Finally! The Inaugural Class Action Fairness Act Case Before the U.S. Supreme Court and What It's All About

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By Anthony Rollo, Michael Ferachi, and Kimberly Higginbotham, McGlinchey Stafford

AN ACT to amend the procedures that apply to consideration of interstate class actions to assure fairer outcomes for class members and defendants….

While it is not as elegant as “We, the people… ,” the preamble of the 2005 Class Action Fairness Act waxes about fairness for both plaintiffs and defendants. Whether the fairness has been two sided has been a topic of debate since CAFA was signed into law on Feb. 18, 2005. CAFA1 has generated extensive litigation in both the federal district and circuit courts laboring to interpret its various provisions, resulting in hundreds of district and circuit court decisions interpreting both its basic provisions and nuances.

Now, over seven years since its enactment, the U.S. Supreme Court finally will weigh in on the CAFA debate for the first time. On Aug. 31, 2012, the U.S. Supreme Court granted writs in the matter captioned Standard Fire Insurance Co. v. Knowles. Oral argument is set for Jan. 7, 2013.

The question presented is:

[W]hen a named plaintiff attempts to defeat a defendant's right of removal under [CAFA] 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?2

Or put another way from the perspective of the defendants, “may a plaintiff automatically remand his own case by stipulating to an artificial damages amount just below the jurisdictional threshold.”

This article discusses the procedural history of Knowles, addresses federal case law and the circuit split on the issue of whether class action damages stipulations may properly limit federal jurisdiction, and analyzes the implications of the anticipated Supreme Court ruling. The court's review of Knowles presents an important opportunity to clarify inconsistent jurisprudence in the CAFA realm, and to give the lower courts greater guidance on how to interpret CAFA consistent with its stated goals and congressional intent.

Procedural Background of Knowles

On April 13, 2011, Greg Knowles filed a putative class action complaint in the Circuit Court of Miller County, Arkansas, against The Standard Fire Insurance Co. alleging breach of contract arising from Standard's underpayment of claims for loss or damage to real property that were made pursuant to certain homeowners' insurance policies.3

On May 18, 2011, Standard removed the case to federal court arguing, among other things, that, although the plaintiff signed a stipulation limiting his and the purported class's recovery, Knowles' counsel failed to sign a stipulation that they would not seek or accept an award of attorneys' fees, which would allow the total amount in controversy to exceed the threshold of CAFA's jurisdictional limit. Moreover, Standard maintained that Knowles lacked the authority to place a limit on recovery that would bind the other class members.

On June 6, 2011, Knowles moved to remand the case back to state court, citing in support of his motion his binding stipulation executed prior to removal, which expressly limited his and the class's recovery to less than the $5 million CAFA threshold. The plaintiff also asserted that, as master of his complaint, he had the right to limit his claims so as to bring this action in the forum of his choice.

Significantly, the district court held that Standard “satisfied its initial burden of proving by a preponderance of the evidence that the actual amount in controversy reaches, if not exceeds, the federal court's minimum threshold for jurisdiction pursuant to CAFA.”4 Nevertheless, the district court concluded that Knowles' stipulation was sufficient for him to show “to a legal certainty that the aggregate damages claimed on behalf of the putative class shall in good faith not exceed the state court's jurisdictional limitation of $5,000,000.”5 Thus, the matter was remanded to state court.

In response, Standard filed an appeal of this ruling with the U.S. Court of Appeals for the Eighth Circuit. The appeal was denied without explanation. Thereafter, Standard petitioned for rehearing en banc which, likewise, was denied without comment.

Not willing to give up yet, Standard petitioned for a writ of certiorari, which the U.S. Supreme Court granted.

Damages Stipulations in the Context
of CAFA's Stated Purpose

One of the stated purposes of CAFA is to “assure fair and prompt recoveries for class members with legitimate claims ….”6 In this regard, the statute noted that “class action lawsuits are an important and valuable part of the legal system when they permit the fair and efficient resolution of legitimate claims of numerous parties by allowing the claims to be aggregated into a single action against a defendant that has allegedly caused harm.”7 However, “[o]ver the past decade, there have been abuses of the class action device that have harmed class members with legitimate claims and defendants that have acted responsibly; adversely affected interstate commerce; and undermined public respect for our judicial system.”8

