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Class Action Fairness Act Spurred Hike in Federal Cases

October 17, 2006 — Federal courts have experienced a "substantial increase" in the number of class action cases since the Class Action Fairness Act of 2005 (CAFA) was enacted, a study shows.

The Federal Judicial Center is conducting a long-term study of CAFA's impact, tracking the number of cases filed in, or removed to, federal courts. An interim report issued in September noted "a substantial increase in class action activity during the months following CAFA's (February 18, 2005) effective date."

The law, aimed at removing class action lawsuits from state to federal courts, gives federal courts jurisdiction over cases in which individual claims number more than 100 and total more than $5 million in value, and in which any individual plaintiff is a resident of a state different from any defendant.

The interim report tracked class action activity in federal courts during the period from January 1, 2001 through June 30, 2005. Another report, expected in the spring of 2007, will offer findings through June 30, 2006.

The recently released report analyzed data from the 85 district courts that use the Case Management/Electronic Case Filing system and have created electronic docketing records for cases filed as of July 1, 2001.

Among the findings:

• Class action filings in district courts were filed at a rate of 10.48 cases per filing day before CAFA and 11.96 cases per filing day after CAFA went into effect. "This difference is statistically significant," the report said.
• Increases occurred primarily in cases likely to include state-law claims, such as contracts and torts.
• Cases based on diversity of citizenship jurisdiction increased from 13 percent of all class action filings and removals to 19 percent of such cases.
• After CAFA, cases removed from state courts increased from 18 percent to 23 percent of all class action activity.

An earlier interim report focused on class action cases in three busy district courts - Pennsylvania Eastern, Illinois Northern, and California Northern.