[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1875 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 1875

To amend title 28, United States Code, to allow the application of the 
   principles of Federal diversity jurisdiction to interstate class 
                                actions.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 19, 1999

   Mr. Goodlatte (for himself, Mr. Boucher, Mr. Bryant, Mr. Moran of 
   Virginia, Mr. DeLay, Mr. Armey, Mr. Hyde, Mr. Sensenbrenner, Mr. 
 McCollum, Mr. Gekas, Mr. Smith of Texas, Mr. Gallegly, Mr. Canady of 
 Florida, Mr. Chabot, Mr. Barr of Georgia, Mr. Hutchinson, Mr. Cannon, 
Mr. Rogan, Mrs. Bono, Mr. Bliley, Mr. Cox, Mr. Cramer, Mr. Dreier, Mr. 
 Goode, Mr. Holden, Mr. John, Mrs. Johnson of Connecticut, Mr. Linder, 
  Mr. Oxley, Mr. Stenholm, Mr. Sununu, and Mr. Upton) introduced the 
  following bill; which was referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
To amend title 28, United States Code, to allow the application of the 
   principles of Federal diversity jurisdiction to interstate class 
                                actions.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND REFERENCE.

    (a) Short Title.--This Act may be cited as the ``Interstate Class 
Action Jurisdiction Act of 1999''.
    (b) Reference.--Whenever in this Act reference is made to an 
amendment to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provision of title 
28, United States Code.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) as recently noted by the United States Court of Appeals 
        for the Third Circuit, interstate class actions are ``the 
        paradigm for Federal diversity jurisdiction because, in a 
        constitutional sense, they implicate interstate commerce, 
        invite discrimination by a local State, and tend to attract 
        bias against business enterprises'';
            (2) most such cases, however, fall outside the scope of 
        current Federal diversity jurisdiction statutes;
            (3) that exclusion is an unintended technicality, inasmuch 
        as those statutes were enacted by Congress before the rise of 
        the modern class action and therefore without recognition that 
        interstate class actions typically are substantial 
        controversies of the type for which diversity jurisdiction was 
        designed;
            (4) Congress is constitutionally empowered to amend the 
        current Federal diversity jurisdiction statutes to permit most 
        interstate class actions to be brought in or removed to Federal 
        district courts; and
            (5) in order to ensure that interstate class actions are 
        adjudicated in a fair, consistent, and efficient manner and to 
        correct the unintended, technical exclusion of such cases from 
        the scope of Federal diversity jurisdiction, it is appropriate 
        for Congress to amend the Federal diversity jurisdiction and 
        related statutes to allow more interstate class actions to be 
        brought in or removed to Federal court.

SEC. 3. JURISDICTION OF DISTRICT COURTS.

    (a) Expansion of Federal Jurisdiction.--Section 1332 is amended by 
redesignating subsections (b), (c), and (d) as subsections (c), (d), 
and (e), respectively, and by inserting after subsection (a) the 
following:
    ``(b)(1) The district courts shall have original jurisdiction of 
any civil action which is brought as a class action and in which--
            ``(A) any member of a proposed plaintiff class is a citizen 
        of a State different from any defendant;
            ``(B) any member of a proposed plaintiff class is a foreign 
        state and any defendant is a citizen of a State; or
            ``(C) any member of a proposed plaintiff class is a citizen 
        of a State and any defendant is a citizen or subject of a 
        foreign state.''
As used in this paragraph, the term `foreign state' has the meaning 
given that term in section 1603(a).
    ``(2)(A) The district courts shall not exercise jurisdiction over a 
civil action described in paragraph (1) if the action is--
            ``(i) an intrastate case,
            ``(ii) a limited scope case, or
            ``(iii) a State action case.
For purposes of this subparagraph, the term `intrastate case' means a 
class action in which the record indicates that the claims asserted 
therein will be governed primarily by the laws of the State in which 
the action was originally filed and the substantial majority of the 
members of all proposed plaintiff classes are citizens of that State of 
which the primary defendants are also citizens. For purposes of this 
subparagraph, the term `limited scope case' means a class action in 
which the record indicates that all matters in controversy asserted by 
all members of all proposed plaintiff classes do not in the aggregate 
exceed the sum or value of $1,000,000, exclusive of interest and costs, 
or a class action in which the number of members of all proposed 
plaintiff classes in the aggregate is less than 100. For purposes of 
this subparagraph, the term `State action case' means a class action in 
which the primary defendants are States, State officials, or other 
governmental entities against whom the district court may be foreclosed 
from ordering relief.
    ``(3)(A) Paragraph (1) shall not apply to any claim concerning a 
covered security as that term is defined in section 16(f)(3) of the 
Securities Act of 1933 and section 28(f)(5)(E) of the Securities 
Exchange Act of 1934.''.
    (b) Conforming Amendment.--Section 1332(c) (as redesignated by this 
section) is amended by inserting after ``Federal courts'' the 
following: ``pursuant to subsection (a) of this section''.
    (c) Determination of Diversity.--Section 1332, as amended by this 
section, is further amended by adding at the end the following:
    ``(f) For purposes of subsection (b), a member of a proposed class 
shall be deemed to be a citizen of a State different from a defendant 
corporation only if that member is a citizen of a State different from 
all States of which the defendant corporation is deemed a citizen.''.

