[Congressional Record Volume 148, Number 28 (Wednesday, March 13, 2002)]
[House]
[Pages H847-H886]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CLASS ACTION FAIRNESS ACT OF 2002
The SPEAKER pro tempore. Pursuant to House Resolution 367 and rule
XVIII, the Chair declares the House in the Committee of the Whole House
on the State of the Union for the consideration of the bill, H.R. 2341.
{time} 1220
In the Committee of the Whole
Accordingly, the House resolved itself into the Committee of the
Whole House on the State of the Union for the consideration of the bill
(H.R. 2341) to amend the procedures that apply to consideration of
interstate class actions to assure fairer outcomes for class members
and defendants, to outlaw certain practices that provide inadequate
settlements for class members, to assure that attorneys do not receive
a disproportionate amount of settlements at the expense of class
members, to provide for clearer and simpler information in class action
settlement notices, to assure prompt consideration of interstate class
actions, to amend title 28, United States Code, to allow the
application of the principles of Federal diversity jurisdiction to
interstate class actions, and for other purposes, with Mr. Linder in
the chair.
The Clerk read the title of the bill.
The CHAIRMAN. Pursuant to the rule, the bill is considered as having
been read the first time.
Under the rule, the gentleman from Wisconsin (Mr. Sensenbrenner) and
the gentleman from Michigan (Mr. Conyers) each will control 30 minutes.
The Chair recognizes the gentleman from Wisconsin (Mr.
Sensenbrenner).
Mr. SENSENBRENNER. Mr. Chairman, I yield myself such time as I may
consume.
Mr. Chairman, I rise in strong support of H.R. 2341, the Class Action
Fairness Act of 2002. Last August, The Washington Post Editorial Board
wrote that ``no portion of the American civil justice system is more of
a mess than the world of class actions. None is in more desperate need
of policymakers' attention.''
Mr. Chairman, the Post almost got it right, except that the world of
class action litigation is not a mess, it is a joke. The examples speak
for themselves:
An airline price-fixing settlement produced $16 million in attorneys'
fees that only provided a $25 credit for class members, if they
purchased an additional airline ticket for more than $250.
The Bank of Boston accounting settlement, which resulted in $8.5
million in attorneys' fees but actually cost class members around $80
apiece. And if that was not bad enough, the plaintiffs' attorneys in
this settlement actually sued the class members for an additional $25
million.
In Mississippi, an asbestos settlement rewarded class members from
Mississippi as much as 18 times more than class members from other
States. In another case, a class action settlement against Cheerios
over food additives produced $2 million in attorneys' fees and class
members only received coupons for more Cheerios.
While these settlements are a disgrace to the American legal system,
H.R. 2341 takes important steps to restore its dignity. First, it would
implement necessary safeguards against these and other unwieldy
settlements that give lawyers millions of dollars in fees and
individual class members a small fraction of any settlement or award.
Secondly, it would expand Federal diversity jurisdiction over
interstate class actions to help curb the serious abuses that continue
to take an enormous toll on our society.
A quick examination of the class action world reveals that the scales
of justice are unable to balance the interests of class action lawyers
and their clients. Currently, attorneys lump thousands and sometimes
millions of speculative claims into one class action and then race to
any available State courthouse in the hopes of a rubber stamp
settlement. Too often these settlements result in millions of dollars
of attorneys' fees and a mere pittance or coupons for class members in
exchange for an agreement not to sue in the future.
While these class actions serve no public policy or benefit to class
members, they are an enormous windfall for their attorneys. In
addition, because most State and Federal procedural rules require the
class members affirmatively opt out of the lawsuit, there are many
instances where people are dragged into class actions and do not know
how to get out. The only available advice is supposedly contained in
extremely complicated class action notices. Mr. Chairman, this system
does not protect the interests of class members.
While case after case demonstrates how greedy attorneys use abusive
class action settlements to game the system at the expense of their
clients, this bill provides long-needed protections to prevent this
from happening in the future. A consumer class action bill of rights
would prohibit the payment of bounties to class representatives, bar
the approval of unreasonable net-loss settlements, and establish a
plain-English requirement for settlement notices which clarify class
members' rights. Additionally, H.R. 2341 would require greater scrutiny
of coupon settlements and settlements involving out-of-state class
members.
With the filing of State court class actions having increased a
thousand percent over the last 10 years, the current system has
transformed certain State courts into the epicenter for class action
abuse. It is widely known that there are a handful of State courts
notorious for processing even the most speculative of class actions.
These courts end up rendering judgments that make national law and bind
people from all 50 States. This is exactly what diversity jurisdiction
in our Federal courts was intended to prevent.
The bill would rectify this situation by updating antiquated Federal
jurisdictional rules and providing our Federal courts with jurisdiction
over large interstate class actions. Currently, the Federal Rules
provide Federal court jurisdiction for disputes dealing with Federal
laws and disputes based upon complete diversity. That means that all
plaintiffs and defendants are residents of different States and that
every plaintiff's claim is valued at $75,000 or more. As a result,
Federal courts have jurisdiction over lawsuits between people from two
different States for just over $75,000 but do not have jurisdiction for
national class actions worth billions of dollars. Instead, these
massive lawsuits are being processed in various county courts
throughout the country.
The bill establishes a new minimal diversity standard for class
actions, requiring that any plaintiff and any defendant are residents
of different
[[Page H848]]
States and that the aggregate of all claims is at least $2 million.
While the bill does not require that all interstate class actions be
filed in Federal court, those that do satisfy this minimal diversity
requirement may be removed to Federal court. However, the bill also
excludes class actions dealing with one State, that are against a
State, or consist of less than 100 class members, and all securities
and corporate governance litigation.
Mr. Chairman, the Federal court is where these cases belong. The
Federal courts are equipped and practiced in handling complex,
interstate cases, unlike many of the county courts that have been the
source of rampant class action abuse. In addition, Federal courts are
trained to balance various State laws in similar complex legislation.
This Congress has already endorsed this notion when it designated a
single Federal district court to resolve all litigation relating to the
September 11 attacks and possible future litigation under the terrorism
reinsurance legislation.
Finally, Mr. Chairman, it is important to note that the cost of class
action abuses are not limited to the parties of these settlements. They
are shared by the American consumer. Because potential liability of a
class action is so enormous and unpredictable under the current system,
most defendants are willing to settle regardless of the merit. The cost
is then passed off to the consumer in the form of higher prices for
goods and services. This burdens the American economy and creates
unneeded threats against America's ingenuity.
Also, Mr. Chairman, these lawsuits pose a threat to the security of
America's retirement plans. While class action liability can be
enormous, news of these lawsuits on Wall Street can drive down a
particular stock by as much as 8 to 10 points in a day. For someone
depending upon a steady return on their invested retirement plan, this
drop should be extremely alarming.
{time} 1230
The bottom line is that H.R. 2341 is a common-sense approach to
promote national litigation efficiency and fairness to all potential
plaintiffs. I urge my colleagues to support this legislation.
Mr. Chairman, I reserve the balance of my time.
Mr. CONYERS. Mr. Chairman, I yield 3 minutes to the gentleman from
Virginia (Mr. Boucher), although he is not opposed to the action but
supports this bill, and we on this side do not.
(Mr. BOUCHER asked and was given permission to revise and extend his
remarks.)
Mr. BOUCHER. Mr. Chairman, I thank the gentleman from Michigan for
yielding me this time.
Cases that are truly national in scope are being filed as State class
actions before certain judges who employ an almost ``anything goes''
approach that renders virtually any controversy subject to
certification as a class action. In such an environment, defendants and
even plaintiff class members are routinely denied their range of normal
rights as there is a rush to certify classes and then a rush to settle
the cases.
Plaintiffs suffer a range of horrors. In order to prevent removal of
the case to Federal court, the amount sued for is sometimes kept
artificially below the $75,000 Federal jurisdictional amount even if
individual plaintiffs would be entitled to recover more.
In another effort to avoid removal to Federal court, the class action
complaint will sometimes not assert Federal causes of action that could
legitimately be raised, denying plaintiffs an opportunity for these
Federal claims to be heard.
Sometimes in the settlement of these cases, the plaintiffs get
coupons while their lawyers receive millions. And in at least one case,
the plaintiff class members at the end of the settlement had a debit of
$91 posted to their mortgage escrow account while their lawyers
received $8.5 million for their services. The plaintiffs had a net loss
because of the suit. They were worse off after the class action than
before it was filed.
Our legislation addresses these problems by permitting cases that are
truly national in scope to be removed to the Federal courts even if the
diversity of citizenship requirements of current law are not strictly
met. Instead, we look to the center of gravity of the case.
The target of these cases is usually a large out-of-State
corporation. The plaintiffs are usually consumers who reside in many
States. These cases are national in character and our bill would permit
removal to Federal court even if a local defendant has been sued for
the purpose of destroying complete diversity of citizenship.
Our reform is truly modest. The procedural remedy it contains
narrowly addresses a broad procedural abuse. I am pleased this
afternoon to urge its passage by the House.
Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
My friend from Virginia has suggested, I thought I heard him say that
this is a consumer-friendly piece of legislation. In the interest of
all the Members knowing about the objections to this bill, I bring to
them communications from the Consumer Federation of America, which
urges that we oppose the measure, indicating that this bill will create
numerous barriers to participating in class actions by permitting
defendants to remove most State class action suits to Federal court and
will clog the already-crowded Federal court system.
In addition, we have a letter from Public Citizen sent to myself and
the gentleman from Wisconsin (Mr. Sensenbrenner) which writes to
comment about the importance of class actions and how these so-called
``procedural changes'' will do great damage to groups of consumers who,
in trying to bring action against corporate defendants, would be forced
either to bring individual suits or to remove themselves to a Federal
docket for reasons that are not quite clear to most of us that are not
happy about the bill. Some of these notions are not in the public
interest.
I hope that, first of all, everybody voting on this bill will not
think that this is a consumer-supported bill. It is opposed by consumer
organizations and would clearly be damaging to consumers trying to get
into the court.
Public Citizen,
Washington, DC, March 5, 2002.
Hon. James Sensenbrenner,
Hon. John Conyers, Jr.,
Committee on the Judiciary, House of Representatives,
Washington, DC.
Re H.R. 2341, Class Action Fairness Act.
Dear Chairman Sensenbrenner and Ranking Member Conyers: We
are writing to comment on H.R. 2341 relating to class
actions. This bill would give the federal courts jurisdiction
over most class action lawsuits, and add a ``Consumer Bill of
Rights'' for members of a class.
Public Citizen has a long history of working to make class
actions fairer and more beneficial to plaintiffs. We have
participated in nearly forty cases to advocate for more
equitable settlement terms for consumers, oppose excessive
attorneys fees, and ensure that the class action vehicle is
not weakened. For the reasons stated in our testimony on an
earlier version of this bill, which is attached, we strongly
oppose this bill. We ask that you include these comments and
our earlier testimony in the hearing record.
The Importance of Class Actions
Proponents of this bill have expressed concerns that
businesses are being unfairly targeted by class action
litigation. We recognize that most businesses are working
hard to provide good products to American consumers. But the
fact is that many of the business enterprises that are being
sued are really no different from the old-fashioned flim-flam
men, taking the corporate guise for the legitimacy it
bestows, and also for its insulation from liability.
This is illustrated best by the tremendous problem of
predatory lending. There are lenders who pay bribes and
kickbacks to mortgage brokers, to induce them to sell out
their clients and sign them up for higher rather than lower
interest rate loans. There are mortgage companies accepting
kickbacks from overpriced title insurance companies. There is
also nickel-and-dime chiseling, turning $85 recording fees
into $100 recording fees, $325 appraisal fees into $500
appraisal fees, and the like. There are $10,000 credit life
insurance policies being packed on to loans, which have
little if any value to the consumer. The defendants in most
class actions are not acting like legitimate businesses, but
are simply fast-buck artists and con men.
In other cases, the businesses are legitimate and are
trying to provide valuable services, but corner-cutting or
overreaching has prevailed. These problems may be caused by
ambitious individual managers, a bean-counter mentality, a
chainsaw-CEO, groupthink, or just plain greed. As the Enron
scandal has demonstrated, in some cases you find that the
moral compass has failed.
In many of these cases, it is only the class action lawsuit
that can protect the victim. In some instances, the amount of
money stolen is too small on a per-person basis to support an
individual lawsuit; in others, there
[[Page H849]]
are vulnerable, unsophisticated consumers, who are unable to
recognize that they have been fleeced. The class action
device permits aggregation of cases and a more efficient
disposition of claims.
Federalism and Class Actions
When Congress perceives a problem in an area that is
traditionally handled by state and local government, it has
five legislative options. You can provide (1) grants or (2)
technical assistance to state and local governments to help
them solve the problem; (3) you can exercise concurrent
jurisdiction; (4) you can mandate state and local compliance
with your standards; or (5) you can pre-empt state law with
federal law.
Obviously, as you move down this list, you are usurping
local control to increasingly greater degrees. So it seems
odd that here, broad federal preemption has been the first
impulse, rather than the last resort, of those who suggest
that class action changes are needed.
We believe that this issue calls for the least onerous
federal intervention, for a number of reasons.
First, proponents of the legislation have argued that some
rural counties in a few states have become magnets for class
actions and invite abuse. If that is the case, the
appropriate response is at the state level, not in
Washington. Responding to due process and forum shopping
concerns expressed by corporate defendants, the Alabama
Supreme Court acted to abolish the practice of ex parte
certifications of class actions. We are confident that any
local problems will be resolved by state governments.
Second, the basic premise behind the bill, that federal
judges are ``better equipped'' to monitor cases (to quote
Senator Grassley) and ``likely to give closer scrutiny'' to
settlements (in the words of Senator Kohl) is untrue.
With regard to the ``better equipped'' proposition, it is
argued that federal judges have more ``complex litigation
experience'' than state judges. In fact, less than 1 percent
of the federal courts' caseload is class actions. Moreover,
of the 2,393 class actions filed in the entire federal system
in 2000, only 321 involved state law claims. The vast
majority of the cases involved uniquely federal law
questions, such as securities, civil rights, or antitrust.
Only 105 of the cases involved consumer fraud-type claims,
which are the mainstay of state court class actions.
That's about one consumer fraud claim per federal
district, not per judge. If a federal judge has experience
with this sort of class action, it is probably because he
or she was a state court judge before elevation to the
federal bench.
The authors of this bill acknowledge that certain state
court judges have expertise in particular areas--the bill
makes an exception for corporate governance cases to be heard
in Delaware. We believe that expertise among state judges is
not limited to Delaware chancery judges. The state court
bench in Arizona is perhaps the most innovative in the
nation, and has been at the forefront of reforms that have
spread to other states and to the federal system. In
responding to horror stories from a few rural counties, this
bill could take cases away from well-qualified state judges
in places like Phoenix or Chicago.
