Coordination Of Class Proceedings The Class Action Fairness Act Cafa Outline

Coordination of Class Proceedings–The Class Action Fairness Act (CAFA)

1. In General

   1. CAFA adds new subsection (d) to 28 U.S.C. § 1332, the diversity jurisdiction statute.

   2. 28 U.S.C. § 1332(d)(2) provides:

      1. “The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which—

         1. (A) any member of a class of plaintiffs is a citizen of a State different from any defendant;

         2. (B) any member of a class of plaintiffs is a foreign state or a citizen or subject of a foreign state and any defendant is a citizen of a State; or

         3. (C) any member of a class of plaintiffs is a citizen of a State and any defendant is a foreign state or a citizen or subject of a foreign state.” (CB 387).

      2. Under 28 U.S.C. § 1332(d)(2):

         1. (1) So long as one class member–not even necessarily the named plaintiff–is diverse from one defendant, the diversity requirement for diversity jurisdiction is satisfied. 28 U.S.C. § 1332(d)(2).

            1. Complete diversity is not required. See id.

         2. (2) The amount-in-controversy requirement is satisfied insofar as the claims in the class suit, taken together, exceed $5 million. 28 U.S.C. § 1332(d)(2).

            1. Pursuant to 28 U.S.C. § 1332(d)(6), “the claims of the individual class members shall be aggregated to determine whether the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interests and costs.” (CB 388).

            2. The putative class representative cannot stipulate regarding the amount in controversy; insofar as the class is not yet certified, the stipulation is not binding on other proposed class members. Standard Fire.

            3. The court is to determine the amount in controversy at the pleading stage with regard to whether the amount in controversy requirement is met. Standard Fire.

   3. Jurisdiction under CAFA does not depend on class certification. 28 U.S.C. § 1332(d)(8) (CB 388).

      1. CAFA jurisdiction attaches when a case is filed as a class action. In re Burlington N. (CB 388).

      2. Denial of class certification does not divest federal courts of jurisdiction. Metz (CB 388).

2. Exclusions from Jurisdiction

   1. CAFA does not apply to class suits with less than 100 class members. See 28 U.S.C. § 1332(d)(5).

   2. CAFA does not authorized jurisdiction over any class action in which “the primary defendants are States, State officials, or other governmental entities against whom the district court may be foreclosed from ordering relief.” 28 U.S.C. § 1332(d)(5)(A) (CB 389).

   3. CAFA does not apply to any class action that “solely” involves specific claims under the federal securities laws or claims “that relate to the internal affairs or governance of a corporation or other form of business enterprise and that arises under or by virtue of the laws of the State in which such corporation or business enterprise is incorporated or organized.” U.S.C. § 1332(d)(9) (CB 389).

3. Removal Under CAFA

   1. CAFA includes a removal provision designed to make it easier to remove qualifying actions from state court to federal court. See 28 U.S.C. §1453.

   2. 28 U.S.C. § 1453(b) provides:

      1. “A class action may be removed to a district court of the United States in accordance with section 1446 (except that the 1-year limitation under section 1446(c)(1) shall not apply), without regard to whether any defendant is a citizen of the State in which the action is brought, except that such action may be removed by any defendant without the consent of all defendants.” (CB 390).

         1. Changes from original removal statute:

            1. (1) All the defendants do not have to agree to removal;

            2. (2) The case does not have to be removed within a year; and

            3. (3) Eliminates the “defendant forum rule,” which doesn’t allow removal where the defendant is sued in his home state. See 28 U.S.C. § 1453(b).

   3. 28 U.S.C. § 1453(c) relaxes the general prohibition on appellate review of orders granting or denying motions to remand a suit from federal to state court.

      1. BUT § 1453(c)’s review provisions are limited to those class actions brought under CAFA. Saab (CB 392).

   4. § 1453 applies to suits over which the federal courts have original jurisdiction under § 1332(d).

   5. District courts have continued to require the removing party to demonstrate that removal is proper.

4. Mandatory Declination of Jurisdiction

   1. 28 U.S.C. § 1332(d)(4) provides that the court “shall decline” to exercise jurisdiction when the requirements of either (1) 28 U.S.C. § 1332(d)(4)(A) or (2) 28 U.S.C. § 1332(d)(4)(B) are met.

      1. (1) The Local Controversy Exception–28 U.S.C. § 1332(d)(4)(A)

         1. § 1332(d)(4)(A) requires a district court to decline to exercise jurisdiction in some cases in which more than two-thirds of the class members are citizens of the state in which the action was originally filed, but not all the primary defendants are citizens of the state in which the action was originally filed.

            1. BUT it is unclear how to calculate the total number of class members.

            2. BUT it is unclear what “primary defendants” means.

         2. In order to decline jurisdiction, at least one of the defendants must be a party (1) “from whom significant relief is sought by members of the plaintiff class”; (2) “whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class”; and (3) “who is a citizen of the State in which the action was originally filed.” 28 U.S.C. § 1332(d)(4)(A)(i)(II) (CB 393).

            1. BUT it is unclear what “significant relief” means.

            2. BUT it is unclear what “significant basis” means.

         3. In addition, the following requirements must be met: (1) the “principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed,” 28 U.S.C. § 1332(d)(4)(A)(i)(III); and (2) during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants...

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