Additionally, “[a]buses in class actions undermine the national judicial system, the free flow of interstate commerce, and the concept of diversity jurisdiction as intended by the framers of the United States Constitution, in that State and local courts are keeping cases of national importance out of Federal court; sometimes acting in ways that demonstrate bias against out-of-State defendants; and making judgments that impose their view of the law on other States and bind the rights of the residents of those States.”9

In order to address these forum-shopping concerns and to combat such class action “abuses,” Congress passed CAFA, which “amend[ed] the procedures that apply to consideration of interstate class actions to assure fairer outcomes for class members and defendants ….”10 As a general proposition, CAFA vests federal courts with “minimal diversity” jurisdiction over class actions if: (1) there are over 100 persons in the class; (2) the aggregate amount in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs; and (3) any class member is a citizen of a state different from any defendant.11 Simply put, CAFA was drafted to enable defendants to remove from state court sizable interstate class actions. According to Standard though, “[i]n cases in which the amount in controversy, based on claims alleged, exceeds $5 million, some class action plaintiffs' lawyers have sought to destroy federal jurisdiction under CAFA by having the named plaintiff sign a ‘stipulation’ that purports to be ‘binding’ on the members of the putative class and purports to limit to under $5 million, in the aggregate, the damages the named plaintiff ‘seeks' on behalf of the putative class he or she hopes to, but does not yet have authority to represent.”12

For example, the complaint in the Knowles case was accompanied by a signed affidavit stating the following: “I do not now, and will not at any time during this case, whether it be removed, remanded, or otherwise … seek damages for the class as alleged in the complaint to which this stipulation is attached in excess of $5,000,000 in the aggregate (inclusive of costs and attorney's fees).”13

Often plaintiffs outline their express intent with such stipulations, so as “not to provide any United States District Court with jurisdiction under the terms of the Class Action Fairness Act of 2005 … or any other provision(s) of law.”14 Then, the question becomes the standard for testing this stipulation. A party seeking to defeat diversity jurisdiction by limiting the amount in controversy must demonstrate “to a legal certainty” that the plaintiff could not recover above the jurisdiction threshold.15

However, the defendant in the Knowles case argues that “[s]uch a purported ‘stipulation’ by an unauthorized representative of an uncertified class is a legal nullity that must be disregarded by federal courts in determining the jurisdictional amount in controversy. Disregarding these ‘stipulations,' which are indisputably contrived for the sole purpose of evading federal jurisdiction under CAFA, not only protects defendants' right of removal and absent class members' constitutional rights, but also ensures that CAFA will achieve its expressed purpose of protecting against state-court abuses of the class action device.”16

Prior Jurisprudence on Damages
Stipulations in the CAFA Context

Substantial and conflicting federal case law exists on the issue of damages stipulations in the context of class actions with many courts finding these disclaimers a viable means of avoiding federal jurisdiction. The noted split among the circuits regarding stipulations in putative class actions was a critical issue for Supreme Court review.

A. Cases Supporting
Damages Stipulation Remands

The U.S. Court of Appeals for the Eighth Circuit has generated a significant number of decisions concluding that damages disclaimers in class actions are proper to avoid federal jurisdiction. For example, in an oft-cited decision, the Eighth Circuit in Bell v. Hershey Co.,17 concluded that “[i]n order to ensure that any attempt to remove would have been unsuccessful, Bell could have included a binding stipulation with his petition stating that he would not seek damages greater than the jurisdictional minimum upon remand …” in the context of his purported class action. Similarly, inHargis v. Access Capital Funding LLC,18 the Eighth Circuit noted that, although the plaintiffs did not execute such in connection with their putative class action, “[a] plaintiff may, however, avoid removal by including ‘a binding stipulation with his petition stating that he would not seek damages greater than the jurisdictional minimum.’ … Such a filing must be made prior to the defendant's removal of the case.”

Similarly, in Freeman v. Blue Ridge Paper Products Inc.,19 the U.S. Court of Appeals for the Sixth Circuit found that “[w]e recognize that plaintiffs can avoid removal under CAFA by limiting the damages they seek to amounts less than the CAFA thresholds. Generally, if a plaintiff ‘does not desire to try his case in the federal court he may resort to the expedient of suing for less than the jurisdictional amount, and though he would be justly entitled to more, the defendant cannot remove.’”

