On February 18, 2005, President Bush signed the Class Action Fairness Act into law. The asserted purposes of the Act are to reduce frivolous class action lawsuits, decrease forum shopping and curb class settlements that provide significant fees to class counsel, with marginal benefits to class members. The Act facilitates the removal of large, multi-state class actions from state to federal court. Complete diversity of citizenship between plaintiffs and defendants will no longer be required for federal court jurisdiction over certain high-stakes, multi-state class actions based upon state law. It also applies stricter scrutiny to coupon settlements and, in particular, to fee awards based upon coupon settlements.
The Act grants federal district courts original jurisdiction of any civil class action in which the matter in controversy exceeds $5m (£2.6m) (exclusive of interest and costs), and the diversity of citizenship exists between any one member of the plaintiff class (whether a named plaintiff or not) and any defendant. The diversity of citizenship requirement is met where any plaintiff is a citizen of a state that is different from any defendant, or where the action is between a citizen of a state and a foreign state or a foreign citizen.
