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CAFA: Finding a Method to the Madness of 'Mass Actions'
The Class Action Fairness Act of 2005 ('CAFA') expanded federal jurisdiction over putative class actions. Under CAFA, the federal diversity jurisdiction statute, 28 U.S.C. '1332, was amended to allow for both original and removal jurisdiction over putative class actions where: 1) the putative class action consists of at least 100 proposed class members; 2) the citizenship of at least one proposed class member is different from that of any defendant ('minimal diversity'); and 3) the matter in controversy, after aggregating the claims of the proposed class members, exceeds $5 million, exclusive of interest and costs. See generally P.L. 109-2 '4(a), codified at 28 U.S.C. '1332(d). This expanded federal diversity jurisdiction is subject to certain exceptions, including the 'local controversy' and 'home-state controversy' exceptions, where, inter alia, a certain percentage of putative class members and the 'primary defendants,' or defendants from whom 'significant relief is sought,' are citizens of the forum state. See 28 U.S.C. '1332(d)(3) and (4).
Notwithstanding its title, CAFA's reach is not limited to 'class actions.' CAFA's expanded federal jurisdiction also embodies a category of cases referred to in CAFA as 'mass actions,' namely, 'civil actions in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs' claims involve common questions of law or fact.' 28 U.S.C. '1332(d)(11)(B)(i). As explained in CAFA's legislative history:
The Committee finds that mass actions are simply class actions in disguise. They involve a lot of people who want their claims adjudicated together and they often result in the same abuses as class actions. In fact, sometimes the abuses are even worse because the lawyers seek to join claims that have little to do with each other and confuse a jury into awarding millions of dollars to individuals who have suffered no real injury. S. Report No. 109-14, at 47 (2005).
In addition, some states have not adopted general class action procedures (e.g., Mississippi) and some states have not permitted class action procedures to be utilized for certain types of actions, such as consumer fraud actions (e.g., Alabama and South Carolina). Thus, by including 'mass actions' under its rubric, CAFA provided defendants with a means to remove (previously unremovable) state court actions involving a large number of plaintiffs, even if the action is not pled as a class action.
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