As to the claim that federal judges would do a better job
scrutinizing class action settlements, we believe that is,
unfortunately, not true. A number of attorneys have alleged
that a federal judge in Chicago recently approved an unfair
``reverse auction'' settlement, whereby defendants settled
with plaintiffs' firm that accepted the least benefits for
the class members. This case involved competing state and
federal class actions over ``refund anticipation loans.'' The
attorneys intervening to stop the settlement allege that the
plaintiff's attorneys accepted a mere $25 million in return
for releasing a nationwide class' claims worth a billion
dollars. We have no way of knowing the actual value of the
claims, but the incident leaves one important question
unanswered: If it is true that federal judges are more likely
to give close scrutiny to settlements, why did the defendants
choose to settle a federal court case rather than one of six
identical state court cases? If the premises underlying this
bill are correct, shouldn't they have settled one of the
state court cases instead? The fact that the federal judge
here had law clerks did not deter this settlement.
Moreover, we note also that the RAND Institute's report was
very clear in finding no empirical evidence to support the
argument that federal judges are better able to manage class
actions than state judges. Public Citizen's own experience
shows that federal judges can err just as often in approving
abusive settlements.
Procedural Changes
H.R. 2341 also contains several ``Consumer Bill of Rights''
provisions. Some of these ideas have merit and some plainly
do not. However, we believe Congress should refrain from
making adjustments to Rule 23 and leave such changes to the
federal judiciary's Advisory Committee on Civil Rules. The
Rules Advisory Committee consists of judges, academics, and
practicing lawyers who are among the nation's top experts on
civil procedure. Pursuant to the Rules Enabling Act, the
Advisory Committee is empowered to review the current rules,
study problems, and propose amendments. The Advisory
Committee solicits and carefully considers input from the bar
and from interest groups in formulating changes.
Class actions have been the subject of their attention in
recent months, and they are currently considering extensive
changes to Rule 23. We respect the expertise that the
Congress and its Judiciary Committees have on civil procedure
matters. Nonetheless, we feel that these contentious issues
are best resolved outside the heated political process.
Finding a Solution
Sound congressional policymaking must take account of the
advantages and disadvantages of our federal system. Achieving
good federalism means understanding the competing values of
local control and national uniformity, and striking the
appropriate balance between these values in individual policy
areas.
Unfortunately, the dispersion of authority among 50 states
can sometimes create perverse incentives. The reverse-auction
phenomenon in overlapping class actions is an example of
this. Narrowly tailored federal legislation could fix this
problem without upsetting the delicate state/national balance
by bringing most state class actions into federal court. But
that in no way resembles the legislation that the sponsors of
H.R. 2341 have proposed.
Another avenue to explore is RAND's suggestion that one way
to improve judicial scrutiny would be to allow judges to seek
assistance from neutral experts and auditors to assess the
value of settlements. Congress could use its spending power
to assist judges, both state and federal, by increasing the
resources available to them to manage class actions. A grant
program through which individual courts could secure funding
for neutral experts and special masters would exemplify
cooperative, rather than coercive federalism. Such a program
could be administered by the Justice Department, the National
Center for State Courts, or the Administrative Office of the
U.S. Courts.
As an organization that vigorously opposes abusive class
action settlements, we can only conclude from H.R. 2341 that
the business community wants this legislation not to end such
practices, but because they perceive an advantage to
defending class actions in federal court. We urge you not to
move forward with this bill.
Sincerely,
Joan Claybrook,
President, Public Citizen.
Frank Clemente,
Director, Public Citizen's Congress Watch.
Mr. Chairman, I reserve the balance of my time.
Mr. SENSENBRENNER. Mr. Chairman, I yield 4 minutes to the gentleman
from Virginia (Mr. Goodlatte) who is the author of the bill.
Mr. GOODLATTE. Mr. Chairman, I thank the gentleman from Wisconsin for
yielding me this time and for his leadership in bringing this
legislation forward.
I was pleased to introduce this legislation along with the gentleman
from Virginia (Mr. Boucher). This much-needed bipartisan legislation
corrects a serious flaw in our Federal jurisdiction statutes. At
present, those statutes forbid our Federal courts from hearing most
interstate class actions, the lawsuits that involve more money and
touch more Americans than virtually any other litigation pending in our
legal system.
Class actions of national importance should be heard in Federal court
by a Federal judge, not by a State or county court judge in one region
of the country. Why? Because the plaintiffs' attorneys choose from a
very select number of courts around the country where the judges are
known to be very favorable to class action lawsuits.
Let me cite on example of a class action horror story. After being
named in 23 class action lawsuits, Blockbuster agreed to provide class
members with only $1-off coupons, buy-one-get-one-free coupons and free
Blockbuster Favorites video rentals. Attorneys are reported to receive
around $9.2 million in attorneys' fees.
Cheerios, the gentleman from Wisconsin mentioned this recently,
without any allegation of any harm to any of the plaintiffs in the case
related to the ingredients of a box of Cheerios, the case was settled.
For what? The opportunity for the customers to go out and get another
box of Cheerios while their attorneys got $2 million.
This is one of my favorites. In this case against Chase Manhattan
Bank, the trial lawyers took $4 million in attorneys' fees and the
plaintiffs in the case got, you can read it here, 33 cents. If you
cannot read it, we will blow it up for you, 33 cents, while the
plaintiffs' attorneys got $4 million in attorneys' fees. What does that
amount to?
There is a catch actually for getting your 33 cents. Because it took
a 34-cent postage stamp to mail in the acceptance of the settlement. So
actually you came up a penny short. But the trial lawyers did not. 4
million bucks.
[[Page H850]]
The Washington Post has it exactly right: ``Having invented a client,
the lawyers also get to choose a court. Under the current absurd rules,
national class actions can be filed in just about any court in the
country. The lawyers cash in while the clients get coupons for product
upgrades. It is a bad system, one that irrationally taxes companies in
a fashion all but unrelated to the harm their products do and that
provides nothing resembling justice to victims of actual corporate
misconduct.''
The Rocky Mountain News put it even more to the point:
``Your lawyers have one more surprise for you after they bring these
suits. You aren't eligible for the full settlement unless you also
agree to spend some of your own money on those stores' products.'' That
is exactly what happened in the Blockbuster case. That is exactly what
happened in the airline case where the plaintiffs got a $25 coupon
against a more-than-$250 airline ticket.
In other words, you must reward the company that supposedly swindled
you in order for it to be punished. It makes absolutely no sense except
to the trial lawyer taking a very large attorney's fee.
The Washington Post sums it all up with this statement:
``That it is controversial at all reflects less on its merit,''
referring to this legislation, ``as a proposal than on the grip that
the trial lawyers have on many Democrats.''
I am pleased that many Democrats are going to vote for this
legislation. I would invite the rest of them to come over and join us
to make sure that we resolve this inequity where trial lawyers receive
millions of dollars and American families receive pennies. That is what
this legislation is all about. It is designed to make sure that the
most complex litigation in the country is brought in the court where it
belongs.
Vote for this legislation.
Mr. CONYERS. Mr. Chairman, I am pleased to yield 3\1/2\ minutes to
the distinguished gentlewoman from Texas (Ms. Jackson-Lee), a member of
the Committee on the Judiciary.
(Ms. JACKSON-LEE of Texas asked and was given permission to revise
and extend her remarks.)
Ms. JACKSON-LEE of Texas. Mr. Chairman, I thank the distinguished
gentleman for yielding me this time.
I would offer to say to my good friend and colleague from Virginia,
if we wanted to address the question of attorneys' fees, then why do we
not legislate an attorney's fee bill on the floor of the House? That is
not what this legislation is all about. We might have some common
agreement that there needs to be some equity in how we assess a formula
in those instances.
This is clearly a knock against corporate responsibility. Coming from
Houston, Texas, I can assure you, ex-Enron employees, existing Enron
employees, those who are trying to reconstruct Enron know one thing:
Corporate responsibility is a key element to moving this country
forward and reinvesting, if you will, reestablishing our faith in the
corporate structure here in America. We do not have that now.
What is so insulting by this legislation is that this legislation
will move a class action lawsuit from the State courts on the basis of
partial diversity. That means that we could have 400 Texans in the
local State court, familiarity, the ability to access the court, and
one person from Chicago, Illinois, and we have to go into the Federal
court.
Everyone knows that the Federal courts are far more burdensome with
their rules, far more complex and far more difficult for those
plaintiffs who have less resources to be able to access justice. And so
I am a little shocked and surprised when this Congress has had any
number of hearings on corporate irresponsibility, and now we bring to
the floor of the House, on a fast track, legislation that will not
help.
When we who oppose this bill simply asked for information, data, to
show us that we are log-jamming the courts, no one could provide that.
I can assure you our overburdened Federal courts with empty seats all
across the country, drug cases beyond their ability to handle, cannot
handle any more legislation.
This does not make any sense. That means those plaintiffs who are in
desperate need of accessing the justice system will be standing on a
bus line waiting and waiting and waiting and waiting to get into
Federal courts.
I would simply argue that we understand what these courts and class
actions are supposed to do. We also realize that my colleagues on the
other side of the aisle have been large and strong proponents that the
State should be given the opportunity to decide for their own citizens
what is best for them, keep the Federal Government out of their
business as much as possible.
But H.R. 2341 goes against Republican philosophy and broadens Federal
jurisdiction over State class action lawsuits. In fact, it is clear
that in light of events such as asbestos, the Love Canal and tobacco
disasters, and now Enron, this bill benefits not consumers but large
corporate interests.
I would ask my colleagues and I would ask this House, let us pause
for a moment and understand the message that we are sending to America.
America now wants corporate responsibility, and we are not doing that.
Class actions were initially created in State courts, based on equity
and common law. They permit one or more parties to file a complaint on
behalf of themselves and all other people who are similarly situated
suffering from the same problem. Love Canal was basically neighbors who
lived in New York. If you had some far-reaching opportunity for some
person by chance to either have moved to another State and then you put
it in Federal court, you are, therefore, denying equity, if you will,
and the use of common law.
This is a bad legislative initiative. I would ask my colleagues to
defeat this, but I would ask them to likewise consider our amendments
that we will offer.
Mr. Chairman, Chairman Sensenbrenner and Ranking Member Conyers. I
oppose this legislation, H.R. 2341, for several policy reasons.
My colleagues on the other side of the aisle have always held that
States should be given the opportunity to decide for their own citizens
what is best for them--keep the Federal government out of their
business as much as possible. But H.R. 2341 goes against Republican
philosophy and broadens Federal jurisdiction over state class action
lawsuits. In fact, it is clear that in light of events such as
asbestos, the Love Canal, and tobacco disasters, and now, Enron, this
bill benefits, not consumers, but large corporate interests.
Class actions were initially created in state courts based on equity
and common law. They permit one or more parties to file a complaint on
behalf of themselves and all other people who are ``similarly
situated'' (suffering from the same problem). A class action is often
used when a large number of people have comparable claims. They are an
efficient means of seeking justice for a large group of people.
Class actions to help bring justice for many people--the innocent
victims. Historically, class actions were brought against huge
corporate giants who impact a large percentage of the population.
Take asbestos. They used it on ceilings of gyms and classrooms where
our children played and learned. It is of no fault of our children that
they unknowingly contracted cancer. Someone should be held accountable
for causing irreparable damage, and death, to these innocent victims.
The paradoxical similarity in all of these class actions is that the
corporate giant was unaware that their actions could cause cancer.
Evidence during litigation showed that the tobacco giants were aware
that nicotine was addictive and caused cancer.
It is no different with Enron. The loyal employees of Enron that were
terminated lost their life savings, their retirement, their child's
college tuition, their second honeymoon, their first home. Top
executives were aware allegedly of their spiraling financial situation
and yet misrepresented themselves, or had their accounting firm do so,
to their stockholders--their employees.
The allegedly barred these employees from selling their shares, while
at the same time, allowing only top executives to sell any shares they
wanted to. Enron gave out tens of thousands of retention bonuses, while
also terminating the ``rank and file''.
I know this because these victims are my constituents and I have
heard their stories and accounts. If these accounts are true, these
people have been robbed of savings that they were entitled to.
A favorable vote on H.R. 2341 would take away the means by which
innocent victims of corporate giants can find justice.
[[Page H851]]
As a threshold matter, I believe that before even considering
legislation, Congress should insist on receiving objective and
comprehensive data justifying such a dramatic intrusion into state
court prerogatives. This legislation potentially damages federal and
state court systems. Expanding federal class action jurisdiction to
include most state class actions, as H.R. 2341 does, will certainly
result in a significantly increase in the already overtaxed workload of
our federal courts. For example, it is no surprise that the 68 judicial
vacancies that existed as of February 2, 2002 contributed to the
average federal district court judge docket backlog of 416 pending
civil cases. It is because of these and other workload problems that
Chief Justice Rehnquist took the important step of criticizing Congress
for taking actions which have exacerbated the courts' workload problem.
H.R. 2341 also has the ability to significantly impact state courts.
This is because in cases where the federal court chooses not to certify
the state class action, the bill prohibits the states from using class
actions to resolve the underlying state causes of action.
It is important to recall the context in which this legislation
arises--a class action has been filed in state court involving numerous
state law claims, each of which if filed separately would not be
subject to federal jurisdiction (either because the parties are not
considered to be diverse or the amount in controversy for each claim
does not exceed $75,000).
H.R. 2341 also has the potential to raise serious constitutional
issues. For one, it unilaterally strips the state courts of their
ability to use the class action procedural device to resolve state law
disputes. The courts have previously indicated that efforts by Congress
to dictate such state court procedures implicate important Tenth
Amendment federalism issues and should be avoided. The Supreme court
has already made clear that state courts are constitutionally required
to provide due process and other fairness protections to the parties in
class action cases.
It is also important to note that as fears of local court prejudice
have subsided and concerns about diverting federal courts from their
core responsibilities increased, the policy trend in recent years has
been towards limiting federal diversity jurisdiction.
Thirdly, as the legislation is currently written, it assumes a
defendant will be automatically subject to prejudice in any state where
the corporation is not formally incorporated (typically Delaware) or
maintains its principal place of business. In so doing, it can be said
the bill ignores the fact that many large businesses have a substantial
commercial presence in more than one state through factories, business
facilities or employees.
H.R. 2341 adversely impacts the ability of consumers and other
victims to acquire compensation in cases concerning extensive damages.
The bill possess the potential to force state class actions into
federal courts resulting in expensive litigation and allowing
defendants to potentially compel plaintiffs to travel distances to
participate in court proceedings.
Essentially, the extensive pleading requirements of the federal court
will virtually make it impossible for individuals to bring a class
actions case. For example, under the bill, individuals are required to
plead with particularity the nature of the injuries suffered by class
members in their initial complaints. The plaintiff must even prove the
defendant's ``state of mind,'' such as fraud or deception, to be
included in the initial complaint.
