Potential Punitive Damages for Fraud Keep Case in Federal Court

Basham v. Am. Nat’l. County Mut. Ins. Co. (W.D. Ark.; October 23, 2013)

The defendant auto insurers met their burden that the class action should not be remanded to state court because the aggregation of Arkansas residents’ potential compensatory damages, based on their claim of a 20 percent underpayment of claims, potential statutory penalties, and potential punitive damages, could exceed the $5 million threshold for class actions. The court focused on the fact that a multiplier of six to potential compensatory damages and possible attorney’s fees of 40 percent were not unreasonable in reaching the threshold.