Class Action Fairness Act
Removal Under the Class Action Fairness Act
Another avenue for removal was created in the Class Action Fairness Act of 2005 (“CAFA”).[1] In contrast to the general rule for federal diversity jurisdiction, the CAFA provisions create original federal subject-matter jurisdiction over suits where there is minimal diversity between the parties (at least one plaintiff is a member of a state different from at least one defendant) and the amount in controversy exceeds $5,000,000.[2]
The Act’s definition of a “class action” includes not just the common understanding of class action as that term is used in Federal Rule of Civil Procedure 23, but also “mass actions,” defined as “any civil action . . . in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact.”[3] For this reason, you will often see state-court mass torts in which 80 or 90 plaintiffs are named, but not more. Multiple suits with common questions of fact with fewer than 100 plaintiffs each but more than 100 plaintiffs in the aggregate do not trigger the removal provision.[4]
The irony of the Class Action Fairness Act is that corporations fought for decades to get courts to whittle down the definition of a class for the purpose of Rule 23, only to successfully lobby for the definition to be expanded for limited purposes that only benefit them. Fairness indeed.
“Mass Actions” Defined
The removal statute expressly excludes from the definition of a “mass action” a suit where “all of the claims in the action arise from an event or occurrence in the State in which the action was filed, and that allegedly resulted in injuries in that State or in States contiguous to that State.”[5] One immediate question that arises is what counts as an “event or occurrence”? Releasing pollutants over a number of years has been held not to be an “event or occurrence.”[6]
Excluded from the definition of “mass action are suits where “the claims have been consolidated or coordinated solely for pretrial proceedings.”[7] You therefore regularly see explicit language in the cases management orders of state-level consolidated proceedings that the cases are consolidated for pretrial purposes only and will not be tried jointly.
An attorney wishing to keep cases in state court should therefore (1) file suits with fewer than 100 plaintiffs (ideally with some cushion); (2) specifically disclaim any demand for joint trials; and (3) specifically request consolidation for pretrial purposes only.
Conversely, an attorney wanting to keep cases in federal court based on CAFA jurisdiction should do the opposite.
Exceptions to the Class Action Fairness Act
There are two significant exceptions to the CAFA removal provisions. First, the corollary to the “mass action” provision mentioned above is another provision of 28 U.S.C. § 1332 that actions in which “the number of members of all proposed plaintiff classes in the aggregate is less than 100” are not eligible for removal under the CAFA provisions.[8] Second, a federal court does not have diversity jurisdiction if (1) “greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed”; (2) at least one defendant against whom “significant relief is sought” and “whose alleged conduct forms a significant basis” for the claims alleged; and (3) the principle injuries resulting from the conduct occurred in the state of filing.”[9] This “local controversy exception”[10] precludes diversity removal of local environmental disaster cases and cases resulting from single-event mass disasters like refinery explosions.
For example, in the Texas consolidated litigation involving the February 2021 Winter Storm Uri, several hundred plaintiffs sued several hundred defendants, alleging products liability causes of action against power generation companies, negligence causes of actions against the power generation companies, and strict liability causes of action against both on the theory that manufacturing and delivering power was an abnormally dangerous activity.[11]
In mass tort cases where there is existing federal multidistrict litigation, it should be noted that “class actions” and “mass actions” removed under CAFA cannot be transferred to the multidistrict litigation unless a majority of the plaintiffs request the transfer.[12] This exception also has its exceptions, though; it does not apply to proposed class actions under Federal Rule 23 or certified classes under Federal Rule 23.[13]
[1] Pub. L. No. 109-2.
[2] 28 U.S.C. § 1332(d)(2).
[3] 28 U.S.C. § 1332(d)(11).
[4] Tanoh v. Dow Chem. Co., 561 F.3d 945 (9th Cir. 2009); Parson v. Johnson & Johnson, 749 F.3d 879 (10th Cir. 2014); Jordan v. Bayer Corp., 2017 WL 1909059 (E.D. Mo. 2017).
[5] 28 U.S.C. § 1332(d)(11)(B)(ii)(I).
[6] Allen v. Boeing Co., 784 F.3d 625 (9th Cir. 2015).
[7] 28 U.S.C. § 1332(d)(11)(B)(ii)(IV).
[8] 28 U.S.C. § 1332(d)(5)(B).
[9] 28 U.S.C. § 1332(d)(4)(A).
[10] See, e.g., Hart v. FedEx Ground Package Sys. Inc., 457 F.3d 675, 676 (7th Cir. 2006).
[11] White v. Bastrop Energy Partners LP, 2021 WL 4295320, at *2 (S.D. Tex. Sept. 21, 2021).
[12] 28 U.S.C. § 1332(d)(11)(C)(i).
[13] 28 U.S.C. § 1332(d)(11)(C)(ii).