Questions Presented
Whether a class action that is removed under the Class Action Fairness Act of 2005 (“CAFA”), Pub. L. No. 109-2, 119 Stat. 4, and indisputably involves a potential
class recovery exceeding $5 million may be remanded on the ground that the named plaintiff has purported to waive any recovery for class members above the jurisdictional threshold.
Case Updates
Cert. petition denied
November 07, 2011
U.S. Chamber files amicus brief regarding evading of Class Action Fairness Act (CAFA) jurisdiction through stipulated damages limits
October 06, 2011
NCLC urged the Supreme Court to agree to decide whether a would-be class action representative may evade federal court jurisdiction over the class action by claiming to waive for herself and absent class members any recovery above $5 million. The Class Action Fairness Act of 2005 (CAFA) - which Congress intended to move economically significant class actions out of class action-friendly state courts and into neutral federal courts - allows defendants to transfer class actions with damage claims greater than $5 million into federal courts. In this case, the plaintiff filed a proposed class action in Arkansas state court, on behalf of an alleged class of Arkansas purchasers, challenging the marketing and advertising of the defendant's shoes. In order to evade federal court jurisdiction over the case, the putative class representative purported to stipulate on behalf of the entire class to limit the damages requested to $5 million, the CAFA threshold for federal court jurisdiction, even though it is indisputable that the potential damages exceeded that amount. In its amicus brief, NCLC argued that district courts must not automatically remand putative class actions to state courts merely because a plaintiff has allegedly stipulated to limit the class's recovery to less than the CAFA threshold. Instead, NCLC argued, district courts must conduct a meaningful analysis to determine with legal certainty whether the stipulation will truly limit the ability of absent class members to recover no more than the stipulated amount, and whether the stipulation is consistent with due process. If allowed to stand, NCLC warned that the lower court's decision would result in an enormous CAFA loophole allowing plaintiffs to drag businesses into class action-friendly state court systems. In addition to encouraging meritless litigation that forces defendants who have done nothing wrong to settle highly dubious claims, the lower court's decision will also force businesses to simultaneously defend against a litany of related class actions in state courts throughout the country.