Maintain — continued from Page 24
three years only if willful conduct is found. In contrast, overtime claims brought under California’s Labor Code enjoy a three-year statute of limitations, and representative UCL actions have a four-year statute of limitations. Additionally, federal court interpretation of state labor laws may lead to varying outcomes depending on the federal courts’ familiarity with the statute in question. Thus, the determination of venue in wage-and-hour cases can have a powerful impact on the ultimate success of the action, the extent of liability and the scope of recovery.
The Class Action Fairness Act The playing field in the struggle over
venue changed on February 18, 2005, when the Class Action Fairness Act (“CAFA”), 28 U.S.C § 1332, became effec- tive. CAFA significantly expanded federal subject-matter jurisdiction over class- action lawsuits. For large class actions, CAFA is a new weapon for employers seeking to reduce the impact of class actions on businesses and employers. CAFA facilitates the removal of class actions from state to federal court and modified the procedures for settling class actions in federal court. Its enactment was motivated in part because the large procedural and substantive variations
among state forums pre-CAFA created equally large disparities among judg- ments and settlements. CAFA passed because of the fairness-ensuring provi- sions governing settlement of class actions in federal court, and the inclu- sion of several exceptions to federal juris- diction allowing truly local controversies to remain in state court. Before CAFA, a non-federal-question
class action was often non-removable because complete diversity was lacking, or the amount in controversy had not been satisfied. Plaintiffs’ counsel, seeking to avoid removal on diversity grounds, would carefully draft their complaints around the statute. For example, plain- tiffs could deliberately plead damages below the jurisdictional threshold or assign all or part of the cause of action to a citizen of the same state as the defen- dant.
With the introduction of CAFA, fed-
eral jurisdiction over class actions has become increasingly accessible since CAFA only requires the existence of mini- mal diversity between plaintiffs and defen- dants, one-hundred or more proposed plaintiffs, and more than $5 million in controversy. Thus, the enactment of CAFA has significantly expanded the abil- ity of a defendant sued in state court to remove the action to federal court.
Additionally, under CAFA there is no longer a one-year time limit for removing an action to federal court and the con- sent of only one defendant is needed in order to remove (pre-CAFA, the consent of all defendants was required). Accordingly, one way to view CAFA is to think of it as a class-action impediment act.
CAFA is comprised of nine sections.
The first two sections provide for the table of contents and legislative intent and the last four address enactment and other organization matters. The meat of CAFA is in sections three, four, and five, which revised three different sets of statu- tory provisions. These revisions expanded diversity jurisdiction to class actions (28 U.S.C. § 1332(d)), made it significantly easier for a defendant to remove class actions to federal court (28 U.S.C. § 1453), and presented additional fairness procedures for the settlement of class actions (28 U.S.C. §1711-1715). This arti- cle will focus on the revisions outlined in Section 1332(d) of CAFA. Although primarily aimed at con-
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sumer class action “forum shopping” and other practices viewed as abusive to busi- ness interests by Congress, CAFA unques- tionably impacts employment class actions, as well. In fact, during floor debate prior to its passage, some civil rights proponents argued that wage-and- hour and civil rights class actions should be excluded from CAFA, but an amend- ment specifically aimed at excluding them from the bill’s reach was not includ- ed within the final text. While CAFA has an impact on employment litigation, it likely has minimal impact on employ- ment-discrimination class actions, as these discrimination class actions tend to be filed in federal court anyway. Thus, CAFA’s impact tends to be greater on FLSA wage-and-hour class actions and other similar collective action claims due to their opt-in component. With respect to FLSA litigation, CAFA has an immedi- ate impact on the practice of filing a “hybrid” employment class action – that is, a federal “opt-in” collective action
See Maintain, Page 28
Lic: PI-10472 Lic: PI-10472
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