Here is our second guest post for the day. This one is from Kevin Krist, a personal injury attorney located in Houston.
The Class Action Fairness Act of 2005 was designed mainly to curtail abuses that class action lawsuits often made on the justice system. It also was meant to give more power to federal courts, especially where the plaintiffs were mixed and settlements were involved.
But has CAFA also reduced "forum shopping" i.e., lawyers looking for state courts that will give them the most favorable verdict? Has CAFA also threatened the autonomy of state courts? Has CAFA truly leveled the playing field and exercised fairness?
The Arguments For and Against CAFA
The advocates of Pro-CAFA stress the problem that clients face of having to pay attorneys’ fees out of their settlement. This defeats the purpose of a class action suit supposedly giving the clients the money that they deserve for damages caused. Therefore, CAFA makes settlement scrutiny more rigorous, giving clients the chance to truly be compensated.
Anti-CAFA advocates, however, stress that leaving the work to federal judges can back up the already congested federal courts. This can lead to longer class action lawsuits which would otherwise be settled if they had been filed at the state level. CAFA would therefore make it harder to file a class action lawsuit because of the amount of work involved in bringing a case to a federal court. To some lawmakers, this meant that large corporations could go scot-free.
Moreover, because federal judges are appointed by the government, the government could also control the outcome of class action lawsuits by changing federal judges, supposedly in favor of large companies that support the government. Not only does CAFA cater to the rich, it could well go against the principle of state autonomy.
The Impact on Federal Courts
Given these concerns, it appears that the most telling outcome would be bogging down of cases in federal courts, as well as the lack of solved class action cases that have diverse plaintiffs and go upwards of $5 million in damages.
Studies have shown that indeed, there are more class action suits filed at federal courts, with the diversity jurisdiction used as justification. More precisely, the number of cases filed represents a three-fold increase from pre-CAFA days. Studies also show that many cases that were previously tried in state courts are now being removed to federal courts, which would justify the concern that federal courts would be filled with case after case.
There has been no study as to whether or not lawsuits are taking longer to file and/or solve. However, the numbers show that while there is an increase in class action suits being filed at federal courts, the number is primarily due to a greater number of newly-filed suits. The higher numbers are not the result of cases simply being moved from the state to the federal level.
Forum shopping has also taken a new form: that of lawyers choosing specific federal courts that are more likely to grant favorable verdicts to a class action lawsuit. This puts state autonomy in danger, as some plaintiffs are most likely going to demand that state-specific laws apply nationwide.
The forum shopping amongst federal courts has also led to division amongst these courts, which may one day require the intervention of the Supreme Court. More class action suits are being filed, and they could well test the rigor and scrutiny that CAFA promises.