Living in CAFA's World

I. Introduction 691II. CAFA's Influence on Class Action Doctrine 699III. Challenging CAFA's Paradigm: Some First Efforts .... 704IV. A Way Forward: Treating Superiority Seriously........713V. Conclusion 719I. IntroductionIt is fashionable these days to talk about the death of class actions.* 1 The steps along the path to the cemetery are easy enough to describe. In 1995, the Seventh Circuit significantly reined in the emerging mass tort class action,2 and Congress imposed constricting requirements on the securities-fraud class action.3 During the next four years, a pair of Supreme Court decisions took a jaundiced view toward both mass tort and settlement class actions.* * 4 The effect of these developments-and of the judicial decisions that followed in their wake-was to make multistate state-law class actions,5 as well as positive-value class actions6 and class actions involving significant individualized proof of causation or damages,7 very difficult to maintain in federal court.According to this story, the death spiral really kicked in when Congress passed the Class Action Fairness Act of 2005 (CAFA),8 which relaxed federal subject matter jurisdiction over state-law class actions.9 That move swept more state-law class actions out of state courts10-especially state courts that had shown a willingness to interpret their class action rules more loosely than federal courts had interpreted Rule 23 after 1995.11CAFA's effect has been magnified by three developments subsequent to its passage. The first was Shady Grove v. Allstate Insurance.12 Although the Court's fractured reasoning left the opinion without a majority for a critical aspect of the case, the present upshot of Shady Grove is that federal courts are free to apply Rule 23 (the federal class action rule) in diversity cases-even when a state court in the state in which the federal court sat would apply a less (or more) restrictive class action rule.13The second development was Wal-Mart v. Dukes}4 In WalMart, a bare majority of the Court interpreted the commonality requirement of Rule 23(a)(2) narrowly,15 and a unanimous Court construed the injunctive-relief requirement of Rule 23(b)(2) narrowly.16 Along the way, the Court also settled-or at least strongly intimated its views on-a number of other issues that had been percolating in the lower courts: whether courts should engage in a rigorous analysis of the merits of a claim when deciding class certification (yes);17 whether class members must be afforded an optout right whenever the class asserts claims for monetary relief (yes), and whether a court may use a trial-by-statistics approach to ease potentially class-destroying difficulties of trying individual claims for damages (no).19 For each of these questions, the Court settled on an interpretation of Rule 23 that constrained a potentially broader use of class actions.Third, the Court shut off the spigot for what was becoming a burgeoning class action practice in arbitration. In Stolt-Nielsen v. AnimalFeeds, the Court held that an arbitrator could not certify a class action in arbitration against a party's wishes unless the arbitration clause provided for class arbitration.20 Then, in AT&T Mobility v. Concepcion, the Court held that an arbitration clause in which a company refused to consent to class arbitration with its customers was enforceable under the Federal Arbitration Act-even though the small amount at stake made the customers' pursuit of individual arbitration so unlikely that the arbitration clause was unconscionable under state law.21Despite these developments, to describe class actions as either "dead" or in their death throes is to overstate the case. Many class actions still proceed in state courts,22 and others are taken to arbitration. …