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Standard Fire Insurance Co. v. Knowles

The Class Action Fairness Act (CAFA) allows a defendant in a suit filed as a class action in state court to remove the case to federal court if the amount in controversy exceeds $5 million. In this case, plaintiff Knowles filed a class-action complaint, along with a stipulation that damages and attorney fees would not exceed $5 million.

The question before the U.S. Supreme Court was whether a plaintiff can avoid removal under CAFA by filing such a stipulation with his complaint. Defendant Standard Fire contended that CAFA does not permit a plaintiff to limit the class’s recovery in this manner and that the stipulation violated the due process rights of the absent class members by limiting their damages. On behalf of Public Citizen and Public Justice, we filed a brief as amici curiae in support of the plaintiff, arguing that the stipulation’s impact on absent class members is properly considered at the class certification stage in analyzing the plaintiff’s adequacy to represent the interests of the class, and that holding that a stipulation can limit the amount in controversy for jurisdictional purposes does not infringe upon the due process rights of the absent class members. The brief also argued that, contrary to an argument advanced by amicus curiae National Association of Manufacturers in support of the petitioner, removal jurisdiction under CAFA requires that a putative class action meet the $5 million amount in controversy threshold.

The Supreme Court held that the plaintiff’s stipulation did not defeat CAFA’s removal jurisdiction because the stipulation was not binding on the class.