Over the summer, the justices of the U.S. Supreme Court made one of the most improbable grants of certiorari you will ever see.
The timing alone was unusual. The court granted cert in Standard Fire Insurance v. Knowles on Aug. 31, almost a month before the first conference of the new term on Sept. 24. But that’s just the beginning of this case’s oddities. There’s no split among the federal circuits on the issue presented in Standard Fire: whether a class action plaintiff can defeat removal to federal court under the Class Action Fairness Act by stipulating on behalf of the entire class to seek less than $5 million, the statutory cutoff for a state-court class action. In fact, there couldn’t possibly be a circuit split on that question because only one appellate court, the 8th Circuit Court of Appeals, has addressed it. And though Standard Fire comes out of 8th Circuit turf in Arkansas, it is not even the case in which the 8th Circuit opined on these class action damages stipulations, which have become an oft-used tactic of plaintiffs’ lawyers who want to keep their cases in state court.
Indeed, as name plaintiff Greg Knowles argued in his brief opposing cert, there is no appellate opinion at all in the Standard Fire case. After a federal court in Arkansas remanded Knowles’s class action to state court in Miller County, where it was filed, the 8th Circuit twice declined to review the district court’s remand opinion. Yet the Supreme Court nevertheless agreed to take the case. Standard Fire’s merits brief is due later this month, and oral arguments will take place later in the term.
That’s quite an extraordinary procedural history for a Supreme Court case, and Standard Fire’s new appellate counsel at Gibson, Dunn & Crutcher regard the high court’s eagerness to hear the case as a sign that the justices take very seriously Standard Fire’s allegations that the plaintiffs’ lawyers are using improper tactics to keep their case in the friendly confines of Miller County state court. So Standard was taken aback last month when class action lawyers at Keil & Goodson; Nix, Patterson & Roach; and Crowley Norman refused the insurer’s informal request to stay the litigation until the Supreme Court has decided whether the case belongs in state or federal court. Without an informal deal to defer to the high court, Standard’s class action defense lawyers at Mitchell, Williams, Selig, Gates & Woodward formally moved to stay the state court case in September.
The class action lawyers promptly opposed the motion. Even if the Supreme Court decided that the damages stipulation improperly bound absent class members under the court’s ruling last year in Smith v. Bayer — which class counsel emphatically believe it does not — the plaintiffs’ lawyers argued that their damages in the statewide class action would still be under $5 million, even without the stipulation. Whichever way the Supreme Court rules, they said, the case is staying in state court.