Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) 121 XV. Class Action Fairness Act of 2005 A. The Purpose of the Act The Class Action Fairness Act of 2005 (“CAFA”) amended the federal diversity jurisdiction statute, 28 U.S.C. § 1332, to broaden the basis for federal diversity jurisdiction. In enacting the CAFA, Congress’s intent was to shift class action litigation from state courts to the federal courts.598 The most significant increase in filings of class actions has been in labor class actions.599 Most of these class actions are brought under either F.R.C.P. 23 or the Fair Labor Standards Act (FLSA).600 B. General Requirements The CAFA grants the federal court jurisdiction over any class action in which (1) the proposed class consists of at least 100 members, (2) the total amount in controversy exceeds $5 million after combining claims, exclusive of interest and costs, and (3) there is diversity between at least one plaintiff class member and one defendant.601 The CAFA expands the jurisdiction of the federal courts to hear class action lawsuits and replaces the strict complete diversity requirement with a more lenient rule, thereby granting jurisdiction where any diversity exists between plaintiffs and defendants.602 CAFA diversity exists when at least one plaintiff is a citizen of one state and one defendant is a citizen of a different state, or when one plaintiff is a citizen of a foreign country and one defendant is a U.S. citizen, or when one plaintiff is a U.S. citizen and one defendant is a citizen of a foreign country.603 The CAFA defines class actions as any civil action filed under Federal Rule of Civil Procedure 23 or similar state law.604 Also included within this definition, for removal purposes, are mass actions, i.e., actions in which monetary 598 Federal Judicial Center, Impact of CAFA on the Federal Courts: Fourth Interim Report, at 1-2, Apr. 2008 (reporting a 72% increase in class action cases filed in the 88 district courts from January to June 2007 compared with July to December 2001). 599 Id. at 7. 600 Id. (reporting a 228 percent increase when comparing the first six-month period to the last six-month period). 601 28 U.S.C. § 1332(d)(2), (5)(B)); Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547, 552 (2014). CAFA does not confer federal subject matter jurisdiction when the primary defendants are states, state officials, or other governmental entities against whom the district court may be foreclosed from ordering relief. 28 U.S.C. § 1332(d) (5). 602 28 U.S.C. § 1332(d)(2)(A). See also Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1021 (9th Cir. 2007) (“under CAFA, complete diversity is not required; ‘minimal diversity’ suffices); Bush v. Cheaptickets, Inc., 425 F.3d 683, 685 (9th Cir. 2005) (“CAFA amends, inter alia, the federal diversity statute, 28 U.S.C. § 1332, and now vests original jurisdiction for class actions in federal court where there is minimal diversity and the amount in controversy exceeds $5,000,000”); Natale v. Pfizer, Inc., 379 F. Supp. 2d 161, 167 (D. Mass. 2005), aff’d, 424 F.3d 43 (1st Cir. 2005) (“any member of a class of plaintiffs is a citizen of a different state from any defendant”). 603 28 U.S.C. § 1332(d)(2); Bush v. Cheaptickets, Inc., 425 F.3d 683, 684 (9th Cir. 2005). 604 28 U.S.C. § 1332(d)(1)(B). Claims brought solely under the Private Attorneys General Act (“PAGA”) are not removable under CAFA. In Urbino v. Orkin Services, 726 F.3d 1118 (9th Cir. 2013), the Ninth Circuit held that the PAGA claims of all “aggrieved employees” could not be aggregated in order to meet the amount in controversy requirement for removal. The Ninth Circuit later held that a PAGA action is not a “suit ‘filed under’ a state statute or rule of judicial procedure ‘similar’ to Rule 23 that authorizes a class action” such that CAFA jurisdiction may be invoked. Baumann v. Chase Inv. Services
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