# Standard Fire Insurance Co. v. Knowles

Cite as: Std. Fire Ins. Co. v. Knowles, 568 U.S. 588 (2013).
Supreme Court of the United States
568 U.S. 588
STANDARD FIRE INSURANCE CO. v. KNOWLES
Certiorari to the United States Court of Appeals for the Eighth Circuit
No. 11-1450 Argued: Jan. 7, 2013 --- Decided: Mar. 19, 2013
The Class Action Fairness Act of 2005 (CAFA) gives federal district courts original jurisdiction over class actions in which, among other things, the matter in controversy exceeds $5 million in sum or value, 28 U.S.C. § 1332(d)(2), (d)(5), and provides that to determine whether a matter exceeds that amount the “claims of the individual class members must be aggregated,” § 1332(d)(6). When respondent Knowles filed a proposed class action in Arkansas state court against petitioner Standard Fire Insurance Company, he stipulated that he and the class would seek less than $5 million in damages. Pointing to CAFA, petitioner removed the case to the Federal District Court, but it remanded to the state court, concluding that the amount in controversy fell below the CAFA threshold in light of Knowles' stipulation, even though it found that the amount would have fallen above the threshold absent the stipulation. The Eighth Circuit declined to hear petitioner's appeal.
Held: Knowles' stipulation does not defeat federal jurisdiction under CAFA. Pp. 592–596.
(a) Here, the precertification stipulation can tie Knowles' hands because stipulations are binding on the party who makes them, see Christian Legal Soc. Chapter of Univ. of Cal., Hastings College of Law v. Martinez, 561 U.S. 661. However, the stipulation does not speak for those Knowles purports to represent, for a plaintiff who files a proposed class action cannot legally bind members of the proposed class before the class is certified. See Smith v. Bayer Corp., 564 U.S. 299, 315. 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. Pp. 592–593.
(b) Knowles concedes that federal jurisdiction cannot be based on contingent future events. Yet, because a stipulation must be binding and a named plaintiff cannot bind precertification class members, the amount he stipulated is in effect contingent. CAFA does not forbid a federal court to consider the possibility that a nonbinding, amount-limiting, stipulation may not survive the class certification process. To hold otherwise would, for CAFA jurisdictional purposes, treat a nonbinding stipulation as if it were binding, exalt form over substance, and run counter [p589] to CAFA's objective: ensuring “Federal court consideration of interstate cases of national importance.” § 2(b)(2), 119 Stat. 5.
It may be simpler for a federal district court to value the amount in controversy on the basis of a stipulation, but ignoring a nonbinding stipulation merely requires the federal judge to do what she must do in cases with no stipulation: aggregate the individual class members' claims. While individual plaintiffs may avoid removal to federal court by stipulating to amounts that fall below the federal jurisdictional threshold, the key characteristic of such stipulations—missing here—is that they are legally binding on all plaintiffs. Pp. 593–596.
Vacated and remanded.
BREYER, J., delivered the opinion for a unanimous Court.
Theodore J. Boutrous, Jr., argued the cause for petitioner. With him on the briefs were Theane Evangelis Kapur, Joshua S. Lipshutz, Amir C. Tayrani, Stephen E. Goldman, Wystan M. Ackerman, and Lyn P. Pruitt.
David C. Frederick argued the cause for respondent. With him on the brief were Brendan J. Crimmins, Jonathan S. Massey, and Richard E. Norman.

## Notes

* ↑ Briefs of amici curiae urging reversal were filed for the State of Alabama et al. by Luther Strange, Attorney General of Alabama, John C. Neiman, Jr., Solicitor General, Andrew L. Brasher, Deputy Solicitor General, and Kasdin E. Miller, Assistant Solicitor General, and by the Attorneys General for their respective States as follows: Tom Horne of Arizona, John Suthers of Colorado, George Jepsen of Connecticut, Pamela Jo Bondi of Florida, Samuel S. Olens of Georgia, Gregory F. Zoeller of Indiana, Derek Schmidt of Kansas, Bill Schuette of Michigan, Jon Bruning of Nebraska, Wayne Stenehjem of North Dakota, Michael DeWine of Ohio, Scott Pruitt of Oklahoma, Marty J. Jackley of South Dakota, Greg Abbott of Texas, Mark Shurtleff of Utah, Robert M. McKenna of Washington, and Darrell V. McGraw, Jr., of West Virginia; for the Arkansas State Chamber of Commerce by Jess Askew III, Andrew King, and Jamie K. Fugitt; for the Cato Institute by David B. Rivkin, Jr., Deborah H. Renner, John B. Lewis, and Ilya Shapiro; for the Center for Class Action Fairness by J. Tracy Walker IV and Lisa M. Sharp; for the Chamber of Commerce of the United States of America et al. by Jeffrey A. Lamken, Michael G. Pattillo, Jr., Robin S. Conrad, Kate Comerford Todd, Sheldon Gilbert, and Deborah White; for Hartford Underwriters Insurance Co. by Paul H. Schwartz; for Partnership for America by Charles J. Cooper and Howard [p590] C. Nielson, Jr.; for the Washington Legal Foundation et al. by Cory L. Andrews and Mary-Christine Sungaila; and for E. Donald Elliott et al. by G. Eric Brunstad, Jr., Collin O’Connor Udell, and Matthew J. Delude.
Briefs of amici curiae urging affirmance were filed for the State of Arkansas et al. by Dustin McDaniel, Attorney General of Arkansas, and Eric B. Estes, Senior Assistant Attorney General, and by the Attorneys General for their respective States as follows: Joseph R. Biden III of Delaware and Jim Hood of Mississippi; and for Public Citizen, Inc., et al. by Scott L. Nelson and Allison M. Zieve.
Briefs of amici curiae were filed for the Arkansas Trial Lawyers Association by Brian G. Brooks; for the Defense Research Institute by Mary Massaron Ross, Paul D. Clement, and Erin Morrow Hawley; for the Manufactured Housing Institute et al. by Jeremy B. Rosen, Peder K. Batalden, and Brett D. Watson; for the National Association of Manufacturers by Gregory G. Katsas, Jeffrey A. Mandell, and Quentin Riegel; and for 21st Century Casualty Co. et al. by Thomas T. Rogers.
This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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