Impact of the Class Action Fairness Act

on the Federal Courts

Preliminary Findings from Phase Two’s Pre-CAFA

Sample of Diversity Class Actions

Emory G. Lee III & Thomas E. Willging

Team Leaders

George Cort Laural Hooper

Marie Leary Angelia Levy

Dean Miletich Robert Niemic

Shelia Thorpe

Project Team

Federal Judicial Center

2008

This Federal Judicial Center publication was undertaken in furtherance of the Center’s statutory

mission to conduct and stimulate research for the improvement of judicial administration. The

views expressed are those of the authors and not necessarily those of the Federal Judicial Center.
Impact of the Class Action Fairness Act on the Federal Courts

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Contents

Introduction .........................................................................................................1

Executive Summary.............................................................................................2

I. Description of the Sample of Class Actions......................................................3

Type of Case..............................................................................................3

Type of Class Sought.................................................................................3

State and Federal Law Claims....................................................................4

Motions Activity........................................................................................4

Dispositions...............................................................................................6

Duration ....................................................................................................7

II. Analysis of Case Outcomes and Motions Activity ...........................................8

Remands....................................................................................................9

Voluntarily Dismissed Cases .....................................................................9

Cases Dismissed on Motion or Summary Judgment...................................9

Class Settlements.......................................................................................9

III. Class Certification and Class Settlements.....................................................11

Class Certification Motions......................................................................11

Class Settlements.....................................................................................11

Settlement Approval Procedures..............................................................12

Conclusion.........................................................................................................16

Appendix: Methods ...........................................................................................17

The sample ..............................................................................................17
1

Introduction

This report presents preliminary findings from Phase Two of the ongoing study of

the impact of the Class Action Fairness Act of 2005 (CAFA) on the federal

courts. Phase One found that the number of class actions based on diversity of

citizenship jurisdiction filed in or removed to the federal courts increased after

CAFA’s effective date. Phase Two will, when complete, measure CAFA’s impact

on litigation activity and judicial rulings in class actions in the federal courts. This

report presents an initial description and overview of the litigation activity, outcomes, and case characteristics of class actions based on diversity of citizenship

jurisdiction filed in or removed to the federal courts in the two years preceding

CAFA’s effective date. Future reports will compare these findings—to the extent

that meaningful comparisons are possible—with prior empirical research and discuss any apparent differences.

The sample consists of a set of 254 diversity class actions. This report is limited to 231 of those cases, 91%, representing the sampled cases that had reached

final disposition in district court to date. The class actions and findings described

in this report represent the “before” portion of a “before and after” study of

CAFA’s impact on the courts. For more information on the study design, see the

Appendix at the end of this report.

Throughout the report the term class action is used to describe any civil action 

in which the plaintiff raises class action allegations in the original complaint, in

state or federal court, or at any subsequent stage in the proceedings. The term

class action applies regardless of whether plaintiffs ever moved for class

certification. This definition is the same as that used in earlier reports to the Advisory Committee on Civil Rules.

Part I of this report describes the characteristics of the sampled cases, addressing the types of cases, the types of classes sought, the number and types of motions filed, the disposition of the cases, and their duration. Part II analyzes the

sample of cases in relation to their dispositions: remand, dismissal on motion,

voluntary dismissal, and class settlement. Part III describes the class settlements

and reports on certification motions, the settlement review process, notification

procedures, objectors and opt-outs, settlement amounts, and attorney fees.
Impact of the Class Action Fairness Act on the Federal Courts

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Executive Summary

The principal findings from the pre-CAFA sample of diversity class actions are:

• Plaintiffs filed motions to certify a class in fewer than one in four class actions;

• Judges granted six motions, in five cases, to certify a litigation class, and all

five cases resulted in a class settlement;

• Before a class settlement, plaintiffs typically had to overcome at least one

challenge to the merits in the form of a dispositive motion;

• Parties proposed class settlements in twenty-one, or 9%, of the 231 class actions;

• Judges approved all twenty-one proposed class settlements; in three cases

approval came only after modification of the settlement;

• Plaintiffs filed motions to remand in 75% of the removed cases and judges

granted remand motions almost 70% of the time, resulting in the remand of

more than half of the removed cases;

• Voluntary dismissal was the most frequent disposition of cases not remanded, occurring 38% of the time;

• Motions activity was relatively infrequent in the sample: 56% of the class

actions had one or zero motions filed; and 

• One in five cases was terminated by the court granting a dispositive motion.

