“In One Direction Only”: Chains of Reasoning and Tail Events in CAFA Amount‐in‐Controversy Claims

• Published date: 01 June 2023
• Author: Jeff Lingwall,Nicole Wood
• Date: 01 June 2023
• DOI: http://doi.org/10.1111/ablj.12224

American Business Law Journal

Volume 60, Issue 2, 369–417, Summer 2023

“In One Direction Only”: Chains

of Reasoning and Tail Events

in CAFA Amount-in-Controversy

Claims

Jeff Lingwall*and Nicole Wood**

While the Class Action Fairness Act (CAFA) establishes a bright-line

jurisdictional amount in controversy for removing cases from state to federal

court, calculating that quantitative threshold in practice is a fraught and

heavily litigated exercise. This article examines removals under CAFA to show

the substantial lack of clarity in how state-law causes of action and damage

claims interact to reach the jurisdictional threshold. It compiles cases illustrat-

ing the challenges surrounding removal litigation that flow from these

uncertainties, particularly in how the structure of CAFA incentivizes defen-

dants to chain together tail-event precedent to inflate theoretical amounts in

controversy. It then applies a Coasean analysis to suggest these uncertainties

impede efficient resolutions to litigation. Finally, it suggests a series of practi-

cal amendments to CAFA and its interpretive case law that would provide

clarity, decrease forum-selection litigation, and enhance the efficacy of class

litigation.

“ratchet, noun: a mechanism . . . that is used . . . to allow effective motion in one

direction only.”Merriam-Webster

1

*Jeff Lingwall is an Associate Professor of Legal Studies at Boise State University; J.D., Yale

Law School; Ph.D., Carnegie Mellon University. jefflingwall@boisestate.edu

**Nicole Wood is a student at Boise State University. We thank the editorial team at ABLJ

and two anonymous reviewers for excellent comments. Any errors are our own.

1

Ratchet,MERRIAM-WEBSTER,https://www.merriam-webster.com/dictionary/ratchet (last visited

May 16, 2022).

©2023 The Authors.

American Business Law Journal ©2023 Academy of Legal Studies in Business.

369

INTRODUCTION

The old Latin adage solvitur ambulando means “it is solved by walking.”

2

Prob-

lems, per the saying, are solved by action.

3

For many defendants facing suits

filed in state courts, this might be reframed as solvitur removendo,or“it is

solved by removing.”

4

Removal to federal court is often used as a default

reaction to state-court litigation, providing the possibility of a more favorable

forum balanced against the risk of minimal consequences in case of remand.

5

2

See Billy Collins, Solvitur Ambulando,THE RAIN IN PORTUGAL 92 (2016) (“I sometimes wonder about

the thoughtful Roman who came up with the notion that any problem can be solved by walking. May-

be his worries were minor enough to be banished by a little amble along the paths of his gardens.”).

3

The phrase might also connote problem solving through active meditation. See, e.g., What

Does Solvitur Ambulando Mean?,S

OLVITUR AMBULANDO (Oct. 6, 2020), https://

solviturambulando.es/en/what-does-solvitur-ambulando-mean/ (pairing the activity of walk-

ing with meditation to encourage problem solving).

4

The Latin remove o conveys the sense of “withdraw”or “remove,”in the same sense of the English

word “removal.”See Removeo,L

ATIN-DICTIONARY.NET,http://www.latin-dictionary.net/search/latin/removeo

(last visited Jan. 28, 2022). Another appropriate but not as homophonic phrase might use transfero

instead of removeo, which conveys the idea of a transfer, as from one forum to another. Transfero,L

ATIN-

DICTIONARY.NET,http://www.latin-dictionary.net/search/latin/transfero (last visited Jan. 28, 2022).

5

The statutory framework for removal is codified at 28 U.S.C. § 1441 (2011). For a general intro-

duction to removal, see Heather R. Barber, V.Removal and Remand,37L

OY.L.A.L.REV. 1555,

1555–1602 (2004). Defendants often see federal court as a much more favorable forum in which

to litigate. See, e.g., KEVIN M. LEWIS &LIBERTY SACKER,ACHIEVING BALANCE:WHICH CASES BELONG IN

WHICH COURTS?, CONG.RES.SERV.LEG.SIDEBAR 2 (2019) (“[M]any defendants prefer to have claims

heard in federal courts. According to critics, state court judges who face highly politicized reelection

or retention campaigns may be motivated to decide cases according to the prevailing popular

will.”). Perhaps putting it too forcefully, one author noted that “[a] defendant’s right to defend

[their] case in federal court is recognized as a powerful instrument against state court bias.”Melanie

M. Fernandez, To Remove or Not to Remove: Lowery v. Alabama Power Co. and the Eleventh Circuit’s

Uncertainty over the Preponderance of the Evidence Standard,64U.M

IAMI L. REV. 1473, 1473–74 (2010)

