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Congress Passes the Class Action Fairness Act of 2005

Volume 4, Issue 3
March 30, 2005

On February 18, 2005, the President signed the Class Action Fairness Act of 2005 ("the Fairness Act"), which is designed to curb excessive class action jury awards in state courts by expanding the jurisdiction of federal courts over state-law-based class actions, and by restricting the types of attorneys' fees recoverable in class action cases.

Under the Fairness Act, defendants can generally remove a class action to federal court if the amount in controversy exceeds $5 million, the case involves more than 100 possible class members, and at least one defendant and one plaintiff are citizens of different states. However, the Fairness Act also allows federal courts to decline jurisdiction over such class actions after considering a number of factors, including whether or not the case involves matters of national or interstate interest.

For Nevada employers, the potential impact of the Fairness Act on employment class actions is still uncertain. However, given that employment-related class actions in Nevada tend to be based upon federal law, as a result of the more generous damages provisions found in federal statutes, the Fairness Act is not likely to be a great source of relief for employers.

To review the text of the act, visit: http://news.findlaw.com/hdocs/docs/clssactns/cafa05.pdf

Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.