The preliminary findings presented in this report suggest that, in diversity 

class actions, there is less to class allegations than one would expect. There was

relatively little motions activity in the typical case, and the majority of cases not

remanded to state court were voluntarily dismissed. Most plaintiffs did not move

to certify a class. But all class actions in which a class was certified, whether for

litigation or settlement purposes, ended with class settlements.
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I. Description of the Sample of Class Actions

Type of Case

Table 1 shows nature-of-suit information for sampled diversity of citizenship

cases. Almost two-thirds are common-law contract or statutory consumer protection class actions, including insurance cases and those alleging fraud, breach of

warranty, and other contract-related claims. Almost one-third are tort actions, including product liability cases. The majority of the tort cases raise personal injury 

damage claims, with the minority raising property damage claims. A small number of sampled cases do not fit into either of these categories and are described as

Other.

Table 1. Nature of Suit Categories of Sampled Cases (N=231)

Nature of suit Number & percentage

Contract and Consumer Credit 150 (65%)

Tort—Personal Injury and Property Damage 75 (32%)

Other 6 (3%)

Type of Class Sought

Plaintiffs alleged classes under a variety of class action rules. Class actions filed 

originally in state court generally referred to the applicable state class action rule

or rules. Because a majority of the sampled pre-CAFA diversity cases were removals, state class action rules accounted for a majority of the rules cited in class

action complaints. Table 2 shows that the federal rule most commonly cited was

Rule 23(b)(3), which was raised in about one class action complaint in four. It is

likely that the Rule 23(b) unspecified cases are largely 23(b)(3) opt-out classes;

these are cases in which the class action complaint did not specify a subsection of

the rule. If that is so, Rule 23(b)(3) was the basis for more than three in ten cases

and for a substantial majority of class actions filed initially in federal court. Rule

23(b)(1) and (b)(2) were also cited in a number of diversity class actions, 10%

and 15%, respectively.
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Table 2. Types of Classes Alleged in Sampled Cases (N=231)*

Nature of suit Number & percentage

Rule 23(b)(1)(A) or (B)-Mandatory 22 (10%)

Rule 23(b)(2)-Injunctive Relief-Mandatory 35 (15%)

Rule 23(b)(3)-Opt out 55 (24%)

Rule 23(b)(unspecified) 18 (8%)

Opt-in class 1 (<1%)

Derivative class 5 (2%)

State class action rule 132 (57%)

Unable to determine 14 (6%)

*Note: In some cases plaintiffs alleged more than one type of class.

State and Federal Law Claims

The sampled diversity class actions primarily raised claims based on state law.

Table 3 shows the frequency of state and federal law claims in class action complaints. All of the cases raised at least one state-law claim, but only twenty cases

(9%) raised at least one federal-law claim. The median number of state-law

claims was 3 and the mean was 4.1.

Table 3. Frequency of Claims Based on State and Federal Law in

Sampled Cases (N=231)

Number of claims State Law Federal Law

1 33 (14%) 14 (6%)

2 40 (17%) 2 (1%)

3 51 (22%) 3 (1%)

4 21 (9%)

5 27 (12%)

6 21 (9%)

7 14 (6%)

8 11 (5%)

9 3 (1%) 1 (<1%)

10 2 (1%)

11 4 (2%)

12 3 (1%)

17 1 (<1%)

Motions Activity

Table 4 shows the number of cases that had at least one motion of the type

identified in the left column. The most frequently filed motion was a motion to

remand a removed case to state court, which occurred in 101 cases, 44% of all the

cases in the sample. Putting to one side the ninety-seven cases filed as original
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actions in federal court, a remand motion was filed in 75% of removed cases. The

next most frequently observed motion was a Rule 12(b)(6) motion to dismiss for

failure to state a claim, occurring in approximately two out of five cases.

