Future attorneys’ fees can be considered in calculating the class action fairness act’s amount in controversy

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In the recent employment class action case of Fritsch v. Swift Transportation Company of Arizona, LLC, the Ninth Circuit Court of Appeals ruled that future recoverable attorneys’ fees can be considered in determining the amount in controversy under the Class Action Fairness Act of 2005 (“CAFA”). The Ninth Circuit opined “We have held that attorneys’ fees awarded under fee-shifting statutes or contracts are part of the amount in controversy, and that the amount in controversy includes all relief to which the plaintiff is entitled if the action succeeds.” “We may not depart from this reasoning to hold that one category of relief—future attorneys’ fees—are excluded from the amount in controversy as a matter of law.”

CAFA’s $5 million amount in controversy threshold is a requirement that a defendant seeking to remove a class action to federal court will need to show. Enacted by Congress on February 18, 2005, CAFA significantly expanded federal diversity jurisdiction over class and mass actions. CAFA changed the amount in controversy requirement for determining whether diversity jurisdiction exists over class actions. To qualify as a class action under CAFA, the amount in controversy must exceed the sum or value of $5 million, exclusive of interest and costs. When determining whether CAFA’s $5 million jurisdictional threshold is met, the claims of individual class members are aggregated. The court may consider the following types of relief when calculating the amount in controversy: compensatory, statutory, punitive, attorneys’ fees, and equitable relief.

Although this matter is a class action employment action, this ruling has practical implications for defendants in general who opt to remove class action cases from state court to federal court under CAFA - by providing another means of showing the $5 million threshold.