11th Circuit Reverses Course On Controversial CAFA Decision
On October 15, 2010, the Eleventh Circuit reversed course on a controversial decision interpreting the jurisdictional requirements of the Class Action Fairness Act of 2005 (“CAFA”). Vacating its earlier decision that was at odds with every other circuit to consider the issue, the Court held that CAFA plaintiffs are not required to allege that at least one of the plaintiffs suffered damages in excess of $75,000. In line with traditional CAFA interpretation, the Court held that plaintiffs need only satisfy the aggregate $5,000,000 amount in controversy requirement.
In its now-vacated July 2010 decision, Cappuccitti v. DirecTV, Inc., 611 F.3d 1252 (11th Cir. 2010) (“Cappuccitti I”), the Eleventh Circuit had held that, in addition to satisfying CAFA’s aggregate $5,000,000 amount in controversy requirement, at least one class plaintiff must satisfy the general diversity statute’s $75,000 amount in controversy requirement. Otherwise, reasoned the Court, federal courts would transform 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 plaintiffs sought to recover early termination fees from DirecTV that amounted to no more than $480 each and, thus, not a single plaintiff was able to satisfy the $75,000 amount in controversy requirement. For that reason, the Eleven Circuit ordered that the case be dismissed for lack of subject matter jurisdiction. The Eleventh Circuit’s decision would have forced many class actions to state court considering that a large number of class actions do not have a single plaintiff that can meet the $75,000 in damages requirement. The decision drew heavy criticism from academia, legal commentators, and even courts. One California federal district court referred to Cappuccitti as “misguided in both [its] reasoning and result.” In re DirecTV Early Cancellation Litigation, 2010 WL 3633079, at *10 (C.D. Cal. 2010).
The Eleventh circuit has now vacated its original decision and issued a replacement decision on October 15, 2010, Cappuccitti v. DirecTV, Inc., --- F.3d ----, 2010 WL 4027719 (11th Cir. 2010) (“Cappuccitti II”). Reversing course, Cappuccitti II unambiguously held that “[t]here is no requirement in a class action brought originally or on removal under CAFA that any individual plaintiff's claim exceed $75,000.” Accordingly, the Court held that plaintiffs had met CAFA’s jurisdictional requirements.
