An initial look at the new class action law

Over the previous two days I worked on a detailed post regarding the new class action law that Bush signed on February 18. I began by reading only news reports and responding to what I found therein. Then my lawyer training kicked in, and I realized I should read the text of the actual law. As usual, reading federal legislation gave me a severe case of tired head, so my initial reaction might not be accurate. Get your own case of tired head by downloading and reading the Class Action Fairness Act of 2005. When you get to the linked page, click on "Text of Legislation," and then on the next page click on the #3 option. From there you can download the Act in either html or pdf. For some odd reason, that site otherwise assigns temporary addresses for which hyperlinks do not work, so that is the reason for the roundabout instructions rather than a direct link.

Anyhoo, as I was reading the legislation, there was very little that caused me alarm, and that made me wonder why Republicans have been claiming that this legislation will limit class actions. Then I got to some provisions toward the end that really caught my attention. It seems to me that the Act now establishes means by which defendants can remove cases filed in state court that were not filed as class actions. Allow me to explain this. Plaintiffs are the ones who seek to file cases as class actions. While defendants can also be a class, as a practical matter this is not typical. Under the new law, if certain cases are filed in a state court, and the plaintiffs do not want it to be a class action, the case might nonetheless come under the definition of "class action" in the new law, and then that case can be removed (in effect transferred) to federal court. There are already laws in effect setting out the circumstances under which a defendant can remove a case to federal court. However, the new class action law creates a new circumstance that will allow a defendant to do so even if none of the existing circumstances exist. So, a group of plaintiffs could file a case in state court that would not be subject to removal to federal court under previous law and now have it put in federal court.

Why is this significant? The answer has much to do with logistics. Federal judges do not like civil cases (and class actions are civil cases). The law requires that all criminal cases MUST be heard within a given time, meaning that 1) federal judges have no flexibility in handling their dockets in regard to criminal cases, and 2) civil cases clog up the system. Creating any kind of new jurisdiction (which the Class Action Fairness Act of 2005 does) will simply place another burden on the federal courts.

And I think I have a good idea of how federal district judges are going to handle this new burden. My experience (in the Northern, Eastern, and Southern Districts of Texas) is that for civil suits (and class actions are civil suits), the entire system, by design, has as its primary objective getting cases dismissed. There are the Federal Rules of Civil Procedure to which all Federal Courts and litigants must comply. In addition, each District has its own local procedural rules, and then individual judges often have their own rules. In the Northern District of Texas, there are even some UNWRITTEN rules which if violated will result in dismissal. The system is a series of traps for plaintiffs. This has nothing to do with politics, views on tort reform, bias, etc. It has to do with docket management and courts trying to be able to do the things they HAVE to do. Thus, in general, my guess is that federal courts are going to try to get rid of as many class actions suits as possible.

This is what will have a chilling effect on class actions and large lawsuits that will automatically be termed class actions even when they are not filed as such.

I will update this analysis--especially if after further study I find my interpretation to be incorrect.