Class Action Fairness Act: Removal, Remand, and Exceptions

Removal under the Class Action Fairness Act lets a defendant move a qualifying class action from state court to federal court if the case involves at least 100 class members, more than $5,000,000 in total claims, and at least one class member who lives in a different state than at least one defendant. The notice of removal goes to the federal district court covering the state court’s location, must be filed within 30 days of the paper showing the case qualifies, and does not require the other defendants to agree.¹

What Qualifies a Class Action for Removal

Three thresholds have to be met together. The proposed class must include at least 100 members. The claims of all class members, added together, must exceed $5,000,000. And at least one plaintiff class member must be a citizen of a different state than at least one defendant.²

Both the diversity rule and the dollar rule are looser than in ordinary federal diversity cases. Traditional diversity jurisdiction demands complete diversity: every plaintiff must be from a different state than every defendant. CAFA needs only one class member on one side of that line, which is why it is called minimal diversity. And where ordinary diversity requires each individual plaintiff to claim more than $75,000, CAFA lets the court aggregate every class member’s claim to reach the $5,000,000 mark. Thousands of small claims can add up to a removable case.²

Citizenship is measured as of the date the complaint (or amended complaint) was filed, not the date of removal or of the court’s jurisdictional ruling. If the original complaint didn’t establish federal jurisdiction, the relevant date shifts to whichever later pleading or paper first showed the case qualified.²

Filing the Notice of Removal

CAFA’s removal mechanics are streamlined by design. A single defendant can file the notice of removal on its own. Ordinary removal requires unanimous defendant consent, and one holdout can block the move; CAFA eliminates that veto for qualifying class actions.¹

The notice is filed in the federal district court for the district covering the state court where the case was filed. The clock is 30 days from the defendant’s receipt of the initial pleading, summons, or other paper showing the case qualifies for removal.³

One deadline that applies elsewhere does not apply here. Standard diversity removal has a one-year cap: if you don’t remove within a year of the case being filed, you lose the option. CAFA has no such cap. A qualifying class action can be removed even after sitting in state court for years.¹

Once the notice is filed, the defendant delivers written notice to all opposing parties and to the state court clerk. At that point the state court must stop all proceedings. The state case is effectively frozen unless and until a federal court remands it.³

Who Has to Prove the Amount in Controversy

The defendant carries the initial burden. In the removal paperwork, the defendant only needs to allege that the aggregated claims exceed $5,000,000. If the plaintiff pushes back, the defendant then has to prove by a preponderance of the evidence that the threshold is met. When a plaintiff’s complaint specifically alleges damages below $5,000,000, some courts raise the bar further and require the defendant to show to a legal certainty that the true amount exceeds the statutory minimum.

Cases the Federal Court Sends Back

CAFA has safety valves so genuinely local disputes don’t sit in federal court just because the arithmetic works. Two are mandatory, one is discretionary.

Home State Exception

The federal court must decline jurisdiction when two-thirds or more of the proposed class members and the primary defendants are all citizens of the state where the case was filed. If almost everyone involved is local, the case goes back.²

Local Controversy Exception

The second mandatory exception has a tighter checklist. All four of the following must be true:

More than two-thirds of class members are citizens of the state where the case was filed.
At least one defendant whose conduct is central to the claims, and from whom significant relief is sought, is a citizen of that state.
The injuries at the heart of the case occurred primarily in that state.
No other class action making the same or similar factual allegations against any of the same defendants was filed during the three years before this case.

Courts require detailed evidence, such as residency records, to verify the percentages. The stringent requirements are meant to keep parties from drawing class definitions in ways that dodge federal oversight.²

Discretionary Decline

When more than one-third but less than two-thirds of the class members and the primary defendants are local, the federal court can decide either way. The statute directs courts to weigh six factors:

Whether the claims involve matters of national or interstate interest.
Whether the claims will be governed by the filing state’s laws or by the laws of other states.
Whether the case was pleaded in a way that tries to avoid federal jurisdiction.
Whether the chosen forum has a genuine connection to the class members, the alleged harm, or the defendants.
Whether citizens of the filing state substantially outnumber citizens from any other single state, and whether the rest of the class is spread across many states.
Whether similar class actions against the same defendants were filed in the prior three years.

This middle zone is where most remand fights happen. No single factor decides the outcome.⁴

Appealing a Remand Order

In ordinary removal, a remand order is essentially unreviewable. CAFA changed that. Either party can ask the court of appeals for permission to appeal a decision granting or denying remand. The application must be filed within 10 days of the order.¹

The court of appeals has discretion to accept or refuse the appeal. If it accepts, it must resolve the appeal within 60 days. That window can be extended up to 10 days for good cause, or by any amount if all parties agree. If the appeals court doesn’t issue a final judgment within the window, the appeal is automatically denied.¹

The 10-day window is a hard cutoff. Missing it forecloses appellate review no matter how strong the merits.

Class Actions CAFA Does Not Reach

Some categories fall outside CAFA’s jurisdictional grant and therefore cannot be removed under it. Class actions involving covered securities under federal securities laws are excluded, as are cases about the internal affairs or governance of a corporation or business entity that arise under the laws of the state of incorporation. Claims relating to rights, duties, or obligations created by a security as defined under the Securities Act of 1933 are also excluded.²

CAFA also does not apply when the primary defendants are states, state officials, or other government entities against whom a federal court may be unable to grant relief.⁴

Mass Actions Follow a Different Amount Rule

CAFA also reaches “mass actions,” which are cases where 100 or more plaintiffs file individual monetary claims proposed to be tried together because they share common questions of law or fact. Each plaintiff in a mass action keeps a separate claim.⁴

The amount-in-controversy rule works differently here. Class action claims are aggregated against the $5,000,000 threshold. Mass action plaintiffs, by contrast, must each independently meet the standard $75,000 amount-in-controversy requirement. Federal jurisdiction attaches only to those plaintiffs whose claims clear that bar. Plaintiffs whose claims fall below $75,000 stay in state court even if others in the same mass action move to federal court.⁴

1
Office of the Law Revision Counsel. 28 USC 1453 – Removal of Class Actions
2
Office of the Law Revision Counsel. 28 USC 1332 – Diversity of Citizenship; Amount in Controversy; Costs
3
Office of the Law Revision Counsel. 28 USC 1446 – Procedure for Removal of Civil Actions
4
Office of the Law Revision Counsel. 28 US Code 1332 – Diversity of Citizenship; Amount in Controversy; Costs