In Brill v. Countrywide Home Loans Inc.,20 the U.S. Court of Appeals for the Seventh Circuit noted, in dicta, that “[t]he complaint did not set a cap on recovery—as it might have done if the plaintiff had represented that the class would neither seek nor accept more than $5 million in aggregate.” Moreover, in Lowdermilk v. U.S. Bank National Association,21 the U.S. Court of Appeals for the Ninth Circuit held that, absent evidence of the plaintiff's bad faith, the court was “obliged to honor” the complaint's stipulation that the aggregate value of the class claims did not exceed $5 million.

Similarly, various district courts have upheld such damages stipulations as permissible in the CAFA context with the majority of these decisions from courts in the Eighth Circuit's jurisdiction.22

Binding the lower court in the Knowles matter was the Eighth Circuit's controlling decision in Rolwing v. Nestle Holdings Inc.23 In Rolwing, Nestle Holdings Inc. agreed to a merger with Ralston Purina Company that provided for Nestle's cash purchase of Ralston Purina's common stock. The merger was completed, and Nestle paid Ralston Purina book-entry shareholders a total of $8,880,809,766.50 for their 265,098,799 outstanding common shares of Ralston Purina. Thereafter, a Ralston Purina book-entry shareholder, John M. Rolwing, filed this putative class action in state court on behalf of himself and all other Ralston Purina book-entry shareholders at the time of the execution of the merger agreement, claiming that Nestle was required to pay the class on December 12, that Nestle's December 18 payment was delinquent, and that the class is entitled to interest on the delinquent payment.

Nestle removed the case to federal court invoking CAFA jurisdiction. Rolwing moved to remand the case to Missouri state court, arguing that the amount in controversy was less than $5 million. Specifically, Rolwing's complaint requested “judgment against defendant in an amount that is fair and reasonable in excess of $25,000, but not to exceed $4,999,999,” and “Plaintiff and the class do not seek—and will not accept—any recovery of damages (in the form of statutory interest) and any other relief, in total, in excess of $4,999,999.”24 According to the complaint, the express purpose of this stipulation was “not to provide any United States District Court with jurisdiction under the terms of the Class Action Fairness Act of 2005 … or any other provision(s) of law.”

Rolwing likewise included the following two stipulations with his complaint: (1) one stating that as named plaintiff and putative class representative he would not seek or accept any recovery in excess of $4,999,999 on his own behalf or on behalf of the class; and (2) a second stipulation signed by his counsel stating that no attorneys' fees would be sought or accepted other than on a contingency basis out of the maximum recovery of $4,999,999 provided for by the other stipulation. As with the complaint's prayer for relief, both stipulations stated that the limitation on damages sought was for the purpose of defeating federal jurisdiction. The district court granted Rolwing's motion to remand on the basis of this disclaimer of damages.

On appeal, the Eighth Circuit acknowledged that a binding stipulation limiting damages to an amount not exceeding $5 million can be used to defeat CAFA jurisdiction. According to the Eighth Circuit, such stipulations, when filed contemporaneously with a plaintiff's complaint and not after removal, have long been recognized as a method of defeating federal jurisdiction in the non-CAFA context. Thus, the judgment of the district court was affirmed. As outlined below, the Knowles defendant-appellant attacks this decision on the basis that it does not comport with the U.S. Supreme Court's ruling in Smith v. Bayer Corp. as discussed below.

B. Cases Rejecting Damages Stipulation Remands

The U.S. Court of Appeals for the Fifth Circuit decision in De Aguilar v. Boeing Co.25 was rendered prior to the enactment of CAFA, yet is cited as a defense to damages stipulations made to escape federal jurisdiction in the CAFA context. The De Aguilar court addressed the propriety of post-removal affidavits by plaintiffs and their attorneys purporting to limit their damages sought in an effort to obtain remand to state court. On appeal of the district court's denial of remand, the court held that the representative plaintiffs could not show they had authority to limit class members' recovery and, thus, could not defeat removal jurisdiction.

Subsequently, in Manguno v. Prudential Property & Casualty Insurance Co.,26 the Fifth Circuit addressed the purported waiver of attorneys' fees that the named plaintiff made for the putative class in order to avoid federal jurisdiction. The court found that the waiver was ineffective because the state court would grant to a successful plaintiff the relief to which she is entitled, even if she has not demanded such relief. Referencing its decision in De Aguilar, the court found that state law did not limit the plaintiff's recovery to the amount specified in the ad damnum clause. Moreover, in further citing De Aguilar the court expressed concern about the possibility of “‘abusive manipulation by plaintiffs, who may plead for damages below the jurisdictional amount in state court with the knowledge that the claim is actually worth more, but also with the knowledge that they may be able to evade federal jurisdiction by virtue of the pleading.’”27 In so concluding, the court found it “improbable” that the named plaintiff could, ethically, unilaterally waive the rights of the putative class members to attorneys' fees without their authorization. Thus, the named plaintiff failed to demonstrate to a legal certainty that the amount in controversy did not exceed the jurisdictional amount.

