U.S. Supreme Court

Supreme Court to Hear Class Action Case; Dispute Is over Removal to Federal Court

The U.S. Supreme Court has agreed to hear an Arkansas class action case in which the defendant insurance company is seeking removal to federal court.

At issue is whether a stipulation limiting damages to less than $5 million signed by the lead plaintiff is binding on other class members, report SCOTUSblog, the Associated Press, Reuters and Bloomberg. The stipulated amount in controversy is below the threshold for transfer to federal court under the Class Action Fairness Act of 2005.

The plaintiff, Greg Knowles, had filed the would-be class action in Miller County, Ark., against the Standard Fire Insurance Co. Knowles alleged the insurer had underpaid claims for hail damage. Standard Fire argues Knowles’ stipulation isn’t binding under the 2011 Supreme Court case Smith v. Bayer Corp., which said a name plaintiff can’t bind other class members without court approval.

The U.S. Chamber of Commerce had urged the court to accept the new case, Standard Fire Insurance Co v. Knowles. The group argues that the stipulation tactic deprives defendants of federal court protections and denies plaintiffs a possibly larger award.

The cert petition and other documents in the case are posted at SCOTUSblog.

Hat tip to How Appealing.

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