US Supreme Court accepts certiorari in CAFA case

Posted on: September 12th, 2012 by Steve Larson

The United States Supreme Court granted certiorari in a case in which the plaintiff stipulated to less than $5 million in damages to deprive the federal courts of jurisdiction to hear the case under the Class Action Fairness Act of 2005 (“CAFA”).  The case is entitled Standard Fire Insurance Company v. Knowles.  The U.S. Supreme Court framed the issue to be decided as follows:

Last term, this Court held that in a putative class action “the mere proposal of a class …could not bind persons who were not parties.”  Smith v. Bayer Corp., 131 S. Ct. 2368, 2382 (2011).  In light of that holding, the question presented is:

When a named plaintiff attempts to defeat a defendant’s right of removal under the Class Action Fairness Act of 2005 by filing with a class action complaint a “stipulation” that attempts to limit the damages he “seeks” for the absent putative class members to less than the $5 million threshold for federal jurisdiction, and the defendant establishes that the actual amount in controversy, absent the “stipulation,” exceeds $5 million, is the “stipulation” binding on absent class members so as to destroy federal jurisdiction?