In Smith v. Nationwide Property & Casualty Insurance . Co.,28 the Sixth Circuit stated that, in the context of a putative class action, “[a] disclaimer in a complaint regarding the amount of recoverable damages does not preclude a defendant from removing the matter to federal court upon a demonstration that damages are ‘more likely than not’ to ‘meet the amount in controversy requirement,’ but it can be sufficient absent adequate proof from defendant that potential damages actually exceed the jurisdictional threshold.”29

Furthermore, in Back Doctors Ltd. v. Metropolitan Property & Casualty Insurance Co.,30 in the context of a putative class action, the Seventh Circuit discussed CAFA's $5 million jurisdictional threshold and stated that “[l]itigants … prevent removal, by forswearing any effort to collect more than the jurisdictional threshold,” and noted its decision inOshana v. Coca-Cola Co., whereby it found that adding disclaimers in the complaint block removal only if state law makes them effective as caps on damages, which some states do not recognize.31 However, the court outlined that a named plaintiff “has a fiduciary duty to its fellow class members. A representative can't throw away what could be a major component of the class's recovery. Either a state or a federal judge might insist that some other person, more willing to seek punitive damages, take over as representative. What [the named plaintiff] is willing to accept thus does not bind the class and therefore does not ensure that the stakes fall under $5 million. (Our point is not that a federal judge should take steps to keep suits in federal court, but that class representatives' fiduciary duty might ensure that the amount in controversy exceeds $5 million no matter where the litigation occurs.)”

In Pendleton v. Parke-Davis32—also decided prior to CAFA—the plaintiffs argued that their claims were worth less than $50,000 in order to avoid both a state jury trial as well as federal jurisdiction over the matter, and, pursuant to De Aguilar, the U.S. District Court for the Eastern District of Louisiana characterized such tactics as constituting bad faith. Moreover, in regard to a purported waiver of attorneys' fees, the court found that plaintiffs cannot waive the right to attorneys' fees, recoverable under state statute, on behalf of the class as a whole absent a showing that the putative class members gave the representative parties or their attorneys the requisite authority to do so, and the waiver was invalid.

C. Other Relevant Supreme Court, Circuit Court
Jurisprudence Supporting Petitioner's Positions

The decisions in Smith v. Bayer Corp., Phillips Petroleum Co. v. Shutts, and Frederick v. Hartford Underwriters Insurance Co. form the basis of the Knowles defendant-appellant's argument against pre-certification damages stipulations to limit federal court jurisdiction.

First, Smith v. Bayer Corp.34 involved two putative class actions arising from Bayer's sale of an allegedly hazardous prescription drug called Baycol, specifically the George McCollins and Keith Smith suits which were filed in a West Virginia state court prior to the enactment of CAFA. The plaintiffs asserted that Bayer had violated a state consumer-protection statute and the company's express and implied warranties in selling a defective product. Bayer removed the McCollins matter to federal court, but the Smith matter was not removable because Smith sued West Virginia defendants in addition to Bayer.

Bayer moved in district court for an injunction ordering the state court not to consider a motion for class certification that Smith filed. Bayer thought the injunction was warranted because, in a separate case, Bayer had persuaded the same district court to deny a similar class-certification motion that McCollins had filed against Bayer. The district court had denied McCollins's certification motion.

The court granted Bayer's requested injunction against the state court proceedings, holding that its denial of certification in McCollins's case precluded litigation of the certification issue in Smith's case.

The U.S. Court of Appeals for the Eighth Circuit affirmed, finding that issue preclusion barred Smith from seeking certification of his proposed class because he was invoking a similar class action rule that McCollins had used to seek certification of the same class in a suit alleging the same legal theories. Therefore, the issue in the state court was sufficiently identical to the one the federal court had decided to warrant preclusion. Additionally, the parties in the two proceedings were sufficiently alike because Smith was an unnamed member of the class that McCollins had proposed. Because their interests were aligned, Smith was appropriately bound by the federal court's judgment. The matter was appealed to the U.S. Supreme Court to resolve several issues, including the scope of the rule that a court's judgment cannot bind nonparties.

