Discuss the consequences of the Class Action Fairness Act of 2005 on the plaintiffs and the defendants

Question

What will be an ideal response?

Answer 1

The Class Action Fairness Act had several intended goals. First, it sought to limit the enormous legal fees attorneys representing plaintiff classes frequently receive as part of their service. They now receive compensation based on the actual amount class members claim as compensation, rather than on the gross sum awarded to the plaintiff class. In addition, the court must first approve the award the plaintiff class members are to receive to ensure that the award does not violate the defendants' due process rights. If the attorney's fees are not to be determined by the amount of the award, the attorney's compensation is to be limited to actual time spent working on the case.
Second, the act was written to allow the defendants in class action lawsuits to have greater access to federal courts. The act provides federal courts with jurisdiction over any class action where there is partial diversity of citizenship. The federal courts also have jurisdiction whenever any plaintiff or defendant is a foreign state or the citizen of a foreign state. There must also be at least five million dollars in controversy. These new requirements allow more class actions to fall within federal jurisdiction. Business defendants are typically happy with this change, as they tend to face smaller awards in federal courts than in state courts. Despite the greater access to federal courts, the act also allows federal courts some discretion in accepting jurisdiction.
Finally, the act was intended to protect the interests of the individual class members and guarantee them equitable compensation. The act forbids any settlement that would result in a net loss to the class members. That is, class members cannot accept a settlement that does not cover their damages, unless the court decides that other, nonmonetary benefits are valuable enough to outweigh the net monetary loss. In addition, class members cannot be awarded different monetary amounts based upon their geographical location. All class members, barring differences in their actual damages, are awarded the same monetary amount.