To meet this criteria is virtually impossible in most instances that
the plaintiff is able to provide this information prior to discovery.
If the pleading requirements are not met, the judge is required to
dismiss the plaintiff's complaint.
Additionally, consumers under H.R. 2341 can be expected to have a far
more complicated and time consuming problem in trying to certify class
actions in the federal court system. Fourteen states, representing some
29% of the nation's population, have adopted different criteria for
class action rules than Rule 23 of the federal rules of civil
procedure.
Consumers may also be disadvantaged by the vague terms used in the
legislation, such as ``substantial majority'' of plaintiffs, ``primary
defendants,'' and claims ``primarily'' governed by a state's laws, as
they are entirely new and undefined phrases with no precedent in the
United States Code or the case law.
Mr. Chairman, this bill is plagued with problems that cheat consumers
of their rights under law and under the Constitution. I oppose it, and
I urge my colleagues to joining me.
{time} 1245
Mr. SENSENBRENNER. Mr. Chairman, I yield myself 1 minute.
Unfortunately, my colleague, the gentlewoman from Texas (Ms. Jackson-
Lee), has missed the boat on a lot of the points. First of all, I
wonder how her Texas constituents would feel if the Enron class action
lawsuit was filed in the Mississippi court that acted like the hometown
umpire in one class action suit and gave residents of Mississippi who
are members of the class 18 times more recompense than residents of
other States? I think she would be the first one to come into this
Congress and say that that is an outrage and that we ought to provide
the protection of the Federal court for people who live outside of
Mississippi. This bill does that.
Secondly, the plaintiffs in the Enron class action lawsuit chose
Federal Court to file their class action lawsuits. What is the beef?
Thirdly, because Enron has filed for bankruptcy, all claims against
Enron are heard in the Federal Bankruptcy Court under the
constitutional provision that the Congress adopts a bankruptcy law.
Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from Arizona
(Mr. Flake).
Mr. FLAKE. Mr. Chairman, I thank the gentleman for yielding me time.
Mr. Chairman, a lot of disinformation is being spread about this
bill. We heard a bit of it just a minute ago when the opponents talked
about Federal caseload and how that would be increased too much. Well,
let us look at the numbers, and we find a different story.
According to the administrative office of the U.S. Courts and the
1998 Court Statistics Project, last year only 2,393 class actions were
filed in Federal district courts. Since 1997, there has been an 8
percent decrease in the number of cases pending in Federal district
courts nationwide.
Meanwhile, civil filings in State trial courts have increased 28
percent since 1984. In most jurisdictions, each new State court judge
is assigned an average of between 1,000 and 2,000 new cases every year.
In contrast, Federal court judges are assigned an average of fewer than
500 cases every year.
I would submit that the opponents of this bill and those who argue
about Federal caseloads ought to get busy and help those approve
Federal judges who are waiting. There are over 100 waiting at the
moment. That represents about 10 percent of the caseloads that could be
handled in Federal Court.
So on one side, the caseload is too heavy; on the other side, we are
not approving, we are holding up, Federal judges who could help with
that caseload.
What this has become, as has been mentioned before, is a racket
involving invent a client, choose a court, browbeat a company into
compliance and settlement, and then watch the money roll in. We need to
stop this.
Mr. Chairman, I would urge my colleagues to support the bill.
Mr. CONYERS. Mr. Chairman, I yield 30 seconds to the gentlewoman from
Texas (Ms. Jackson-Lee).
Ms. JACKSON-LEE of Texas. Mr. Chairman, I thank the gentleman for
yielding me time.
Mr. Chairman, let me say to my distinguished colleague from Wisconsin
that the question that he raises does not give credence to the fact
that the plaintiffs chose where they wanted to file their cases. This
legislation bars individuals from making the choice as to whether or
not they are in State court, because if there is partial diversity,
they are forced to go into Federal courts, which undermines those
individuals' access to justice.
Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, for the benefit of my distinguished chairman, the
gentleman from Wisconsin (Mr. Sensenbrenner), who referred to the
infamous airline cases where the plaintiffs were given airline coupons,
and he illustrates this as really something that is not good, that we
should not do it, that occurred in a Federal Court. That was a Federal
district court case that the gentleman I think is trying to use as an
argument against keeping the law the same way that it is.
Mr. SENSENBRENNER. Mr. Chairman, will the gentleman yield?
Mr. CONYERS. I yield to the gentleman from Wisconsin.
Mr. SENSENBRENNER. The gentleman from Michigan knows that there are
several features of the bill. One involves jurisdiction on where cases
can be filed and removal of cases filed in State court. But there are
other provisions that require increased judicial scrutiny of coupon
settlements. That would call into play when
[[Page H852]]
you get a coupon to buy more of the product or service that is sold by
the corporation that did it to you.
Mr. CONYERS. Mr. Chairman, I am pleased to yield 5 minutes to the
distinguished gentleman from North Carolina (Mr. Watt).
Mr. WATT of North Carolina. Mr. Chairman, I thank the gentleman for
yielding me time.
Mr. Chairman, it is always great to come to the floor and engage in a
debate with members of the Committee on the Judiciary, because all of
them were good lawyers before they came to Congress, so you know that
they will try to build their case in the way that they would litigate a
case if they were in court, and they will sometimes fudge the facts and
obfuscate and do whatever is necessary to prove a point. We have had a
lot of that happening already.
The gentleman from Virginia (Mr. Goodlatte), of course, knows that
one of the purposes for class action suits is that sometimes the amount
that an individual member of the class would gain from that suit is so
small that he or she cannot afford to litigate it without the benefit
of putting that claim with other claims of other people who are
similarly situated, so the gentleman has done a great job of making it
appear that the lawyers in the cases got disproportionate amounts of
money to the members of the class.
What the gentleman did not tell you in each of these cases was the
total amount that was going to the class members in each one of those
cases, whether they were litigated in State court or Federal court, and
that is the primary reason that you have class actions.
I want to point out a couple of things. I want to acknowledge that
there are abuses in the class action system, and anybody who gets up
here and tells you that there are not abuses in the class action system
probably does not know anything about litigating cases. The real
question, though, is will this bill eliminate those abuses, or will
this bill make it possible for other abuses to take place that are
worse than the abuses that are taking place now? I would submit that
this bill will not eliminate abuses, and that the bill will, in fact,
add to the number of abuses in the system.
The one abuse that I think is first and foremost I talked about in
1999 when we first had this bill on the floor. This is not the first
time this bill has been here. This is the way I described it back then.
I practiced law for a number of years before I ever got to Congress,
and I raised this basic fairness argument. If a plaintiff is injured,
he goes and hires a lawyer. That lawyer cultivates, researches, puts
together the case, decides where the appropriate place to litigate that
case is, spends months and months preparing for the case; and then, 2
days before he is getting ready to go in and start the real processing
of the case, somebody from the outside, a member of the class, comes
and hijacks that case and moves it to a Federal court.
There is something to me that is basically unfair about that. That is
what this bill will allow to happen, one of those abuses that I am
talking about.
The second point I want to make is that the proponents of this bill
are the same people who in 1994, 1995, I guess, when they came riding
into Congress and took the majority, came in talking about that they
supported the notion of removing things from the Federal level and
returning them to the local level. Decentralized government, they said
they believed in. The whole system of federalism was in jeopardy, they
said, and we needed to return power to the States.
So, now, why are we on the floor today with a group of people saying
to me, well, this is inefficient and this is too time consuming?
Well, democracy is inefficient and time consuming. Federalism is
inefficient and time consuming. But we have decided in our Constitution
that some things should be done at the State level and some things
should be done at the Federal level, and just because we find it
convenient to bring something into Federal court should not be the
rationale on which we do that.
I think the same people who are out there giving lip service to
States' rights should not be in here talking about let us take the
whole field of tort law and federalize it and put it in the Federal
courts.
Mr. SENSENBRENNER. Mr. Chairman, I yield myself 30 seconds.
Mr. Chairman, one of the most intriguing documents, legal documents,
that has arisen in the American continent was the Constitution of the
Confederacy, which was basically based on the whole notion of States'
rights. It allowed States through their legislative bodies to nullify
decisions made by the Federal courts and their effect within their
boundaries, and even to remove Federal officials like Federal judges
and postmasters and the like.
Listening to the gentleman from North Carolina, I think he would have
done quite well in their Congress.
Mr. Chairman, I yield 4 minutes to the gentleman from Virginia (Mr.
Moran).
Mr. MORAN of Virginia. Mr. Chairman, I thank the chairman for
yielding me time and bringing this bill to the floor, because I was the
original sponsor of this bill; and I am very appreciative of our
colleagues, the gentleman from Virginia (Mr. Boucher) and the gentleman
from Virginia (Mr. Goodlatte), who have gotten this out of committee to
the floor, because it is a good bill; and it should be passed, and it
should be passed in a bipartisan fashion.
The class action device is an important part of our legal system that
allows wrongdoers to be held accountable for harm they have inflicted
upon a large number of people. Unfortunately, there are too many
lawyers who have abused this tool for their own monetary profit.
Our current system allows cases of national importance to be heard in
local courts and allows abuses to take place unchecked because of
something called diversity jurisdiction. The Framers of the
Constitution created diversity jurisdiction to allow large multi-state
lawsuits to be heard in Federal court. However, when they drafted
statutes in the 1790s to implement it, no one foresaw class action
lawsuits. No one ever could have guessed that large multi-state suits
would have been heard in local courts and it was certainly not their
intention to create such a situation so vulnerable to abuse.
H.R. 2341, this bill, simply corrects this problem and rationalizes
the system by updating the law. Class actions of national importance,
affecting people all over the country, should be heard in Federal court
by a Federal judge, not by a State or county court judge in one region
of the country. No one can rationally say that a large national class
action belongs in local courts.
The Washington Post, not the Washington Times, the Washington Post
said it best in this weekend's editorial. It said: ``Nowhere is the
need for civil justice reform greater than in the high stakes arena of
class actions where irrational rules have allowed trial lawyers to
enrich themselves . . . without benefit to the lawyers' supposed
clients.''
Clearly there is a serious crisis in our court system. Some counties
have seen an increase of over 1,000 percent, because once a local court
shows a willingness to ignore its own State's rules and constitutional
due process, that court and judge becomes a magnet for many national
class actions.
Cases heard in State courts have skyrocketed, where Federal cases
have only gone up by about 8 percent. So that addresses the argument
that there is not enough time or docket space in Federal courts.
Federal court is where these cases belong, because the trial lawyers
can have these cases heard in a hand-picked court the way it works now.
There is gaming of the diversity rules to keep these cases in State
court just by finding one retail outlet or point of sale and one
customer in one State. That does not make sense. With over 9,000 State
and county courts and 50 States to choose from, there is inevitably at
least one court that will certify a class, even in the most egregious
class action suits.
Actually, it occurs in courts where judges are invariably elected;
and, frankly, they are elected with a substantial amount of trial
lawyers' financial and political support. That is one of the biggest
problems we are facing. These abusive suits brought in hand-
[[Page H853]]
picked courts do not compensate victims; they do not encourage more
responsible corporate behavior. And they are paid for by consumers with
higher costs of goods and services.
{time} 1300
Simply put, our current system which governs class actions too often
works for no one except the lawyers. Most plaintiffs only get coupons
to assist them in buying more of the product which caused the injury in
the first place, and that is if they are lucky.
When the Bank of Boston was sued in a southern state for their delay
in posting mortgage escrow accounts, the attorneys were awarded $8
million, while all their clients got was $9; and then their clients got
a bill for $91 for the lawyers' fees, and many of the clients were not
even notified that they were plaintiffs in the case. Unbelievable.
This abuse has to be stopped and this is the best vehicle for
stopping it. That is why I urge that it be passed, and it ought to be
passed in a bipartisan fashion. This is moderate, needed reform. It
should not be a partisan issue.
Mr. CONYERS. Mr. Chairman, I am pleased to yield 4 minutes to the
gentleman from Texas (Mr. Gonzalez), himself a judge, a former judge,
and a former lawyer as well.
Mr. GONZALEZ. Mr. Chairman, I thank the gentleman from the great
State of Michigan for yielding me this time.
Having been a State district court judge, I think I can appreciate
some of the facts and some of the arguments that are being advanced
today. The importance of it is that hopefully I will be able to
distinguish fact from fiction.
I do want to address some comments made earlier about the rising
numbers of civil actions, class actions, and otherwise in the State
courts. That is historical, that is tradition. The truth is that the
Federal courts on the civil side handle a mere fraction of the
litigation that is going on out there in the civil courts throughout
the United States. They do not handle as many cases as the traffic
court in San Antonio handles throughout the whole United States, all
the Federal system. We have to look at those numbers as to what they
are really doing out there.
They are overburdened. They have to give precedence and priority to
criminal cases. Do we see a Federal court that is designated civil in
nature and only handles a civil docket? But we see that at the State
level, day in and day out, because they are specialized, recognizing
the efficiency that it lends to a civil court system.
Judicial appointments. Of course we should fill all vacancies in a
most deliberate and efficient manner, but not with just any judge.
We complain of abuses. How we stop the abuses is to make sure that we
have qualified and fair individuals to fill those judicial roles.
I will tell my colleagues, as an opponent, this is what I will give
the proponents. I will give them everything they are asking for. I will
give the proponents everything that they ask for in this bill, save and
except for one thing, and that is moving it to the Federal system. I
will not have a taker. I will not have a taker, because what this is
all about is not giving individual litigants choice. What this is all
about is getting it into the Federal court system.
This is not a class action bill, this is a class inaction bill. It is
designed, its true motive is to stall, is to obstruct and to delay all
class actions, regardless of merit, regardless of merit.
Do we have abuses? Of course we do. But the alternative, the
alternative that they seek here today in this House is not a step
forward, it is not a positive improvement. It sets us back.
Are our State courts more efficient than Federal courts? I am here to
say yes. What I hear from my Federal judges is, Charlie, please do not
federalize everything out there. You are doing it on the criminal side,
and you want to do it on the civil side. You cannot do it.
The certification process in most State courts, the majority of the
State courts, and I know that my colleagues cite the aberrations and
the abuses; but where do I find them citing those cases in the State
court where we have State district court judges that are responsible,
mature, and deliberative in classifying? I myself had the great
privilege of having class action lawsuits filed in my district court,
and I know how we handled them in Texas.
What happened to States' rights? What I say is, let us work together.
Let us come up with something where maybe it can be adopted on a State
level addressing the abuses that we all agree exist in today's system.
But what my colleagues propose is basically doing away with the class
action lawsuit. That is the end result of the proposed legislation.
My colleagues are assuming, and wrongly, that the quantity and
quality of the Federal judiciary is superior to the State courts; and
if my colleagues want to go out there and talk in a confidential manner
with all of the trial attorneys, they will tell us what is going on out
there in the system.
All I will say is, this is ill-advised, it is ill-proposed, and it is
not a workable alternative.
