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Litigation News | 2020

A Comprehensive Handbook on the Class Action Fairness Act

Charles Samuel Fax


  • This handbook outlines key considerations attendant to current class action practice under CAFA.
A Comprehensive Handbook on the Class Action Fairness Act
Fotografía de eLuVe via Getty Images

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Thorough. Practical. Accessible. To my mind, these are the signal qualities of a first-class legal treatise.

The Class Action Fairness Act: Law and Strategy comfortably meets that high standard. Edited by Gregory C. Cook, former cochair of the ABA Section of Litigation's Class Action & Derivative Suits Committee, with chapters contributed by distinguished members of the plaintiffs' and defense class action bars, this handbook comprehensively treats the key considerations attendant to current class action practice under the Class Action Fairness Act (CAFA).

Congress enacted CAFA in 2005 in response to perceived class action abuses by the plaintiffs' bar, exemplified by awards of attorney fees that seemed, to a majority of the legislators, disproportionate to the relief obtained for the class. For example, sponsors of the legislation argued that attorney fees in "coupon" settlements bore little or no relation to the true value of those settlements. (In coupon settlements, class members are not paid cash, but receive coupons, which individually could be of negligible value, for discounts on future purchases.) Likewise, the majority in Congress felt that many local courts were too close to the plaintiffs' tort bar and overly hospitable to class actions for that reason.

Thus, an underlying premise of CAFA was that federal courts would be more neutral and circumspect in their adjudication of class actions than many state courts. Accordingly, CAFA dramatically expanded federal subject matter jurisdiction over class actions and "mass" actions that formerly had been consigned to state courts due to an absence of complete diversity. Among other changes wrought by CAFA, calculation of attorney fees in a coupon settlement could no longer be based on the size of the affected class eligible for redemptions, but instead, must be based on the value of the coupons redeemed.

Cook's tour of CAFA begins with a fascinating chapter on the legislative history of the statute, which took eight years to travel from inception to enactment. This discussion amply illustrates the hoary maxim that "if you like laws and sausages, you should never watch either one being made." There follow sections—with multiple subchapters—on the definition of "class action" under CAFA; issues concerning the minimum amount in controversy triggering CAFA coverage (must exceed $5 million exclusive of interest and costs); the numerosity requirement (minimum of 100 class members); the relaxed requirement of "minimal" diversity jurisdiction under CAFA; exceptions to CAFA jurisdiction; the distinction between class actions and "mass" actions, both of which are embraced by CAFA; tactics and strategy for securing or defeating CAFA jurisdiction on removal from state court; appellate procedure; and settlement. The detailed discussions in each section are a valuable resource for the novice and experienced practitioner alike. As someone who does class action work, I can attest to the breadth and comprehensiveness of the information and guidance contained in this handy volume.

In fact, having read the book cover-to-cover and enjoying all of it, I have only one very minor criticism. Chapter 11, titled "CAFA Settlement Provisions," does a nice job of explaining the basis for calculation of attorney fees when the settlement includes both equitable and coupon relief. But what are the court's options in awarding attorney fees under CAFA when the settlement includes coupons, equitable relief, and payment of cash to class members? I think that the text would benefit from a discussion of that all-too-real scenario and a marshalling of the apposite cases.

Graphics are one of the best features of the book, effectively enhancing the material's accessibility. Contributor Kathryn Honecker, currently cochair of the Class Actions & Derivative Suits Committee, has prepared an ingeniously simple set of charts that graphically portray CAFA diversity jurisdiction, mandatory and permissive exceptions to CAFA jurisdiction, and exclusions thereto. Thus the reader can find the information sought on these topics in a matter of seconds. In addition, each subchapter contains one or more highlighted paragraphs that summarize its essence, further guiding the reader who needs a quick answer.

Under the guise of tort reform, Congress is now poised to consider significant amendments to CAFA (the "Fairness in Class Action Litigation Act," H.R. 1927, introduced in the 114th Congress), aimed at further bridling class action practice as we know it. If those proposed amendments are enacted, I trust that Cook and his colleagues will produce a supplement to this excellent work. In the meantime, I commend it heartily to all litigators seeking a thorough grounding in CAFA today.

Gregory C. Cook, The Class Action Fairness Act: Law and Strategy, (ABA 2013).