key term - CAFA

Definition

The Class Action Fairness Act (CAFA) is a federal law enacted in 2005 that provides federal courts with jurisdiction over certain class action lawsuits, primarily those involving diversity of citizenship and a total amount in controversy exceeding $5 million. CAFA was designed to address perceived abuses in the class action system by moving many class actions from state courts to federal courts, where it is believed there is a more uniform standard of fairness.

5 Must Know Facts For Your Next Test

1. CAFA applies to class actions where the aggregated claims exceed $5 million and where there is minimal diversity among the parties involved.
2. The act also allows defendants in class action lawsuits to remove cases from state court to federal court, giving them access to what they perceive as a more favorable legal environment.
3. CAFA includes provisions to prevent local defendants from removing cases if they are sued by their own state's residents, aiming to protect against forum shopping.
4. One of the primary goals of CAFA was to reduce the number of class actions filed in state courts, which were often seen as being more favorable to plaintiffs.
5. Under CAFA, federal courts have additional responsibilities regarding class action certification and oversight, ensuring that settlements are fair and reasonable for all class members.

Review Questions

• How does CAFA impact the jurisdictional landscape for class actions compared to before its enactment?
  • CAFA significantly changed the jurisdictional landscape by allowing more class actions to be heard in federal court rather than state court. This shift was intended to address concerns about perceived abuses within state court systems. With CAFA, class actions must meet certain criteria regarding the amount in controversy and diversity of citizenship, thus providing a framework that encourages federal oversight and potentially enhances uniformity in legal standards.
• Evaluate the potential benefits and drawbacks of CAFA for plaintiffs and defendants in class action lawsuits.
  • For plaintiffs, CAFA can lead to a more structured environment for litigation and potentially more favorable outcomes if federal judges are seen as impartial. However, some plaintiffs may find it harder to pursue their claims due to stricter procedural requirements. For defendants, CAFA provides access to federal courts, which they may view as less sympathetic to class actions. Nonetheless, this can also mean facing more rigorous scrutiny under federal rules regarding certification and settlement approval.
• Critically analyze how CAFA has influenced the overall trend of class action litigation in the United States since its passage.
  • Since its passage in 2005, CAFA has significantly influenced class action litigation by increasing the number of cases removed from state courts to federal courts. This transition has prompted a more rigorous examination of class action certifications and settlements by federal judges. While some studies suggest that CAFA has reduced frivolous lawsuits and improved fairness in settlements, others argue that it has created barriers for small claimants and altered the dynamics of legal representation in these cases. Overall, CAFA has reshaped how class actions are litigated, leading to a complex interplay between state and federal jurisdictions.

Related terms

Diversity Jurisdiction:

A type of subject matter jurisdiction that allows federal courts to hear cases where the parties are from different states and the amount in controversy exceeds a specified threshold.

Class Action: A lawsuit where a group of people with similar claims against the same defendant can sue as a collective, typically representing all members of the class.

Removal: The process of moving a case from state court to federal court, often invoked under CAFA when class action requirements are met.