In July, the Eleventh Circuit released an opinion reviving a proposed class action accusing building supplier Lumber One Wood Preserving LLC of providing wood that is susceptible to rotting because it did not undergo the proper treatment process as advertised. Recently, the court denied a motion for en banc rehearing of that decision. The earlier decision of a three-judge panel reversed an Alabama federal court’s dismissal of the suit against Lumber One applying the high court’s 5-4 decision in Shady Grove Orthopedic Associates PA v. Allstate Insurance Co. Justice Antonin Scalia, writing for the majority in Shady Grove, found that Rule 23 of the Federal Rules of Civil Procedure allows class actions to proceed in federal court even when state laws restrict them.
In this case, Lisk had alleged violations of the Alabama Deceptive Trade Practices Act (ADTPA), which by its text purports to bar private class actions. In its July order, the circuit panel said that if the case were pending in Alabama state court, then the statute would preclude presentation of the ADTPA claims in a private class action. But because the case is in federal court, the Rule 23 allows class actions and makes no exception for cases of this kind. At the time of its decision, the Eleventh Circuit noted that there was a conflict in the Lumber One case over what the impact of the Shady Grove decision would be, because “no single rationale garnered five votes” in that case.
But the panel said that Justice John Paul Stevens, who wrote a concurrence in the Shady Grove case, only departed from the four others who ruled with him on the question of “whether a federal rule abridges, enlarges or modifies a substantive right,” according to the July opinion. The panel found that what was most critical was that all five justices agreed that applying Rule 23 to allow class actions for a statutory penalty created by New York law did not abridge, enlarge or modify a substantive right, according to the court document.
The application of Shady Grove to the ADTPA provides a great benefit to consumers who can now seek class-wide relief against those who commit unfair and deceptive acts in the Eleventh Circuit. If you need more information on anything related to this decision, or the subject matter generally, contact Rebecca Gilliland, a lawyer in our firm’s Consumer Fraud and Commercial Litigation Section, at 800-898-2034 or by email at Rebecca.Gilliland@beasleyallen.com.
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