(additionally characterizing removal as offering defendants “a potential plethora of tactical and

logistical advantages”). As Senator Chuck Grassley phrased it, “[s]omething of national implication

should not be decided in one Podunk county in one State but should be decided by . . . Federal

courts.”150 CONG.REC. 14369 (2004) (statement of Sen. Charles Grassley) (quoted in Sadie

J. Kavalier, Note, Valuing Injunctive Relief Under the Class Action Fairness Act,21D

UKE L.J. 701, 703

(2021)). See generally Vict or E. Fla ngo, Litigant Choice Between State and Federal Courts,46S.C.L.R

EV.

961, 965–66 (1995) (noting survey results of preferences for state versus federal courts among

attorneys). The costs to remove are generally small—the preparation of paperwork and an affidavit

from the client as to potential damages. The consequences for remand are often minimal relative

to the stakes in the litigation. See 28 U.S.C. § 1447 (giving courts the option of awarding costs and

attorneys’ fees in case of remand). Finally, even if remanded, the time spent in removal can func-

tion as a delaying tactic to allow additional time to respond to a complaint—Rule 81 offers defen-

dants at least an additional week to file their responsive pleading. FED.R.CIV.P.81(c).

370 Vol. 60 / American Business Law Journal

Yet despite its prevalence as a defense strategy, doctrinal clarity for

removal is remarkably lacking, especially for removal of actions under

the Class Action Fairness Act (CAFA), a procedural area that is heavily

litigated because plaintiffs cannot avoid removal under CAFA through

artful pleading.

6

When Congress enacted CAFA, the goal was to move certain class

actions into federal court based on a single, precise threshold: an

amount-in-controversy requirement of $5,000,000 or greater.

7

Yet

despite the theoretical simplicity of this number, in practice much of

CAFA litigation is a swamp of vacuous motion practice in which parties

brief and argue a series of speculative assertions about this threshold with

6

28 U.S.C. § 1332 (2005). For a general introduction to CAFA, see Stephen B. Burbank,

The Class Action Fairness Act of 2005 in Historical Context:A Preliminary View,156U.P

A.

L. REV. 1439, 1444 (2008) (noting, e.g., that “CAFA’s jurisdictional provisions, by con-

trast, are detailed, complicated, and replete with both undefined terms and ambiguous

phrases”); Elizabeth J. Cabraser, The Consequences of CAFA:Challengesand Opportunities for

the Just,Speedy,and Inexpensive Determination of Class and Mass Actions,13S

EDONA CONF.J.

181, 184 (2012). For an examination of some of the dissonances within CAFA, see

MichaelD.Y.Sukenik&AdamJ.Levitt,CAFA and Federalized Ambiguity:TheCaseforDis-

cretion in the Unpredictable Class Action,120Y

ALE L.J. ONLINE 233, 234 (2011) (“Millions of

dollars in legal fees, along with a great deal of litigants’ and judges’ time, have been

spent trying to unravel CAFA’s statutory framework and its practical meaning.”). For the

inability of plaintiffs to control choice of forum in class pleadings, see infra text accompa-

nying note 43.

7

CAFA sets two quantitative thresholds for removal to federal court. The amount in contro-

versy is the subject of this article. The second quantitative threshold is the size of the puta-

tive class, which CAFA requires to be at least one hundred. 28 U.S.C. § 1332(d)(5). This is

often uncontested in our context. One curious situation that bears on numerosity is

whether parens patriae litigation (invoking all persons within a state as potential class mem-

bers) qualifies for removal under CAFA. See LG Display Co. v. Madigan, 665F.3d 768, 772

(7th Cir. 2011) (finding that parens patriae litigation did not quality as a class action under

CAFA). CAFA’s bright-line limitation to suits involving one hundred or more plaintiffs par-

allels the traditional question of numerosity under Rule 23, which requires only that joinder

be “impracticable”rather than providing a bright-line rule. See, e.g., Esler v. Northrop

Corp., 86 F.R.D. 20, 34 (W.D. Mo. 1979) (noting that “the rule contains no explicit numeri-

cal limitations. It has been suggested, however, that generally classes of forty or more per-

sons have been certified, while those of less than twenty-five have not been certified.”)

(citing ARTHUR R. MILLER,ANOVERVIEW OF FEDERAL CLASS ACTIONS:PAST,PRESENT,AND FUTURE

22 (FEDERAL JUDICIAL CENTER FJC-ETS-77-8) (1977)); id.(“The difficulty inherent in joining

as few as 25 or 30 class members should raise a presumption that joinder is impracticable.”)

(quotation omitted).

2023 / Chains of Reasoning and Tail Events in CAFA 371