The Class Action Fairness Act of 2005 (CAFA) expands diversity jurisdiction to allow most significant class actions based on state law to proceed in federal court. Hoping to limit the application of state law through class actions, CAFA's supporters believe that federal judges harbor a collective animosity toward the large, multistate class actions the statute targets. CAFA has no substantive component, and it does not tighten Rule 23's certification requirements. Nonetheless, if supporters are right about judicial preferences and their likely impact on certification decisions, CAFA will weaken the regulatory reach of state law.
Arguments about diversity jurisdiction and judicial preferences made during CAFA debates bear a number of striking resemblances to arguments made for and against diversity jurisdiction during the decades leading up to Erie Railroad v. Tompkins. Many Progressive Era lawyers believed that, although no positive law instructed them to do so, federal judges shared a set of policy preferences that made them particularly receptive to corporate interests. As an expression of these preferences, the general common law attracted attention for its interference with the application of state law. By destroying the general common law, Erie limited the implications of judicial preferences for the federalism balance of power.
This Article examines the similar justifications given for diversity jurisdiction during the decades leading up to Erie and during the debates over CAFA. It describes a shift in approaches to choice-of-law problems in class actions as evidence of a hostility in federal courts toward the cases that come within CAFA's reach. The Article then uses Erie to criticize CAFA's federalism implications. Erie stands for the proposition that Congress, not judicial preferences unmoored from positive law, should bear responsibility for the displacement of state law. To achieve its intended effect, CAFA will rely on a perceived hostility toward large state law class actions in federal courts rather than a positive instruction from Congress. The statute thus contradicts Erie's message about the proper role federal judges should play in the federalism balance of power.