Despite the presence of class allegations in all of the sample cases, plaintiffs

filed a motion to certify a class in slightly fewer than one in four of the cases. Motions for summary judgment—almost all filed by defendants—were even less frequent, occurring in 16% of the sample. Part II will discuss motions activity in relation to the various case outcomes. Rule 12(b)(1) motions to dismiss for lack of

subject-matter jurisdiction were filed in 10% of the sampled cases. Other types of

motions were filed in less than 10% of sampled cases.

Table 4. Motions Activity in Pre-CAFA Diversity Class Actions (N=231)

Number of class actions with

Type of motion at least one such motion

Motion to remand 101 (44%)

Motion to dismiss for failure to state a claim 91 (39%)

Motion to certify a class 56 (24%)

Motion for summary judgment (plaintiff or defendant) 37 (16%)

Motion to dismiss for lack of subject matter jurisdiction 24 (10%)

Motion to dismiss for lack of personal jurisdiction 12 (5%)

Motion for a more definite statement 6 (3%)

Motion for judgment on the pleadings 5 (2%)

Motion to dismiss for insufficient service of process 4 (2%)

Motion to dismiss for improper venue 3 (1%)

Motion to dismiss for insufficiency of process 1 (<1%)

Motion to dismiss for failure to join a party 0

Table 5 presents a count of the number of motions of the types listed in Table

4 that were filed in the sample cases. The median number of motions filed in a

sampled class action is 1.0 and the average number is 1.8. In a total of 129 cases,

representing 56% of the sample, the parties filed one or zero motions of the types

listed in Table 4. The maximum number of motions of the types listed in Table 4

was seven motions, filed in three cases.
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Table 5. Number of Motions in Sampled Cases (N=231)

Number of motions Number and percentage of cases

0 34 (15%)

1 95 (41%)

2 42 (18%)

3 33 (14%)

4 11 (5%)

5 11 (5%)

6 2 (1%)

7 3 (1%)

Dispositions

Table 6 categorizes the dispositions of the sampled class actions. In the order of

the frequency of each disposition, class actions were terminated by voluntary

dismissal (38%), remand to state court (30%), judicial ruling granting a motion to 

dismiss or for summary judgment (21%), class settlement (9%), and administrative closing (3%). Two-thirds of the cases were either voluntarily dismissed or

remanded to state court. Not a single case was resolved by summary judgment for

plaintiff or by a verdict of any kind.

Pending class actions are, of course, still proceeding through pretrial processes. As noted in the Introduction, twenty-three class actions, 9% of the total

sample of 254 class actions, were still pending as of September 2008. Excluding 

these pending cases from this preliminary analysis is likely to lead to an underestimate of the likelihood of class settlement—and possibly of verdict—as case dispositions, assuming that these two dispositions are correlated with longer case

pending times (the excluded cases have been pending at least 3.5 years). Future

reports will include analysis of these cases.

Table 6. Outcome of Sampled Cases (N=231)

Cases not

All cases remanded

Outcome (N=231) (N=161)

Voluntary dismissal without class certification

or class settlement 88 (38%) (55%)

Remand to state court 70 (30%) ___

Judicial ruling dismissing entire complaint 46 (20%) (29%)

Ruling on motion to dismiss 28 (12%) (17%)

Sua sponte dismissal 4 (3%) (3%)

Summary judgment 14 (6%) (9%)

Class settlement 21 (9%) (13%)

Administrative closing 6 (3%) (4%)
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Table 5 indicated that the median case involved a single motion and the average case fewer than two motions. Together the findings presented in Tables 5 and

6 suggest that many of the class actions filed or removed in the two years prior to 

CAFA’s effective date did not have a large impact on the resources of the federal

courts.