Mr. SENSENBRENNER. Mr. Chairman, I yield 1 minute to the gentleman
from Virginia (Mr. Goodlatte).
Mr. GOODLATTE. Mr. Chairman, I thank the gentleman for yielding me
this time.
I would say to the gentleman from Texas that he has mischaracterized
this legislation. This legislation creates the kind of choice that he
is talking about, because right now if a plaintiff or a defendant wants
to have these cases heard in Federal court, they cannot be heard in
Federal court simply because of a Federal rule, even though these are
the most complex cases in the country.
As to the case load, more than 12 percent of our Federal judges are
awaiting appointment in the other body right now. Help us get our
colleagues in the Senate to appoint President Bush's nominees, and we
will easily have the ability to handle these cases in the jurisdiction
that was actually created in our Constitution in article 3 for the very
purpose of handling diversity cases, disputes among folks from many
different States.
It is wrong to allow the current system to persist where the
plaintiffs' attorney can choose from more than 4,000 jurisdictions in
the country, and whatever judge they know is the most favored judge
gets the case; and then nobody has the option to have it heard in a
fair and neutral court. That is what this legislation is all about.
Mr. CONYERS. Mr. Chairman, I yield myself 1 minute before yielding to
the gentleman from Washington.
Mr. Chairman, sometimes we have to look to see where the interest is
in these bills. Are the consumer organizations supporting this
legislation? Answer: No.
Is the Firestone Corporation supporting this legislation? Answer:
Yes.
Is Monsanto supporting this legislation? Answer: Yes.
Is W.R. Grace Corporation supporting this legislation? Answer: Yes.
Are the tobacco companies supporting this legislation, all of them?
Answer: Yes.
Are the asbestos people, Johns Manville formerly, supporting this
legislation? Answer: Yes.
Are the mining companies, the results of the black lung class action
cases, supporting this legislation? Answer: Yes.
Are the Pintos, the airbag cases? Answer: Yes.
All the corporations are supporting this. But I am being told by my
friends on the other side that this is a consumer-friendly bill.
Mr. Chairman, I yield 3 minutes to the distinguished gentleman from
Washington (Mr. Inslee).
(Mr. INSLEE asked and was given permission to revise and extend his
remarks.)
Mr. INSLEE. Mr. Chairman, it takes real chutzpah to bring this bill
at this time. It takes real chutzpah, after we have thousands of Enron
employees having lost their life savings, to bring a bill to diminish
the rights of Americans to be compensated for their losses. It takes
chutzpah to bring a bill to the floor of the House at this time to the
benefit of the Ken Lays and the Mr. Skillings of the world.
Now, think about the timing of this. Think about the timing of this.
The very first bill that comes to the floor of the House after Enron
takes the life savings away from Americans is to make it easier for
people to do that and harder for people to get compensation when it
happens to them.
Now, before we go home for spring break, when we go home and talk to
[[Page H854]]
our constituents and they ask us, Joe, Mr. Congressman, What did you do
about the Enron situation, I do not think the first thing we should say
is, We made it hard for Americans to get compensation for their losses.
In fact, that is what this is about, because when we strip away the
verbiage and the philosophical language that we have all sincerely
engaged in here today, this is about one thing. Some people who have
been burned because they got caught with their hands in the cookie jar
in class action litigation want to make it harder for Americans to
bring class action litigation. That is what this is about because they
know a simple thing. The Federal courts do not have room for any more
class action litigation. They will go to the end of the line. This
simply will result in making it more difficult for people to have their
cases get a day in court.
If my colleagues do not believe me, listen to Chief Justice Rehnquist
who said, and this is in 1998: ``I also criticize Congress and the
President for their propensity to enact more and more legislation which
brings more and more cases into the Federal court system. This
criticism received virtually no public attention. If Congress enacts
and the President signs new laws allowing more cases to be brought into
the Federal courts, just filling the vacancies will not be enough. We
will need additional judgeships.''
The fact of the matter is, as the proponents of the bill and those
who advocate this bill know very well, there is a pipeline that is this
big in our Federal court system. Now we want to take cases out of State
courts and try to jam it through a pipeline with that pipeline getting
no bigger, they will not go. They will not go. That is why this bill
has sought the support of those like Jack-in-the-Box Corporation who
served E. coli with their hamburgers, the result of which was a young
girl and many hundreds in the State of Washington ending up with kidney
damage. They used the State courts class action for compensation.
Now, I do not think I should go home and tell them that we are
reducing our ability to have a fair day in court in our State courts.
For that reason, we should reject this.
Mr. SENSENBRENNER. Mr. Chairman, I yield myself 1 minute.
I deeply regret my friend from Washington has not read the bill. This
bill has nothing to do with Enron, and it specifically states that
claims like the Enron claim are not covered by the differing
jurisdictional provisions of this. The Enron claim involves tax law,
Federal tax law where the jurisdiction is in the Federal courts. It
involves securities law, Federal securities law where the jurisdiction
is in the Federal courts.
On page 14 of the amendment in the nature of a substitute, this
bill's jurisdictional aspect is exempt from the internal affairs or
governance of a corporation that arises under or by virtue of the laws
of a State in which such corporation or business enterprise is
incorporated or organized. So everything that the gentleman from
Washington has said relating to Enron is simply not true under the
terms of the bill.
Now, finally, that would be the case if Enron were not in bankruptcy.
Because they are in bankruptcy, all claims are presented to the Federal
bankruptcy court.
Mr. Chairman, I would say to the gentleman from Washington, please
read the bill.
Mr. CONYERS. Mr. Chairman, I yield 3 minutes to the gentleman from
Texas (Mr. Sandlin).
Mr. SANDLIN. Mr. Chairman, our friends on the other side have had
some pretty charts, but they have had some very misleading stories.
Let us talk about the effects of class actions and how it helps
normal Americans. A class action in Texas forced Turn of the Century
Adventure, Inc., and Travelbridge International, Inc, to stop
defrauding consumers. If we want to talk about coupons, let us talk
about the coupons that they gave folks, giving thousands of dollars in
coupons in return for false discount promises. It took a class action
suit to cure that.
My friend from Washington brought up the suit against Foodmaker, Inc.
Three children died and 500 people were injured as a result of eating
E. coli. It took a class action suit to take care of that.
Are we are going to complain about attorneys' fees all day? Is that
what we are going to talk about in class action?
Why do we not complain about Beech-Nut? Do we know what those folks
did? They sold sugar water labeled as pure apple juice for infants.
They gave it to parents and parents all across America fed it to their
children as nutrition. It took a class action to make that corporation
back down and say, We are going to sell you apple juice if we charge
you for apple juice.
{time} 1315
Native Americans in San Juan County, Utah, 52 percent of the
residents there were Native Americans. None served on juries from 1932
to 1960. It took a class action to make people stand up for the
Constitution of the United States and get them access to the courts.
How about promoting accountability? A group of homeless students and
their parents brought a class action suit against the Chicago Board of
Education and the Illinois State Board of Education because the
defendants turned away homeless children from the Chicago public school
system because they could not show proof of permanent residency. Twelve
thousand homeless students in Chicago were denied schooling. It took a
class action to cure that, and we are going to complain about pennies?
It took a class action when UDC Homes filed for bankruptcy in 1995
and 15,000 shareholders were left holding worthless stock certificates.
They had been artificially inflating profits. Does that sound familiar?
Does that sound like Enron? I can tell the Members this, when they say
it walks like a duck and quacks like a duck, it is a duck. When they
say it is not about Enron, it is not about Enron, it is not about
Enron, it is about Enron.
They want to put all of America, everyone watching us today and
everyone on this floor, in the same position that they have put Enron.
They want to tie our hands, not give us access to the court, not let us
go to State court, not use the State law, not use the State procedure.
They say everyone in America has to be in the position that the Enron
pensioners and employees and stockholders are in. That is what they
want to do.
Support States' rights, use State law, use State procedure. Let us
remember that, and protect consumers against wrongdoing corporations.
Mr. SENSENBRENNER. Mr. Chairman, I yield myself 15 seconds.
Mr. Chairman, this bill does not take away a cause of action that any
member of a class has. All of the class action suits that the gentleman
from Texas has talked about could still be filed and litigated, but
litigated fairly.
Mr. Chairman, I yield 3 minutes to the gentleman from California (Mr.
Cox).
Mr. COX. Mr. Chairman, I thank the gentleman for yielding time to me.
Mr. Chairman, this debate is difficult to understand for me because
on the one hand people are talking about putting multistate claims with
plaintiffs all over the country into the form that the Founding Fathers
described in article III of the Constitution, a Federal form; and on
the other hand, people are saying that class actions help normal
Americans, class actions are good, and class actions can bring about
good results. Those two things are hardly incompatible.
What we are talking about is making sure that class actions, which
involve the whole country and not just local issues, are resolved in
the jurisdiction that the Framers had in mind, Federal jurisdiction in
a Federal court.
We do not have a problem in this Congress, I do not believe, in
appreciating the work that our State courts do. Indeed, one prolific
source of the people who serve on the Federal bench is the State courts
themselves.
The problem is not with State courts; the problem is with lawyers
trying to manipulate the system who pick not the State court system but
a particular place, a particular forum, where they shop for where they
know, because of their connections with that particular forum, that
they can put their thumb on the scale of justice and they can skew the
result so the facts and the evidence and the law do not matter.
The leading treatise on Federal civil procedure has declared that the
current rules for deciding when admittedly nationwide class actions are
[[Page H855]]
heard in Federal court make no sense: ``The traditional principles in
this area have evolved haphazardly and with little reasoning. They
serve no apparent policy.''
An 11th circuit case recently had the judge apologizing to litigants
because they could not have a Federal forum because the rules as
presently written for diversity are so easily defeated by lawyers
trying to manipulate the system.
Judge John Nangel, who was for many years the Chair of the Federal
Judicial Panel on Multidistrict Litigation, said this: ``Plaintiffs'
attorneys are increasingly filing nationwide class actions in various
State courts, carefully crafting language . . . to avoid . . . the
Federal courts. Existing Federal precedent . . . [permits] this
practice . . . although most of these cases . . . will be disposed of
through `coupon' or paper settlements,'' that is, through extortion, at
settlements at which the lawyers are paid to go away and the plaintiffs
in the case, in most cases who have never even met the lawyers, get
sent pennies on the dollar.
In an opinion by Judge Anthony Scirica, the chairman of the Federal
Judicial Conference's Standing Committee on Rules and Procedure, the
U.S. Court of Appeals for the Third Circuit observed that ``national
(interstate) class actions are the paradigm for Federal diversity
jurisdiction. . . .'' That is what the Federal courts are telling us;
that is what the Federal judiciary is telling us.
Former Solicitor General Walter Dellinger, someone who most
Democrats, I would think, would be happy to learn from, testified
before the Committee on the Judiciary: ``If Congress were to start over
and write a new Federal diversity statute, interstate class actions
would be the first kind of cases'' that we would put within that
diversity jurisdiction.
This is good for litigants, good for defendants, good for plaintiffs,
good for fairness, good for America, and good for the American
consumers, which is why The Washington Post has supported it: ``That it
is controversial reflects less on its merit as a proposal than on the
grip that trial lawyers have on many Democrats.'' I do not believe that
would be true, and I think many Democrats will support this
legislation.
Mr. CONYERS. Mr. Chairman, I am pleased to yield the balance of my
time to the gentlewoman from California (Ms. Waters).
Ms. WATERS. Mr. Chairman, I thank the gentleman for yielding time to
me.
Mr. CONYERS. Mr. Chairman, will the gentlewoman yield?
Ms. WATERS. I yield to the gentleman from Michigan.
Mr. CONYERS. Mr. Chairman, I know Enron is not a nice word to bring
up on the floor with our conservative friends. I raise the name Enron
reluctantly, because it is offensive to some of our colleagues.
But several of the employees in the Enron case, if they were suing
Mr. Lay, affectionately known as ``Kenny boy'' in some parts of the
government, for breach of an employment contract, they would be
brought, under this bill, into Federal court. We need that, do we not?
I do not think so, and I thank the gentlewoman for yielding to me.
Ms. WATERS. Mr. Chairman, I yield myself the balance of my time.
Mr. Chairman, I beg to differ with the gentleman from Wisconsin
(Chairman Sensenbrenner). This has everything to do with Enron.
As a matter of fact, I think the American public must know and
understand the difference between this side of the aisle and that side
of the aisle. We are about the business of protecting consumers, and we
are about the business of allowing the average person to have their day
in court.
This bill would make it more difficult. It would put obstacles in the
way. It would send class action lawsuits to the Federal court, which
are overjammed. We do not have enough judges there. We have the big
drug cases there. These cases would be backlogged, and they know it.
They are creating obstacles to people getting their fair day in court.
Members heard some of the cases referred to, where class action
lawsuits are the only way people can get any justice. Let me remind
Members of just a few of them.
As a matter of fact, the average person would not be able to go into
court and get any justice against Enron. It would only be through class
action lawsuits.
Remember Firestone? They knowingly sold defective tires, where tread
separation caused more than 800 injuries and 271 deaths. They failed to
recall and replace defective tires in a timely manner.
What about Monsanto? They hid 40 years' worth of dumping of toxic
PCBs, mercury, lead, and mustard gas in Anniston, Alabama. They
continued dumping toxic chemicals even after dangers were known.
It goes on and on and on. Without class action lawsuits brought in
State courts, we would never be able to get at this kind of injustice.
People on the other side said do not charge them with wanting to
protect big corporations when they have done something bad, but they
speak for themselves. They speak for themselves with this bill. What
they are saying is, Poor consumers, working class people, we know you
cannot afford to hire a lawyer. We know the only way you can get some
justice is through class action, but we are going to make it tougher
for you. We are going to make it more difficult for you. We are going
to send you to the Federal courts, because you will never get there.
As a matter of fact, people may go in the State courts under this
bill and find out in the middle of the trial that it is going to be
sent to the Federal court, another big obstruction.
Well, it is very difficult for my friends on the other side of the
aisle to claim to be for working people, for consumers, with this kind
of action. This really tells who they really are and who they care
about.
Mr. SENSENBRENNER. Mr. Chairman, I yield 1\1/2\ minutes to the
gentleman from Michigan (Mr. Rogers).
Mr. ROGERS of Michigan. Mr. Chairman, I thank the chairman for his
great work, and I thank the gentleman from Virginia (Mr. Goodlatte) for
a great bill. I think it finally brings justice back to the American
people. We are hearing a lot about judges, lawyers, technicalities,
which is exactly why I think we have the problem of litigation in
America as it stands now.
As simply as I can put it, something we all experience when Americans
get to the end of the roll of toilet paper, they find aggravation. When
our friends, the trial lawyers, get to the end of the roll of toilet
paper, they find a pot of gold.
