What Is the Class Action Fairness Act (CAFA)?

The Class Action Fairness Act of 2005 (CAFA) is a federal law that gives federal courts jurisdiction over most large class actions and adds protections for class members in certain settlements. It is the reason many consumer class actions are heard in federal court rather than state court.

What CAFA does

• ✓Federal jurisdiction: federal courts can hear class actions where the total amount in controversy exceeds $5 million, there are at least 100 class members, and at least one class member is a citizen of a different state from any defendant
• ✓Removal: defendants can move qualifying cases from state court to federal court
• ✓Coupon settlements: attorneys' fees tied to coupons must be based on the value of coupons actually redeemed, and courts must scrutinize these deals
• ✓Official notice: defendants must notify the US Attorney General and relevant state officials of a proposed settlement, and final approval cannot come until a waiting period after that notice

CAFA also includes exceptions that keep some primarily local cases in state court, such as when most class members and the main defendant are from the same state.

Why it matters to you

You rarely need to think about CAFA directly, but it shapes what you see. Because of it, most nationwide consumer settlements run under federal Rule 23 and appear on federal dockets you can look up. Its notice requirement gives state attorneys general a chance to weigh in. Its coupon rules make it harder to settle a case with low-value coupons while lawyers collect large fees.

A simple example

A consumer files a class action in state court on behalf of buyers nationwide. The company removes the case to federal court under CAFA. When a settlement is reached, the company sends notice to state and federal officials, and the judge waits out the required period before granting final approval.

For class members, the visible effects are practical. Federal courts follow uniform procedural rules, federal dockets are searchable online, and settlement approvals tend to follow the same Rule 23 framework. That consistency makes it easier to check a case's status and compare how different settlements are run.

Related terms

See coupon settlement and nationwide class, both closely tied to CAFA.

SettleScout tracks open federal and state settlements and matches them to the companies you use.