Supreme Court Prevents Plaintiffs from Circumventing the Class Action Fairness Act

The Class Action Fairness Act (CAFA) provides for federal court jurisdiction for most class action lawsuits that exceed $5 million in potential damages.  Plaintiffs often prefer state court venues and have sought various ways to circumvent the reach of CAFA and avoid the perceived tougher scrutiny they receive in federal court.  One of those ways of circumventing CAFA was to stipulate that they would not seek damages exceeding $5 million.  The Supreme Court this past week closed that loophole, holding that plaintiffs cannot avoid CAFA with such a stipulation.  The Court reasoned that a plaintiff lacks the legal authority to bind absent putative class members and therefore a stipulation to limit damages cannot form the basis for avoiding jurisdiction.  The opinion can be found at http://www.supremecourt.gov/opinions/12pdf/11-1450_9olb.pdf.