Defining

• Author: Amanda Coney
• Pages: 903-933

I would like to thank my sister, Amy Coney Barrett, for her guidance and insight as I drafted this comment. I would also like to thank Professor John Devlin, my faculty advisor, who gave me invaluable comments and feedback throughout the writing process.

Words are clumsy tools, and it is very easy to cut one's fingers with them, and they need the closest attention in handling; but they are the only tools we have, and imagination itself cannot work without them. You must master the use of them, or you will wander forever guessing at the mercy of mere impulse and unrecognized assumptions and arbitrary associations, carried away with every wind of doctrine. ¹

I Introduction

On February 18, 2005, President Bush signed into law the Class Action Fairness Act of 2005 ("CAFA") after congressional efforts spanning over seven years.² One focus of CAFA was the expansion of federal diversity jurisdiction.³ The purpose of this jurisdictional modification was to remedy the influx of complex class action suits in state courts, as well as to regulate plaintiffs' attempts to defeat federal diversity jurisdiction by naming "token defendants."⁴ Generally, CAFA provides for federal jurisdiction Page 904 when there is minimal diversity⁵ and the amount in controversy exceeds $5 million.⁶ This provision states the general rule that class actions falling within the scope of CAFA are to be litigated in federal court.⁷

Because CAFA requires plaintiffs to bring nearly all class action claims in federal court, there was a concern that the Act might interfere with the states' interest in adjudicating truly local disputes.⁸ In order to combat this concern, Congress integrated a series of exceptions into CAFA that provide for adjudication of class action suits in state court.⁹ These exceptions include the Page 905 "Home State" exception, the "Local Controversy" exception, and the "State Action Case" exception.¹⁰

The problem with these exceptions is that they are ill-defined.11 They provide state court jurisdiction when the primary defendants and the majority of the plaintiff class are citizens of the state in which the action was filed or when one real defendant from whom the class seeks significant relief is local.¹² The statute is unclear about which defendants classify as "primary" or "significant," thus making it difficult to determine when the exceptions apply.

This comment analyzes several ways in which the ambiguous term "primary defendant," as used in the "Home State" exception and the "State Action Case" exception, should be defined. It also illustrates the importance of distinguishing "primary defendants" from "significant defendants." The comment is organized as follows. Part II includes background information on CAFA. It addresses the history and purpose of the exceptions allowing certain class action suits to remain in state court. Part II also examines one of the first cases to address the meaning of "primary defendant" and introduces the importance of distinguishing between "primary" and "significant" defendants. The section concludes with a summary of the problems posed by the federal jurisdiction exceptions. Part III analyzes the term "primary defendant" through the use of traditional statutory interpretation techniques. It examines the face of the text, the legislative intent of the term, and the use of "primary defendant" in other areas of the law. This section also analogizes CAFA to the Multiparty, Multiforum Trial Jurisdiction Act ("MMTJA"), which utilizes the term "primary defendant" in a similar minimal diversity provision. Part IV proposes a series of possible definitions for "primary defendant" as derived from other areas of the law. Part V concludes with the proposal that classifying the "primary defendants" as those who are directly liable to the plaintiff class is the most effective definition. Defining the "primary defendants" in such a manner is consistent with both the plain meaning of the text Page 906 and the legislative intent. It is also the most workable definition from a public policy perspective.

II Background

In order to better understand CAFA, it is important to consider the pre-CAFA jurisdictional problems faced by courts litigating class actions. It then becomes clearer why Congress believed there was a need for the Act. Because of the length and complexity of CAFA, this comment will only focus on several important provisions in CAFA. In analyzing these focal provisions, this comment will explain each provision and illustrate, through the use of Adams v. Federal Materials Co., Inc.,¹³ the problems that arise in their application.

A Pre-CAFA Jurisdictional Problems

Congress's enactment of CAFA was a reaction to the inequitable practices of the parties involved in class action litigation. Defendants fought to remove cases to federal court where it was more likely they could defeat class certification and protect their clients' interests.¹⁴ Plaintiffs, on the other hand, fought to keep class actions in state court because it was a more favorable forum. They not only had a better chance of getting class certification, but they also had a better chance of receiving larger damages from sympathetic juries.¹⁵

Page 907

As part of their forum shopping scheme, plaintiffs also filed "copy cat" class action suits in multiple jurisdictions.¹⁶ As a result, corporate defendants were forced to settle frivolous suits in order to avoid lengthy and expensive litigation in several different states.¹⁷ These multiple suits resulted in greater expenses and wasted resources. Federal courts have the ability to remedy this problem by consolidating same or similar suits filed in multiple jurisdictions.¹⁸

Plaintiffs' and defendants' competing interests led to Congress's amendment of class action procedures.¹⁹ Erie Railroad Co. v. Tompkins²⁰ stands for the proposition that the result of a case should not be different simply because it was brought in state rather than federal court.²¹ CAFA expands federal jurisdiction in an attempt to prevent forum shopping and to stop plaintiffs from "gaming the system" in order to keep their case in state court.²²

Though forum shopping and plaintiffs' attempts to "game the system" were the primary reasons for amending 28 U.S.C. ß 1332(d), the Congressional Record reflects several other reasons for the enactment of CAFA's procedural changes.

Congress believed that federal judges would more carefully apply the complex procedural requirements that govern class actions.²³ Allegedly, state courts failed to carefully apply class certification requirements and gave counsel leverage to obtain unwarranted settlements.²⁴ Congress believed federal judges were more apt to scrutinize class action allegations and to deny certification where a state judge may improperly grant it.²⁵

Page 908

Congress also believed that federal courts could help alleviate the strain on state court resources resulting from the increasing number of class action suits brought in state courts.²⁶ Though federal courts also face burdensome caseloads, they have more resources, such as law clerks, magistrate judges, and consolidation procedures, to help alleviate the difficulties inherent in litigating a complex class action suit.²⁷

These problems are examples of some of the recurring issues in class action litigation that led to the amendment of 28 U.S.C. ß 1332, one of several CAFA provisions. Congress believed these problems could be resolved if federal courts were the forum for the majority of these suits.

B An Explanation of the Focal Provisions of This Comment

This comment focuses on CAFA's new diversity requirements as laid out in 28 U.S.C. ß 1332(d). As a result of the problems in the pre-CAFA class action regime, Congress amended ß 1332's jurisdictional provisions to provide for the litigation of the majority of class action suits in federal court. It is clear that CAFA makes it easier for plaintiffs and defendants to bring class action suits in federal court, but there was concern that such an exclusive provision would potentially hinder the states' adjudication of class action suits in which they have a strong interest.²⁸ As stated earlier, Congress developed three exceptions providing instances in which a class action suit should remain in state court: the "Home State" exception, the "Local Controversy" exception, and the "State Action Case" exception.²⁹

Page 909

1. The "Home State" Exception

The "Home State" exception originated as a means to address class action...