Class Action Fairness Act (CAFA)

Definition

The Class Action Fairness Act (CAFA) is a federal law enacted in 2005 that expanded federal court jurisdiction over class action lawsuits, allowing for greater removal of such cases from state courts to federal courts. The act aims to address perceived abuses of the class action system by ensuring that more class actions with national implications are heard in a neutral federal venue rather than potentially biased state courts. This law specifically allows defendants to move class actions to federal court if certain criteria are met, which plays a significant role in venue considerations and the procedures for removal and remand of cases.

5 Must Know Facts For Your Next Test

1. CAFA applies when the amount in controversy exceeds $5 million and there is minimal diversity among the parties involved.
2. The law facilitates the removal of class action cases from state to federal court to avoid potential biases that may arise in state courts.
3. Under CAFA, class action defendants can challenge the jurisdiction of state courts based on the size and scope of the class, potentially impacting where cases are heard.
4. CAFA includes provisions that require notice to be given to all class members when a case is removed to federal court, ensuring transparency.
5. The act has been instrumental in shaping how large class actions are litigated and has led to increased scrutiny of attorneys' fees and settlements.

Review Questions

• How does the Class Action Fairness Act affect the decision-making process regarding venue selection in class action lawsuits?
  • The Class Action Fairness Act affects venue selection by allowing defendants to remove class actions from state courts to federal courts if specific criteria are met. This shift is important because it aims to provide a more neutral and impartial forum for class actions, especially those with nationwide implications. By expanding federal jurisdiction, CAFA ensures that cases involving diverse parties or significant monetary amounts are less likely to be influenced by local biases found in some state courts.
• What are some key criteria that allow a class action lawsuit to be removed from state court to federal court under CAFA, and why are these criteria significant?
  • Key criteria for removing a class action under CAFA include having at least $5 million in controversy and minimal diversity among class members, meaning that at least one plaintiff is from a different state than one defendant. These criteria are significant because they help determine whether federal courts have jurisdiction over cases that could have national implications. This process ensures that larger, potentially complex cases are handled in a federal system that is perceived as more neutral compared to local state courts.
• Evaluate the impact of CAFA on the landscape of class action litigation and its implications for both plaintiffs and defendants in such cases.
  • The impact of CAFA on class action litigation has been substantial, reshaping how these lawsuits are filed and adjudicated. For plaintiffs, it can mean facing a more challenging legal environment as cases are moved to federal court, where procedural rules may differ and be less favorable than in some state jurisdictions. On the other hand, defendants benefit from CAFA as it provides them an avenue to contest potentially unfavorable state rulings, thereby leveling the playing field. Overall, CAFA has heightened scrutiny on class action settlements and attorney fees while fostering an environment where large-scale claims can be managed more consistently across jurisdictions.

Related terms

Diversity Jurisdiction: A form of subject-matter jurisdiction allowing federal courts to hear cases where the parties are from different states, often applied in class actions under CAFA.

Remand: The process by which a higher court sends a case back to a lower court for further proceedings, often relevant when a class action is returned to state court after being removed.

Class Action: A lawsuit filed by one or several individuals on behalf of a larger group, allowing for collective legal action for similar claims or grievances.