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Where's the Party: Do Class Action Plaintiffs Really Prefer State Courts?

32 Pages Posted: 1 Feb 2009 Last revised: 9 Jul 2009

Neil J. Marchand

George Washington University Law School

Date Written: January 6, 2009

Abstract

Scholars and interest groups have discussed litigants' behavior in the class action context. This paper uses empirical data to determine whether class action plaintiffs actually prefer to litigate their suits in state courts. Despite well-reasoned conjectures on the subject, to date there is a paucity of empirical data on class action litigation, especially at the state court level. This scarcity has thwarted analysis of the likelihood of class certification in the state courts, the Class Action Fairness Act of 2005's (CAFA) total impact on the judiciary, and the predictability of class action litigation. This study aims to start filling the void in empirical analysis of class action suits by focusing on one representative state: Michigan. The goal of this empirical analysis is to help inform the larger debates over class action litigation.

Four hypotheses are tested. The first hypothesis is whether plaintiffs prefer to file their class action suits in Michigan's state courts. The data in this study shows that plaintiffs prefer to file their labor and civil rights class action suits in Michigan's federal courts and their contract, consumer protection, property, and tort class action cases in Michigan's state courts. Combined with other data, this suggests that plaintiffs prefer to file class actions based on federal substantive law in federal court and state substantive law in state court. However, this forum selection paradigm is disrupted by the presence of a non-resident party because diversity of citizenship provides an alternate basis for federal jurisdiction.

The second hypothesis is whether the total amount of class action activity has increased since CAFA's enactment. An alternative hypothesis is whether CAFA is relocating class action activity to the federal courts. The results of this study show that both propositions can be answered in the negative, for total class action activity has decreased and CAFA may have failed to relocate any category of class actions to the federal courts. This finding suggests that CAFA is not fulfilling its purpose of relocating class actions to federal court. This conclusion is qualified, however, by the limitations of the databases used to perform the research.

Finally, the fourth hypothesis analyzed is whether plaintiffs in the post-CAFA period are alleging more federal question claims in their complaints now that federal diversity and removal jurisdiction has been expanded. The data shows that plaintiffs who file contract class actions may be alleging more claims based on federal law and the same plaintiffs may be choosing to file their case in federal court. This suggests that CAFA may have had an indirect effect on class action litigation.

Keywords: class action, CAFA, Class Action Fairness Act, federal jurisdiction, federal courts, Michigan, choice of forum, class certification, empirical research, statistical data, labor class actions, contract class actions, consumer protection

JEL Classification: K00, K10, K11, K12, K13, K31, K4, K40, K41

Suggested Citation

Marchand, Neil J., Where's the Party: Do Class Action Plaintiffs Really Prefer State Courts? (January 6, 2009). Available at SSRN: https://ssrn.com/abstract=1334923 or http://dx.doi.org/10.2139/ssrn.1334923

Neil J. Marchand (Contact Author)

George Washington University Law School ( email )

United States
(586) 255-1800 (Phone)

HOME PAGE: http://www.law.gwu.edu

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