CAFA Update: The Class Action Jurisdictional World Clarifies
Nearly four years ago, Congress enacted landmark legislation - the Class Action Fairness Act of 2005 (“CAFA”) - in an effort to curb class action abuse and create more rational rules for federal jurisdiction over class action cases. The statute was historic in many respects: it expanded the contours of diversity jurisdiction, it allowed for appeals of certain jurisdictional remand orders, and it gave judges - for the first time - discretion to decide whether to exercise jurisdiction over certain class actions. There are strong signs that CAFA is achieving the intent of its framers:
• Class action filings in state courts - particularly in the notorious “magnet” courts that condoned class action abuses - have plummeted. In 2004, there were 82 class actions filed in Madison County, Illinois, the rural county that became an international emblem of litigation abuse in the United States. By contrast, in the two years following CAFA's enactment, only 16 class actions were filed in the county, an annualized decline of more than 90 percent.
• The most recent findings of the Federal Judicial Center (“FJC”) on the impact of CAFA on the federal courts also indicate that CAFA is having its intended effect. The FJC recently reported an “increase in the number of diversity class actions filed as original proceedings in the federal courts in the post-CAFA period.”1 At the sam
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