What am I talking about, Mr. Chairman? There is a class action suit
in California that is suing because there is a roll of premium toilet
paper that only has 340 sheets as opposed to the regular that has 400.
That is not justice. Justice is fairness. Justice is logic. Justice is
a case heard by a jury of one's peers.
Do not let what happens in California cost my constituents in
Michigan more money for everyday living expenses. Because what happens
here, Mr. Chairman, is that Cheerios go up and milk goes up and toilet
paper goes up.
Enron will get its day in court, and the people who are abused by
Enron will get their day in court. Let us stand united about this. Let
us stand for that fairness and that justice. Let us stand for a court
system that will represent all Americans, when it comes to asking me
and my family and my neighbor's family and the working families of
Michigan to pay more for the goods they need to survive.
The people who make out in this, Mr. Chairman, are the trial lawyers.
Let us stand up for justice. Let us stand up for families. Let us pass
this bill.
Mr. SENSENBRENNER. Mr. Chairman, I yield myself the balance of my
time.
Mr. Chairman, there has been an awful lot of hyperbole that is
floating around this Chamber from those who are opposed to this
legislation.
First of all, the legislation does not diminish any cause of action
that anybody may have, either as an individual or member of a class. So
if they have a cause of action and the right to sue now, if this bill
becomes law, they will still have that cause of action and that right
to sue. So what is the beef?
What this bill does do is it provides fairness. I think the biggest
example of how unfair the State court system can be involves the
Mississippi case that has been referred to several times previously,
where the hometown judge in Mississippi approved a class action
settlement that gave Mississippi residents
[[Page H856]]
as much as 18 times more than residents of other States. That is what
the Federal court diversity citizenship jurisdiction that was put into
the Constitution was designed to prevent.
This bill changes the way diversity is defined so that the abuses
that the Framers were concerned about in 1787 can be prevented in class
action lawsuits that they never thought would ever arise in this
country. So that is what we are dealing with here.
What we are dealing with here also is a better way of having the
courts review the fairness of noncash settlements. We have heard an
awful lot about the coupons, where people end up having to buy the same
product of the company that injured them, or the same service of the
company that injured them.
It seems to me that if somebody injured me enough to go to court and
file a lawsuit and try it, if I won my lawsuit, I ought not to be
forced to go back to the same company that caused the problem to begin
with. This bill provides for increased scrutiny to protect consumers
against that.
Mr. Chairman, I think that the hyperbole we are hearing from the
people who are opposed to this bill really is designed to try to get
the attention of this body and the American public away from what is in
the bill.
{time} 1330
All I would ask while we continue debating this bill and the
amendments is for the opponents to read the bill, because most of the
complaints that they have are really not present in this legislation.
Ms. SCHAKOWSKY. Mr. Chairman, I rise in strong opposition to H.R.
2341, the ``Class Action Fairness Act.'' The Republican sponsors of
this legislation falsely claim that it will rein in ``frivolous
lawsuits.'' This bill is not about lawyers and lawyers' fees; it is
about whether consumers will have legal rights when corporate
wrongdoing, dangerous practices or faulty products injure them. This
bill would take away legal rights that consumers need. Class action
lawsuits are one of the few protections consumers have against
corporate fraud and abuse.
In fact, anyone who wants to lower the cost of health care for
consumers should oppose this bill. Class action suits are an important
tool for health care consumers who have been forced to pay exorbitant
prices for prescription drugs and medical bills. For example, in Iowa,
Blue Cross/Blue Shield negotiated ``secret discounts'' with hospitals
and providers but charged the full amount to consumers, pocketing the
difference. Many policyholders ended up paying 10 to 20 percent more
than they should have.
In response, three state court class action lawsuits were filed
against Blue Cross/Blue Shield. Eventually Blue Cross/Blue Shield
agreed to pay $14.6 million to settle the claims. The tens of thousands
of consumers affected by the lawsuit received reimbursements for all
claims over $50. Since the settlement agreement, Blue Cross has changed
its billing practices to lower the cost for consumers. The money lost
was not enough for any one policyholder to bring suit on his or her
own. But through a class action lawsuit, all policyholders were able to
be protected against this practice.
This case would have never seen the light of day if the bill before
us today were the law of land. This legislation will take money out of
people's pockets and will make consumers even more vulnerable to abuses
by HMOs. For the sake of everyone who relies on health care insurance
please join me in opposing this ill-conceived piece of legislation.
Mr. KNOLLENBERG. Mr. Chairman, I rise in strong support of H.R. 2431,
the Class Action Fairness Act of 2002.
I do so because this bill represents common sense reforms that will
make our civil justice system simpler and fairer while curtailing the
abusive and frivolous lawsuits that cost us so much.
Lawsuit abuse is a serious problem. I should know--back when I was
running my insurance company, lawsuit abuse was one of the principal
reasons that insurance premiums kept rising each year. And that rise
has not stopped.
And we do not just pay for lawsuit abuse through higher insurance
premiums. We pay for it through higher health care costs, higher prices
for consumer items, higher taxes, and fewer jobs. In fact, according to
a study by the Public Policy Institute in New York, people in my home
state of Michigan pay a hidden lawsuit tax of $574 per year. I know
many families who could put that money to good use, but cannot.
Not all lawsuits are abusive, but I believe there are reforms that
can be made that will protect the rights of businesses and consumers
alike. Today's bill strikes that balance.
When the federal government acts, it too often does so to detriment
of our economy. The Class Action Fairness Act is an excellent chance
for us to remove some of the drag on our economy by curtailing costly,
abusive lawsuits.
I urge all my colleagues to support this legislation and return the
legal system to the individuals who it is supposed to benefit--the
average American.
Mr. UDALL of New Mexico. Mr. Chairman, I rise today in opposition to
final passage of H.R. 2341, laughingly called the Class Action Fairness
Act. I say ``laughingly'' because there is nothing fair about this
bill, unless your idea of fair means changing the tort system to
benefit corporate polluters, monopolistic enterprises, and
irresponsible groups at the expense of everyday Americans. If enacted,
this bill will change the rules to make it easier than ever for
corporations to move important class action lawsuits from state
courts--the courts that are most in touch with and responsible to our
constitutents--to federal courts. While this change may not sound like
a very big change at first, the impact will actually be enormous.
Every corporate defender in this country knows that federal courts
are the most desirable venue in which to try class action cases because
federal court rules disadvantage plaintiffs and ordinary citizens. As
they attempt to defend their wealthy clients, corporate lawyers try
every trick in the book to have important cases moved from local courts
to federal courts, and this bill will only make their job easier! I
cannot imagine why we would want to make the enormous challenges faced
by the plaintiffs in class actions cases even harder, but the
leadership of this body had made it a priority!
At a time when our armed forces are defending this country across the
ocean, when millions of Americans are out of work, and when we face
serious threats to Social Security and Medicare, it is amazing to me
that this body would decide to address the issue of class action
``fairness'' instead of addressing the most serious issues facing this
country. I urge my colleagues to join me in opposing this bill and ask
that this body move forward in addressing real problems.
Mrs. CAPITO. Mr. Chairman, today I rise in support of H.R. 2341, the
Class Action Fairness Act of 2002. This legislation will streamline our
judicial system, making it more consistent, fair and efficient.
First, H.R. 2341 will cut down on and discourage so-called forum
shopping, where trial attorneys file lawsuits based on which state's
law is most favorable to their claim. This practice results in a small
handful of state courts, whose laws are most favorable to plaintiffs,
exerting their jurisdiction over other states and creating precedent
for entire national industries across the Nation.
Second, there's the issues of fairness. We all have heard stories of
lawsuit abuse. There are the so-called ``coupon settlements,'' where
class action members receive coupons from a sued business while the
attorneys reel in millions. You get a coupon, and they get a fortune!
In fact, many business are coerced into settling meritless claims,
believing their defense is too costly to litigate.
This system cannot be allowed to go on. There are too many small
business out there, surviving on thin margins as it is. And there are
too many class action members, people who have been wronged, who
deserve compensation, but watch their attorneys take the lion's share
of the award.
Finally, Congress needs to pass real class action reform because it
will make our federal courts more efficient. Class action lawsuit
filings have increased by 1,000 percent over the past decade.
Businesses and consumers need protection from these runaway lawsuits
and frivolous cases that clutter the courts. This backlog of excessive
suits hurts the economy by closing down businesses and costing people
their jobs.
Remember, it is the consumer who has to ultimately pay for these
transferred liability costs to businesses. It comes out of the pockets
of hard working men and women when someone decides that they want to
take the local business for a ride.
Mr. Chairman, let's restore the true intent of the Constitution and
allow federal courts to hear large interstate class action lawsuits. It
is the right thing to do so that we can protect class action members
and businesses from unscrupulous trial lawyers. We owe it to our
citizens, our country and our economy.
Mr. ISSA. Mr. Chairman, I rise in support of H.R. 2341, ``The Class
Action Fairness Act of 2002.'' I thank Congressman Bob Goodlatte,
author of this bill, House Judiciary Committee Chairman James
Sensenbrenner and the Judiciary Committee staff for their leadership on
this bill.
Class action lawsuits serve a very important role, but the legal
system is being compromised because attorneys have been the benefactors
of class action lawsuit settlements, not the plaintiffs. These lawsuits
should
[[Page H857]]
be weighed on their own merits. The decision to file in a certain state
or region should not be based on the possibility of the courts having
favorable attitudes toward certifying class action suits against out-
of-state corporations. Many times, attorneys find a topic or angle for
a class action lawsuit and then begin to seek plaintiffs, sometimes in
a different region than where the problem occurred. When they register
a large number of plaintiffs, the lawyers file a class action suit in a
favorable state forum and modify the case so that it will be exempt
from federal jurisdiction. These attorneys then are not beholden to any
one individual, allowing them to broker a settlement that provides
minimal benefits to the class members, but may reward the attorneys
handsomely. Additionally, lawyers in other states can bring forward an
identical ``copy cat'' lawsuit, forcing companies to defend the same
case in another court, with potentially different results. Ultimately,
the cost is passed on to consumers in the form of higher prices for
their products.
H.R. 2341 brings fairness to the class action arena by providing a
federal forum for out-of-state defendants and out-of-state plaintiff
class members. Instead of having plaintiffs in multiple states bring
forward the same lawsuit. This bill will only allow one lawsuit and it
must be handled at the federal level. It emphasizes efficiency by
ensuring only one bite at the apple. The current system has judges from
one state deciding the fate of plaintiffs from other states, and
binding them to whatever decision the judge brings down or the lawyers
reach in a settlement. This legislation will provide the plaintiff an
opportunity for settlements that benefit them.
H.R. 2341 protects the rights of the plaintiffs or class members with
inclusion of a Consumer Class Action Bill of Rights. It will begin to
address reform on an issue and at a time where numbers of class action
suits have skyrocketed.
I thank you for the opportunity to speak on this bill and I urge all
my colleagues to vote in favor of this legislation.
Mr. SENSENBRENNER. Mr. Chairman, I yield back the balance of my time.
The CHAIRMAN pro tempore (Mr. Sweeney). All time for general debate
has expired.
Pursuant to the rule, the amendment in the nature of a substitute
printed in the bill shall be considered as an original bill for the
purpose of amendment under the 5-minute rule and shall be considered
read.
The text of the committee amendment in the nature of a substitute is
as follows:
H.R. 2341
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Class
Action Fairness Act of 2002''.
(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.
(c) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; reference; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Consumer class action bill of rights and improved procedures
for interstate class actions.
Sec. 4. Federal district court jurisdiction of interstate class
actions.
Sec. 5. Removal of interstate class actions to Federal district court.
Sec. 6. Appeals of class action certification orders.
Sec. 7. Effective date.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--The Congress finds as follows:
(1) Class action lawsuits are an important and valuable
part of our legal system when they permit the fair and
efficient resolution of legitimate claims of numerous parties
by allowing the claims to be aggregated into a single action
against a defendant that has allegedly caused harm.
(2) Over the past decade, there have been abuses of the
class action device that have harmed class members with
legitimate claims and defendants that have acted responsibly,
and that have thereby undermined public respect for our
judicial system.
(3) Class members have been harmed by a number of actions
taken by plaintiffs' lawyers, which provide little or no
benefit to class members as a whole, including--
(A) plaintiffs' lawyers receiving large fees, while class
members are left with coupons or other awards of little or no
value;
(B) unjustified rewards being made to certain plaintiffs at
the expense of other class members; and
(C) the publication of confusing notices that prevent class
members from being able to fully understand and effectively
exercise their rights.
(4) Through the use of artful pleading, plaintiffs are able
to avoid litigating class actions in Federal court, forcing
businesses and other organizations to defend interstate class
action lawsuits in county and State courts where--
(A) the lawyers, rather than the claimants, are likely to
receive the maximum benefit;
(B) less scrutiny may be given to the merits of the case;
and
(C) defendants are effectively forced into settlements, in
order to avoid the possibility of huge judgments that could
destabilize their companies.
(5) These abuses undermine our Federal system and the
intent of the framers of the Constitution in creating
diversity jurisdiction, in that county and State courts are--
(A) handling interstate class actions that affect parties
from many States;
(B) sometimes acting in ways that demonstrate bias against
out-of-State defendants; and
(C) making judgments that impose their view of the law on
other States and bind the rights of the residents of those
States.
(6) Abusive interstate class actions have harmed society as
a whole by forcing innocent parties to settle cases rather
than risk a huge judgment by a local jury, thereby costing
consumers billions of dollars in increased costs to pay for
forced settlements and excessive judgments.
(b) Purposes.--The purposes of this Act are--
(1) to assure fair and prompt recoveries for class members
with legitimate claims;
(2) to protect responsible companies and other institutions
against interstate class actions in State courts;
(3) to restore the intent of the framers of the
Constitution by providing for Federal court consideration of
interstate class actions; and
(4) to benefit society by encouraging innovation and
lowering consumer prices.
SEC. 3. CONSUMER CLASS ACTION BILL OF RIGHTS AND IMPROVED
PROCEDURES FOR INTERSTATE CLASS ACTIONS.
(a) In General.--Part V is amended by inserting after
chapter 113 the following:
``CHAPTER 114--CLASS ACTIONS
``Sec.
``1711. Judicial scrutiny of coupon and other noncash settlements.
``1712. Protection against loss by class members.
``1713. Protection against discrimination based on geographic location.
``1714. Prohibition on the payment of bounties.
``1715. Clearer and simpler settlement information.
``1716. Definitions.
``Sec. 1711. Judicial scrutiny of coupon and other noncash
settlements
``The court may approve a proposed settlement under which
the class members would receive noncash benefits or would
otherwise be required to expend funds in order to obtain part
or all of the proposed benefits only after a hearing to
determine whether, and making a written finding that, the
settlement is fair, reasonable, and adequate for class
members.
``Sec. 1712. Protection against loss by class members
``The court may approve a proposed settlement under which
any class member is obligated to pay sums to class counsel
that would result in a net loss to the class member only if
the court makes a written finding that nonmonetary benefits
to the class member outweigh the monetary loss.
