Does Cappuccitti Mark The End Of Federal Jurisdiction Over Consumer Class Actions In The Eleventh Circuit?
In a decision that could render the Class Action Fairness Act (“CAFA”) virtually meaningless, the Eleventh Circuit recently held sua sponte that CAFA does not allow for federal court jurisdiction over class actions unless the amount in controversy for at least one plaintiff (or class member) exceeds $75,000. Should this decision hold up, courts in the Eleventh Circuit would lack jurisdiction over virtually all consumer class actions, most of which involve modest claims, whether they are originally filed in or subsequently removed to federal court.
As you may know from previous posts on this blog, Congress enacted CAFA in 2005 to curb “abuses of the class action device,” including state courts being overly friendly toward class certification, insufficient notice being provided to putative class members, and favoring some plaintiffs over others in making class awards. CAFA was supposed to situate more class actions in federal court and make it easier for defendants in a state court action to remove the action to federal court. CAFA provides federal courts with original jurisdiction over class actions in which the amount in controversy exceeds $5,000,000 (aggregating individual class member claims to meet this threshold) and there is minimal diversity (at least one plaintiff and one defendant are from different states).
In Cappuccitti v. DirecTV, Inc., No. 09-14107 (11th Cir. July 19, 2010), plaintiffs sued DirecTV seeking the recovery, on behalf of themselves and those similarly situated DirecTV subscribers in Georgia, of the fees DirecTV charges its subscribers for canceling their subscriptions prior to the subscriptions’ expiration. The fees ranged from $175 to $480 per subscriber. DirecTV moved to compel plaintiffs to submit to arbitration, per the arbitration and class action waiver provision in the DirecTV subscriber agreements, and to dismiss the complaint for failure to state a claim. Plaintiffs did not move to dismiss for lack of subject matter jurisdiction. The district court dismissed plaintiffs’ complaint for failure to state a claim, and plaintiffs appealed. On appeal, the Eleventh Circuit held that the district court lacked jurisdiction to entertain the complaint, it vacated the district court’s order, and remanded the case with instructions to dismiss the complaint.Continue Reading...