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Sweeping Litigation Reform Expands Federal Jurisdiction over Class Actions
On Feb. 18, 2005, President Bush signed into law the Class Action Fairness Act of 2005 (“CAFA”), which will apply to any civil action commenced on or after the date of enactment. CAFA is the first major litigation reform legislation to pass Congress in nearly a decade and arguably represents the most significant change in class action law in the United States since the adoption of Rule 23 of the Federal Rules of Civil Procedure in 1967.
CAFA substantially expands federal jurisdiction over large “interstate” class actions:
- by making it dramatically easier for such class action to be filed in, or removed to, federal court under minimal federal diversity requirements; and
- by imposing new rules designed to prevent abuses in the settlement of such class actions.
Henceforth, after CAFA, most major interstate class actions involving more than $5 million at stake will likely end up being litigated in federal court. As such, CAFA represents a seismic shift in how class actions are litigated in this country.
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