Supreme Court Rules Against Homeowner

Carol Keough March 22, 2013

An insured homeowner, Gregg Knowles (Knowles), whose house had sustained hail damage, alleged that Travelers Co.’s Standard Fire and Insurance Co. had refused to allow homeowners to hire general contractors to fix the damage.  On March 19, 2013, the U.S. Supreme Court ruled on Knowles and other similar claimants case as one of the four pending class action cases before them.  The claimants brought the case as a class action and wanted the case to be in an Arkansas state court in Miller County, Arkansas.  Under the Class Action Fairness Act, the case could be removed to a federal court if the damages exceeded five million dollars.  To prevent removal to federal court by Standard Fire,  Knowles individually stipulated that the total amount of damages would not exceed five million dollars.  Justice Stephen Breyer, who wrote the opinion, said the stipulation was not binding on the class and the damages could exceed five million dollars.  Very often, Plaintiffs will stipulate to an amount of damages to prevent removal of their case to federal court.  In individual plaintiff cases these stipulations are binding if the case is sent back to state court after an unsuccessful removal.  However, here the stipulation failed, because Knowles did not have any authority to concede the amount of damages at issue for absent class members.  The Supreme Court ruling will make it more difficult for class action plaintiffs to avoid federal court and the reach of the Class Action Fairness Act.

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