The third column in Table 6 presents the outcomes of class actions that were

not remanded to state court. This allows one to look separately at the outcomes

for cases retained in the federal court until the court or the parties terminated the

litigation. A majority (55%) of class actions not remanded to state court were resolved by a voluntary dismissal of plaintiffs’ claims without either class

certification or class settlement. Of the remaining class actions, 29% were resolved by a judgment dismissing the entire complaint and 13% resulted in a class

settlement.

Duration

Table 7 shows the duration of sampled class actions, grouped by disposition. The

median remanded case was resolved in about three and a half months and the

mean remanded case in about four and a half months. The median voluntarily 

dismissed case was terminated in nine months and the mean voluntarily dismissed

case in twelve months. Cases dismissed on motion typically lasted more than a

year, and class settlements generally took more than a year and a half to reach

termination.

Table 7. Duration of Sampled Cases, by Disposition (N=225)*

Median Mean 75th

Outcome (months) (months) percentile

Remanded (N=70) 3.5 4.6 5.9

Voluntarily dismissed (N=88) 9.0 12.0 18.6

Dismissed on motion, sua sponte order,

or summary judgment (N=46) 14.0 16.1 23.8

Class settlement (N=21) 18.4 21.2 30.0

* Six cases that were closed administratively are not included in the table.
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II. Analysis of Case Outcomes and Motions Activity

This part presents analyses of motions activities for the various case dispositions.

Table 8 presents findings on the number of motions filed per case, broken out into

categories based on disposition. The motions counts are limited to the types of

motions listed in Table 4 and do not include, e.g., motions for extension of time or

pro hac vice motions.

Table 8. Total Motions Activity Per Case, By Disposition 

Motions/Case Motions/Case

Mean Median N

All cases 1.8 1.0 231

Remand

Remanded 1.6 1.0 70

All other dispositions 1.8† 1.0 161

Voluntary dismissal

Voluntarily dismissed 1.3 1.0 88

All other dispositions, excluding remands 2.6*** 2.0 73

Dispositive motions

Dispositive motions granted 2.3 2.0 46

All other dispositions, excluding remands 1.7* 1.0 115

All other dispositions, excluding remands 3.0† 3.0 27

and voluntary dismissals

Class settlement

Class settlements 3.2 3.0 21

All other dispositions 1.6** 1.0 210

All other dispositions, excluding remands 1.7** 1.0 140

All other dispositions, excluding remands 2.3† 2.0 52

and voluntary dismissals

† p < .1 * p < .05 ** p < .01 *** p < .001

Not surprisingly, few motions are filed in cases that are ultimately remanded 

to state court (1.6 motions per case) or voluntarily dismissed (1.3 motions per

case). More motions are filed in cases disposed of on a Fed. R. Civ. P. 12 motion

or by summary judgment (2.3 motions per case) than in remands and voluntary

dismissals, but fewer than in cases that result in class settlement (3.2 motions per

case). Interestingly, the mean number of motions in class settlement cases is still

somewhat low; even the average class action settlement based on diversity of citizenship, pre-CAFA, did not involve that much motions activity. All of the differences of means presented in Table 9 reach statistical significance at the .1 level or

better, meaning that it is likely that the observed differences are not the result of

sampling error but exist in the underlying population of diversity class actions

filed in the two years preceding CAFA’s effective date.
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Remands

Remand motions were filed in 101 of the 134 removed cases in the sample

(75.4%). A remand motion was granted in 70 of these cases, or 69.3% of cases in

which at least one remand motion was filed; remand was the disposition of fully 

52.2% of the removed cases in the sample.

As seen in Table 8, only 1.6 motions were filed, on average, in remand cases.

After motions to remand, the most common motions filed in cases resulting in remands were, from most common to least, motions to dismiss for failure to state a

claim (filed in 30% of remand cases), motions to dismiss for lack of subjectmatter jurisdiction (4.3%), motions to dismiss for lack of personal jurisdiction

(4.3%). In the 70 remand cases, one motion to certify a class was filed, and one

motion for summary judgment. In short, the motions activity in the remand cases

consisted almost entirely of remand motions and motions to dismiss for failure to

state a claim.

