The American Class Action Fairness Act and Forum Shopping American-Style

Abstract

This paper looks at the practice of forum shopping in the United States and focuses on the new Class Action Fairness Act which was passed in 2005 and is one of the most sweeping legislative initiatives relating to class action litigation. 

Professor Harald Koch, in his paper entitled ‘‘International Forum Shopping and Transational Lawsuits’’ has accurately described the twin rationales for forum shopping by continental lawyers. He makes the dual points that forum shopping embodies both good lawyering as well as averting legal malpractice. In his view, which I believe is correct, an attorney who does not take forum attributes into account in pursuing litigation is acting in a fashion that is tantamount to malpractice. In short, all good lawyers forum shop. 

Professor Koch also has accurately articulated a compelling list of why continental lawyers might seek to forum shop by selecting a forum in the United States. He points out the various advantages of litigation in the American legal system: (1) varying advantageous substantive law; (2) the availability of jury trials; (3) contingency fee arrangements permitting recovery of large attorney fee awards; (4) no fee shifting for legal costs and expenses; (5) liberal discovery rules; and (6) the availability of punitive damages. 

Professor Koch further Professor Koch further points out that the possibility of forum shopping is largely a plaintiff-favouring strategy, because plaintiffs always have the initial choice of forum, and defendants typically must suffer the plaintiff’s choice of forum. 

I agree with all of Professor Koch’s arguments and points, and would like to expand on his observations. In the United States, forum shopping also is an attribute of good lawyering, and the failure to take into account forum advantages and disadvantages also might be tantamount to malpractice in certain circumstances. Practicing attorneys do forum shop all the time.

Forum shopping in the United States, however, involves far more nuanced and sophisticated gamesmanship than continental lawyers might appreciate. In the United States, forum shopping is the consequence of, and involves the complex interplay of, a dual federal and state court system. In addition, American procedural rules provide for an elaborate system of forum-shopping opportunities for both plaintiffs and defendants. 

While a continental lawyer, at first blush, might perceive American forum-shopping opportunities as plaintiff-favouring, the multiple complex of procedural rules actually levels the litigation playing field in interesting ways. As I will, the recently enacted Class Action Fairness Act (CAFA) embodies both a sophisticated forum-shopping mechanism, and as such, CAFA also embodies a procedural approach to tort reform. Rightly understood, CAFA is a part of the American tort reform movement.