Class Actions: The State Court Action Is Alive & Well
State court class actions remain a viable vehicle in Pennsylvania. But, they still take a backseat to the federal case. Let’s consider the law and some recent statistics.
The Class Action Fairness Act (CAFA), enacted by Congress in 2005, significantly expanded federal jurisdiction over class action lawsuits. For actions based on diversity jurisdiction, CAFA increased the monetary threshold for jurisdiction from $75,000 to $5 million, but permitted aggregation of individual plaintiffs’ claims to reach this threshold. CAFA also relaxed the requirement that all plaintiffs be diverse from all defendants to provide jurisdiction where minimal diversity (at least one plaintiff is diverse from at least one defendant) is established.
In a study of 88 federal district courts, the Federal Judicial Center found that there was a dramatic increase in class action activity following the enactment of CAFA. Specifically with regard to diversity class actions, the Center found that the number of class actions filed increased from 11.9 per month on average pre-CAFA to 34.5 per month on average post-CAFA.
In late 2014, a Pennsylvania Supreme Court ruling generally supported certification of a class based on aggregated proof, Braun v. Wal-Mart Stores, Inc. Commentators were concerned that Braun would encourage class action filings in Pennsylvania. However, it appears that federal court remains the venue of choice for class action litigation. In 2011, Philadelphia saw 43 class actions filed. This number remained relatively constant in 2015 with 41 class actions filed. Similar trends exist in the surrounding counties. Bucks County went from a single class action in 2011 to 4 in 2015. Chester County decreased from 19 to 5. Delaware County remained constant with a single class action filed in both 2011 and 2015. Montgomery County saw 13 class actions in 2011 and 11 in 2015.
The U.S. Judicial Conference’s Committee on Rules of Practice and Procedure recently proposed changes to Federal Rule of Civil Procedure 23, which governs class actions. If approved, these proposed changes could become effective in 2018. It will be interesting to see if the current trends favoring class action litigation in federal court will continue.
Timoney Knox will continue to monitor these trends and report any significant developments. Please contact any member of our Insurance Industry Group for more information or inquiries.