The U.S. Supreme Court has issued its first-ever decision interpreting the 2005 Class Action Fairness Act.
On March 19, the high court ruled 9-0 that courts should disregard written promises by plaintiffs who are trying to represent a class in state court that the class will seek damages less than $5 million -- the amount that can trigger federal court jurisdiction over a case.
The narrow decision in Standard Fire Insurance Co. v. Knowles means that plaintiffs in a proposed class action will not be able to agree in writing to a damage cap in order to stay in state court. But it does nothing to clarify the debate over how courts should figure out how much money really is at stake in a lawsuit, which determines in part whether the defendant may move the case to federal court. This matters deeply to some defendants because federal courts are perceived to be more friendly to business interests.
We joined Public Citizen on an amici brief in the case to argue against a broad approach by the Court that could have undermined legitimate litigation choices by plaintiffs to protect the interests of the class.
So even though the plaintiffs lost, the good news is that the Court did not take a broad approach and refused even to acknowledge the defendant's repeated attempts to characterize the plaintiff's stipulation as an underhanded effort to evade federal jurisdiction. The decision did not open the door to second-guessing of the myriad strategic decisions that go into filing a lawsuit; it simply focused on whether the stipulation was binding on the proposed class, finding it was not.