Aug 31 The U.S. Supreme Court on Friday agreed
to consider the constitutionality of a legal tactic that can
make it harder for companies to defend against class-action
lawsuits, in a case it will review in the term that starts on
At issue is whether a company can be forced to defend itself
in a state court, rather than in federal court as it might
prefer, when a plaintiff's lawyer has his client sign a binding
"stipulation" limiting the size of the case.
The Class Action Fairness Act of 2005 lets companies move
cases to federal court from state court provided that more than
$5 million is at stake and they are not incorporated or based in
the state where the case was filed.
In the case accepted for review, Standard Fire Insurance Co
had been sued in a Miller County, Arkansas, state court over
alleged underpayment of homeowner claims.
The Hartford, Connecticut-based insurer said the named
plaintiff, Greg Knowles, whose house sustained hail damage,
signed a stipulation limiting damages and binding potential
class members, including people his lawyer did not yet
A federal judge in Arkansas approved the stipulation, saying
Knowles had shown to a "legal certainty" that damages for all
class members would not exceed $5 million. The 8th U.S. Circuit
Court of Appeals in St. Louis later upheld that decision.
In its appeal, Standard Life said the lower courts ignored
the Supreme Court's 2011 decision in Smith v. Bayer Corp, which
said a named plaintiff seeking class-action status cannot
without court approval bind others who could join that class.
A decision in the case is expected in the coming Supreme
Court term, which ends next June.
The cases is Standard Fire Insurance Co v. Knowles, U.S.
Supreme Court, No. 11-1450.