The Class Action Fairness Act in perspective: the old and the new in federal jurisdictional reform.

• Author: Purcell, Jr., Edward A.

INTRODUCTION

The Class Action Fairness Act of 2005 (CAFA) (1) was the product of an extended and well-organized political campaign. In Congress, its passage required a grinding eight-year effort, several modifications to the original proposal, numerous committee hearings, multiple reports by both Houses, political compromises that drew some Democratic support, two unsuccessful attempts to terminate debate in the Senate by imposing cloture, and strenuous efforts to amend in both the House and Senate when the bill came to the floor for a final vote. (2) Passage also required Republican control of both Houses of Congress and the presidency as well.

Compared to the determined political campaign necessary to secure its passage, CAFA itself might seem a relatively minor measure. Ostensibly, it altered no substantive law, denied no one a judicial forum, left the federal judicial power untouched, relied on established congressional authority, and bowed to federalism by limiting its extension of national authority to class actions with significant interstate connections. Indeed, the changes it made might appear to some narrow and technical. Principally, CAFA provided for federal diversity jurisdiction over multistate class actions (3) and established a "Consumer Class Action Bill of Rights" that imposed mild limitations on certain types of settlements and required that defendants give notice of proposed settlements to state and federal officials. (4) The Senate Judiciary Committee, in fact, termed CAFA a "modest" measure. (5)

The apparent contrast between the "modest" label and the eight-year congressional battle might seem puzzling, and the seeming discordance between effort and result suggests the utility of seeking some historical perspective. Has such discordance been common in jurisdictional reform efforts? Was CAFA a relatively ordinary and typical measure, or did it involve new or unusual elements? Was it truly a "modest" reform? Indeed, what, exactly, did it seem likely to accomplish?

Pursuing those questions, this Article proceeds in four sections. Part I considers five basic characteristics that marked federal jurisdictional reform in the past, and Part II examines CAFA in light of those traditional characteristics. Part III then identifies some aspects of CAFA that are relatively new in the history of federal jurisdictional reform. Finally, Part IV considers what the historical comparison suggests about federal jurisdictional reform and, more broadly, about the operations of American law and government.

1. TRADITIONAL FEDERAL JURISDICTIONAL REFORM

   Since the drafting of the U.S. Constitution, efforts to establish and alter the rules of federal jurisdiction have exhibited five prominent characteristics. Together, those characteristics suggest the complexities of federal jurisdictional reform and highlight not only its multifaceted legal nature but also its inherently political and social nature.

   1. Practicality

      Above all, jurisdictional reform in the United States has been an intensely practical matter, a series of pragmatic responses to pressing real-world problems. Over the centuries those problems came in many forms, and they found their sources in the multitude of diverse social, racial, ethnic, cultural, political, and economic interests that energized and divided the American people. As the nation changed, the nature of both the problems and the interests changed, but their dynamic interplay remained ever present. "Legislation concerning judicial organization throughout our history," Felix Frankfurter concluded some eight decades ago in his classic study of federal jurisdictional reform, "has been a very empiric response to very definite needs." (6)

      At the nation's outset, the Founders battled over the most basic question: whether or not the new national government should even have its own courts. They finally agreed on the serviceable but uncertain "Madisonian Compromise," mandating "one supreme Court" but punting to the legislative branch the decision whether to establish "inferior" federal courts. (7) When the First Congress subsequently decided to establish a system of lower courts, its efforts were understandably shaped by compelling political and practical considerations. In the First Judiciary Act, Congress balanced a belief that the new nation needed its own system of courts against state pressures to rely exclusively on existing local courts and a variety of other serious practical concerns, including the heavy expenses that a system of national courts would impose on the new government, the uncertain nature of the substantive law they would enforce, and the burdens of travel and inconvenience they would impose on poorer and distantly located litigants. (8)

      Over the next two centuries alterations to that original structure were equally products of practical needs, and jurisdictional reforms often came only belatedly and as a result of far-reaching social changes and decades of intensifying pressures. (9) It required more than a century of westward expansion, population growth, and swelling dockets to convince Congress to end circuit riding by Supreme Court Justices and to establish a tier of intermediate appellate courts, and only the Civil War and a dozen strife-filled years of Reconstruction could induce it to confer general federal question jurisdiction on the national courts. (10) Even more limited jurisdictional changes, however, also commonly required similar concentrations of practical and political pressures. For example, Congress enacted the first statutes allowing removal of actions against federal officials only to counter extreme threats of state resistance--first, New England's effort to interfere with the collection of customs duties during the War of 1812, and then, South Carolina's announced determination to block federal tariff laws in the nullification crisis of 1832-1833. (11) Similarly, other specific extensions of federal jurisdiction--to civil rights cases, habeas corpus to state officials, broadened categories of diversity suits, and actions against federal officials and federally chartered corporations (12)--came only with the crises of secession, the Civil War, and continuing and violent Southern resistance to national authority.

      The years that followed the Civil War brought not only turmoil but transformation, as new social and economic conditions generated new challenges for the federal judicial system. Drives for reform in the early republic had arisen for the most part from sectional conflicts and the politics of federalism, but in the late nineteenth century those driving conflicts began to arise increasingly from the all-encompassing social consequences of urbanization, industrialization, and economic nationalization. When Congress responded to those new conflicts in the early twentieth century by repeatedly restricting the jurisdiction of federal judges to issue injunctions, (13) it was seeking to limit the ability of those who used the federal courts to fight government regulation, and when it prohibited removal under the Federal Employers' Liability Act (FELA) in 1910 (14) and then again under the Jones Act ten years later, it was seeking to assist injured workers who sought compensation from their employers. (15) Indeed, in 1914 when Congress altered the Supreme Court's appellate jurisdiction by making a technical change in what seemed a relatively abstruse area of law, it was intervening in a fiercely contested issue: the constitutionality of state workers' compensation statutes. (16)

      As those examples suggest, over the course of the late nineteenth and twentieth centuries federal jurisdictional reform became more closely intertwined not just with issues of institutional structure and federal-state relations but also with issues of private economic conflict and public social policy. More particularly, reform efforts became increasingly intertwined with what might be called "litigation-generated" issues, that is, issues that arose not from traditional structural or institutional conflicts but from pervasive and socially resonant patterns of litigation, especially the rapidly escalating number of cases that pitted national corporations against a wide variety of claimants--suppliers, customers, employees, and adversely affected third parties. Indeed, much if not most of the "law of the federal courts" during the first half of the twentieth century could be studied simply by considering the litigation between employers and employees that arose under a single responsive statute, the FELA. (17)

   2. Debating and Adapting Diversity Jurisdiction

      A second characteristic of federal jurisdictional reform was its relatively continuous debate over diversity jurisdiction, especially during the century and a half after the Civil War. (18) Attacked at the nation's inception, diversity came to be relatively well accepted by the mid-nineteenth century and served, along with admiralty, as a mainstay of the federal docket. (19) The intensely practical nature of federal jurisdiction and the rise of litigation-generated problems in the late nineteenth century, however, transformed it into a perennial battleground. One obvious reason for its centrality was that it was the jurisdictional basis that allowed the federal courts to hear the controversial and rapidly multiplying number of cases between national corporations and their numerous adversaries. In 1906, in his famous address, The Causes of Popular Dissatisfaction with the Administration of Justice, Roscoe Pound emphasized the disruptive and wasteful excesses involved in diversity litigation against corporations, (20) and by the end of the 1920s two types of diversity cases--tort and insurance claims brought by individuals against corporations--accounted for seventy percent of all the diversity cases on the federal docket. (21)

      There were, however, two additional reasons why diversity became a central battleground...