In the proud eyes of its proponents, the 2005 Class Action Fairness Act set out to radically change the cat-and-mouse game between class action plaintiffs lawyers and the corporations whose cheese they challenge. It was crafted to board up most entry holes to state courts for cases reaching nationwide, leaving only the federal courts. CAFA declared, in effect, to hell with the so-called judicial hellholes—those jurisdictions thought to favor plaintiffs and super-sized jury awards.
But as the corporate cats sat on state courthouse steps ready to pounce and use CAFA to remove such cases to the federal system, many mice have headed straight to federal court. In the three years since the act was passed, plaintiffs lawyers have been seeking those federal circuits considered more tolerant of class actions, according to research by the Federal Judicial Center, the research arm of the federal courts.
CAFA gives federal courts jurisdiction over class actions involving more than $5 million when any class member resides in a different state from any of the defendants. Such a case could stay in state court if at least two-thirds of the class and the primary defendants are in the state where the case was originally filed. Before CAFA, the federal courts could take only those cases with complete diversity of citizenship between each named plaintiff and the defendants—and no individual claim could be under $75,000.
CAFA may also alter the face of federalism as federal courts deal more often with multistate analyses of matters involving substantive state law. "State courts will no longer be developing law in the most important cases, and we don’t have a federal common law of consumer fraud or negligence, and the consumer statutes are state statutes," says Elizabeth Cabraser of the San Francisco office of Lieff Cabraser Heimann & Bernstein, which specializes in bringing class actions. "So it seems an odd state of affairs that the federal courts will of necessity be making important new law in those areas."
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