July 23, 2010
Decision of Interest on the Class Action Fairness Act (CAFA)
This week the Eleventh Circuit issued a decision interpreting 28 U.S.C. § 1332(d), the new form of diversity jurisdiction created by the 2005 Class Action Fairness Act (CAFA). In Cappuccitti v. DirecTV, Inc., No. 09-14107, ___ F.3d ___, 2010 WL 2803093, 2010 U.S. App. LEXIS 14724 (11th Cir. July 19, 2010), the court holds that even if the class action’s aggregate amount-in-controversy exceeds § 1332(d)’s $5,000,000 requirement, CAFA diversity jurisdiction is available only if at least one class member’s claim exceeds the $75,000 threshold required for ordinary diversity jurisdiction under 28 U.S.C. § 1332(a). From the opinion:
We hold that in a CAFA action originally filed in federal court, at least one of the plaintiffs must allege an amount in controversy that satisfies the current congressional requirement for diversity jurisdiction provided in 28 U.S.C. § 1332(a). . . . If we held that § 1332(a)'s $75,000 requirement for an individual defendant did not apply to § 1332(d)(2) cases, we would be expanding federal court jurisdiction beyond Congress's authorization. We would essentially transform federal courts hearing originally-filed CAFA cases into small claims courts, where plaintiffs could bring five-dollar claims by alleging gargantuan class sizes to meet the $5,000,000 aggregate amount requirement. While Congress intended to expand federal jurisdiction over class actions when it enacted CAFA, surely this could not have been the result it intended.
(Hat Tip: Jay Tidmarsh)