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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Guest Post: The Impact of the Class Fairness Act

Posted in Resources

Today, we are pleased to publish a Guest Post written by Paul Kasparov on behalf of MayoWynneBaxter.co.uk – specialist Wills and Probate Solicitors.   Paul, you have the floor.

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Legislating litigation is one of the most politicized and unpredictable functions undertaken by the United States government. In many cases, legislation that addresses how class action and civil suits play out in the American justice system have unpredictable results. Often legislation will be used in ways that are not expected by the creators of the bills or be interpreted in unexpected ways by jurors and judges. These discrepancies in the interpretations of laws often lead to results in the justice system that are unintended or in some cases completely contrary to the initial intent of the legislation. The Class Action Fairness Act of 2005, according to many critics, has had the opposite effect of its intended purpose in practice – although according to Congress, its intended effects have proceeded as planned.

The Class Action Fairness Act of 2005 was designed by reform advocates that had two main goals. The first was to limit the abuse of the class action procedure. In the past, out-of-state defendants essentially “shopped around” to find state courts that were friendly to their complaints. This act was designed to curb this tendency by expanding federal jurisdiction over this type of suit. By diversifying federal jurisdiction, the “complete diversity” of federal jurisdiction would eliminate the occurrence of so-called magnet areas of jurisdiction where there might be biased rulings. Secondly, the act was designed to limit the fees that attorneys could charge the class members should they be deemed excessive. Prior to this act there were instances of class action suits in which the lawyer fees actually exceeded the amount of the settlement awarded to class members. The Class Action Fairness Act was signed into law by George W. Bush, expanding the federal jurisdiction over a large majority of class action lawsuits and mass legal action that is taken in the United States.

Specifically, this act gave the federal government jurisdiction in certain class actions in which the amount of money being considered exceeded five million dollars or in which members of the class of plaintiffs were citizens of a different state then that of the defendants. The Class Action Fairness Act drew a great deal of controversy, with critics claiming that it limited the rights of individuals who were wronged by large corporate entities. They also claimed that the bill prolonged litigation, slowed the court dockets of federal proceedings and even opened the door to federal control of court outcomes through judicial appointments to particular cases. Some critics also argued that this act was in fact an infringement of state’s rights, although supporters of the bill responded that the act was consistent with the founders’ original intent for federal jurisdiction.

In reality, researchers have found that this act was followed by an increase in class action suits moved into the federal jurisdiction. This increase came in the form of consumer class actions and original filings that were already present in the federal court system. Such a trend suggests that plaintiff attorneys are willingly choosing the federal stage for their cases rather than the defendants’ counsel removing their cases from state jurisdiction, which was indeed unexpected.

Author Bio:

Guest post contributed by Paul Kasparov on behalf of MayoWynneBaxter.co.uk – specialist Wills and Probate Solicitors. Paul is a freelance writer who has worked extensively as an attorney. He has combined his love for writing with his experience in the legal field. His articles appear on various online legal blogs.