Wage Law

From the American Enterprise Institute for Public Policy Research:

On February 18, 2005, President George W. Bush signed into law the Class Action Fairness Act (CAFA) of 2005, the most significant civil justice reform of his administration. Has it succeeded in curbing abusive class actions? Because litigation tactics are dynamic, the long-term answer will depend in part on the plaintiffs bar's response.

CAFA addressed two sizable problems in the area of class action litigation by expanding federal jurisdiction over class actions and scrutiny over class action settlements. First, the plaintiffs bar would use "magnet jurisdictions," sometimes called "judicial hellholes," to bring cases of nationwide significance in local courts that tended to rubber-stamp illegitimate certifications.[2] Such certifications, by creating aggregate litigation in which individualized issues predominated, prevented defendants from being able to adequately defend themselves, and created settlement pressure on defendants where none would otherwise exist.[3] Second, there were negotiated settlements (often approved by these same courts) that rewarded attorneys at the expense of the unrepresented class members. In one notorious example involving an Alabama state court class action settlement against Bank of Boston approved by an elected judge, class members found that their escrow accounts faced deductions because the attorneys' fees exceeded the minimal recovery for the class.[4] Even more common and less extreme "coupon" settlements involved situations in which class members received rarely redeemed coupons of questionable value while attorneys received fees reflecting the exaggerated face value of the entire coupon issue.

Two years later, how well is CAFA working? What remains to be done?

The entire essay can be downloaded at http://www.aei.org/docLib/20070327_Liability.pdf.