Voluntarily Dismissed Cases

The average number of motions filed in voluntary dismissal cases was 1.3. No 

single type of motion was filed in a majority of these cases. The most commonly

filed motion in the voluntarily dismissed cases was a motion to dismiss for failure

to state a claim, filed in 30 of 88 cases, 34.1%. Remand motions were filed in

20.5% of voluntarily dismissed cases, motions to certify a class in 18.2%, motions

for summary judgment in 11.4%, and motions to dismiss for lack of subject matter jurisdiction in 9.1%. No other type of motion was filed in more than four cases

(4.5%).

Cases Dismissed on Motion or Summary Judgment

The average number of motions filed in these cases was 2.3. Among the forty-six

cases disposed of by a judicial ruling on a motion to dismiss or for summary 

judgment, the most commonly filed motion was a motion to dismiss for failure to

state a claim, filed in twenty-eight, or 60.9%, of the cases. Motions for summary 

judgment were filed in 34.8%, motions to certify a class in 32.6%, motions to

dismiss for lack of subject matter jurisdiction in 23.9%, motions to remand in

17.4%, and motions to dismiss for lack of personal jurisdiction in 10.9%. No 

other type of motion was filed in more than two of these cases.

Class Settlements

The average number of motions filed in class settlement cases was 3.2. At least

one motion to certify a class was filed in every class settlement—the average

number of such motions, including motions for preliminary approval of a class

settlement, was 1.6 per class settlement case. The next most commonly filed motion was a motion to dismiss for failure to state a claim, filed in nine, or 42.8%, of

the class settlements. Motions for summary judgment were filed in 38.1%, and 

motions to remand in 19%. Motions for a more definite statement were filed in 

two class settlement cases, and a motion to dismiss for lack of subject-matter ju-
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risdiction was filed in one case. These findings suggest that, in the typical class

settlement case, the plaintiffs generally have to overcome at least one challenge

directed at the merits of the case—a motion to dismiss or for summary judgment.

The voluntary dismissal cases present something of a mystery. They make up 

the largest group of cases in the pre-CAFA sample and represent a majority of

non-remanded class action cases based on diversity jurisdiction. But neither plaintiffs nor defendants seem to have pursued them very aggressively—filing, on average, only 1.3 motions in these cases. Defendants, for example, were less likely 

to file dispositive motions in these cases than in other types of cases. (Of course, it

is possible that there would be fewer cases in this category, had defendants filed

more dispositive motions in these cases.) Comparing voluntary dismissed cases to

class settlements, for example, defendants were more likely to file motions to 

dismiss for failure to state a claim in class settlements, 42.9% to 34.1%, and more

likely to file motions for summary judgment, 38.1% to 11.4%. Both relationships

are statistically significant at the .05 level or better.

Voluntary dismissals may represent a financial or equitable-relief settlement

of the individual claims of the named plaintiffs or a dismissal of such claims

without a settlement. As of the date of this report, we have not attempted to distinguish between these two forms of voluntary dismissal. Dismissal without a settlement can also be divided into two types of cases: those dismissed for all time

because of lack of merit or a solvent defendant, and those dismissed with an eye

toward litigating the same case in another court. Docket records almost never indicate which of those scenarios is applicable to a given case. In the voluntary 

dismissals, plaintiffs and defendants may have agreed to file a proposed class settlement in another forum. Or, in removed cases, 39% of the voluntary dismissals,

plaintiffs may have plans to pursue the dismissed claims in another, presumably

more favorable, federal venue. Such subjective intentions and side-agreements are

not likely to appear in the docket records.
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III. Class Certification and Class Settlements

This part describes class certification motions activity and class settlements in the

sampled cases. As seen in Table 6, 21 class actions—or 9% of the total sample

and 13% of the class actions that were not remanded to state court— resulted in a

settlement for the class. Because of the limited number of class settlements in the

sample, the findings outlined in this section may not be generalizable to class

settlements beyond this example.

Class Certification Motions

In the 231 sampled class actions, 70 motions to certify a class were identified. Table 9 presents information on the outcomes of the certification motions filed. The

difference between the class settlement cases and all other dispositions is striking.

