[Congressional Record Volume 145, Number 73 (Wednesday, May 19, 1999)]
[Extensions of Remarks]
[Page E1026]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      INTRODUCTION OF THE INTERSTATE CLASS ACTION JURISDICTION ACT

                                 ______
                                 

                           HON. BOB GOODLATTE

                              of virginia

                    in the house of representatives

                        Wednesday, May 19, 1999

  Mr. GOODLATTE. Mr. Speaker, today I rise on behalf on my colleagues 
Mr. Boucher, Mr. Bryant and Mr. Moran of Virginia to introduce 
important bipartisan legislation to correct a serious flaw in our 
federal jurisdiction statutes. In recent years, the number of class 
action filings has risen dramatically and the large majority of these 
cases are brought in state courts. A 1999 survey indicates that the 
number of state court class actions pending against surveyed companies 
has increased by 1,042 percent over the ten-year period 1988-1998. This 
increase in class action filings has been accompanied by a number of 
abuses of our judicial system.
  Interstate class actions are flooding into certain state courts 
because those courts tend to favor local lawyers in cases against out-
of-state companies; however, state courts are often ill-equipped to 
handle such cases. Many state courts don't have either the support 
staff and other resources or the complex litigation experience to 
handle interstate class actions, which often involve thousands (and 
sometimes millions) of purported class members.
  In addition to forum-shopping, lawyers frequently exploit major 
loopholes in federal jurisdiction statutes to block the removal of 
class actions that belong in federal court. For example, plaintiffs' 
counsel may name parties that are not really relevant to the class 
claims in an effort to destroy diversity. In other cases, counsel may 
waive federal law claims or shave the amount of damages claimed to 
ensure that the action will remain in state court.
  Some state courts use very lax class certification criteria, making 
virtually any controversy subject to class action treatment and 
allowing state courts to hear purely interstate class actions. The 
result is that state courts are increasingly deciding out-of-state 
residents' claims against out-of-state companies under other states' 
laws. When state courts preside over class actions involving claims of 
residents of more than one state (especially nationwide class actions), 
they end up dictating the substantive laws of other states, sometimes 
over the protests of those other states.
  At present, our federal diversity jurisdiction statutes essentially 
provide that interstate disputes involving significant sums of money 
may be heard in a federal court. But because class actions (as we now 
know them) did not exist when those statutes were initially framed, 
class actions were omitted, leading to outrageous results. For example, 
under current law, a citizen of one state usually may bring in a 
federal court a simple $75,001 slip-and-fall action against a party 
from another state. But if a class of 25 million product owners living 
in all 50 states bring claims collectively worth $15 billion against 
the product manufacturer, that lawsuit usually must be heard in a state 
court.
  Our legislation offers a solution to class action abuse by making it 
easier for plaintiff class members and defendants to remove class 
actions to federal court, where cases involving multiple state laws are 
more appropriately heard.
  This legislation does not limit the ability of anyone to file a class 
action lawsuit. It does not change anybody's rights to recovery. It 
merely closes the loophole, allowing federal courts to hear big 
lawsuits involving truly interstate issues, while ensuring that purely 
local controversies remain in state courts. This is exactly what the 
framers of the Constitution had in mind when they established federal 
diversity jurisdiction.
  I urge my colleagues to support this important legislation.

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