March 22, 2013

Supreme Court Limits Plaintiffs' Strategy to Avoid Class Action Fairness Act Removal

Arnold & Porter Advisory

On March 19, 2013, the Supreme Court's first opinion addressing the Class Action Fairness Act (CAFA), Standard Fire Insurance Company v. Knowles, unanimously rejected a state class action plaintiff's attempt to avoid federal court by using a precertification stipulation to come in under the amount in controversy requirement of the statute. In doing so, the Supreme Court blocks one of plaintiffs' counsels more popular strategies for structuring class action pleadings to avoid federal jurisdiction. As a result, plaintiffs' efforts to forum shop class action litigation in favorable state court venues should be curtailed, and it is likely that more class action litigation will be subject to stricter federal rules on class certifications. It is less clear how the Court's ruling will affect other popular plaintiff strategies to avoid federal jurisdiction. However, at a minimum, the Court's emphasis on prioritizing substance over form when interpreting CAFA may be helpful for defendants seeking removal in other contexts.

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