Commentary and analysis of the carve-outs and exceptions to federal court jurisdiction under the Class Action Fairness Act of 2005 (CAFA). The article surveys the emerging judicial decisions that construe the CAFA home-state exception and the local-controversy exception. Congress enacted CAFA to create a new federal diversity jurisdiction for class actions where the class members and the defendants were from diverse states; there are at least 100 members in the class, and the amount in controversy exceeds $5 million. 28 U.S.C. § 1332(d). The statute only requires minimal diversity among the parties and damages of the claimants may be aggregated to satisfy the amount-in-controversy requirement. CAFA nonetheless recognizes two exceptions to this federal jurisdiction. One is called the local controversy exception, which is mandatory. 28 U.S.C. § 1332(d)(4)(A). The other is the home-state exception, which also is mandatory. 28 U.S.C. § 1332(d)(4)(B). Courts generally agree that plaintiffs carry the burden of showing that the exceptions apply to defeat federal jurisdiction, drawing on the statute’s legislative history. However, other courts have determined that the burden is on the defendant to show the inapplicability of either exception.
Linda S. Mullenix, Complex Litigation: CAFA Exceptions, National Law Journal, October 23, 2006, at 12.