In a significant blow to business, the Supreme Court on Wednesday ruled that certain class actions barred or limited by state laws may proceed in federal courts.

In Shady Grove Orthopedic Associates v. Allstate Insurance Co. (pdf), a 5-4 majority, led by Justice Antonin Scalia, held that the federal class action rule, Civil Procedure Rule 23, trumped a New York law prohibiting class actions that seek to recover statutory penalties or minimal recoveries.

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