This decision is significant because it increases the likelihood that class action defendants will be able to successfully remove class actions to federal court, where discovery is often more limited than in state court and class certification standards may be more stringent. The Standard Fire decision also eliminates one tactic class action plaintiffs have been using to avoid litigating in federal court.
It is likely that the rule announced in Standard Fire will also apply to other similar tactics used by class action plaintiffs. For example, assertions by a plaintiff in a complaint about the amount in controversy have been found by some courts to create a heightened burden of proof for a defendant to establish that more than $5 million is in controversy under CAFA. Although Standard Fire did not address this specific issue, the Supreme Court held that district courts, when assessing the amount in controversy for CAFA purposes, should ignore assertions by the class action plaintiff attempting to limit the amount in controversy. The Supreme Court also noted the importance of CAFA's "primary objective," which is to ensure that federal courts can consider "'interstate cases of national importance.'"
The decision does not expressly resolve the divergent case law on the burden of proof placed on the defendant to establish the amount in controversy, which ranges from a "preponderance of the evidence" to a "legal certainty" standard. Nevertheless, any damages-limitation stipulation from the named plaintiff should not result in a heightened burden on the defendant to establish the amount in controversy, as suggested in decisions such as the U.S. Court of Appeals for the Ninth Circuit's pronouncement in Lowdermilk v. U.S. Bank National Ass'n. Until that issue is squarely resolved in the courts, removing defendants will be wise to continue to use extra care in establishing that the projected amount in controversy exceeds the $5 million threshold.
. Standard Fire Insurance Co. v. Knowles
, No. 11-1450 (U.S. Mar. 19, 2013), available here
. Id. at 6 (quoting §2(b)(2), 119 Stat. 5).
. Lowdermilk v. U.S. Bank Nat'l Ass'n, 479 F.3d 994 (9th Cir. 2007).