Burbank on The Class Action Fairness Act of 2005 in Historical Context

Stephen B. Burbank, University of Pensylvania, has posted a new article, The Class Action Fairness Act of 2005 in Historical Context: A Preliminary View. It is forthcoming in the University of Pennsylvania Law Review. Here's the abstract:

This article sets CAFA in the contexts of the history of federal diversity of citizenship litigation in general and, within that larger story, the history of diversity class actions in federal court. I consider whether changes in the litigation landscape since 1958, when Congress formally embraced corporate citizenship, might be thought to justify the changes in the balance of power in forum selection that CAFA brings about. Critical to my views in that regard are the failures of the Supreme Court effectively to police interstate forum shopping through constitutional control of personal jurisdiction or choice of law and the steroidal effect of the modern (post-1966) class action on the incentives that drive forum choice. I conclude that it was not unreasonable for Congress to assert a federal interest in regulating the process by which and the forums in which nationwide and multistate class action decisions are made. To be sure, the interest in question bears little relation to the historic account of diversity jurisdiction with which we are familiar. But, as Section IV demonstrates, it is consistent with the policy that the Supreme Court in fact pursued when umpiring ordinary diversity litigation in the late nineteenth and early twentieth centuries, and consistent as well with the policy that Congress pursued in its 1958 amendments to the diversity statute.

I reach a very different conclusion with respect to the numerous class actions within CAFA's reach that are not in any meaningful sense "multistate." The 1958 Congress left in place (if it did not enhance) the instruments of countervailing power for plaintiffs that had developed in the system and that made the fictions of corporate citizenship tolerable. The 2005 Congress dismantled those instruments in order to open federal courts to multistate class actions. It conveniently forgot them when it came time to fashion exceptions. In the process, Congress neglected the critical role they played in equilibrating not just plaintiffs' and defendants', but federal and state, interests. Ultimately, a combination of special interest overreaching, abetted by the fictions of corporate citizenship, and confusion about legislative aims, abetted by the institutional federal judiciary's schizophrenia regarding overlapping class actions, led Congress to lose sight of its duty, when fashioning CAFA's exceptions, to preserve the "happy relation of States to Nation."