Every case in which a motion to certify was granted, unconditionally or for settlement purposes, resulted in a class settlement. In all other dispositions, the most

common outcome for certification motions was denial, in 44.4% of motions, followed by no judicial action, in 30.6%, and an order finding the motion moot, in

19.4%.

Table 9. Class Certifications Motions Activity in Sample

Class Settlements All other dispositions

Certified for settlement purposes before parties have

agreed to a settlement

4 (11.8%) 0

Certified for settlement purposes after parties have agreed

to a settlement

20 (58.8%) 0

Certified without restriction 6 (17.6%) 0

Denied 2 (5.9%) 16 (44.4%)

Deferred 1 (2.9%) 2 (5.6%)

Decertified 0 0

Mooted 1 (2.9%) 7 (19.4%)

No action taken 0 11 (30.6%)

Unable to determine 0 0

Total 34 (100%) 36 (100%)

Note: Some cases had more than one motion to certify.

Class Settlements

The class settlement cases are similar in many respects to the entire sample. As

with the entire sample, two-thirds of the twenty-one class settlements involved

contract/consumer credit cases and the other third involved tort-personal in-
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jury/property damage cases. Contract and tort class actions were equally likely to 

produce a class settlement: about one in seven cases did so. Like the cases in the

full sample (see Table 3), the typical class settlement involved a case with three

state law claims and no federal law claims. Two of the twenty-one class actions

had a single federal law claim; all of the others had none. Eleven of the class actions had been removed from state court and ten had been filed as original actions

in federal court.

Settlement Approval Procedures

This section describes the class settlement review process in the sampled class

settlements.

Hearing and notice. As Rule 23(e) requires, all of the class actions included

judicial review of the proposed settlement. In each case a copy of the settlement

was filed; the court made a preliminary finding that the proposed settlement was

within an acceptable range of reasonableness and fairness; and the court directed

that a notice of the proposed settlement be communicated to the class. Notice took 

the following forms. As Table 10 shows, in some class actions multiple forms of

notice were used.

Table 10. Forms of Notice to Class Members of a Proposed Class Action 

Settlement

Form of Notice Number (N=21)

Individual postal mailing or personal delivery 21 (100%)

Individual electronic mailings to class members 0

Publication in newspaper or other print medium 9 (43%)

Advertisement on radio or television 0

Posting electronic notice (e.g. on internet website) 8 (38%)

Content of notices. Rule 23(c)(2)(B) specifies certain categories of information that the “notice must clearly and concisely state in plain, easily understood 

language.” The categories specified in the rule are presented in bold in the first

column of Table 11. This study does not, however, present any judgments about

the conformity of the notices with Rule 23’s plain language standard.
Impact of the Class Action Fairness Act on the Federal Courts

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Table 11. Content of Notice of Proposed Class Action Settlements

Subject of statement Number and percentage

Nature of the action 20 (95%)

Definition of the class 20 (95%)

Class claims, issues, and defenses 16 (76%)

Class member may appear through an attorney 18 (86%)

Court will exclude any member who so requests 18 (86%)

Time and manner for requesting exclusion 18 (86%)

Binding effect of a judgment 21 (100%)

State total value of monetary portion of settlement 12 (58%)

State amount of attorney fees requested 17 (81%)

State the approximate size of the class 3 (14%)

Present information to enable class member to calculate share of

settlement

14 (67%)

Establish a procedure for making a claim or otherwise participating

in the settlement by a fixed date

18 (86%)

Specify a time and place for a hearing 21 (100%)

State a distribution plan 12 (57%)

Describe equitable relief, if any 5 (24%)

Notices in the majority of class actions covered the mandatory topics. The

most frequent omission dealt with amended Rule 23’s requirement that the notice

state the “class claims, issues, or defenses.” About one-fourth of the cases did not

specify claims, issues, and defenses. In all but one of those instances, the notice

stated the nature of the case, but did not describe further the claims, issues, or defenses. The single case that did not describe the nature of the case was a settlement of a consumer contract case for $175,000, minus attorney fees and expenses.

