High Court Will Examine Jurisdictional Maneuver

(CN) - The Supreme Court on Friday took up a case against an insurance company that an Arkansas man is fighting to keep in state court.

Greg Knowles filed a class action against the Standard Fire Insurance Co. in April 2011. The complaint in the Circuit Court of Miller County, Ark., concerned damage Knowles sustained to his home in a March 2010 hail storm.

Knowles claimed that he hired general contractor to repair the damage, but that Standard Fire underpaid on his claim.

Standard Fire was obligated to pay a charge known as general contractors' overhead and profit (GCOP), but it concealed this obligation, according to the complaint.

He also said that there are hundreds or thousands of similarly situated individuals entitled to full reimbursement.

Knowles framed the class for a two-year recovery, but the insurer called this a tactic to escape federal jurisdiction. It removed the case to the U.S. District Court for the Western District of Arkansas, but the judge Texarkana remanded the case to state court.

Though the court agreed that the amount in controversy exceeds $5 million, it found that Knowles could keep the case in state court "by stipulating at the time the complaint is filed that he will not seek more than the federal jurisdictional minimum for himself and the putative class."

The 8th Circuit rejected the insurer's ensuing appeal in a brief order, but leading the case to the U.S. Supreme Court.

The justices on Friday published the question they will determine: "When a named plaintiff attempts to defeat a defendant's right of removal under the Class Action Fairness Act of 2005 by filing with a class action complaint a 'stipulation' that attempts to limit the damages he 'seeks' for the absent putative class members to less than the $5 million threshold for federal jurisdiction, and the defendant establishes that the actual amount in controversy, absent the 'stipulation,' exceeds $5 million, is the "stipulation" binding on absent class members so as to destroy federal jurisdiction?

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit