Valuing Injunctive Relief Under the Class Action Fairness Act

by Sadie J. Kavalier

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Abstract

Injunctive relief class actions afford victims of mass harms a chance to sue collectively and enjoin an actor’s conduct. While the moral value of these suits may be monumental for litigants, one procedural question remains murky: how should courts value the amount in controversy to determine whether the suit qualifies for federal diversity jurisdiction?

Historically, federal courts adopted one of two approaches. The “Plaintiff’s Viewpoint approach” values the amount in controversy strictly from any monetary benefit to the plaintiff(s). The “Either Viewpoint approach” values the amount in controversy as the higher of any monetary benefit to the plaintiff or the cost to the defendant of implementing the injunction. Naturally, the more inclusive Either Viewpoint approach tends to result in successful removal more often than the Plaintiff’s Viewpoint approach. For defendants, removal to federal court can be an incredible asset to a class action litigation.

In 2005, the Class Action Fairness Act (“CAFA”) effectively opened federal courts’ doors to a broader array of class action suits than federal diversity jurisdiction previously allowed. Despite this expansion, some federal district courts have continued to apply the more restrictive Plaintiff’s Viewpoint approach even in cases removed under CAFA. This Note argues that CAFA’s text, legislative history, and underlying policy concerns require using the Either Viewpoint approach uniformly in CAFA class actions and suggests a congressional amendment to require this approach.

Valuing Injunctive Relief Under the Class Action Fairness Act

by Sadie J. Kavalier

Click here for a PDF file of this article

Abstract

Injunctive relief class actions afford victims of mass harms a chance to sue collectively and enjoin an actor’s conduct. While the moral value of these suits may be monumental for litigants, one procedural question remains murky: how should courts value the amount in controversy to determine whether the suit qualifies for federal diversity jurisdiction?

Historically, federal courts adopted one of two approaches. The “Plaintiff’s Viewpoint approach” values the amount in controversy strictly from any monetary benefit to the plaintiff(s). The “Either Viewpoint approach” values the amount in controversy as the higher of any monetary benefit to the plaintiff or the cost to the defendant of implementing the injunction. Naturally, the more inclusive Either Viewpoint approach tends to result in successful removal more often than the Plaintiff’s Viewpoint approach. For defendants, removal to federal court can be an incredible asset to a class action litigation.

In 2005, the Class Action Fairness Act (“CAFA”) effectively opened federal courts’ doors to a broader array of class action suits than federal diversity jurisdiction previously allowed. Despite this expansion, some federal district courts have continued to apply the more restrictive Plaintiff’s Viewpoint approach even in cases removed under CAFA. This Note argues that CAFA’s text, legislative history, and underlying policy concerns require using the Either Viewpoint approach uniformly in CAFA class actions and suggests a congressional amendment to require this approach.