``Sec. 1713. Protection against discrimination based on
geographic location
``The court may not approve a proposed settlement that
provides for the payment of greater sums to some class
members than to others solely on the basis that the class
members to whom the greater sums are to be paid are located
in closer geographic proximity to the court.
``Sec. 1714. Prohibition on the payment of bounties
``(a) In General.--The court may not approve a proposed
settlement that provides for the payment of a greater share
of the award to a class representative serving on behalf of a
class, on the basis of the formula for distribution to all
other class members, than that awarded to the other class
members.
``(b) Rule of Construction.--The limitation in subsection
(a) shall not be construed to prohibit any payment approved
by the court for reasonable time or costs that a person was
required to expend in fulfilling his or her obligations as a
class representative.
``Sec. 1715. Clearer and simpler settlement information
``(a) Plain English Requirements.--Any court with
jurisdiction over a plaintiff class action shall require that
any written notice concerning a proposed settlement of the
class action provided to the class through the mail or
publication in printed media contain--
``(1) at the beginning of such notice, a statement in 18-
point Times New Roman type or other functionally similar
type, stating `LEGAL NOTICE: YOU ARE A PLAINTIFF IN A CLASS
ACTION LAWSUIT AND YOUR LEGAL RIGHTS ARE AFFECTED BY THE
SETTLEMENT DESCRIBED IN THIS NOTICE.'; and
``(2) a short summary written in plain, easily understood
language, describing--
``(A) the subject matter of the class action;
``(B) the members of the class;
``(C) the legal consequences of being a member of the
class;
``(D) if the notice is informing class members of a
proposed settlement agreement--
``(i) the benefits that will accrue to the class due to the
settlement;
``(ii) the rights that class members will lose or waive
through the settlement;
``(iii) obligations that will be imposed on the defendants
by the settlement;
``(iv) the dollar amount of any attorney's fee class
counsel will be seeking, or if not possible, a good faith
estimate of the dollar amount of
[[Page H858]]
any attorney's fee class counsel will be seeking; and
``(v) an explanation of how any attorney's fee will be
calculated and funded; and
``(E) any other material matter.
``(b) Tabular Format.--Any court with jurisdiction over a
plaintiff class action shall require that the information
described in subsection (a)--
``(1) be placed in a conspicuous and prominent location on
the notice;
``(2) contain clear and concise headings for each item of
information; and
``(3) provide a clear and concise form for stating each
item of information required to be disclosed under each
heading.
``(c) Television or Radio Notice.--Any notice provided
through television or radio (including transmissions by cable
or satellite) to inform the class members in a class action
of the right of each member to be excluded from the class
action or a proposed settlement of the class action, if such
right exists, shall, in plain, easily understood language--
``(1) describe the persons who may potentially become class
members in the class action; and
``(2) explain that the failure of a class member to
exercise his or her right to be excluded from a class action
will result in the person's inclusion in the class action or
settlement.
``Sec. 1716. Definitions
``In this chapter--
``(1) Class action.--The term `class action' means any
civil action filed in a district court of the United States
pursuant to rule 23 of the Federal Rules of Civil Procedure
or any civil action that is removed to a district court of
the United States that was originally filed pursuant to a
State statute or rule of judicial procedure authorizing an
action to be brought by one or more representatives on
behalf of a class.
``(2) Class counsel.--The term `class counsel' means the
persons who serve as the attorneys for the class members in a
proposed or certified class action.
``(3) Class members.--The term `class members' means the
persons who fall within the definition of the proposed or
certified class in a class action.
``(4) Plaintiff class action.--The term `plaintiff class
action' means a class action in which class members are
plaintiffs.
``(5) Proposed settlement.--The term `proposed settlement'
means an agreement that resolves claims in a class action,
that is subject to court approval and that, if approved,
would be binding on the class members.''.
(b) Technical and Conforming Amendment.--The table of
chapters for part V is amended by inserting after the item
relating to chapter 113 the following:
``114. Class Actions............................................1711''.
SEC. 4. FEDERAL DISTRICT COURT JURISDICTION OF INTERSTATE
CLASS ACTIONS.
(a) Application of Federal Diversity Jurisdiction.--Section
1332 is amended--
(1) by redesignating subsection (d) as subsection (e); and
(2) by inserting after subsection (c) the following:
``(d)(1) In this subsection--
``(A) the term `class' means all of the class members in a
class action;
``(B) the term `class action' means any civil action filed
pursuant to 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 one or more
representative persons on behalf of a class;
``(C) the term `class certification order' means an order
issued by a court approving the treatment of a civil action
as a class action; and
``(D) the term `class members' means the persons who fall
within the definition of the proposed or certified class in a
class action.
``(2) The district courts shall have original jurisdiction
of any civil action in which the matter in controversy
exceeds the sum or value of $2,000,000, exclusive of interest
and costs, and is a class action in which--
``(A) any member of a class of plaintiffs is a citizen of a
State different from any defendant;
``(B) any member of a class of plaintiffs is a foreign
state or a citizen or subject of a foreign state and any
defendant is a citizen of a State; or
``(C) any member of a class of plaintiffs is a citizen of a
State and any defendant is a foreign state or a citizen or
subject of a foreign state.
``(3) Paragraph (2) shall not apply to any civil action in
which--
``(A)(i) the substantial majority of the members of the
proposed plaintiff class and the primary defendants are
citizens of the State in which the action was originally
filed; and
``(ii) the claims asserted therein will be governed
primarily by the laws of the State in which the action was
originally filed;
``(B) the primary defendants are States, State officials,
or other governmental entities against whom the district
court may be foreclosed from ordering relief; or
``(C) the number of proposed plaintiff class members is
less than 100.
``(4) In any class action, the claims of the individual
class members shall be aggregated to determine whether the
matter in controversy exceeds the sum or value of $2,000,000,
exclusive of interest and costs.
``(5) This subsection shall apply to any class action
before or after the entry of a class certification order by
the court with respect to that action.
``(6)(A) A district court shall dismiss any civil action
that is subject to the jurisdiction of the court solely under
this subsection if the court determines the action may not
proceed as a class action based on a failure to satisfy the
requirements of rule 23 of the Federal Rules of Civil
Procedure.
``(B) Nothing in subparagraph (A) shall prohibit plaintiffs
from filing an amended class action in Federal court or
filing an action in State court, except that any such action
filed in State court may be removed to the appropriate
district court if it is an action of which the district
courts of the United States have original jurisdiction.
``(C) In any action that is dismissed under this paragraph
and is filed by any of the original named plaintiffs therein
in the same State court venue in which the dismissed action
was originally filed, the limitations periods on all
reasserted claims shall be deemed tolled for the period
during which the dismissed class action was pending. The
limitations periods on any claims that were asserted in a
class action dismissed under this paragraph that are
subsequently asserted in an individual action shall be deemed
tolled for the period during which the dismissed action was
pending.
``(7) Paragraph (2) shall not apply to any class action
brought by shareholders that solely involves a claim that
relates to--
``(A) a claim concerning a covered security as defined
under section 16(f)(3) of the Securities Act of 1933 and
section 28(f)(5)(E) of the Securities Exchange Act of 1934;
``(B) the internal affairs or governance of a corporation
or other form of business enterprise and arises under or by
virtue of the laws of the State in which such corporation or
business enterprise is incorporated or organized; or
``(C) the rights, duties (including fiduciary duties), and
obligations relating to or created by or pursuant to any
security (as defined under section 2(a)(1) of the Securities
Act of 1933 and the regulations issued thereunder).
``(8) For purposes of this subsection and section 1453 of
this title, an unincorporated association shall be deemed to
be a citizen of the State where it has its principal place
of business and the State under whose laws it is
organized.
``(9) For purposes of this section and section 1453 of this
title, a civil action that is not otherwise a class action as
defined in paragraph (1)(B) of this subsection shall
nevertheless be deemed a class action if--
``(A) the named plaintiff purports to act for the interests
of its members (who are not named parties to the action) or
for the interests of the general public, seeks a remedy of
damages, restitution, disgorgement, or any other form of
monetary relief, and is not a State attorney general; or
``(B) monetary relief claims in the action are proposed to
be tried jointly in any respect with the claims of 100 or
more other persons on the ground that the claims involve
common questions of law or fact.
In any such case, the persons who allegedly were injured
shall be treated as members of a proposed plaintiff class and
the monetary relief that is sought shall be treated as the
claims of individual class members. The provisions of
paragraphs (3) and (6) of this subsection and subsections
(b)(2) and (d) of section 1453 shall not apply to civil
actions described under subparagraph (A). The provisions of
paragraph (6) of this subsection, and subsections (b)(2) and
(d) of section 1453 shall not apply to civil actions
described under subparagraph (B).''.
(b) Conforming Amendments.--
(1) Section 1335(a)(1) is amended by inserting ``(a) or
(d)'' after ``1332''.
(2) Section 1603(b)(3) is amended by striking ``(d)'' and
inserting ``(e)''.
SEC. 5. REMOVAL OF INTERSTATE CLASS ACTIONS TO FEDERAL
DISTRICT COURT.
(a) In General.--Chapter 89 is amended by adding after
section 1452 the following:
``Sec. 1453. Removal of class actions
``(a) Definitions.--In this section, the terms `class',
`class action', `class certification order', and `class
member' have the meanings given these terms in section
1332(d)(1).
``(b) In General.--A class action may be removed to a
district court of the United States in accordance with this
chapter, without regard to whether any defendant is a citizen
of the State in which the action is brought, 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 without the consent of all
members of such class.
``(c) When Removable.--This section shall apply to any
class action before or after the entry of a class
certification order in the action, except that a plaintiff
class member who is not a named or representative class
member of the action may not seek removal of the action
before an order certifying a class of which the plaintiff is
a class member has been entered.
``(d) Procedure for Removal.--The provisions of section
1446 relating to a defendant removing a case shall apply to a
plaintiff removing a case under this section, except that in
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 files notice of removal within 30
days after receipt by such class member, through service or
otherwise, of the initial written notice of the class action.
``(e) Review of Orders Remanding Class Actions to State
Courts.--The provisions of section 1447 shall apply to any
removal of a case under this section, except that,
notwithstanding the provisions of section 1447(d), an order
remanding a class action to the State court from which it was
removed shall be reviewable by appeal or otherwise.
``(f) Exception.--This section shall not apply to any class
action brought by shareholders that solely involves--
``(1) a claim concerning a covered security as defined
under section 16(f)(3) of the Securities Act of 1933 and
section 28(f)(5)(E) of the Securities Exchange Act of 1934;
``(2) a claim that relates to the internal affairs or
governance of a corporation or other form of
[[Page H859]]
business enterprise and arises under or by virtue of the laws
of the State in which such corporation or business enterprise
is incorporated or organized; or
``(3) a claim that relates to the rights, duties (including
fiduciary duties), and obligations relating to or created by
or pursuant to any security (as defined under section 2(a)(1)
of the Securities Act of 1933 and the regulations issued
thereunder).''.
(b) Removal Limitation.--Section 1446(b) is amended in the
second sentence 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.''.
SEC. 6. APPEALS OF CLASS ACTION CERTIFICATION ORDERS.
(a) In General.--Section 1292(a) is amended by inserting
after paragraph (3) the following:
``(4) Orders of the district courts of the United States
granting or denying class certification under rule 23 of the
Federal Rules of Civil Procedure, if notice of appeal is
filed within 10 days after entry of the order.''.
(b) Discovery Stay.--All discovery and other proceedings
shall be stayed during the pendency of any appeal taken
pursuant to the amendment made by subsection (a), unless the
court finds upon the motion of any party that specific
discovery is necessary to preserve evidence or to prevent
undue prejudice to that party.
SEC. 7. EFFECTIVE DATE.
The amendments made by this Act shall apply to any civil
action commenced on or after the date of the enactment of
this Act.
The CHAIRMAN pro tempore. No amendment to that amendment is in order
except those printed in House Report 107-375. Each amendment may be
offered only in the order printed in the report, by a Member designated
in the report, shall be considered read, shall be debatable for the
time specified in the report, equally divided and controlled by the
proponent and an opponent, shall not be subject to amendment, and shall
not be subject to a demand for division of the question.
The Chair has been informed that Amendment No. 1 will not be offered.
It is now in order to consider Amendment No. 2 printed in House
Report 107-375.
Amendment No. 2 Offered by Mr. Nadler
Mr. NADLER. Mr. Chairman, I offer an amendment.
The CHAIRMAN pro tempore. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 2 offered by Mr. Nadler:
Page 9, insert the following after line 20 and redesignate
the succeeding section accordingly:
``Sec. 1716. Sunshine in court records
``No order, opinion, or record of the court in the
adjudication of a class action, including a record obtained
through discovery, whether or not formally filed with the
court, may be sealed or subjected to a protective order
unless the court makes a finding of fact--
``(1) that the sealing or protective order is narrowly
tailored, consistent with the protection of public health and
safety, and is in the public interest; and
``(2) if the action by the court would prevent the
disclosure of information, that disclosing the information is
clearly outweighed by a specific and substantial interest in
maintaining the confidentiality of such information.
Page 6, in the matter preceding line 1, strike the item
relating to section 1716 and insert the following:
``1716. Sunshine in court records.
``1717. Definitions.''.
Modification to Amendment No. 2 Offered by Mr. Nadler
Mr. NADLER: Mr. Chairman, I ask unanimous consent to modify the
amendment and further request that such modification be considered as
read.
The CHAIRMAN pro tempore. Is there objection to the request of the
gentleman from New York?
There was no objection.
The text of the amendment, as modified, is as follows:
Page 10, insert the following after line 4 and redesignate
the succeeding section accordingly:
``Sec. 1716. Sunshine in court records
``No order, opinion, or record of the court in the
adjudication of a class action, including a record obtained
through discovery, whether or not formally filed with the
court, may be sealed or subjected to a protective order
unless the court makes a finding of fact--
``(1) that the sealing or protective order is narrowly
tailored, consistent with the protection of public health and
safety, and is in the public interest; and
``(2) if the action by the court would prevent the
disclosure of information, that disclosing the information is
clearly outweighed by a specific and substantial interest in
maintaining the confidentiality of such information.
Page 6, in the matter preceding line 7, strike the item
relating to section 1716 and insert the following:
``1716. Sunshine in court records.
``1717. Definitions.''.
The CHAIRMAN pro tempore. Pursuant to House Resolution 367, the
gentleman from New York (Mr. Nadler) and a Member opposed each will
control 10 minutes.
The Chair recognizes the gentleman from New York (Mr. Nadler).
Mr. NADLER. Mr. Chairman, I yield myself such time as I may consume.
I am pleased to offer this amendment along with the gentleman from
Massachusetts (Mr. Delahunt) and the gentlewoman from Texas (Ms. Eddie
Bernice Johnson).
