Class Actions: Fairness Act's Effect on Mass Torts

Abstract

In this column we consider how the Class Action Fairness Act (CAFA) may apply to tort suits, with an emphasis on mass tort litigation. Our conclusion is that, although major sections of the new law are aimed at making rather sweeping changes in the handling of groups of tort cases, it may have little practical effect.

Three parts of the act deal with tort litigation. The first provides a means to remove a true class action from a state court to a federal court, under spelled-out requirements and limits. The second brings mass tort actions within the ambit of class actions for removal purposes, but also with numerous limitations. Third, if one considers suits for economic loss (coupon suits) as torts, these too are regulated.

As to the class action provisions, class actions started in state court, including those for tort, are removable under the minimal diversity requirement if the amount in controversy in the aggregate is $5 million or more. Such a provision will mean little to the parties in New York class actions, however, since the courts have refused to apply CPLR Article 9 to allow tort-based class actions.

A number of states, however, have been amenable to certifying class actions for tort cases, sometimes for citizens of that state and sometimes creating a nationwide class actions. The new definition of civil actions for which federal courts have original jurisdiction -- and therefore removal jurisdiction exists -- includes a mass action, which is defined as one in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs' claims involve common questions of law or fact.

This language will lead to years of litigation. Concentrating on the phrase proposed to be tried jointly, the questions are who has proposed it and how has it been proposed to be done. Past experience in mass torts aggregations indicates that it is only rarely that a large number of cases have been brought together for trial purposes by either joinder or consolidation. These devices are not expansive enough to round up hundreds of cases.

Mississippi practice aside, we are aware of very few state court mass tort actions which have been tried jointly. The law also regulates attorney fees in coupon settlements. The new law seeks to control fees by limiting the fees to the actual value of the redeemed coupons or to use an hourly rate for the time counsel has spent.

How much use will be made of the new act in the field of tort litigation? Where a state court class action has been filed, especially after a federal one involving the same product has been denied, predictably it will be almost inevitably used. That is that the new act was primarily aimed at. Realizing that, plaintiffs may be inhibited from even trying, producing the same result. As to the use in mass torts as defined separately from class actions, time will tell about how often it will be used, but it would seem that the new law will not have a great amount of use. Indeed, knowing the inventiveness of the plaintiffs' bar, another law may come into play: the law of unintended consequences.