High court rules for insurer in class-action suit

WASHINGTON (AP) - A unanimous Supreme Court on Tuesday rejected efforts by a plaintiff in a class-action lawsuit to keep his claim in state court rather than more business-friendly federal court by limiting the amount of money sought to under $5 million.

The justices threw out a federal appeals court ruling in favor of an Arkansas homeowner who sued his insurer, the Standard Fire Insurance Co. of Hartford, Conn., over the cost of repairing hail damage. The appeals court sided with the homeowner, Greg Knowles of Miller County in southwestern Arkansas, in allowing the case to go forward in state court because Knowles promised in writing to seek less than $5 million for himself and other Arkansas homeowners insured by Standard Fire.

But Justice Stephen Breyer said for the high court that Knowles could not bind all others who might join the lawsuit to the $5 million limit. A 2005 federal law, the Class Action Fairness Act, allows defendants to transfer class actions involving more than $5 million to federal court.

Breyer noted that the trial judge found that the sum of the damages would have exceeded $5 million, but for the promise.

"And we must decide whether the stipulation makes a difference. In our view, it does not. Our reason is a simple one: Stipulations must be binding," Breyer said.

The Class Action Fairness Act was intended to prevent what business interests have described as the gaming of the legal system by plaintiffs' lawyers to drag out lawsuits and make fighting them so expensive that companies would rather settle than continue in court.

Standard Fire and interest groups supporting it at the Supreme Court complained that Knowles' home of Miller County has become a "magnet" for class actions because of judges who refuse to shut down even meritless lawsuits.

The Supreme Court has in recent years backed limits on class actions, most notably in the 2011 decision that stopped a suit against Wal-Mart involving up to 1.6 million of its female employees who complained of sex discrimination.

The case is Standard Fire Insurance Co. v. Knowles, 11-1450.


(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

Top Stories

  • New Look
    The Seattle Police Department unveils new uniforms, logo

  • 'It Was My Turn'
    K.J. Wright has signed a $27 million, four-year extension with the Seahawks

  • Holiday Map
    Find holiday events, Santa photo opportunities, and light displays
ATTENTION COMMENTERS: We've changed our comments, but want to keep you in the conversation.
Please login below with your Facebook, Twitter, Google+ or Disqus account. Existing MyNorthwest account holders will need to create a new Disqus account or use one of the social logins provided below. Thank you.
comments powered by Disqus
Sign up for breaking news e-mail alerts from MyNorthwest.com
In the community
Do you know an exceptional citizen who has impacted and inspired others?
KIRO Radio and WSECU would like to recognize six oustanding citizens this year. Nominate them to be recognized and to receive a $2,000 charitable grant.