As courts confront, and commentators begin to write about, the many jurisdictional questions that emerged from CAFA’s long and messy legislative process, I propose instead to set that legislation in context. The contexts that, given my training and interests, I find most revealing concern the history of federal diversity of citizenship litigation in general and, within that larger story, the history of diversity class actions in federal court. Because all questions of federal court subject matter jurisdiction implicate the "happy relations of States to Nation," both accounts necessarily pay attention to state court litigation and to the impact of doctrinal change on the federal-state equilibrium. To focus on one to the exclusion of the other – on class actions to the exclusion of ordinary diversity litigation, or on federal litigation to the exclusion of state litigation – risks a critical loss of perspective. The same risk attends the failure to mark the peculiar history of corporate citizenship for jurisdictional purposes. It is my view that the true measure of CAFA's significance is to be found not so much in its technical details as in the historical and institutional circumstances that brought it forth.
This work suggests reasons for concern about the impact that CAFA may have on the enforcement of state law. In addressing that concern, I consider whether changes in the litigation landscape since 1958, when Congress formally embraced corporate citizenship, might be thought to justify the changes in the balance of power in forum selection that CAFA brings about. Critical to my views in that regard are the failures of the Supreme Court effectively to police interstate forum shopping through constitutional control of personal jurisdiction or choice of law and the steroidal effect of the modern (post-1966) class action on the incentives that drive forum choice. I recognize that the state court abuses cited by CAFA's supporters tended to be episodic and transient. I also recognize that some of what they alleged as abuses go to the heart of the modern class action. At the same time, however, at least where nationwide class actions are concerned, it takes only one state court to declare an empire, and what the political process takes away, it can restore.
In the circumstances, and given the stakes involved, I conclude that it was not unreasonable for Congress to assert a federal interest in regulating the process by which and the forums in which nationwide and multistate (collectively, "multistate") class action decisions are made. To be sure, the interest in question bears little relation to the historic account of diversity jurisdiction with which we are familiar. But, as Section IV demonstrates, it is consistent with the policy that the Supreme Court in fact pursued when umpiring ordinary diversity litigation in the late nineteenth and early twentieth centuries, and consistent as well with the policy that Congress pursued in its 1958 amendments to the diversity statute. Neither the Court nor Congress has limited diversity jurisdiction to accord with the traditional account of the reasons for the constitutional grant. In my view, therefore, CAFA's basic approach – which is similarly not so limited and is in that respect continuous with past practice -- should not be tarred with the motives of some who supported the statute, and neither should the federal judiciary.
I reach a very different conclusion with respect to the numerous class actions within CAFA’s reach that are not in any meaningful sense "multistate." Although the 1958 Congress effectively blessed the fictions of corporate citizenship created by the federal judiciary, it left in place (if it did not enhance) the instruments of countervailing power for plaintiffs that had developed in the system and that made the fictions tolerable. The 2005 Congress dismantled those instruments in order to open federal courts to multistate class actions. It conveniently forgot them when it came time to fashion exceptions. In the process, Congress neglected the critical role they played in equilibrating not just plaintiffs' and defendants', but federal and state, interests. Ultimately, a combination of special interest overreaching, abetted by the fictions of corporate citizenship, and confusion about legislative aims, abetted by the institutional federal judiciary's schizophrenia regarding overlapping class actions, led Congress to lose sight of its duty, when fashioning CAFA's exceptions, to preserve the "happy relation of States to Nation." As a result, CAFA represents an affront to federalism in two respects and a potential affront in a third.
First, CAFA deprives states of the ability to regulate matters of intense local interest by enlisting for that purpose the regulatory potential of the class action as they conceive it, on the basis of a definition of national interest that rests on legal fictions and on a vision of aggregate litigation that ignores the costs of complexity. Second, and quite apart from the regulatory void that CAFA may entail, the means by which Congress reached that result are deplorable. Working with exceptions so complicated that even some academics have been unable to penetrate them – and in a fog of ambiguity and hypocrisy – Congress sacrificed transparency and accountability in the interests of preserving deniability. Third, by exalting the gathering powers of the federal courts, Congress has created incentives for litigants and courts to create ever bigger "litigations." Whether in the form of multistate class actions or through non-class aggregations, such litigation packages may replicate in federal court some of the supposed abuses in state court class actions to which CAFA supposedly responded, including the subordination of factual and legal differences of intense interest to individual states.
The last concern also highlights questions about the effects that the increased federal caseload attributable to CAFA – consisting of substantial numbers of new District Court cases that are notoriously demanding and of appeals from orders granting (or denying) motions to remand -- will have on the ability of the federal courts to deal fairly with all of their cases. Concerns about the effect that CAFA’s predecessor bills would have on the federal courts' workload were long-standing and legitimate. It is thus surprising that, through inability to speak clearly with one voice, the Judicial Conference allowed a vision of the gathering powers of federal courts to compound the potential damage. It appears that federal courts are now seeking to minimize that damage by resisting some of the more blatant overreaching by CAFA's supporters. If so, the phenomenon marks a return to a more sober view of institutional self-interest and in so doing contributes to understanding of the federal judiciary as an interest group.
Date of Authorship for this Version
complex litigation, CAFA, federal diversity of citizenship litigation, history of diversity class actions, forum choice, multistate class actions, caseloads, federal judiciary, Judicial Conference
Burbank, Stephen B., "The Class Action Fairness Act of 2005 in Historical Context: A Preliminary View" (2008). Scholarship at Penn Law. Paper 198.