CAFA (Class Action Fairness Act)

The Class Action Fairness Act of 2005 expanded federal jurisdiction over class actions and mass actions by granting federal courts original jurisdiction over cases with more than 100 plaintiffs where the aggregate amount in controversy exceeds $5 million and minimal diversity exists between any plaintiff and any defendant. CAFA effectively moved large, multi-state class litigation from state courts — where plaintiffs historically enjoyed more favorable certification standards — into federal courts, accelerating the shift toward MDL as the preferred vehicle for coordinating large personal injury dockets. For litigation funders, CAFA jurisdiction determinations matter because they establish whether a docket proceeds in federal court (subject to MDL consolidation) or remains in state court (potentially in a plaintiff-favorable jurisdiction), which materially affects settlement leverage and recovery probability. Mass tort funders must also assess whether their funded docket is at risk of CAFA-based removal challenges that could disrupt state court coordination strategies.

Because CAFA jurisdiction determines whether a large multi-state docket proceeds in federal court, subject to MDL consolidation, or remains in a potentially plaintiff-favorable state court, funders assess CAFA removal exposure early, since the forum question materially changes both settlement leverage and expected timeline. A docket funders expected to stay in state court that instead gets removed under CAFA can require a full underwriting reset around a different judge, different procedural rules, and a different consolidation pathway.