The settlement included a claims process but the court records did not disclose

how many class members made claims. The fact that a cy pres award was made to

a bar association suggests that the notice had not been entirely successful in

reaching class members and motivating them to file claims. McBride v. Preferred

Warranties, No. 8:4cv23296 (D.S.C.).

Size of class. For twelve of the twenty-one class actions researchers found no

information regarding the approximate size of the class. For the remaining nine

class settlements, the range was wide: the numbers are 25, 52, 106, 132, 186,

4,100, 5,400, 77,000, and 200,000 members. These numbers are too few to draw

any inferences about class size in general.

Opt outs. In nineteen of the twenty-one class actions, the record included information about whether there were opt-out class members. In seven of those

nineteen class settlements, there were no opt outs. In the remaining twelve class
Impact of the Class Action Fairness Act on the Federal Courts

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settlements, there were 1, 2, 4, 9, 19, 40, 82, 161, 514, 520, 946, and 1061 class

members who opted out.

Objections. In nine of the class settlements no objections were filed with the

court. In four settlements, one or more objectors asserted that the monetary

amount of the settlement was insufficient to compensate the class members for

their injuries; that groups of claimants were unfairly favored; and that the attorney 

fees were disproportionate with the class settlement. In one case an objector

claimed that nonmonetary portions of the settlement, such as coupons or discounts, provided little or no benefit to class members. Because CAFA expressly

bars some of these provisions, researchers looked for but did not find any indication of objections that monetary costs to some class members exceeded the monetary benefits to those class members; that a settlement provided greater recovery 

to class members solely because they are located closer to the courthouse; that

relief as a whole was inadequate to deter future wrongdoing; that groups of claimants were unfairly favored; or that the settlement was based on collusion between

the named representatives or attorneys and the opposing party.

Judicial action on proposed settlements. Judges approved without changes all

but three of the proposed settlements. In the other three cases (14%), judges approved the proposed settlement after the parties made changes in the agreement.

In one of those cases, the court delayed approval of the settlement and ordered a

claims administrator to contact by telephone all class members who had not responded to the first mailed notice of settlement and to send an additional letter

specifying the member's share of the settlement. The court also reduced counsel's

request for attorney fees. In another case—one that did not literally require a

change in the agreement—the parties agreed to include attorney fees of up to 40%

of settlement and the court awarded 29%. In the third case involving a change in

the agreement, the court allowed a $32,000 claim of a class member who had filed 

the claim one day late (which the claims administrator had rejected as untimely);

reduced the incentive award to a named plaintiff from $31,000 to $20,000; and

reduced the attorney fee request from $323,437 to $275,000.

Amounts of settlement. In eighteen of the twenty-one settlements information 

on the monetary amount of the settlement was available. The median amount was

$2,950,000 and the mean amount was $9,480,967. Six of the settlements included 

a declaratory judgment or an injunction. Five settlements involved nonmonetary 

relief in the form of coupons, discounts, securities, or similar remedies. In four of

those settlements there was also monetary relief or injunctive relief, or both. In

the remaining settlement there was no class-wide monetary fund created, but there

was a provision that the defendant reimburse class members for repair costs already incurred.

Class representative allocation. In fourteen of the twenty-one settlements information on the amount awarded to class representatives was available. The median award was $12,500 and the mean was $21,370.93.
Impact of the Class Action Fairness Act on the Federal Courts

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Attorney fee requests. Attorneys representing plaintiffs and the class requested

fees in all class actions, in the median amount of $1,100,000. The average fee request for the twenty-one class actions was for $3,053,236.

Attorney fee awards. Courts awarded attorney fees in the amount requested in

sixteen of the class settlements, slightly more than three out of four. In the other

five cases, courts awarded 62%, 65%, 73%, 79%, and 85% of the request. For all

twenty-one class settlements, the median award was $770,749 and the average

award was for $3,054,251.

