Yesterday, the Supreme Court issued its opinion in Standard Fire Insurance v. Knowles. The question the Court faced in this case was whether a plaintiff may avoid removal of a class action under CAFA by stipulating that the case is worth less than $5 million, the statutory amount-in-controversy requirement.
The Knowles opinion–which was unanimous–provides a straightforward answer. As Justice Breyer put it:
As applied here, the statute tells the District Court to determine whether it has jurisdiction by adding up the value of the claim of each person who falls within the definition of Knowles’ proposed class and determine whether the resulting sum exceeds $5 million. If so, there is jurisdiction and the court may proceed with the case. The District Court in this case found that resulting sum would have exceeded $5 million but for the stipulation. And we must decide whether the stipulation makes a critical difference.
In our view, it does not. Our reason is a simple one: Stipulations must be binding. … The stipulation Knowles proffered to the District Court, however, does not speak for those he purports to represent.
That is because a plaintiff who files a proposed class action cannot legally bind members of the proposed class before the class is certified.
(Emphasis added) In other words, until a class is certified, a named plaintiff is just an individual plaintiff, not the head of some mystical entity known as a class.
Knowles, combined with a few other cases, like Bayer and Shady Grove, shows that the Supreme Court is slowly coming to a coherent vision of what a class action is. That vision is helpful for defendants, less so for current plaintiffs. The Supreme Court is envisioning the class action as a procedural aggregation device, rather than a corporate deterrent or a trust-like entity. This is good news for defendants, who have traditionally argued that the class action is a rule-based joinder device that should not confer any special treatment onto the named plaintiff.
Disclosure: I was on a team that assisted Ted Frank of the CCAF in filing its amicus brief in this case.