key term - Class Action Fairness Act of 2005

Definition

The Class Action Fairness Act of 2005 (CAFA) is a federal law that aimed to address concerns regarding abuses in class action lawsuits by expanding federal jurisdiction over these cases. The act allows federal courts to hear class action cases if the amount in controversy exceeds $5 million, and if there is minimal diversity among the parties involved, meaning at least one plaintiff and one defendant are from different states. CAFA was designed to curb perceived forum shopping and prevent state courts from being overwhelmed with large class action suits.

5 Must Know Facts For Your Next Test

1. CAFA was enacted in response to concerns about abusive practices in class action litigation, especially the tendency for large settlements to favor attorneys over actual class members.
2. Under CAFA, federal courts can exercise jurisdiction over class actions where the total amount in controversy exceeds $5 million, regardless of the number of claims.
3. The act facilitates removal of class action cases from state to federal court, making it easier for defendants who believe they will have a fairer trial in federal courts.
4. CAFA includes provisions that require courts to ensure adequate representation for all class members and to consider the interests of both the plaintiffs and defendants.
5. The legislation has led to significant changes in how class action lawsuits are filed and litigated, particularly affecting the strategies of plaintiffs’ attorneys.

Review Questions

• How did the Class Action Fairness Act of 2005 change the landscape for class action lawsuits in relation to diversity jurisdiction?
  • The Class Action Fairness Act of 2005 expanded diversity jurisdiction by allowing federal courts to hear more class action lawsuits. Specifically, it introduced minimal diversity requirements, meaning that as long as one plaintiff and one defendant are from different states, federal jurisdiction can be established. This shift aimed to reduce the number of class actions in state courts and address perceived abuses in litigation practices.
• Discuss the implications of CAFA on forum shopping and how it affects both plaintiffs and defendants in class action litigation.
  • CAFA was designed to curb forum shopping by giving federal courts more authority over class actions that meet specific criteria. This means defendants can more readily remove cases from state to federal court, which they may perceive as more favorable. For plaintiffs, this can limit their ability to choose a court believed to be sympathetic to their case. Overall, CAFA shifts the balance towards federal jurisdiction, impacting the strategic decisions made by both sides in litigation.
• Evaluate the effectiveness of the Class Action Fairness Act of 2005 in achieving its goals regarding class action litigation and access to justice.
  • The effectiveness of CAFA can be assessed by examining its impact on class action filings and outcomes. While it successfully increased federal oversight and aimed to protect against abusive practices, critics argue it has made it harder for legitimate claims to be heard in favorable forums. The legislation may have inadvertently limited access to justice for some individuals whose claims are now less likely to proceed as class actions due to increased procedural hurdles and the need for federal jurisdiction.

Related terms

Diversity Jurisdiction:

A form of subject matter jurisdiction that allows federal courts to hear cases where the parties are citizens of different states or countries, provided the amount in controversy exceeds a specified threshold.

Minimal Diversity: A legal requirement under CAFA that permits federal jurisdiction when at least one plaintiff is from a different state than any defendant, even if other plaintiffs share a state with a defendant.

Forum Shopping: The practice of choosing the most favorable jurisdiction or court in which to bring a lawsuit, often based on perceptions of how laws will be applied or outcomes expected.