Mr. SENSENBRENNER. Mr. Chairman, will the gentleman yield?
Mr. NADLER. I yield to the gentleman from Wisconsin.
Mr. SENSENBRENNER. Mr. Chairman, I think this is a very constructive
amendment, and we are pleased to support it.
Mr. NADLER. Mr. Chairman, in that case, let me never take yes for an
answer. I appreciate the comments of the gentleman, and I urge everyone
to vote for it and I suppose, aside from saying that this deals with
the question of shielding records in settlements.
Mr. Chairman, I am pleased to offer this amendment with the gentleman
from Massachusetts, Mr. Delahunt and gentlewoman from Texas, Ms.
Johnson.
Mr. Chairman, this amendment is designed to prevent the sealing of
information regarding settlements of class action lawsuits--information
that would protect the health and safety of others.
I have been concerned for a number of years about agreements to seal
the information about settlements of lawsuits that affect public health
and safety.
More often than not, a class action suit is filed because a number of
people have been harmed by the actions of a large corporation. They
come together to seek to recover damages by providing that a company
behaved in a way that resulted in foreseeable harm to public health and
safety. Often, the company settles the lawsuit, pays the people it
harmed who sued, and then tells them to be quite. But the company may
never change its dangerous practices. They simply regard the lawsuits
as the cost of doing business, and ignore the underlying problem. Since
the companies force the plaintiffs never to discuss the problems with
anyone else, more people end up getting hurt by the companies. This is
reprehensible.
The Firestone Tire situation is a case in point. One of the main
reasons why there was not timely public disclosure of the dangers of
Firestone tires is because Firestone insisted on a series of gag orders
when settling product liability lawsuits.
An article in the September 25, 2000, edition of the Legal Times
points out that:
One of the principal roadblocks to timely public disclosure
of the danger of Firestone tires has been a series of gag
orders the company insisted on as a condition of settling
product liability lawsuits in the early 1990s.
Simply put, Firestone made a calculated determination that
they would compensate victims so long as the plaintiffs
agreed not to share their stories with other victims or the
public. Congress was given the opportunity to address this
very problem in 1995 when an amendment was offered that would
prevent such gag orders if the public safety need outweighed
the privacy interests of the litigants. Unfortunately, the
amendment was defeated, with opponents arguing that the
information was proprietary information that does not belong
in the public domain.
The reality is that the release of such information in the Firestone
case 7 or 8 years ago potentially could have saved scores of human
lives. We can't blame the people who settled their case for recovering
damages and agreeing to the gag orders as a condition of getting the
money. But as a result, the public is kept in the dark, and many more
people are injured. This should not happen again.
It is important for the people to be aware of the health and safety
hazards that may exist so that other people can make informed choices
about their lives, and, I might add, so that public agencies, perhaps,
can crack down on such dangers. To often critical information is sealed
from the public and other people may be harmed as a result.
Let me add that this amendment is very reasonably drafted. The
amendment is written in such a way that the judge must make a finding
of fact where a gag order is requested. If the judge finds that the
privacy interest is broader than the public interest, then the judge
must issue the gag order. If the judge finds that the public interest
in the health and safety outweighs the primary interests asserted, the
judge may not issue the gag order. The judge also has to make sure the
gag order is drafted as tightly as possible. This will prevent the
unnecessary disclosure of confidential information, but will not allow
the sealing of information that may harm the public.
[[Page H860]]
When it comes to health and safety, public access to class action
lawsuit materials is absolutely essential. I urge my colleagues to
support the Nadler/Delahunt/Johnson Amendment.
Mr. KUCINICH. Mr. Chairman, today Congress is considering a bill to
make it easier for corporations to avoid compensating victims for
injuries corporations and their products cause. But current law is
already heavily skewed toward their interests, and the public health
suffers as a result.
Case in point is the gag order on victims who receive a settlement.
Under current law, victims receiving compensation under a settlement of
a class action suit can be required not to disclose the dangers,
evidence and admissions made by the corporate criminal as a condition
of settlement. As a result, dangerous products remain on the market and
able to do harm to an unknowing public.
In a society dedicated to safety and security, there is no place for
these gag orders. Safety and security cannot be realized with secrecy
agreements. The Nadler/Delahunt/Johnson amendment is narrowly drafted
to clear the way for disclosure of information unearthed in settled
class action cases that would benefit the public health.
It is a fact that enforcing the Nation's product liability laws rests
in part on citizen-suits brought as class actions. But prevention is
worth a pound of cure. If we repeal the gag rule on evidence of
dangerous products, we will make society a safer, more secure place for
the Nation's citizens. Vote ``yes'' on Nadler.
Mr. DELAHUNT. Mr. Chairman, I urge a ``yes'' vote on this amendment.
It is simple and straightforward. And it's been well-presented and
fully explained by previous speakers. It outlaws a practice that has
cost the lives of hundreds, if not thousands, of Americans--the sealing
of court records in class action settlements where the health and
safety of the public are at risk.
And if you have any doubts about the consequences of this practice,
just ask the families of those who lost loved ones who were driving
Ford Explorers outfitted with Firestone tires. At last count, 271
people had died.
The company knew about the problem. But insisted on secrecy as a
condition of settlement. And just kept on selling those tires to an
unsuspecting public who were unaware of the danger.
In committee, the lead sponsor of the bill stated that publicizing
the details of settlement agreements would deter people from entering
into them. Let's be clear. There is absolutely no evidence to support
that claim.
And he further suggested that the amendment would eliminate an
effective negotiating tool for plaintiffs. His concern for plaintiffs
and hard-working American families is noble. But I can't quite believe
that the U.S. Chamber of Commerce and the National Association of
Manufacturers, who support this bill, share that same concern. I
believe that would be a real stretch, Mr. Chairman.
But even if it were true, I submit that the price of secrecy is too
high if it costs a single human life.
Consumers are entitled to know when there are dangerous and defective
products on the market. They are entitled to the information that will
protect them and their families from the unconscionable conduct that we
witnessed in the Firestone case.
Well, let's exercise our collective conscience and do the right
thing. Let's remember those families, who were the victims of corporate
secrecy and greed. It's time to let the sunshine in, before more
innocent people are hurt.
Ms. EDDIE BERNICE JOHNSON of Texas. Mr. Chairman, I urge members of
this body who care about the health and safety of the public to support
the Amendment I offer today with my colleagues Mr. Delahunt and Mr.
Nadler.
This amendment will require a judge to look at the facts and
determine whether the plaintiff's interest in privacy outweigh the
public's need and right to know. Often plaintiffs who find themselves
in difficult circumstances will agree to seal documents in order to
obtain a settlement. These plaintiffs and their attorneys are looking
out for their own interests. This is understandable. When faced with
the prospect of not obtaining a settlement or going along with the
defendant's demands to seal the documents and forever keep them secret,
few people will jeopardize their own recovery. And that is why the
interests of justice demand that a judge review these agreements. The
parties involved in the suit are consumed with pursuing their own
interests. Only a judge is required to keep the public interests in
mind and to look down the road and determine what effect secrecy will
have on future litigants. Florida, Texas and Washington all have rules
prohibiting secrecy in cases involving defective products. And several
states, including California and Illinois, through their court rules
require that a judge review any secrecy deal. Mr. Speaker, the public
needs this protection and this body should not refuse to provide
ordinary people with the means to pursue justice in the courts of this
land.
Let me just outline a few instances in which these secret agreements
have endangered the public health and safety:
My colleagues have discussed the Firestone Tire case in which
plaintiffs in over 50 cases all over the country were required to agree
to secret settlements before the problems with these tires finally came
to light. We have all heard of the injuries that resulted from people
unwittingly continuing to drive on these defective tires.
In 1999 alone, about 300 asbestos lawsuits were settled for $200
million in Cook County Illinois. That deal kept secret not only the
dangers uncovered but also the exact number of plaintiffs, their
injuries and the amount received by each.
In 2000, BP Amoco reached an out of court deal with one former
employee and the estates of four others, settling lawsuits that claimed
the five developed brain tumors as a result of working at Amoco's
Naperville research center. The company insisted that the amount it
paid be kept secret. But two of the settlements were revealed when a
Judge insisted that wrongful death benefits be made public.
Mr. Chairman, we must follow the lead of Texas and several other
states. We must assure that the secrecy which has become so fashionable
lately not overtake our judicial system and deny justice to ordinary
people who have been harmed by the negligence of others or defectively
made products. I urge my colleagues to support this amendment.
Mr. NADLER. Mr. Chairman, I yield back the balance of my time.
The CHAIRMAN pro tempore. The question is on the amendment, as
modified, offered by the gentleman from New York (Mr. Nadler).
The question was taken; and the Chairman pro tempore announced that
the ayes appeared to have it.
Mr. NADLER. Mr. Chairman, I demand a recorded vote.
The SPEAKER pro tempore. Pursuant to clause 6 of rule XVIII, further
proceedings on the amendment offered by the gentleman from New York
(Mr. Nadler) will be postponed.
It is now in order to consider Amendment No. 3 printed in House
Report 107-375.
Amendment No. 3 Offered by Mr. Conyers
Mr. CONYERS. Mr. Chairman, I offer an amendment.
The CHAIRMAN pro tempore. Is the gentleman from Michigan (Mr.
Conyers) a designee of the gentlewoman from California (Ms. Waters)?
Parliamentary Inquiry
Mr. SENSENBRENNER. Mr. Chairman, parliamentary inquiry.
The CHAIRMAN pro tempore. The gentleman from Wisconsin will state it.
Mr. SENSENBRENNER. Mr. Chairman, I believe that the rule that was
adopted, House Resolution 367, requires that amendments may be offered
only by the Member designated in the report and not by a designee. Am I
correct?
The CHAIRMAN pro tempore. That is not correct. A designee may offer
the amendment.
Mr. CONYERS. Mr. Chairman, I ask unanimous consent to offer an
amendment and present it on behalf of the gentlewoman from California
(Ms. Waters).
The CHAIRMAN pro tempore. That unanimous consent request is not in
order in the Committee of the Whole.
Mr. CONYERS. Mr. Chairman, may I ask unanimous consent that we move
to the next amendment and reserve the opportunity to bring it up later?
The CHAIRMAN pro tempore. That request is also not in order in the
Committee of the Whole.
Parliamentary Inquiry
Mr. SENSENBRENNER. Mr. Chairman, parliamentary inquiry.
The CHAIRMAN pro tempore. The gentleman from Wisconsin.
Mr. SENSENBRENNER. Mr. Chairman, under the rule, which amendment may
be offered now?
The CHAIRMAN pro tempore. Right now, Amendment No. 3 by the
gentlewoman from California (Ms. Waters) is in order.
Point of Order
Mr. CONYERS. Mr. Chairman, a point of order. Can the gentlewoman from
California (Ms. Waters) offer her amendment at a later time?
The CHAIRMAN pro tempore. Only by unanimous consent granted by the
House. That unanimous consent request is not in order in the Committee
in the Whole. Under the rule, amendments only may be offered printed in
the report.
Mr. SENSENBRENNER. Mr. Chairman, I call for regular order.
[[Page H861]]
The CHAIRMAN pro tempore. Is the gentleman from Michigan (Mr.
Conyers) a designee of the gentlewoman from California (Ms. Waters)?
Mr. CONYERS. Mr. Chairman, I am.
The CHAIRMAN pro tempore. If the gentleman from Michigan (Mr.
Conyers) is a designee of the gentlewoman from California (Ms. Waters),
the gentleman from Michigan is recognized to offer Amendment No. 3.
Mr. CONYERS. Mr. Chairman, I offer Amendment No. 3.
The CHAIRMAN pro tempore. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 3 offered by Mr. Conyers:
Page 9, insert the following after line 20 and redesignate
the succeeding section accordingly:
``Sec. 1716. Withholding or destruction of material
``If the court in a class action issues a discovery order
and a party to which the order is directed withholds or
destroys material subject to the order or makes a
misrepresentation with respect to the existence of such
material, such action by that party shall be deemed an
admission of any fact with respect to which the order was
issued.
Page 6, in the matter preceding line 1, strike the item
relating to section 1716 and insert the following:
``1716. Withholding or destruction of material.
``1717. Definitions.''.
Parliamentary Inquiry
Mr. SENSENBRENNER. Mr. Chairman, parliamentary inquiry.
The CHAIRMAN pro tempore. The gentleman from Wisconsin will state his
inquiry.
Mr. SENSENBRENNER. Mr. Chairman, I have the text of House Resolution
367 before me, and the relevant part says each such amendment may be
offered only in the order printed in the report, may be offered only by
a Member designated in the report and shall be divided and controlled
by the proponent and opponent. The words ``or a designee'' is not in
the rule. It is not in the text of the summary provisions of the
resolution in House Report 107-375, but is in a head note.
The CHAIRMAN pro tempore. House Resolution 367 says ``a Member
designated in the report'' and House Report 107-375 designate ``the
gentlewoman from California (Ms. Waters), or designee.'' Under those
circumstances, the gentleman from Michigan (Mr. Conyers) is recognized
as a designee.
Does the gentleman from Michigan (Mr. Conyers) wish to withdraw his
offering of the amendment as the designee of the gentlewoman from
California?
Mr. CONYERS. Mr. Chairman, I ask unanimous consent to withdraw the
amendment.
The CHAIRMAN pro tempore. Is there objection to the request of the
gentleman from Michigan?
There was no objection.
Amendment No. 3 Offered by Ms. Waters
Ms. WATERS. Mr. Chairman, I offer Amendment No. 3.
The CHAIRMAN pro tempore. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 3 offered by Ms. Waters:
Page 9, insert the following after line 20 and redesignate
the succeeding section accordingly:
``Sec. 1716. Withholding or destruction of material
``If the court in a class action issues a discovery order
and a party to which the order is directed withholds or
destroys material subject to the order or makes a
misrepresentation with respect to the existence of such
material, such action by that party shall be deemed an
admission of any fact with respect to which the order was
issued.
Page 6, in the matter preceding line 1, strike the item
relating to section 1716 and insert the following:
``1716. Withholding or destruction of material.
``1717. Definitions.''.
Modification to Amendment No. 3 Offered by Ms. Waters
Ms. WATERS. Mr. Chairman, I ask unanimous consent to modify the
amendment and further request that such modification be considered as
read.
The CHAIRMAN pro tempore. Is there objection to the request of the
gentlewoman from California?
There was no objection.
The text of Amendment No. 3, as modified, is as follows:
Page 10, insert the following after line 4 and redesignate
the succeeding section accordingly:
``Sec. 1716. Withholding or destruction of material
``If the court in a class action issues a discovery order
and a party to which the order is directed withholds or
destroys material subject to the order or makes a
misrepresentation with respect to the existence of such
material, such action by that party shall be deemed an
admission of any fact with respect to which the order was
issued.
