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The common fund exception is a narrow exception to both the non-aggregation rule and the rule that at least one class member must have a claim of $75,000 in order to establish ordinary diversity jurisdiction. Courts have recognized that, “when several plaintiffs unite to enforce a single title or right, in which they have a common and undivided interest,” the claims may be aggregated for purposes of the amount-in-controversy requirement.⁵⁹

Unless the common fund exception applies, the amount in controversy for non-CAFA class actions is calculated for individual plaintiffs, rather than the class as a whole. In computing the amount in controversy, the court must consider potential compensatory, statutory, and punitive damages, some but not all attorney fees, and the value of injunctive and other equitable relief. Application of these principles is fraught with difficulty and debate.

Punitive damages that are colorable under the facts and the law count toward the $75,000 amount.⁶² The claim for punitive damages is viewed as having the same character as the underlying compensatory claims.⁶³ If the underlying claims are individual, the punitive damages award cannot be treated as a common fund.⁶⁴ Instead, the prospective punitive damage award must be pro-rated among the estimated number of class members.

If a statutory claim allows for multiple or treble damages, then the actual damages pleaded should be multiplied to determine the amount in controversy.⁶⁶ As in the case of common-law punitive damages, multiple damages for the whole class are not aggregated and applied to the named representative or treated as a common fund.⁶⁷

Issues presented by requests for equitable relief, such as injunctive relief or disgorgement, include whether (1) the cost of compliance by the defendant can be counted and, (2) if that is permissible under any circumstances, the jurisdictional amount can be satisfied by a request that the defendant be ordered to disgorge or refund amounts to an entire class or to stop overcharging.

The CAFA by its terms applies “to any class action before or after the entry of a class certification order by the court with respect to that action” and defines a class action as “any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action.”⁸⁹ Thus, federal jurisdiction attaches (assuming other conditions are met) when a complaint is filed that includes class allegations; plaintiffs m

By its terms, the CAFA does not apply to class actions with fewer than 100 class members, aggregating all subclasses.¹⁰³ For discussion of burdens of proof when elements of CAFA jurisdiction are in dispute, see § 2.5, infra.

Under the CAFA, federal diversity jurisdiction is expanded to encompass most class actions in which any class member is a citizen of a state different from any defendant, provided the other conditions of the statute are met.¹⁰⁴ This diversity is so broadly defined that it is satisfied if all the class members reside in the same state as the defendant but at least one member of the class is a resident alien.¹⁰⁵ Nevertheless, diversity must be properly pleaded in the complaint, o

The CAFA grants federal jurisdiction for class actions meeting its substantive criteria that were “commenced” on or after February 18, 2005.¹³² The date of commencement is to be decided under the applicable state law.¹³³ In the years after the CAFA was enacted, however, courts have had to determine whether certain activity occurring after the original filing constitutes “commencement” for purposes of removal jurisdiction under the CAFA.¹³⁴

This appendix analyzes state laws and regulations dealing with service contracts, extended warranties, and mechanical breakdown insurance. It covers laws of general applicability and those applying to motor vehicles and electronic products, but does not cover service contract laws applying to homes or condominiums. This appendix also does not cover the many state statutes regulating service contracts for portable electronic devices. Practitioners should use this appendix for easy reference to their own state’s statute, and to compare their statute with other states’ laws.

Ala. Code §§ 8-32-1 to 8-32-12

Alaska Stat. § 45.25.620

Ariz. Rev. Stat. Ann. §§ 20-206, 20-356, 20-357, 20-1095 to 20-1095.10, 20-1110.01

Ark. Code Ann. §§ 4-90-501 to 4-90-512

Cal. Civ. Code §§ 1794.4, 1794.45 (West)

Colo. Rev. Stat. §§ 42-11-101 to 42-11-109

Conn. Gen. Stat. § 42-260

D.C. Code § 28-3904

It shall be an unlawful trade practice, whether or not any consumer is in fact misled, deceived or damaged thereby, for any person to fail to supply to a consumer a copy of a service contract which the consumer executes (§ 28-3904(q)).

D.C. Code §§ 31-2351.01 to 31-2351.13

Del. Code Ann. tit. 18, §§ 917, 918

Defines service contract, maintenance agreement, warranty, and vehicle theft protection product warranty (§ 918). None of these are insurance, unless the insurance laws are “made expressly applicable thereto” (§ 917).

Fla. Stat. §§ 634.011 to 634.288

Ga. Code Ann. § 33-7-6

Haw. Rev. Stat. § 431:1-209(14)

Included in definition of casualty insurance and thus subject to insurance regulations is any contract of warranty or guaranty which promises service maintenance, parts replacement, repair, money, or any other indemnity in the event of loss of or damage to a motor vehicle or any part thereof, if made by a party conducting an insurance business; provided that service contracts, as defined and meeting the requirements of Haw Rev. Stat. ch. 481X, shall not be subject to Haw Rev. Stat. ch. 431.

Idaho Code §§ 41-506(b), 41-1812, 41-6201 to 41-6211

215 Ill. Comp. Stat. §§ 152/1 to 152/99

Ind. Code §§ 27-1-43.2-1 to 27-1-43.2-19

These provisions are effective November 26, 2018. A service contract is not insurance (§ 27-1-43.2-10(a)). Other than for a motor vehicle service contract, the contract company must provide proof of financial solvency (§§ 27-1-43.2-11(a), 27-1-43.2-14). For any contract, the contractor must make disclosures to the consumer (§ 27-1-43.2-12).