In Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court held that a class-action plaintiff may not avoid the effect of the federal Class Action Fairness Act (CAFA) by “stipulating” he will not seek damages in excess of $5,000,000. CAFA provides that the federal “district courts shall have original jurisdiction” over a civil “class action” if, among other things, the “matter in controversy exceeds the sum or value of $5,000,000.” 28 U.S.C. §§ 1332(d)(2), (5). The statute further states that to “determine whether the matter in controversy exceeds the sum or value of $5,000,000,” the “claims of the individual class members shall be aggregated.” § 1332(d)(6).

Plaintiff Knowles filed a proposed class action in an Arkansas state court against the Standard Fire Insurance Company (Standard). Knowles claimed that when Standard made certain insurance loss payments for homeowners’ policies, it had unlawfully failed to include a general contractor fee. On that basis, Knowles sought to certify a class of similarly situated Arkansas policyholders. In the prayer for relief in the complaint, Knowles stipulated the class would seek damages less than $5 million.