In Standard Fire Insurance v. Knowles, the U.S. Supreme Court ruled that a plaintiff in a proposed class action cannot avoid federal jurisdiction by promising to seek less than $5 million in damages.
Greg Knowles filed a proposed class action in Arkansas state court claiming that when the company made certain homeowner’s insurance loss payments, it unlawfully failed to include a general contractor fee. He sought to certify a class of hundreds, and possibly thousands, of Arkansas policyholders. But, under the Class Action Fairness Act (CAFA), federal courts have jurisdiction over class actions in excess of $5 million. Knowles wanted to keep the case in state court for strategic reasons. So he filed an affidavit stipulating that he would not seek damages for the class in excess of $5 million. Standard Fire removed the case to federal court, but the trial court sent the case back to state court due to the stipulation.
The case eventually made its way to the U.S. Supreme Court, which recently ruled that Knowles’ stipulation was insufficient to avoid federal court. Thus, the case is to stay in federal court. The Supreme Court explained that a stipulation signed by the plaintiff in a class action is only binding on him and is not legally binding on members of the proposed class before the class is certified.
The business and injury attorneys at DeBlasio & Gower LLC have the experience necessary to pursue class action claims. To schedule an appointment to speak with one of our attorneys, call us at (630) 560-1123 or visit us at our website at https://www.dgllc.net
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