Cy pres allocations. Four of the settlements resulted in a distribution of some

of the proceeds to an entity in lieu of distributing that portion of the proceeds to

class members. The recipients of these funds were a bar association (in McBride,

supra p. 13), the American Red Cross Katrina Relief Fund, the public schools in 

the district that were affected by the pollution alleged in the class complaint, and a

“home for the holidays” program.
Impact of the Class Action Fairness Act on the Federal Courts

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Conclusion

Preliminary findings indicate that in diversity class actions there is less to class

allegations than one would expect. Most of the plaintiffs in cases that raised class

allegations did not take the next step and move to certify a class. All class actions

that were certified, whether for litigation or settlement purposes, ended with class

settlements—about 10% of the sample. Relatively little motions activity took

place in the typical case, and many cases—the majority of cases not remanded to 

state court—ended in a voluntary dismissal. Further analysis and comparison with

class actions based on federal questions may shed further light on these observations.
Impact of the Class Action Fairness Act on the Federal Courts

17

Appendix: Methods

The study design defines a class action to include any civil action in which a

plaintiff makes a class action allegation in the original complaint or at any subsequent stage in the proceedings. For the first phase of this study we created a database of all class actions filed in or removed to the federal courts between July 1,

2001, and June 30, 2007. To create that database, we used three methods: (1) an

electronic search for the term class in the electronic docket records of the eightyeight (of ninety-four) federal district courts that participate in the Case Management/Electronic Case Filing (CM/ECF) system, followed by elimination of false

positives, such as cases that referred to first class mail; (2) inclusion of cases

identified as class action in the Integrated Data Base (IDB); and (3) inclusion of

cases identified as class actions in the CourtLink electronic service compiled by

Lexis/Nexis. To evade these three searches, a case in which class allegations were

raised would have had to have been one in which the term class was not used in a

single docket entry; would have also evaded CourtLink’s search of docket records

and case captions for the terms class and similarly situated; and would have had 

to have been miscoded in both CM/ECF and the IDB.

From the population of more than 30,000 class actions produced by the above

methods, we eliminated overlapping and duplicative federal class actions by

searching for indications of consolidations within or between districts and excluding all but the lead case for each consolidation. Cases transferred by the Judicial

Panel on Multidistrict Litigation (JPML) were represented by a single case for

each MDL number. Finally, we excluded all cases in which a pro se litigant

sought to represent a class and all cases involving prison litigation. All of the

above steps produced a database of approximately 21,000 class actions.

The sample

CAFA expands diversity of citizenship jurisdiction by employing the concept of

minimal diversity, in which at least one plaintiff and one defendant are citizens of

different states, and by permitting aggregation of the amount in controversy.

CAFA also facilitates removal of class actions filed originally in state courts, for

example by eliminating the need for all defendants to consent to removal and by 

eliminating the need to remove within one year of the filing of the action. CAFA’s

primary purpose is to bring certain class actions with state-law claims and at least

minimal diversity of citizenship into the federal courts. Following CAFA’s design, we concentrate our attention on diversity class actions.

The sample of class actions covers the period from February 18, 2003,

through February 17, 2005, the day before CAFA went into effect. This sample

will serve as the baseline measure of pre-CAFA activity. A second sample has

been drawn to represent the two years after CAFA went into effect. We will then 

compare the litigation activities and outcomes in the two samples to measure any

effect CAFA may have had.
Impact of the Class Action Fairness Act on the Federal Courts

18

Of the 21,000 class actions in the filings and removals database, approximately 600 had been classified in the IDB as having been brought into federal

court between February 18, 2003, and February 17, 2005, on the basis of diversity 

of citizenship jurisdiction. A random sample of approximately half (301) of those

class actions was drawn.

In examining the docket records and coding the 301 class actions, we determined that 45 of them had been filed in or removed to federal court solely on the

basis of federal question jurisdiction and apparently miscoded in the IDB. Two

cases proved not to be class actions, that is, they did not contain class allegations

presented by a plaintiff who was represented by counsel in a non-prison context.

Those 47 cases were excluded from the sample. Of the remaining 254 class actions, 23 were pending as of mid-September 2008. The remaining 231 terminated

class actions serve as the sample from which the findings in this report are drawn.