The Class Action Fairness Act: An Ill-Conceived Approach to Class Settlements

Abstract:     
Much has been written by scholars and practitioners and in the popular press about the profound impact of the Class Action Fairness Act of 2005 (CAFA) on jurisdiction over class actions. It is well known that under CAFA, most major class actions, including virtually all multistate class actions, will now be heard in federal court. But Congress attempted to address more than just the concern of perceived plaintiff-oriented bias by state court judges; it also sought to address the problem of class settlements that mainly benefit lawyers rather than class members. With respect to its jurisdictional objective, Congress was largely successful. The statute has some ambiguities that will need to be worked out, but, in general, CAFA's impact on federal court jurisdiction will be immediate and significant. Congress addressed a discrete problem - getting most class actions to federal court - and its solution will largely accomplish that result.

On the settlement front, however, Congress lacked any clear understanding of what it was trying to fix. As a result, the so-called "problem" of class action settlements is ill-defined, and Congress has passed a series of unrelated provisions that achieve little and raise more questions than they answer.

This Article analyzes the settlement provisions of CAFA. Part I looks at what Congress sought to achieve in CAFA's settlement provisions and the problems and ambiguities created by the language of the statute. Part II argues that Congress did not fix the problem it attempted to address and offers a proposal to amend CAFA to achieve that purpose.

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