Standard Fire Insurance Co. v. Knowles
133 S. Ct. 1345
| SCOTUS | 2013Background
- Knowles filed a proposed class action in Arkansas state court alleging improper homeowner’s insurance payments and seeking class certification.
- Knowles and the class stipulated before certification that they would seek less than $5 million in aggregate damages.
- Standard Fire removed the case to federal court under CAFA, asserting jurisdiction based on aggregation of class claims.
- The district court remanded, concluding the CAFA threshold would be met absent the stipulation, but the court ignored the stipulation in its jurisdictional calculation.
- The Eighth Circuit declined to hear an interlocutory appeal; the Supreme Court granted certiorari to address whether a precertification stipulation binds absent class members for CAFA purposes.
- Supreme Court vacated the judgment and remanded, holding that the stipulation cannot bind absent class members and does not defeat CAFA jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does a precertification stipulation binding only the named plaintiff defeat CAFA jurisdiction? | Knowles argues the stipulation lowers the aggregate amount, removing jurisdiction. | Standard Fire contends the stipulation, if binding, could defeat jurisdiction. | No; stipulations are binding only on the stipulator, not absent class members. |
| Can a named plaintiff bind absent class members pre-certification for CAFA purposes? | Knowles claims the stipulation should limit the class’s recovery. | Knowles cannot bind absent class members pre-certification. | A named plaintiff cannot bind absent class members before certification. |
| Should courts aggregate class members’ claims to determine the amount in controversy when a nonbinding stipulation exists? | Aggregation should be bypassed if stipulation controls. | Aggregation should reflect potential class-wide recovery, regardless of stipulation. | Yes; courts must aggregate the class members’ claims, not rely on nonbinding stipulations. |
| Does CAFA permit considering the possibility that a nonbinding stipulation may not survive class certification? | Stipulation dynamics could affect jurisdiction. | Stipulations should be treated as binding if they affect jurisdiction. | CAFA allows considering nonbinding stipulations; they do not convert into binding forfeitures. |
| If a stipulation could influence jurisdiction, must the district court excise the stipulation to proceed under CAFA? | Stipulation may be excised to achieve jurisdiction. | Stipulation could be maintained to limit liability. | District court should ignore the nonbinding stipulation and aggregate claims; remand |
Key Cases Cited
- Wisconsin Dept. of Corrections v. Schacht, 524 U.S. 381 (1998) (jurisdictional focus on the time of filing; aggregation required for CAFA)
- St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283 (1938) (removal based on amount in controversy; plaintiffs may restrain jurisdiction by stipulation but bindingness matters)
- Devlin v. Scardelletti, 536 U.S. 1 (2002) (nonnamed class members not parties before certification; leads to binding limitations post-certification)
- Christian Legal Soc. Chapter of Univ. of Cal., Hastings College of Law v. Martinez, 561 U.S. _ (2010) (stipulations generally binding but not on unnamed class members before certification)
- Back Doctors Ltd. v. Metropolitan Property & Cas. Ins. Co., 637 F.3d 827 (7th Cir. 2011) (class representative fiduciary duty and potential to modify representation)
- Hertz Corp. v. Friend, 559 U.S. 77 (2010) (simplicity in jurisdictional decision-making supported; avoid artificial constraints)
- Smith v. Bayer Corp., 564 U.S. _ (2011) (class action pre-certification limitations on binding absent class members)