Although decided in the context of the Anti-Injunction Act, the court set forth several principles that are noteworthy for Knowles. The court articulated that “in the absence of a certification under [Federal Rule 23], the precondition for binding Smith was not met. Neither a proposed class action nor a rejected class action may bind nonparties.” “[T]he mere proposal of a class in the federal action could not bind persons who were not parties there.” In so concluding, the court found that the injunction was improper. The defendant-appellant in Knowles adopted this argument to show that, under Smith, the named plaintiff's unauthorized stipulation on behalf of people he has not been authorized to represent is a legal nullity because a named plaintiff has no right to stipulate to a binding cap on the damages of people he or she does not represent.35

The defendant-appellant also cites Phillips Petroleum Co. v. Shutts36 to assert that if the stipulation is effective at the time suit is filed, then it violates the due process rights of the proposed class members. In Phillips Petroleum Co. v. Shutts, a Kansas state court certified a class consisting of 33,000 royalty owners seeking to recover interest on royalty payments which had been delayed by Phillips Petroleum Co. which produced or purchased natural gas from leased land located in 11 different states and sold most of the gas in interstate commerce.

The plaintiffs provided each class member with a notice by first-class mail describing the action and informing each member that he could appear in person or by counsel, and that otherwise he would be represented by respondents, and that class members would be included in the class and bound by the judgment unless they opted out of the action by returning a request for exclusion. The final class consisted of some 28,000 members, who resided in all 50 states, the District of Columbia, and several foreign countries. Despite the plaintiff class members' no apparent connection to Kansas except for the lawsuit, the trial court applied Kansas contract and equity law to every claim and found Phillips liable for interest on the suspended royalties to all class members.

Phillips appealed to the Kansas Supreme Court which affirmed the trial court's judgment despite Phillips's contention that due process requirements prevented Kansas from adjudicating the claims of all the class members and that constitutional principles prohibited application of Kansas law to all of the transactions between petitioner and the class members.

On Phillips' appeal to the U.S. Supreme Court, the court determined whether a state court could exert jurisdiction over the claims of out-of-state class action plaintiffs without their affirmative consent. The court found that, if the forum state wishes to bind an absent plaintiff concerning a claim for money damages or similar relief at law, it must provide minimal procedural due process protection. The plaintiff must receive notice plus an opportunity to be heard and participate in the litigation, whether in person or through counsel.

The defendant-appellant in Knowles argues that the absent, putative class members in Knowles did not receive any notice or an opportunity to be heard, and treating the named plaintiff's stipulation as binding at the time of removal would violate the due process rights of these putative class members.37

Between the filing of the defendant-appellant's Petition for Writ of Certiorari and the filing of plaintiff-appellees' opposition, the U.S. Court of Appeals for the Tenth Circuit rendered its decision in Frederick v. Hartford Underwriters Insurance Co.38 In Frederick, after the plaintiff's putative class action suit was removed, he sought remand on the basis that as “master of his complaint,” in his complaint he “decided to limit total damages to an amount no more than $4,999,999.99.” The district court remanded the case, finding that a complaint requesting damages of less than $5,000,000 should be taken at face value irrespective of the evidence that the defendant advanced and, thus, interpreted the plaintiff's complaint as a binding limitation on damages. However, the Tenth Circuit reversed, concluding that “[a] court may not forgo an analysis of a defendant's claims regarding the amount in controversy merely because a plaintiff pleads that he is seeking less than the jurisdictional minimum.”39 Per the Knowles defendant-appellant, Frederick demonstrates how the issue is “important and recurring ….”40

Potential Implications

As the Ninth Circuit acknowledged, the “irony” of such “damage stipulation remands” is inescapable.41 A plaintiff has diminished or disparaged the amount he is seeking, while the defendant seeks to augment or aggrandize that amount.42 Although the plaintiff is stipulating to damages in order to avoid federal jurisdiction, or the jurisdiction of particular federal courts, in the context of a putative class action, each side has a profound disincentive to avoid such stipulations.43 In the view of the Ninth Circuit, the plaintiff may undermine his case for serving as class representative by pleading a lesser amount in controversy, and the defendant, who is seeking removal, surely would not be willing to stipulate that, if any damages are received at all, the damages must exceed $5,000,000.44 However, even greater implications exist for both parties.

