Precertification stipulations cannot be used to avoid removal to federal court under CAFA

March 27, 2013 by

Supreme Court BlogThe U.S. Supreme Court recently ruled that counsel for a proposed class cannot avoid removal to federal court by stipulating that the damages being sought are less than the federal jurisdictional amount.

In Standard Fire Insurance Co. v. Knowles, the plaintiff alleged that the defendant had underpaid homeowners’ property loss claims by refusing to pay general contractor fees.  The complaint limited damages to less than $5 million.  Standard Fire removed the case to federal court under the Class Action Fairness Act which authorizes removal when the amount in controversy exceeds $5 million.  The District Court remanded the case back to Arkansas state court finding that the plaintiffs had limited their recovery to less than $5 million.  An appeal to the 8th Circuit was denied.

The Supreme Court found that the District Court did have jurisdiction because the damages limitation in the complaint was not binding on the class since no class had been certified.  So the main holding is that a precertification stipulation to limit class damages is not binding.  But also noteworthy is the way the Court concluded that the amount in controversy exceeded $5 million.  To reach that threshold the Court not only aggregated individual class member’s claims, the Court added the possibility of a forty percent fee award.

Keith Dubanevich
Keith is an accomplished trial, appellate, and healthcare lawyer with over 30 years of experience in more than a dozen different jurisdictions around the country. With a focus on complex dispute resolution, with particular emphasis in the healthcare industry, Keith is adept at handling multi-state and internal antitrust cases, consumer litigation, and securities disputes. In healthcare, he has handled peer review disputes, partnership and incorporation matters, and billing investigations. Keith has led internal investigations for public entities as well as for not-for-profit organizations. Keith's clients value his keen instincts in court and his ability to delve into complex legal issues while never losing sight of the overall strategy of a case. During his time at the Oregon Department of Justice as Associate Attorney General and Chief of Staff, Keith led the creation of a civil rights unit, managed securities litigation including multiple cases against financial services companies, and supervised antitrust investigations and prosecutions. He was also involved with the adoption of legislation that expanded the Unlawful Trade Practices Act and legislation that imposed a mediation requirement prior to non-judicial foreclosures.

Legal Disclaimer

The information contained in this blog does not constitute legal advice, and does not create an attorney-client relationship. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in or linked to this blog.