Five years ago, Congress enacted the Class Action Fairness Act of 2005 (CAFA) in reaction to widespread “abuses of the class action device” in state courts. Congress heard evidence that many nationwide class actions were being filed in state courts with reputations for hostility to business defendants (especially those from out of state) or for rubber-stamping coupon settlements under which the class counsel — not the class members — received the lion’s share of the benefit. Concluding that these abuses were operating as a drag on the nation’s economy, Congress enacted CAFA to expand federal diversity jurisdiction to encompass substantial interstate class actions. Congress’s belief was that in federal court these abuses would be diminished. See S. Rep. No. 109-14, at 10-27 (2005).
How has CAFA fared? Looking back at the past five years, CAFA’s reforms have had mixed success. As intended by Congress, class actions increasingly proceed in federal court. Since CAFA took effect, the number of class actions originally filed in federal court has nearly tripled. See Emery G. Lee III & Thomas E. Willging, Federal Judicial Center, The Impact of the Class Action Fairness Act of 2005 on the Federal Courts 1 (April 2008). Diversity removals also spiked after CAFA’s enactment, although they have trended downward in the years since, probably because so many class actions are now initially filed in federal court. But CAFA is not an unqualified success: Many observers have concluded that new tactics by the plaintiffs’ bar — and several judicial decisions — have undermined CAFA’s goal of stopping class action abuses. They are discussed below.
