Class Action Fairness Act: Is it working?

Ann Knef Mar. 21, 2006, 3:00pm

Bob Ambrogi

J. Craig Williams

Has the Class Action Fairness Act, which makes it more difficult to file complaints in state courts, had its desired effect on the nation's legal system?

"Eventually what President Bush said he wanted will be realized," attorney Richard W. Cohen said recently as guest on a Legal Talk Network program. Cohen, of Lowey Dannenberg Bemporad and Selinger, P.C. in White Plains, N.Y., works for plaintiffs and defendants and is currently defending a class action suit against Aetna Insurance.

In January 2005, Bush used Madison County -- which was known as the class action capitol of the nation -- as his bully pulpit to push for the enactment of CAFA. He said the law would help reduce frivolous lawsuits that "clog our courts, hurt the economy, cost jobs and burden American businesses."

Cohen said defendants are regularly invoking the act which moves cases involving damages exceeding $5 million and geographically diverse parties to federal court jurisdiction.

Cohen and appellate attorney Howard Bashman, a columnist for and The Legal Intelligencer of ALM Media, and legal reporter Shannon Duffy, who also writes for The Legal Intelligencer and other ALM Media publications, were guests on Coast to Coast, a program hosted by attorneys and bloggers, J. Craig Williams and Bob Ambrogi.

"CAFA has deprived plaintiff lawyers of forum choice," said Cohen.

The panel of experts seemed to agree that CAFA has been an effective tool in minimizing forum shopping, and that the law is not "horrible" or "terrible" for plaintiffs. In fact, Cohen said, plaintiffs in complex cases such as anti-trust matters prefer federal court where juries are perceived as more sophisticated and judges more competent.

"CAFA was aimed at a few abusive magnet state court," Cohen said.

The guests predicted that challenges to CAFA will erupt over issues involving commencement, the $5 million "entry fee," attorneys fees and arbitration.

Cohen said that a federal judge --relying on Alabama state law -- ruled on his behalf, defining commencement as occurring when summons were filed, rather than, as plaintiffs argued, when the action was filed.

Duffy said that "the next big battle" after the "first wave" of commencement arguments will be over the $5 million requirement.

"The new law puts the burden on plaintiffs to show that it is not a $5 million case," Duffy said.

According to the panelists, arbitration, favored by federal courts as a means to resolving disputes, may also help kick class action cases out of court.

Bashman said the passage of CAFA may end up being one of the most important accomplishments of Bush's domestic policy agenda.

Since it was signed into law Feb. 18, 2005, there has been a precipitous drop in the number of filings in Madison and St. Clair County.

Glancing at Madison County figures, in 2005, a total of 46 such cases were filed -- most of them, 36, were filed before the law was enacted.

There have been no class action lawsuits filed in Madison County in 2006.

It was quite another story leading up to the enactment of CAFA.

In 2002, there were 77; in 2003, 106 and in 2004, 84.

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