Tuesday, March 08, 2005

The Feb 2005 CAFA changes

CAFA - Class Action Fairness Act

February 2005
Class Action Fairness Act of 2005
The Class Action Fairness Act of 2005 (“CAFA”) became law on February 18, 2005. CAFA
expands federal district court jurisdiction to encompass many more large, multistate class actions and places limits on so-called coupon settlements. This update summarizes the statute and highlights the most important changes to class action law.

Effective Date
CAFA became effective when signed by President Bush on February 18, 2005. The statute is not retroactive so cases filed before the effective date are not subject to the Act.

Expanded Federal Jurisdiction
CAFA eliminates the “complete diversity” requirement for class actions. Federal district courts now have original jurisdiction over any class action in which any plaintiff is a citizen of a state different from any defendant and the amount in controversy exceeds $5 million.
The claims of individual plaintiffs may be aggregated to meet the jurisdictional amount.
CAFA provides certain exceptions to the general grant of federal jurisdiction for class actions:
• There is no federal jurisdiction if:
(1) more than two-thirds of the class members are citizens of the state of filing, (2) at least one “primary defendant” is also a citizen of that state,
(3) the principal injuries were incurred in that state; and
(4) no similar class actions were filed in the preceding three years against any defendant.
• There is no federal jurisdiction if at least two-thirds of the class members and all primary defendants are citizens of the state where the action was filed.
• There is no federal jurisdiction if:
(1) the plaintiffs' class has fewer than 100 members;
(2) the primary defendants are states, state officials or government entities; or (3) the claims arise under certain securities laws or state laws related to the internal affairs or governance of a business.

Page 2
A district court may choose to decline jurisdiction if between one-third and two-thirds of the class and all primary defendants are citizens of the filing state. The statute lists several factors for the court to consider in making this decision.
CAFA does not define “primary defendant” but, at minimum, such defendant must meet
the following requirements:
(1) class members seek significant relief from that defendant; and
(2) the defendant’s conduct forms a significant basis for the class claims. The legislative history indicates that Congress intended to prevent the practice of adding a local retailer, for example, to block removal to federal court.

Removal to Federal Court
CAFA changes removal procedures in class actions. Defendants may remove a class action to federal court even if a defendant is a citizen of the state in which the action was filed.
Class actions no longer must be removed within one year of filing, and any defendant may remove without the consent of all other defendants. Plaintiffs and defendants may appeal an order granting or denying a motion to remand to state court within seven days of the district court's decision. Appellate review is discretionary.

CAFA limits coupon settlements. If the parties submit a proposed coupon settlement, the district court must:
(1) hold a hearing;
(2) make written findings on the fairness and adequacy of the agreement; and
(3) limit the fees of class counsel to a portion of the value of any
coupons actually redeemed. The parties may offer expert testimony on the value of the
settlement. If the class is awarded non-monetary relief or a portion of the coupon recovery is not used to determine the class counsel’s fees, attorney’s fees must be based on the amount of time the class counsel reasonably expended. All fee awards are subject to the district court’s approval.
District courts may not approve any settlement that gives a higher recovery to certain class members based solely on their geographic proximity to the court. If a settlement results in a net monetary loss to a class member, the district court must make a written finding that the non-monetary benefits outweigh the monetary loss.
Within ten days of filing a proposed settlement with the court, each defendant must serve a detailed notice of the settlement with the U.S. Attorney General and either the state Attorney General or the state official with regulatory authority over the defendant’s conduct for each state where a class member resides. If the defendant is a federal or state depository institution or a foreign bank, the notice must be filed with the federal official with regulatory authority or the state bank supervisor of the state in which the defendant is incorporated or chartered. Courts may not approve any settlement until ninety days after the defendants serve notice on the appropriate regulatory authorities. If the defendants do not serve this
notice, class members may refuse to be bound by the settlement.


At 8:56 AM, Blogger Marsha Alvarez said...

I don't know if this class action suit is still active. But I'll post about my Vaio laptop. I purchase a laptop & desktop. Spent nearly 4 grand for both. Within months the laptop battery wouldn't charge. Mailed it back to sony. The found nothing wrong!!! My daughter's friend worked for the GEEK SQUAD. He found a crack in the battery, as well as the mother board! I thought I had filed with a Sony claim. Well thanks for letting me vent!


Post a Comment

<< Home