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The Standard Fire Insurance Company v. Knowles - Supreme Court Update

October 30, 2012 1:43 PM | Posted by Roberts, Joshua | Print this page

In petitioner’s recently filed merits brief, Standard Fire set out its argument that the district court erred in remanding the case to state court, thereby allowing plaintiffs an “end run around CAFA.

CAFA provides for federal jurisdiction over interstate class actions where the amount in controversy, as determined by “aggregat[ing]” the “claims of the individual class members” exceeds $5 million.  28 U.S.C. § 1332(d)(6). Despite performing this calculation and concluding that the aggregated claims of the individual class members exceeded the threshold, the district court remanded the case based on a stipulation by the named plaintiff that bound the entire putative class to an aggregate class-wide recovery of less than $5 million.  Standard Fire contended that such a stipulation was a nullity because under the express language of the statute, it could not bear on the “claims of the individual class members” that must “be aggregated” under CAFA. “Once that determination has been made, the statute does not authorize a putative class representative to evade the calculation through a stipulation, allegation, or any other means.”

Standard Fire furthered this argument by citing the Court to Smith v. Bayer Corp., where just last year, the Supreme Court held that before certification of a class, a plaintiff has no authority to diminish the rights of absent individuals he does not yet (and may never) represent. 131 S. Ct. 2368, 2379 (2011). In other words, nothing that a putative class representative says or does before class certification can have any effect on the claims of the individual members who are not before the court. As such, plaintiff’s stipulation purporting to waive damages on behalf of all putative class members could not effect CAFA’s amount-in-controversy determination.

As always, we will keep you updated on the progress of this case!

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