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18 October 2010

US Court of Appeals for the Eleventh Circuit Abandons Prior Interpretation of Class Action Fairness Act That Would Have Deprived Federal Courts Of Jurisdiction Over Most Consumer Class Actions

In Cappuccitti v. DirecTV, Inc. (decided in July 2010), a panel of the US Court of Appeals for the Eleventh Circuit held that the Class Action Fairness Act of 2005 (CAFA) does not provide jurisdiction over a class action unless the amount in controversy for one plaintiff’s (or class member’s) claim is at least $75,000. This ruling deprived federal courts in the Eleventh Circuit of jurisdiction over virtually all consumer class actions (and many other class actions), as the plaintiffs in those cases tend to have modest claims.

Reflecting an unusual consensus about the consequences of the panel’s decision, both parties to the appeal petitioned for rehearing. In addition, Mayer Brown lawyers filed an amicus brief in support of rehearing on behalf of the US Chamber of Commerce and CTIA—The Wireless Association arguing that the panel’s decision would undermine CAFA’s purpose of ensuring a federal forum for significant class actions. Mayer Brown also issued a report on the panel’s initial decision.

On October 15, 2010, the Eleventh Circuit granted panel rehearing and replaced its prior opinion, explaining that “subsequent reflection has led us to conclude that our interpretation [of CAFA] was incorrect.” Cappuccitti v. DirecTV, Inc., No. 09-14107 (11th Cir. Oct. 15, 2010). Instead, the court wrote that “CAFA’s text does not require at least one plaintiff in a class action to meet the [$75,000] amount in controversy requirement of 28 U.S.C. § 1332(a).”

The initial panel opinion in Cappuccitti had raised significant doubts over the availability of a federal forum for many class actions that were pending in courts within the Eleventh Circuit; the opinion on rehearing should eliminate those questions.

For more information about the issues raised in this Legal Update, please contact Donald M. Falk, Archis A. Parasharami or Kevin S. Ranlett.

Learn more about our Consumer Litigation & Class Actions and Supreme Court & Appellate practices.

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