By Brian Wolfman
The Federal Judicial Center, in a report written by Tom Willging and Emery G. Lee III, has concluded based on early data that the Class Action Fairness Act (CAFA) is generally having its intended effect of moving state-law-based class actions from state to federal court. The report's key findings are as follows:
• Class action filings in or removals to federal district courts post-CAFA brought class action activity to its highest level during the four-year period. Class actions were filed at a rate of 10.48 cases per filing day before CAFA (July 1, 2001, through February 17, 2005) and 11.96 cases per filing day after CAFA went into effect. This difference in filing rates is statistically significant.
• Increases in class action activity during the post-CAFA period occurred primarily in the nature-of-suit categories likely to include state-law claims: contracts, torts (almost entirely in property damage and not in personal injury cases), and “other fraud” cases (about half of which were based on diversity jurisdiction; many were filed originally in state courts). Increases in the contracts and fraud cases were statistically significant; the increase in property damage cases was not statistically significant.
• After CAFA, cases based on diversity of citizenship jurisdiction increased from 13% of all class action filings and removals to 19% of such cases. The percentage of federal question cases declined correspondingly. Time-series analysis confirmed that the increase in the number of diversity class actions in federal courts was associated with CAFA.
• After CAFA, cases removed from state courts increased from 18% of all class action activity to 23% of such activity. The percentage of original proceedings filed in federal court declined correspondingly. Time-series analysis confirmed that the increase in the number of class actions removed to federal courts was associated with CAFA.
The report is based on data on cases filed in and removed to federal court from July 1, 2001 through June 30, 2005, and thus it extends through only the first 134 days of CAFA's existence. A more comprehensive report is scheduled for release in Spring 2007.