Commercial Litigation and Arbitration

Federal Class Action Jurisdiction after CAFA, Exxon Mobil and Grable

Gregory P. Joseph*

2005 featured dramatic changes in federal jurisdiction effected by the Class Action Fairness Act of 2005, Pub. L. 109-2 (‛CAFA“) and the United States Supreme Court decisions in Exxon Mobil Corp. v. Allapattah Servs., 125 S.Ct. 2611 (2005) (‛Exxon Mobil“), and Grable & Sons Metal Prods., Inc. v. Darue Engr’g & Mfg., 125 S.Ct. 2363 (2005) (‛Grable“). This article explores the impact of CAFA, Exxon Mobil and Grable on federal jurisdictional principles governing class actions.

I. The Class Action Fairness Act of 2005

CAFA affects class action practice, primarily in four ways:

  • It expands federal diversity jurisdiction to encompass most class actions — and some mass actions — that are not directed at state governmental entities.
  • It authorizes removal of class actions filed in state courts, curtails the ability of the federal courts to remand them and authorizes accelerated appellate review.
  • It substantially changes the procedure for settling any class action in federal court.
  • It regulates settlements involving coupons or out of pocket payments by class members, and it bars geographically-disparate consideration to class members.

A. Expansion of Federal Jurisdiction over Class Actions and Mass Actions

The heart of CAFA is its expansion of federal diversity jurisdiction. Section 4 of CAFA inserts a new 28 U.S.C. § 1332(d), which, with a few limited exceptions, confers federal jurisdiction over any class action[1] if: (i) the claims of all plaintiffs, aggregated together, exceed $5 million, and (ii) at least one plaintiff is diverse from at least one defendant. See § 1332(d)(2) and (6).[2]

  • Threshold Issue No. 1: Burden of Proof

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