New case at high court aims to blunt class actions

AP News
Posted: Aug 31, 2012 11:49 AM
New case at high court aims to blunt class actions

WASHINGTON (AP) — The Supreme Court will consider an insurance company's plea to move a class-action lawsuit from state court to a more business-friendly federal court.

The justices on Friday agreed to hear an appeal from The Standard Fire Insurance Co. of Hartford, Conn. The case involves the reach of a 2005 federal law that allows defendants in class-action lawsuits to transfer disputes involving more than $5 million to a federal court from state courts that often favor plaintiffs.

Standard Fire is being sued in Arkansas by a homeowner who complained the company did not pay enough to repair hail damage.

A federal appeals court ruled that the suit could remain in state court because the homeowner has promised in writing to seek less than $5 million for himself and other Arkansas homeowners insured by Standard Fire.

The issue for the justices if whether the promise made by homeowner Greg Knowles, who lives in Miller County in southwestern Arkansas, is binding on others who may eventually be part of the lawsuit.

The U.S. Chamber of Commerce, the nation's largest business group, sided with the insurance company in urging the court to take the case because it is "of exceptional importance" to the business community.

The chamber said plaintiffs and their lawyers easily could avoid federal courts and the greater protection they afford defendants in class-action lawsuits by promising to limit the amount of money at stake.

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Knowles put forward several reasons for turning down the appeal, including that the state court has yet even to certify that Knowles can represent similarly situated Standard Fire policy holders.

The case probably will be argued after Thanksgiving.

The justices rarely decide in the middle of the summer to add new cases for the term that begins in October. But they were short of cases to fill their December argument calendar, and if they waited until their next scheduled conference in late September, there would not be enough time to file legal briefs before the early December argument dates.