The case of Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Company revolved around a dispute over insurance payments and the applicability of state versus federal rules in class action lawsuits. Shady Grove Orthopedic Associates sued Allstate Insurance for delayed payment on an insurance claim in New York State court but later moved the case to federal court as a class-action suit representing all similar plaintiffs. The issue arose because under New York law, this type of lawsuit was not permitted as a class action, while under Federal Rule 23 it was allowed if certain criteria were met. The Supreme Court had to decide whether the state rule or federal rule should apply in this situation - essentially determining which held supremacy when there was conflict between them within diversity jurisdiction cases (cases involving parties from different states). In a 5-4 decision, the Supreme Court ruled that Federal Rule 23 takes precedence over state law in such circumstances; thus allowing Shady Grove's lawsuit to proceed as a class action.

In the dissenting opinion for Shady Grove Orthopedic Associates, P. A. v. Allstate Insurance Company, Justice Ginsburg argued that state laws should not be overridden by federal rules when they are integral to state rights and obligations. She contended that New York's law barring class actions in suits seeking penalties or statutory minimum damages was a substantive provision designed to prevent excessive punishment rather than a procedural rule merely dictating the form of litigation. Therefore, she believed it should have been applied in this case instead of Federal Rule 23 which allows class action lawsuits under certain conditions regardless of potential damage amounts involved. The majority decision allowing the plaintiff to pursue a class action lawsuit against Allstate Insurance Company disregarded New York’s legislative judgment according to her view.