The mechanism of law--what courts are to deal with which causes and subject to what conditions--cannot be dissociated from the ends that law subserves. So-called jurisdictional questions treated in isolation from the purposes of the legal system to which they relate become barren pedantry. After all, procedure is instrumental; it is the means of effectuating policy. Particularly true is this of the federal courts.
Felix Frankfurter & James M. Landis (1)
INTRODUCTION I. SUBJECT MATTER JURISDICTION OVER CLASS ACTIONS IN THE DEFAULT REGIME A. Original Jurisdiction B. Removal Jurisdiction II. CAFA'S JURISDICTIONAL PROVISIONS A. Original Jurisdiction 1. Carve-Outs 2. Diversity and Amount in Controversy 3. Definitions 4. Exceptions B. Removal Jurisdiction III. DIVERSITY LITIGATION IN HISTORICAL CONTEXT IV. DIVERSITY CLASS ACTIONS IN HISTORICAL CONTEXT A. Federal Class Actions in General and the Revolution of 1966 B. The Supreme Court Leads a Counterrevolution C. Mass Tort and Settlement Classes in Federal Court D. State Court Class Actions E. Overlapping Class Actions V. CAFA'S SIGNIFICANCE: A PRELIMINARY VIEW CONCLUSION APPENDIX INTRODUCTION
Jurisdictional legislation, like the law of procedure with which it tends to be grouped, can become disembodied from the political and social contexts in which it was enacted, the political and social contexts in which it functions, and the historical and institutional circumstances that affect--if not determine--its significance. Scholars who are preoccupied with doctrine, and courts that must try to make sense of jurisdictional legislation and precedent interpreting it, may be content (or constrained) simply to grapple with the technical details. Those who seek to understand law's significance, however, require perspectives in addition to the internal logic of technical reasoning. Particularly when the law in question is labeled "procedure," they must resist the temptation to accept a doctrinal question at face value (that is, to regard doctrine as an end in itself), to view such a question apart from the litigation dynamics that it engenders, and otherwise to ignore issues of power that may be at stake in its resolution.
Some of the political and social implications of the Class Action Fairness Act of 2005 (CAFA) (2) are hard to miss. That statute, after all, resulted from years of intense lobbying (on both sides of the aisle by interest groups associated with both plaintiffs and defendants), partisan wrangling, and, following two successful filibusters, fragile com promises. (3) Not only does CAFA mark a sharp break from a nearly uniform history of congressional contraction of diversity jurisdiction. (4) The scope of putative class actions that, at the end of the day, the statute brings within the subject matter jurisdiction of the federal courts is very broad. Those facts--coupled with the legislation's place in a trio of "tort reform" measures sought by the Bush administration, and with unrelenting attacks on lawyers in general and plaintiffs' lawyers in particular--help to understand why some critics regard the compromises as insufficient and the ultimate legislation as inimical to the interests of numerous groups of potential litigants. (5)
How, one might wonder (particularly after reading supporters' protestations to the contrary), could a statute that purportedly does not change the state substantive law usually applicable in federal diversity litigation be considered "tort reform"? (6) The answer is simple. Members of Congress now realize what most informed observers have long realized, to wit, that procedure is power. (7) More specifically, all informed observers of the litigation process now understand that Federal Rule of Civil Procedure 23 and state class action rules, although regulating the process of litigation, can still have major substantive impact. (8) Even if such rules do not change the substantive law directly, they can change the practical enforcement of substantive rights, whether by enabling plaintiffs to sue who would not otherwise be able to do so, or by exerting irresistible pressure on defendants to settle cases that they regard as lacking in merit.
