CAFA Jurisdiction Cannot Be Evaded By Limiting Amount In Controversy

The U.S. Supreme Court holds in a 9–0 decision that class action plaintiffs cannot promise to limit damages in an effort to remain below the Class Action Fairness Act's $5 million federal jurisdictional threshold.

Under the Class Action Fairness Act (CAFA), a defendant in a class action filed in state court may remove the case to federal court if, among other requirements, the projected amount in controversy exceeds $5 million. Notwithstanding that provision, some class action plaintiffs have successfully avoided CAFA removal by stipulating that they will not seek more than $5 million on behalf of the putative class. On March 19, the U.S. Supreme Court unanimously held in Standard Fire Insurance Co. v. Knowles that a named plaintiff cannot avoid federal CAFA jurisdiction (if CAFA jurisdiction is otherwise appropriate) by stipulating, prior to class certification, that the class will not seek aggregate damages in excess of $5 million.¹ The Court held that