A. The Removing Party Wins Scenario

Should the defendant-appellant prevail in the Supreme Court, the obvious benefits include the preservation of congressional intent set forth both in the statutory language of CAFA, as well as in its legislative history. Defendants will secure the benefit of a neutral federal forum for local class actions and the efficiency of the federal docket. Moreover, this outcome will “assure fair and prompt recoveries for class members with legitimate claims …”45 and avoid judgments that impose one state's view of the law on other states binding the rights of the residents of those states. Furthermore, cases of national importance will be channeled into federal court. Once there, they will be subject to federal supervision and resources.46

However, according to class action plaintiff counsel, a defendant-appellant win arguably will strike a serious blow to the well-settled view that the plaintiff is the “master of his complaint.” As the plaintiff-appellee points out, “[i]f he [the plaintiff] does not desire to try his case in the federal court he may resort to the expedient of suing for less than the jurisdictional amount, and though he would be justly entitled to more, the defendant cannot remove.”47 This general principle for pleading for all types of cases though, when viewed through the narrower class action prism where the fundamental due process rights of absent class members are at risk, necessarily should give way to the greater constitutional principles involved here.

B. The Non-Removing Party Wins Scenario

A plaintiff-appellee victory would be preferable according to class counsel. Should the stipulation be binding and the plaintiffs are unable to seek or accept damages in excess of $4,999,999.99, then this places a $5,000,000.00 cap on damages and precludes limitless class action judgments, as the plaintiffs assert in their opposition, and is, therefore, consistent with the purpose of CAFA.48 Moreover, per the plaintiff-appellee, keeping purely state-law claims that residents of a single state assert below the jurisdictional minimum promotes the judicial economy and conserves the judicial resources of the federal courts.49 However, these procedural concepts ultimately cannot trump the fundamental due process rights of absent class members if their claims would be unfairly impaired by class counsel upon filing of the case.


There are strong arguments being made that severe repercussions would result from allowing the plaintiff-appellee's practice here, which result may be contrary to the purposes of CAFA. The Chamber of Commerce of the United States of America set forth many of these consequences in its Amicus Brief.50 First, forum shopping will be encouraged. The U.S. Supreme Court has found that “forum manipulation concerns are legitimate and serious.”51 Allowing pre-certification damages stipulations potentially encourages the use of “magnet jurisdictions.”52 Prior to the enactment of CAFA, plaintiffs were attracted to “magnet jurisdictions” with minimal connectivity to the asserted national claims and which had minimal certification scrutiny.53

Additionally, the Chamber of Commerce outlined that such a damages stipulation “deters settlement, spawns litigation about the consequences of former litigation, and promotes serial lawsuits.”54 When the named plaintiff waives potential recovery, dissatisfied absent class members inevitably will file additional, post-settlement lawsuits seeking additional remuneration.55 As such, such a stipulation “threatens the finality of otherwise concluded class-action litigation and undermines incentives for voluntary resolution.”56 Moreover, the incentive to opt-out of the capped litigation is increased, and such will generate “splinter” suits resulting in costs to organize competing claims.57 Lastly, and probably most important, a judgment arising from a pre-certification damages stipulation may benefit the named plaintiff and class counsel at the expense of defendants and unnamed class members.58 The approach sanctioned by the Eighth Circuit “allows putative class representatives to circumvent congressionally imposed protections simply by betraying the class they purport to represent.”59 In a putative class action, a plaintiff “has a fiduciary duty to … fellow class members. A representative can't throw away what could be a major component of the class's recovery.”60However, such stipulations foreclose potential recovery to the detriment of absent plaintiffs and, as stated above, may generate additional litigation with absent plaintiffs seeking additional awards.61

In summary, since its enactment in 2005, CAFA has generated extensive litigation on this very important issue of damages stipulations, and the law on this issue is unsettled. Now, the U.S. Supreme Court finally will enter the CAFA arena and rule on the propriety of pre-certification stipulations. The implications of this decision will be far-reaching and will forever impact the manner in which class actions are litigated.

Anthony Rollo, senior member of McGlinchey Stafford, Baton Rouge, heads the Consumer Class Action Defense Group and is supervising editor of the CAFA Law Blog ( Rollo can be reached at

Michael Ferachi, senior member of the firm's Baton Rouge office, practices in the Consumer Class Action Defense Group. Ferachi is editor-in-chief of the Blog, and can be reached at

Associate Kimberly Higginbotham also practices in the firm's Consumer Class Action Defense Group, and can be reached at


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