Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Supreme Court Issues Key Class-Action Decision

Author: Scarinci Hollenbeck, LLC

Date: April 3, 2013

Key Contacts

Back

The U.S. Supreme Court recently issued a key decision on class-action lawsuits. The case, Standard Fire Insurance Co. v. Knowles, involved the Class Action Fairness Act of 2005 (CAFA), which gives federal district courts original jurisdiction over class actions in which the matter in controversy exceeds $5 million in sum or value.

The law aims to ensure that large class-action lawsuits are decided in federal court and to deter abuse of the class-action process in state courts. To accomplish this goal, when more than $5 million is at stake, the CAFA allows class actions to be removed to federal court, giving defendants the benefit of federal procedural protections.

The Facts of the Case

The question before the Supreme Court was whether a corporate defendant can be forced to litigate in state court if the plaintiff offers a stipulation purporting to waive any recovery above the $5 million threshold on behalf of not only the named plaintiff but any future class members.

In Standard Fire Insurance Co v. Knowles, the complaint was accompanied by an affidavit that included the following language: “I do not now, and will not at any time during this case, whether it be removed, remanded, or otherwise . . . seek damages for the class as alleged in the complaint to which this stipulation is attached in excess of $5,000,000 in the aggregate (inclusive of costs and attorneys’ fees). I understand that this stipulation is binding, and it is my intent to be bound by it.”

The Supreme Court’s Decision

In a unanimous opinion, the justices concluded that the stipulation stating that the class would seek less than five million dollars in damages did not defeat federal jurisdiction under the CAFA.

As explained by the Court in a brief opinion, the precertification stipulation can tie Knowles’ hands because stipulations are binding on the party who makes them. However, it cannot legally bind members of the proposed class before the class is certified. “Because Knowles lacked authority to concede the amount in controversy for absent class members, the District Court wrongly concluded that his stipulation could overcome its finding that the CAFA jurisdictional threshold had been met,” the Court concluded.

The decision is good news for businesses. Groups, including the U.S. Chamber of Commerce, had argued that allowing damages stipulations to defeat federal jurisdiction would encourage the same forum-shopping that Congress intended to stop by enacting CAFA.

If you have any questions about this case or would like to discuss the legal issues involved, please contact me, Christine Vanek, or the Scarinci Hollenbeck attorney with whom you work. 

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
New York NDA Requirements for Businesses post image

New York NDA Requirements for Businesses

Non-disclosure agreements (NDAs) remain a critical tool for protecting sensitive business information. However, New York NDA requirements have evolved, and businesses must ensure these agreements are carefully drafted to remain enforceable. In a competitive market like New York City, NDAs are commonly used to protect proprietary information, client relationships, and strategic plans. At the same […]

Author: Dan Brecher

Link to post with title - "New York NDA Requirements for Businesses"
New Jersey Will Contest Grounds Explained post image

New Jersey Will Contest Grounds Explained

How Courts Evaluate Testamentary Capacity and Undue Influence Will contests in New Jersey are difficult to win, given the strong presumption that a properly executed will reflects the testator’s intent. However, challenges based on lack of testamentary capacity and undue influence remain common, particularly where there are concerns about mental capacity or the involvement of […]

Author: Marc J. Comer

Link to post with title - "New Jersey Will Contest Grounds Explained"
Legal Issues Before Bringing on Investors post image

Legal Issues Before Bringing on Investors

Bringing on outside investors can provide the capital and strategic support a business needs to grow. However, raising capital also introduces important legal, financial, and operational considerations. Before bringing on investors, businesses should address key legal issues to reduce risk, streamline investor due diligence, and position the company for long-term success. Early preparation signals that […]

Author: Dan Brecher

Link to post with title - "Legal Issues Before Bringing on Investors"
SECURE 2.0 RMD Planning Strategies post image

SECURE 2.0 RMD Planning Strategies

How the Updated Law Shapes Retirement and Estate Planning The SECURE 2.0 Act of 2022 materially reshapes the required minimum distribution (RMD) landscape, extending tax deferral opportunities while accelerating distribution requirements for many beneficiaries. For high-net-worth individuals and families, these changes are not merely technical. They require a reassessment of retirement income strategies, beneficiary planning, […]

Author: Marc J. Comer

Link to post with title - "SECURE 2.0 RMD Planning Strategies"
Buying Commercial Property in New Jersey: Legal Guide for Small Businesses post image

Buying Commercial Property in New Jersey: Legal Guide for Small Businesses

Small businesses considering buying commercial property in New Jersey must evaluate a range of legal, financial, and operational factors. While ownership can offer long-term value and control, it also introduces significant risks if not properly structured. This guide outlines key considerations to help New Jersey business owners make informed decisions, minimize legal exposure, and successfully […]

Author: Robert L. Baker, Jr.

Link to post with title - "Buying Commercial Property in New Jersey: Legal Guide for Small Businesses"
The SEC’s Latest Guidance on Applying Federal Securities Laws to Tokenized Securities post image

The SEC’s Latest Guidance on Applying Federal Securities Laws to Tokenized Securities

On January 28, 2026, staff of the U.S. Securities and Exchange Commission’s Divisions of Corporation Finance, Investment Management, and Trading and Markets issued a joint statement clarifying how existing federal securities laws apply to tokenized securities. The SEC’s “Statement on Tokenized Securities” does not establish new law, but it does provide greater clarity on the […]

Author: Dan Brecher

Link to post with title - "The SEC’s Latest Guidance on Applying Federal Securities Laws to Tokenized Securities"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form. By providing a telephone number and submitting this form you are consenting to be contacted by SMS text message. Message & data rates may apply. Message frequency may vary. You can reply STOP to opt-out of further messaging.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!