Complex Litigation: CAFA's $5 Million Question

Abstract

Commentary and analysis of the $5 million amount-in-controversy requirement in order to establish diversity jurisdiction under the Class Action Fairness Act of 2005 (CAFA). Congress enacted CAFA in 2005 to create new federal diversity jurisdiction especially for class actions. In order to gain access to federal court, the proponents of a class action must demonstrate diversity of citizenship between the class claimants and the defendants, that there are at least 100 members in the class, and that the amount in controversy exceeds $5 million. 28 U.S.C. § 1332(d). To satisfy these requirements, the proponents needs only to show minimal diversity among the parties, and may aggregate the claimants’ damages to reach the $5 million amount-in-controversy threshold. This article discusses the evolving standards for determining the requisite $5 million, including which parties carry the burden either as a matter of original jurisdiction or upon removal of a state class action to federal court. 28 U.S.C. § 1453. To date, federal courts have disagreed on the allocation of the burden of proof to satisfy the amount-in-controversy requirement. The article also surveys the conflicting judicial views with regard to the permissible use of CAFA’s legislative history in interpreting the statutory requirements.

Keywords: Class Action Fairness Act of 2005, CAFA, 28 U.S.C. 1332(d), CAFA amount in controversy, $5 million amount in controversy, aggregation of damages, CAFA burdens of proof, CAFA removal, 28 U.S.C. 1453