2.1.10 Reason #10: Defending Against a Collection Action Allows for a Class Action to Stay in State Court

The Class Action Fairness Act (CAFA) has resulted in many state court consumer class actions being removed to federal court.²³ Class actions can avoid removal and stay in state court only if they allege state law causes of action and include fewer than 100 class members, or seek less than $5 million. Otherwise they can be removed to federal court unless two-thirds of the class members and all the primary defendants are residents of the state.²⁴

Defense against a consumer collection action provides an exception. A class counterclaim brought in the collection action cannot be removed to federal court, even if it could be removed if brought as an affirmative action.²⁵ The CAFA allows only the defendant, not the plaintiff, to remove a case. Thus, class counterclaims can stay in state court even if they allege federal causes of action.²⁶