"The Class Action Fairness Act of 2005, CAFA, gives federal district courts original jurisdiction over class actions in which, among other things, the matter in controversy exceeds $5 million in sum or value," the court said. CAFA also "provides that to determine whether a matter exceeds that amount the 'claims of the individual' class members must be aggregated,'" or added up.
In April 2011, Greg Knowles brought suit in an Arkansas state court against the Standard Fire Insurance Co., claiming the company had failed to include a general contractor's fee in homeowner's loss payments.
He sought a class action that included hundreds or thousands of Arkansas policyholders.
Knowles stipulated, or agreed, the loss would be less than $5 million in damages -- below the CAFA threshold. The company removed the case to federal court, but a U.S. judge sent it back to state court and an appeals court refused to review.
The Supreme Court reversed. The unanimous opinion written by Justice Stephen Breyer said the stipulation "does not speak for those Knowles purports to represent" in the class action.