Business Law 11th Edition by Kenneth Clarkson,Roger LeRoy Miller,Gaylord Jentz,Frank Cross

تمرين 5

Many product liability actions are class actions. A class action is a lawsuit in which a single person or a small group of people represents the interests of a larger group. Women allegedly injured by silicone breast implants, for example, sued the manufacturers as a class, as did many of those allegedly injured by asbestos and tobacco. The idea behind class actions is that an individual consumer who has been injured by a product is unlikely to have the financial means to pursue complex litigation against a large corporation. A class action allows all those injured by a product to pool their resources and obtain competent legal counsel to bring a single lawsuit on their behalf.
Federal courts have always had specific requirements for class actions. For example, the class (the group of plaintiffs) must be so large that individual suits would be impracticable, and the case must involve legal or factual issues common to all members of the class. Until 2005, however, any state or federal court could hear class actions.
The Class Action Fairness Act of 2005
The Class Action Fairness Act (CAFA) of 2005 a significantly changed the way class actions are tried. Though it affects all class actions, the CAFA was primarily designed to shift large, interstate product liability and tort class-action suits from the state courts to the federal courts. Under the act, federal district courts now have original (trial) jurisdiction over any civil action in which there are one hundred plaintiffs from multiple states and the damages sought exceed $5 million.
a. Pub. L. No. 109-2, 119 St. 4 (February 18, 2005), codified at 28 U.S.C. Sections 1711 et seq.
Under the CAFA, a state court can retain jurisdiction over a case only if more than two-thirds of the plaintiffs and at least one principal defendant are citizens of the state and the injuries were incurred in that state. If more than one-third but less than two-thirds of the plaintiffs live in a state, the act allows a federal judge to decide (based on specified considerations) whether the trial should be held in state or federal court.
In addition, the act makes it easier for a defendant to remove (transfer) a case from a state court to a federal court, even if the defendant is a citizen of the state where the action was filed. In cases involving multiple defendants, the CAFA also allows one defendant to remove the case to federal court without the consent of all the defendants (as was previously required). In sum, the act encourages all class actions to be heard in federal courts, which have historically been less sympathetic to consumers' product liability claims than state courts have been.
Goals of the Act
One of the main goals of the CAFA was to prevent plaintiffs' lawyers from "forum shopping," or looking for the state court that is most likely to be sympathetic to their claims. Corporate lawyers and business groups have long complained that class actions are often brought in states and counties where the judges and juries have a reputation for awarding large verdicts against corporate defendants. Sometimes, cases are even brought in states where only a small number of the plaintiffs reside. According to these critics, the CAFA will prevent such practices and help cut down on frivolous lawsuits. Not only will the business community benefit, but consumers will gain as well because businesses will no longer have to bear the costs of frivolous suits and will therefore be able to lower prices. President George W. Bush said that the act marks a critical step toward ending the "lawsuit culture in our country." b
b. Presidential press release, "President Signs Class-Action Fairness Act of 2005," February 18, 2005.
Critics of the act contend, however, that class actions are the only way that individual consumers can obtain redress for injuries suffered from defective products. They say that by making it more difficult to pursue class actions, the CAFA is making it harder for injured parties to hold large corporations accountable for their wrongful acts and harmful products.
Even with the CAFA, Removing a Class Action to Federal Court Is Not Always Easy
The CAFA contains numerous ambiguities that the courts are still interpreting as they try to establish the new "rules of engagement" under the act. PepsiCo, Inc., found this out when it tried to remove a class-action suit from a New Jersey state court to a federal district court under the CAFA. The plaintiff had brought the suit against PepsiCo "for herself and on behalf of all persons in New Jersey who, within the past four years, purchased beverages with the tendency to contain benzene." The federal court held, however, that the case did not meet the CAFA's requirement that the amount in controversy exceed $5 million. c
c. Lamond v. PepsiCo, Inc., ___ F.Supp.2d ___ (D.N.J. 2007).
Alabama Power Company suffered a similar fate when it also tried to remove a class action to a federal district court. When it appealed to the U.S. Court of Appeals for the Eleventh Circuit, the court denied the company's request in a seventyseven- page ruling that addressed not only the $5 million threshold requirement but a number of other unresolved issues raised by the CAFA as well. d
d. Lowery v. Alabama Power Co., 483 F.3d 1184 (11th Cir. 2007).
In essence, the Eleventh Circuit raised the burden of proof for defendants seeking to remove cases to federal court. To do so, defendants must now prove that the amount-incontroversy requirement is a legal certainty. Prior to this ruling, the tradition was the use of a "preponderance of the evidence" standard.
IMPLICATIONS FOR THE BUSINESS PERSON
1. Product liability actions may still be tried in state courts. The CAFA applies only to class actions in which the plaintiffs seek damages of more than $5 million.
2. Businesspersons should be aware that even though a law appears to change only procedural rules, such as where and how a dispute is litigated, it may have consequences that affect substantive rights, including a party's ability to litigate.
Critics of the CAFA argue that this legislation deprives Americans of "their day in court" when they are wronged by powerful corporations. Under what circumstances could this criticism be justified