Hey guys, we found another law review article while we were out scouring the internet for CAFA goodies. The title of this one is Protecting Federalism Interests after the Class Action Fairness Act of 2005: A Response to Professor Vairo by Heather Scribner published in the Winter 2005 issue of the Wayne Law Review.
This article discusses federalism and whether CAFA may be unconstitutional. The author states that CAFA trades one problem of federalism for another. Federalism is concerned with the allocation of power among the sovereigns in our unique system of government.
The author describes two distinct aspects of federalism: (1) the division of power among several states is called horizontal federalism and (2) the division of power between the federal and state governments is called vertical federalism.
Before CAFA was enacted, a plaintiff friendly jurisdiction would certify nationwide class actions and apply its forum law to the claims of its residents and non-residents the same. According to the author, this is a problem of horizontal federalism. In horizontal federalism, states took the power that rightfully belonged to other co-equal states. CAFA fixes this horizontal federalism problem by taking away the states’ powers to hear multi-state class actions.
CAFA, solves this horizontal federalism problem, but creates a new problem of vertical federalism. Under CAFA a single court can fashion a generalized common law rule and any state with a real interest in adjudicating the dispute has no recourse. If the applicable state law is not settled, the federal court adjudicating the claim is interfering with the state’s interest in developing and applying its own law.
The author points out that Professor Georgene Vairo, who strongly opposed CAFA, suggested that CAFA is an unconstitutional infringement on the rights of the states under the Tenth and Eleventh Amendments. The author disagrees and states CAFA is a straight forward exercise of Congress’ Article III power to provide for diversity jurisdiction in the federal courts. This article specifically refutes Professor Vairo’s claim that CAFA is unconstitutional. The article also proposes an alternative solution. The author suggests that federal courts should abstain from deciding diversity cases when the applicable state law is unclear. The author’s solution is to request federal courts to abstain under the Thibodeaux abstention doctrine from Louisiana Power & Light Co. v. City of Thibodeaux, 360 U.S. 25 (1959), and allow the state courts to rule upon unsettled issues of state law.
This is a fantastic article in the Wayne Law Review and worth a quick read for anyone who has state law issues in their class action. Enjoy.