High Court Considered Congressional Intent in Class-action Decision

by Mark Friedman  on Monday, Mar. 25, 2013 12:00 am  

The U.S. Supreme Court decision in Knowles v. Standard Fire rested on what Congress intended to do when it enacted class-action reforms eight years ago, according to Georgene Vairo, a law professor at Loyola Law School at Los Angeles who wrote a book on the Class Action Fairness Act of 2005.

During oral arguments on Standard Fire’s appeal in January, Chief Justice John Roberts said it was difficult to speculate about Congress’ intent.

“Presumably, they may not have thought about the idea that there will be class actions worth a lot more than $5 million but the plaintiff’s lawyer will only ask for less than $5 million,” he said.

In a brief, opposing counsel David Frederick told the Supreme Court said that Knowles’ case was “exactly as Congress intended” because it capped the damages and limited the class to Arkansas residents.

“This case therefore avoids all of the concerns of ‘judicial blackmail,’ nationwide classes in state court, and other problems at which CAFA was directed,” Frederick wrote.

But the win for Standard Fire, Vairo said, now makes it easier for defendants to move cases to federal court, which is where they want to be.

“Plaintiffs think they have a better chance in front of a state court judge, and they probably do,” Vairo said.

But she added that both the plaintiffs’ and defense attorneys are committing malpractice if they don’t attempt to get the litigation in the jurisdiction where they think their client is going to get the best deal.

“And both sides have all kinds of rules to play with to try to achieve that goal,” Vairo said.

She said she would be watching to see how the plaintiffs’ attorneys react to the ruling. They still might craft their lawsuits to limit their damages so they still fall under the $5 million threshold, which would keep them in state court.



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