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CAFA Jurisdiction Ruling Shakes Class Action Bar

Practitioners on both the defense and plaintiff sides were left scratching their heads when an 11th Circuit panel handed down its opinion in Cappuccitti v. DirecTV, Inc. on July 19. The case involved a class action lawsuit that consumers brought in Georgia federal court to challenge the early-cancellation fees that DirecTV imposed against its cable television subscribers. The issue before the 11th Circuit was DirecTV's motion to compel arbitration in the case, which the U.S. District Court for the Northern District of Georgia denied.

Instead of addressing the arbitration issue, however, the 11th Circuit ruled sua sponte that it lacked jurisdiction to hear the case, which it then remanded to the district court for dismissal. The way the court reached its conclusion has raised eyebrows: For the case to belong in federal court, it said, at least one of the class members' individual claims had to exceed $75,000. It cited Section 1332(a) of the U.S. Code (Section 1332 governs diversity jurisdiction).

"The surprise that this created in the class action bar, both the defense and plaintiffs' sides, was immense because everybody understood that Congress was actually doing exactly that," says Archis Parasharami, a partner at Mayer Brown. "Cases involving small claims aggregated into massive cases were exactly the type of potentially abusive claims Congress wanted removed to federal courts, on the theory they would give the defense a fairer shake."

If the ruling stands, it could have a massive impact on class actions in the 11th Circuit.

Associate Editor

Melissa Maleske

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