CAFA (Class Action Fairness Act of 2005) and Rule 23 - A General Overview
Class action litigation is rampant, and all too often class action lawsuits cause more injury than the wrong they sought to redress. These actions seem driven by a desire to maximize attorney fees rather than to serve the public. A 1995 House Conference Report, for example, enumerated ways in which abusive class actions have hurt the U. S. economy. See, H.R.Rep. No. 104-369, p. 31 (1995). These concerns led to sweeping reforms in federal securities law class actions through the enactment of SLUSA (Securities Litigation Uniform Standards Act) in 1998. Abuse of class action lawsuits also led to the enactment of CAFA (Class Action Fairness Act of 2005).
Class actions may serve an important function. The preamble to CAFA (Class Action Fairness Act of 2005) states, Class-action lawsuits are an important and valuable part of the legal system when they permit the fair and efficient resolution of legitimate claims of numerous parties by allowing the claims to be aggregated into a single action against a defendant that has allegedly caused harm.
In federal court, class actions are governed by Rule 23 of the Federal Rules of Civil Procedure. The procedure for filing a class action is simple enough; the difficulty arises when one seeks to certify the class.
A lawsuit is filed with one or more plaintiffs purporting to bring the action on behalf of a putative class. (This is not to suggest that the court may only approve a plaintiff-class. On the contrary, it is possible to seek certification of a defendant class. See e.g., ASARCO Inc. v. Kadish, 490 U.S. 605, 610, 109 S.Ct. 2037, 2041 (1989) (noting that trial court certified the case as a defendant class action); Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812 n.3, 105 S.Ct. 2965, 2974 (1985) (noting that opinion is limited to those class actions which seek to bind known plaintiffs concerning claims wholly or predominately for money judgmentsand [does not] address class actions where the jurisdiction is asserted against a defendant class. It is far more common, however, for a suit to seek certification of a plaintiff class.)