It has also long been clear that plaintiffs' lawyers react to changes that make litigation more difficult in one court system by moving their cases to other court systems, while defense counsel seek forum advantages for their clients by using the tools available to them to affect the site of litigation. Forum shopping is not necessarily, indeed not usually, a ground for criticism of lawyers or their clients, as the existence and historic rationale of diversity of citizenship jurisdiction in the federal courts suggest. (9) Moreover, a price of federalism is that people who can sue and perhaps secure relief in one state can't sue, or can't secure relief, in another. Forum shopping may, however, be a good reason to reexamine the constellation of legal rules (and other influences) that causes it. One's normative assessment of any particular forum-shopping phenomenon should consider differences in the ability of different types of litigants to benefit from forum shopping, the purposes for which a forum is being selected, the fairness of the forum selected to the parties and legal systems concerned, and the proportionality of forum choice. (10)
CAFA begins with statements of findings and purposes, the latter pitched at a high level of generality. The statute's stated purposes are to "(1) assure fair and prompt recoveries for class members with legitimate claims; (2) restore the intent of the framers of the United States Constitution by providing for Federal court consideration of interstate cases of national importance under diversity jurisdiction; and (3) benefit society by encouraging innovation and lowering consumer prices." (11)
CAFA's jurisdictional provisions, by contrast, are detailed, complicated, and replete with both undefined terms and ambiguous phrases. Having worked hard to close off avenues of forum choice that are available in the jurisdictional regime that CAFA largely replaces for class actions, CAFA's architects were forced by the need to compromise (and perhaps inclined by a strategic preference for ambiguity) to leave some questions implicating forum allocation unanswered. (12) They thus guaranteed years of work for lawyers and courts that is unrelated to the merits of the underlying disputes. (13)
As courts confront, and commentators begin to write about, the many jurisdictional questions that emerged from CAFA's long and messy legislative process, I propose to set that legislation in context. The contexts that I find most revealing concern the history of federal diversity-of-citizenship litigation in general and, within that larger story, the history of diversity class actions in federal court. Because all questions of federal court subject matter jurisdiction implicate the "happy relation of States to Nation," (14) both accounts will necessarily pay attention to state court litigation and to the impact of doctrinal change on the federal-state equilibrium. To focus on one to the exclusion of the other--on class actions to the exclusion of ordinary diversity litigation, or on federal litigation to the exclusion of state litigation--risks a critical loss of perspective. The same risk attends the failure to mark the peculiar history of corporate citizenship for jurisdictional purposes. It is my view that the true measure of CAFA's significance is to be found not so much in its technical details as in the historical and institutional circumstances that brought it forth.
Although mastery of technical reasoning is not a sufficient condition for illuminating scholarship about procedural law, it is a necessary condition. (15) Readers of this Article should have what they need to evaluate for themselves the potential significance of the changes CAFA effected in jurisdictional law, as well as of changes in the law that it did not attempt. For that reason, I will begin in Part I with a description--a snapshot, if you will--of the jurisdictional rules governing federal diversity class action litigation prior to CAFA, (16) as a prelude to a description, in Part II, of the changes in jurisdictional law that CAFA ushered in (or may have ushered in). (17) Readers who are familiar with those details may want to move directly to Part III, where I review the history of ordinary diversity litigation in the federal courts, with particular attention to the status and role of corporate litigants, (18) and to Part IV, where I revisit pre-CAFA diversity class action litigation in the context of the broader world of modern federal and state class actions and of overlapping class actions. (19) Finally, in Part V and the Conclusion, I seek preliminary answers to the question of CAFA's significance. (20)
This work suggests reasons for concern about the impact that CAFA may have on the enforcement of state law. In addressing that concern, I consider whether changes in the litigation landscape since 1958, when Congress formally embraced corporate citizenship, might be thought to justify the changes in the balance of power in forum selection that CAFA brings about. Critical to my views in that regard are the failures of the Supreme Court to police interstate forum shopping effectively through constitutional control of personal jurisdiction or choice of law, and the steroidal effect of the modern (post-1966) class action on the incentives that drive forum choice. I recognize that the state court abuses cited by CAFA's supporters tended to be episodic and transient. I also recognize that some of what they alleged as abuses go to the heart of the modern class action. At the same time, however, at least where nationwide class actions are concerned, it takes only one state court to declare an empire, and what the political process takes away, it can restore.
In the circumstances, and given the stakes...