless reading of Rule 23 today does exactly that: The Federal Rule, it says, authorizes the recovery of class-size statutory damages even though the New York provision instructs that such penalties shall not be available.
The Court states that “[w]e cannot rewrite [a state law] to reflect our perception of legislative purpose.” Ante, at 408. But we can, of course, interpret the Federal Rules in light of a State’s regulatory policy to decide whether and to what extent a Rule preempts state law. See supra, at 439-442. Just as we read Federal Rule 3 in Walker v. Armco Steel Corp.,
The New York Legislature appears to have anticipated this result. In discussing the remedial bar effected by § 901(b), the bill’s sponsor explained that a “statutory class action for actual damages would still be permissible.” S. Pink, [Sponsor’s] Memorandum, p. 2, Bill Jacket, L. 1975, Ch. 207. See also State Consumer Protection Board Memorandum (May 29, 1975), Bill Jacket, L. 1975, Ch. 207. On this understanding, New York courts routinely authorize class actions when the class waives its right to receive statutory penalties. See, e. g., Cox v. Microsoft Corp., 8 App. Div. 3d 39, 778 N. Y. S. 2d 147 (2004); Pesantez v. Boyle Env. Servs., Inc., 251 App. Div. 2d 11, 673 N. Y. S. 2d 659 (1998); Ridge Meadows Homeowners’ Assn., Inc. v. Tara Development Co., 242 App. Div. 2d 947, 665 N. Y. S. 2d 361 (1997); Super Glue Corp. v. Avis Rent A Car System, Inc., 132 App. Div. 2d 604, 517 N. Y. S. 2d 764 (1987); Weinberg v. Hertz Corp., 116 App. Div. 2d 1, 499 N. Y. S. 2d 693 (1986).
The plurality notes that “we have rejected, every statutory challenge to a Federal Rule that has come before us.” Ante, at 407. But it omits that we have interpreted Rules with due restraint, including Rule 23, thus diminishing prospects for the success of such challenges. See Ortiz v. Fibreboard Corp., 527 U. S. 815, 842 (1999); Amchem Products, Inc. v. Windsor, 521 U. S. 591, 612-613 (1997); supra, at 439-443.
States have adopted a variety of formulations to limit the use of class actions to gain certain remedies or to pursue certain claims, as illustrated by the 96 examples listed in Allstate’s brief. Apps. to Brief for Respondent. The Court’s "one-size-fits-all” reading of Rule 23, ante, at 399, likely prevents the enforcement of all of these statutes in diversity actions— including the numerous state statutory provisions that, like § 901(b), attempt to curb the recovery of statutory damages. See, e. g., Cal. Civ. Code Ann. § 2988.5(a)(2) (West 1993); Colo. Rev. Stat. Ann. § 12-14.5-235(d) (2009); Conn. Gen. Stat. § 36a~683(a) (2009); Haw. Rev. Stat. § 489-7.5(b)(l) (2008); Ind. Code § 24-4.5-5-203(a)(2) (West 2004); Ky. Rev. Stat. Ann. § 367.983(l)(c) (West 2006); Mass. Gen. Laws, ch. 167B, § 20(a)(2)(B) (West 2008); Mich. Comp. Laws Ann. §493.112(3)(c) (West 2005); N. M. Stat. Ann. § 58-16-15(B) (2007); Ohio Rev. Code Ann. § 1351.08(A) (Lexis 2006); Okla. Stat., Tit. 14A, §5-203(1) (West 2007 Supp.); Wyo. Stat. Ann. §40-19-119(a)(iii) (2009).
Shady Grove’s argument that § 901(b) is procedural based on its possible application to foreign claims is also out of sync with our Erie decisions, many of them involving state statutes of similarly unqualified scope. The New Jersey law at issue in Cohen v. Beneficial Industrial Loan Corp., 337 U. S. 541 (1949), for example, required plaintiffs to post a bond as security for costs in “any [stockholder’s derivative] action.” Id., at 544, n. 1 (quoting 1945 N. J. Laws ch. 131 (emphasis added)). See also, e. g., Walker, 446 U. S., at 742-743, and n. 4 (Oklahoma statute deemed “[a]n action” commenced for purposes of the statute of limitations upon service of the summons (quoting Okla. Stat., Tit. 12, § 97 (1971)). Our characterization of a state statute as substantive for Erie purposes has never hinged on whether the law applied only to domestic causes of action. To the contrary, we have ranked as substantive a variety of state laws that the state courts apply to federal and out-of-state claims, including statutes of limitations and burden-of-proof prescriptions. See infra, at 455-456.
In contrast, many “state rules ostensibly addressed to procedure,” ante, at 404 (majority opinion) — including pleading standards and rules governing summary judgment, pretrial discovery, and the admissibility of
There is no question that federal courts can “give effect to the substantive thrust of [§ 901(b)] without untoward alteration of the federal scheme for the trial and decision of civil cases.” Gasperini, 518 IX S., at 426. There is no risk that individual plaintiffs seeking statutory penalties will flood federal courts with state-law claims that could be managed more efficiently on a class basis; the diversity statute’s amount-in-controversy requirement ensures that small state-law disputes remain in state court.
It remains open to Congress, of course, to exclude from federal-court jurisdiction under CAFA, 28 U. S. C. § 1332(d), claims that could not be maintained as a class action in state court.
