William & Mary Business Law Review


Willy E. Rice


Judges as well as members of plaintiffs’ and defense bars agree: a class action is a superior, efficient, and inexpensive procedural tool to litigate disputes that present similar questions of fact and law. To be sure, corporations and insurers have a long history of filing successful class actions against each other in state courts. Yet those corporate entities convinced Congress to embrace an uncommon view: continuing to allow allegedly “hostile” and “biased” state judges and juries to hear and decide everyday consumers’ “purely substantive state law class actions” is unfair and inefficient. Responding to the plea, Congress enacted the Class Action Fairness Act of 2005 (CAFA).

Reading CAFA’s purpose and findings, one discovers several questionable assumptions: (1) Out-of-state corporate defendants are more likely to lose consumer-initiated class actions in state courts, (2) allowing multinational insurers and corporations to remove consumers’ “purely state law class actions” to federal courts will increase efficiency between states’ and the federal judiciaries, and (3) federal judges are more “impartial” and significantly less likely to allow extralegal factors to influence the dispositions of class actions.

To determine whether reformers’ assumptions were sound, the author sampled, read, and coded 2,657 federal and state court class actions and ordinary decisions. This Article discusses the historical and empirical findings and provides evidence that refutes reformers’ assumptions about class action litigation in state and federal courts. Also, this Article questions the rationality of Congress’s sweeping removal reforms, which find no sound support in law or in fact. Moreover, this Article highlights several unintended consequences of class action reforms, which insurers and corporations are likely to regret. Finally, given that CAFA’s removal provisions are likely to undermine traditional principles of judicial federalism, this Article encourages the Supreme Court or, preferably, a more enlightened Congress, to address the concerns raised here as soon as the opportunity arises.

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