SEC. 4. REMOVAL OF CLASS ACTIONS.

    (a) In General.--Chapter 89 is amended by adding after section 1452 
the following:
``Sec. 1453. Removal of class actions
    ``(a) In General.--A class action may be removed to a district 
court of the United States in accordance with this chapter, except that 
such action may be removed--
            ``(1) by any defendant without the consent of all 
        defendants; or
            ``(2) by any plaintiff class member who is not a named or 
        representative class member of the action for which removal is 
        sought, without the consent of all members of such class.
    ``(b) When Removable.--This section shall apply to any class action 
before or after the entry of any order certifying a class.
    ``(c) Procedure for Removal.--The provisions of section 1446(a) 
relating to a defendant removing a case shall apply to a plaintiff 
removing a case under this section. With respect to the application of 
subsection (b) of such section, the requirement relating to the 30-day 
filing period shall be met if a plaintiff class member who is not a 
named or representative class member of the action for which removal is 
sought files notice of removal no later than 30 days after receipt by 
such class member, through service or otherwise, of the initial written 
notice of the class action provided at the court's direction.
    ``(d) Exception.--This section shall not apply to any claim 
concerning a covered security as that term is defined in section 
16(f)(3) of the Securities Act of 1933 and section 28(f)(5)(E) of the 
Securities Exchange Act of 1934.''.
    (b) Removal Limitations.--Section 1446(b) is amended in the second 
sentence--
            (1) by inserting ``, by exercising due diligence,'' after 
        ``ascertained''; and
            (2) by inserting ``(a)'' after ``section 1332.''
    (c) Technical and Conforming Amendments.--The table of sections for 
chapter 89 is amended by adding after the item relating to section 1452 
the following:

``1453. Removal of class actions.''.
    (d) Application of Substantive State Law.--Nothing in this section 
or the amendments made by this section shall alter the substantive law 
applicable to an action to which the amendments made by section 2 of 
this Act apply.
    (e) Procedure After Removal.--Section 1447 is amended by adding at 
the end the following new subsection:
    ``(f) If, after removal, the court determines that no aspect of an 
action that is subject to its jurisdiction solely under the provisions 
of section 1332(b) may be maintained as a class action under Rule 23 of 
the Federal Rules of Civil Procedure, it shall dismiss the action. An 
action dismissed pursuant to this subsection may be filed again in a 
State court, but any such refiled action may be removed again if it is 
an action of which the district courts of the United States have 
original jurisdiction. In any action dismissed pursuant to this 
subsection, the period of limitations for any claim that was asserted 
in the action on behalf of any named or unnamed member of any proposed 
class shall be deemed tolled to the full extent provided under Federal 
law.''.

SEC. 5. APPLICABILITY.

    The amendments made by this Act shall apply to any action commenced 
on or after the date of the enactment of this Act.
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