Eleventh Circuit creates confusion with CAFA decision

Posted on: October 15th, 2010 by Steve Larson
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CAFA substantially changed the class action landscape in 2005 by creating specialized jurisdiction in federal court for class action cases. The law amended 28 U.S.C. § 1332 to permit federal courts to hear class action cases of at least 100 members when the parties are minimally diverse and the aggregate damages exceed $5 million.  In Cappuccitti v. DirecTV, Inc., the Eleventh Circuit held that the case before it, originally filed as a class action in the Northern District of Georgia under CAFA, did not meet the jurisdictional requirements to be heard in federal court.  While instructing the district court to dismiss the case due to lack of jurisdiction, the court held that in class actions originally filed under CAFA, at least one plaintiff must assert damages of over $75,000 to meet the jurisdictional requirements of Section 1332(a).  To do otherwise, the court stated, would “transform federal courts hearing originally-filed CAFA cases into small claims courts, where plaintiffs could bring five-dollar claims by alleging gargantuan class sizes to meet the $5,000,000 aggregate amount requirement.”

The Cappuccitti case, which involved early-termination fees charged by DirecTV, was on appeal from an order finding an arbitration clause unenforceable. According to the attorneys arguing the case, subject matter jurisdiction was never questioned at any point in the case until the appellate panel raised the issue during oral argument.  In its decision, the court relied upon a statutory subsection, Section 1332(d)(11)(B)(i), that specifically makes the $75,000 amount in controversy requirement of Section 1332(a) applicable to “mass actions” removable under CAFA.

The case creates confusion, because no other court has ever said that in order for a federal court to have subject matter jurisdiction, at least one of the plaintiffs must have suffered damages of $75,000.  The attorneys for both the plaintiff class and DirecTV contend that the decision was wrongly decided and have independently filed motions for rehearing en banc.