Page 6, in the matter preceding line 7, strike the item
relating to section 1716 and insert the following:
``1716. Withholding or destruction of material.
``1717. Definitions.''.
The CHAIRMAN pro tempore. Pursuant to House Resolution 367, the
gentlewoman from California (Ms. Waters) and a Member opposed each will
control 10 minutes.
The Chair recognizes the gentlewoman from California (Ms. Waters).
Ms. WATERS. Mr. Chairman, I yield myself such time as I may consume.
My amendment seeks to prevent a disgraceful action taken by some
defendants. Specifically, it addresses the problems of withheld or
shredded documents. We have recently heard allegations that Enron and
Arthur Andersen have engaged in document shredding. Those documents
were being sought by lawyers for the company's former employees, by
Members of Congress and by government investigators.
In any lawsuit involving shredded documents, the information those
documents contain may be lost forever. So while a court may sanction a
party that shreds documents, other parties will never be able to use
the documents to prove their case.
Under my amendment, any party that withholds or destroys material
related to a court discovery order would be deemed to have admitted to
any fact relating to the discovery order. Before that can happen, it
would have to be proven that the party did, in fact, destroy or
withhold those documents or that the party made a misrepresentation as
to their existence; but once that has been proven, the party that
engaged in illegal activity would have essentially admitted to the
facts relating to the discovery order. That party would no longer have
the option of arguing that it did not do the facts alleged under that
order.
Keep in mind that this amendment would not impact on the facts of the
case. It only addresses the facts directly related to the discovery
order that was violated.
All this amendment does is to ask that parties comply with court
orders. It says if they have broken the law by destroying or
withholding evidence, then they cannot deny the allegations under the
discovery request; we are going to rule that they are guilty with
regard to the information destroyed or withheld.
This amendment provides a common-sense approach to a very serious
problem. We should provide a strong disincentive to companies that
think destroying documents is a way to save their case.
Mr. Chairman, I know that there are a lot of people who are tired of
hearing about Enron, but Enron is not going to go away. The collapse of
Enron represents the largest corporate failure in American history. At
its height, Enron's total market capitalization was over $90 billion
while today it trades at less than 25 cents a share. Enron's collapse
resulted in tens of billions of losses for individual investors and
pension funds.
Mr. Chairman, I am absolutely surprised that even with all of us
knowing and understanding what took place at Enron, and each day we
continue to learn more, I am surprised that we still have efforts
anywhere to try and protect our corporations that not only are involved
in wrongdoing, such as Enron, but Enron has gone beyond wrongdoing. It
has tried to cover its tracks by shredding documents, and they did not
just shred, get caught and stop. After it was discovered that they were
shredding documents, they shredded more documents. It is absolutely
unbelievable what we are learning about Enron.
We not only wish to protect our consumers against the Enrons and the
Global Crossings of the world and others that we are going to find out
about, we want to create statutes that will to help to shine the light
on these corporations in every conceivable way. It goes beyond the need
for transparency.
We still have those who would argue, and just a moment ago I was in
our
[[Page H862]]
Committee on Financial Services where I had someone from American
Enterprise arguing that we should not interfere, we should not try and
create too many laws, we should allow the marketplace to work their
will, correct itself.
I am sorry, we cannot watch people be harmed. We cannot watch
investors harmed. We cannot watch pensioners harmed and say, Well,
Enron is going to go down and that is the price they will pay.
How many times do we have to watch consumers hurt? How many times do
we have to unveil the manipulations of the greedy corporations of
America that will take advantage of anybody that it has the opportunity
to take advantage of?
This business of shredding documents should have us all outraged, but
we do not hear a chorus of voices coming from those who are trying to
protect Enron and the other corporations of America who are
manipulating their consumers. What we hear is, Let us make a few new
rules, not too many, let us do something to let the American public
know we hear them, but let us not do too much.
{time} 1345
Well, I want to make sure that we pass laws in this Congress that
will not only deal with the tricks of Enron and the way that they
created all of these phony and funny companies, but I also want to deal
with the accounting firms. I want to make sure they are never able
again to receive consulting fees from the same company that it is
supposed to be auditing; never able again to turn a blind eye to the
practices of the corporation.
We cannot do all of that in this legislation. This is about something
else. But we have an opportunity here to do something about the
shredding of documents. The shredding of documents shows intent, intent
to hide something, intent to make sure there is not a certain kind of
discovery. It is really criminal on its face. The shredding of
documents by a major corporation in the middle of a scandal, where they
have declared this huge bankruptcy, cannot be left untouched.
Mr. CONYERS. Mr. Chairman, will the gentlewoman yield?
Ms. WATERS. I yield to the gentleman from Michigan.
Mr. CONYERS. Mr. Chairman, I would ask the gentlewoman, is it not
true that in the Enron case that the shredding was flagrant and
outrageous in the sense that even after they were discovered shredding,
they continued to shred?
Ms. WATERS. Reclaiming my time, Mr. Chairman, that is absolutely
correct; and that is what is so outrageous about it all. They started
shredding early, they continued shredding, and even after it was
discovered, they shredded some more.
So what they have done is to flaunt their criminal activity in all of
our faces; and literally, in the way they are acting, they are daring
us to do something about it.
Mr. CONYERS. If the gentlewoman will continue to yield, I would ask
her if her amendment, then, would hold them accountable and reinforce
any existing remedies against shredding, sanctions of the court,
criminal prosecution, and emphasizes this, in the face of the arrogance
that has been displayed in this case, and perhaps other cases that have
not even come to light?
Ms. WATERS. Mr. Chairman, the gentleman is absolutely correct.
Everybody knows about the shredding that took place in Enron. We have
all the employees who said, yes, we did it; they told us to do it. And
so what we have here is such an admission and knowledge by so many
people that with my amendment here they would not be able to get out
from under the fact that they absolutely committed the shredding of the
documents.
Mr. CONYERS. Well, Mr. Chairman, I want to thank the gentlewoman on
behalf of many of us on the committee for a very timely, appropriate,
and very sensible provision in the light of what has come to become
common knowledge to everyone in the country now.
Ms. WATERS. Reclaiming my time once again, Mr. Chairman, the
gentleman is certainly welcome, and let me just say this to him. I
believe that as we legislate in this Congress, we must take every
opportunity to close every loophole, shut every door, shut down every
opportunity for any corporation in America to ever do again what Enron
and what appears Global Crossing is doing and has done.
I hate to repeat it because I know people do not want to keep hearing
it, but I know the stories of Enron employees who had paid into their
401(k)s. They only had $400,000 for their retirement to last them for
the rest of their lives. It is gone. It is gone. There is nothing that
anybody can say about us being too involved, overlegislating,
attempting to micromanage. There is nothing that anybody can say that
should keep us from using every opportunity.
The CHAIRMAN pro tempore (Mr. Sweeney). The time of the gentlewoman
has expired.
Mr. SENSENBRENNER. Mr. Chairman, I yield myself such time as I may
consume, and I rise in opposition to the amendment.
Mr. Chairman, I rise in opposition to this amendment because it
confuses discovery orders with factual evidence and appears to give the
court discretion to admit unproven facts into evidence. This not only
undermines the bill but it undermines the very notion of a fair trial
that our judicial system is based upon.
There are rules for a fair trial: the right to confront your accuser,
a right to a jury in some instances, and a rule that allows both sides
to discover information. But there is no precedent in the American
legal system for a court to have the authority to simply decide facts
without proof. The amendment of the gentlewoman from California (Ms.
Waters) proposes to do that.
The gentlewoman's amendment strikes at the heart of so many
constitutional protections intended to protect the rights of all
Americans when they are brought before the court, and it sticks the
thumb on the scale of justice against those rights that have been
protected both by court rules and statutes, as well as the Constitution
of the United States.
For that reason, and for that reason alone, it ought to be rejected.
But I would like to talk about two things. The other side keeps on
talking about Enron, and we will confront that directly. Enron is
broke. No matter what comes out of the bankruptcy court, the people
that have lost money in their 401(k)s and had employment contracts
ripped up and all of that are not going to get very much money out of
it. I think that is a given. And that is a shame, and it is something
that we are going to have to get into in another forum. But the law is
quite clear that the destruction of subpoenaed documents is a criminal
obstruction of justice, and this bill does not change that criminal
statute. This bill does not deal with the criminal law in any respect
whatsoever.
If people did do that destroying of documents, as we have read that
they did, they should be indicted and prosecuted. And if the jury finds
them guilty, they should go to jail and they should go to jail for a
long time. But I think they deserve a fair trial just like everybody
else who is accused of a crime. Because they happen to be associated
with Enron or Arthur Andersen really should not make any difference.
Because if we erode the right of a fair trial to those defendants, we
have set a precedent that is going to bite the people of this country
and this Congress for years and years to come. The way to keep the lid
on Pandora's box is to reject the amendment of the gentlewoman from
California.
Now, the second thing I would like to bring up is let us run the
wheel back about 3\1/2\ or 4 years. There were certain e-mails in the
Clinton White House that were destroyed after having been subpoenaed by
the Committee on Government Reform. Now, under the amendment of the
gentlewoman from California, whatever the gentleman from Indiana (Mr.
Burton), the chairman of the Committee on Government Reform, thought he
was looking for would have been admitted as evidence and as fact and
could not be impeached, even though the destroyed e-mails might have
had nothing to do with what he put in his subpoena. That is the type of
Pandora's box that this misdrafted amendment is opening up.
And I think my friends on the other side of the aisle, including the
gentlewoman from California and the gentleman from Michigan, who were
most
[[Page H863]]
eloquent in their defense of the former President, regardless of what
the facts were, would have really talked about how unfair a Waters
provision would have been relating to those destroyed e-mails. So I
think that if it would have been bad as it applied to former President
Clinton, it is bad if it applies to Enron or anybody else. We should
not open up the Pandora's box.
Mr. Chairman, I yield 2 minutes to the gentleman from Utah (Mr.
Cannon).
Mr. CANNON. Mr. Chairman, I thank the gentleman for yielding me this
time, and I rise in opposition to this amendment. It is frivolous. Its
premise is that courts cannot or do not have the power to sanction
wrongdoing by parties in discovery or that the system itself does not
prosecute crimes when they occur in our court system.
But, Mr. Chairman, the Democrats have talked today about Enron. They
have talked about prescription drug benefits, they have talked about
apple juice, tires and the environment. Our friend from Texas even
raised my constituents in San Juan County, Utah. Yes, each of these
cases presents terrible tragedies committed by one party against a
group of others. But this debate is not about whether the plaintiffs in
each of these cases is entitled to sue or even entitled to seek class
action status. I have heard no one in this Chamber calling for doing
away with class action lawsuits. This debate is about where the cases
are heard, Federal or State court, and that is it.
When our friends on the other side of the aisle talk about Enron,
prescription drugs, truck tires, the environment, or my constituents in
San Juan County, what they are doing is to change the subject. Make no
mistake, they do not want to talk about multimillion dollar awards for
trial lawyers while Americans get coupons in the mail.
It is not often I agree with The Washington Post editorial page, but
today I do. The current system is obscene. Trial lawyers take
advantage, the little guys get taken to the cleaners, and consumers
ultimately pay the price in the form of higher prices.
This legislation deserves everyone's support. I encourage a vote
against this amendment and for H.R. 2341.
Mr. SENSENBRENNER. Mr. Chairman, how much time do I have remaining?
The CHAIRMAN pro tempore. The gentleman from Wisconsin has 3\1/2\
minutes.
Mr. SENSENBRENNER. Mr. Chairman, I yield the balance of my time to
the gentleman from Virginia (Mr. Goodlatte).
Mr. GOODLATTE. Mr. Chairman, I thank the gentleman for yielding me
this time.
There are two major problems with this amendment, which I strongly
oppose and which is not well thought out. First, it betrays a serious
misunderstanding about how discovery works in civil litigation.
The amendment says if documents subject to a discovery order are
destroyed or withheld such action shall be deemed an admission of any
fact with respect to which the order was issued. The problem is that
discovery orders normally are not issued with respect to facts. The
orders normally say that certain categories of documents should be
retained or produced.
For example, the order may say produce all letters sent between
person A and person B; or the order may say preserve all documents
regarding subject X. Thus, the punch line to this amendment does not
make any sense. If a party withheld a letter sent between person A and
person B, what fact would be admitted? And if a party destroyed a
document regarding subject X, what facts would be admitted?
In sum, the amendment is fatally flawed because it bears no
relationship to how civil discovery really works. Second, and perhaps
more importantly, the amendment would actually disrupt and water down
existing rules that apply to the destruction or withholding of
documents in the discovery process.
Federal Rule of Civil Procedure 37 already provides for an array of
sanctions if a party destroys or withholds documents. The court may
order that certain facts be admitted. The court may order that a party
may not introduce certain defensive evidence at trial. The court may
order that monetary sanctions be paid. And most importantly, the court
may order a default judgment. The court may issue an order that the
party that disobeyed a discovery order loses the entire case and must
pay the plaintiffs what they requested.
There is a considerable risk that courts would view this amendment as
replacing this very tough rule 37 in the context of class actions. The
amendment only requires admissions. Rule 37 authorizes a court to
impose much more serious penalties. Thus, this amendment likely would
substantially weaken existing law in addressing and correcting
discovery abuses in the context of class actions.
Rule 37 is a preferable approach to discovery abuse issues because it
awards various levels of sanctions that may be imposed depending upon
the seriousness of discovery abuse. Not every document destruction or
withholding situation is the same, and rule 37 allows courts to impose
even stronger sanctions than this amendment, if the circumstances
warrant.
The chairman of the Committee on the Judiciary is exactly right. If
we allow a person making an allegation and then demanding a production
of documents to be deemed to have proven their point; that whatever
they allege was in those documents to have been what that party
alleged, a serious misjustice will occur and abuses will crop up all
throughout our legal system. This is a bad approach and I urge my
colleagues to oppose it.
The CHAIRMAN pro tempore. The gentleman's time has expired. All time
for debate on amendment No. 3 has expired.
The question is on the amendment, as modified, offered by the
gentlewoman from California (Ms. Waters).
The question was taken; and the Chairman pro tempore announced that
the noes appeared to have it.
Mr. CONYERS. Mr. Chairman, I demand a recorded vote, and pending
that, I make the point of order that a quorum is not present.
The CHAIRMAN pro tempore. Pursuant to clause 6 of rule XVIII, further
proceedings on the amendment offered by the gentlewoman from California
(Ms. Waters) will be postponed.
The point of no quorum is considered withdrawn.
{time} 1400
The CHAIRMAN pro tempore (Mr. Sweeney). It is now in order to
consider amendment No. 4 printed in House Report 107-375.
Amendment No. 4 Offered by Mr. Keller
Mr. KELLER. Mr. Chairman, I offer an amendment.
The CHAIRMAN pro tempore. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 4 offered by Mr. Keller:
Page 9, insert the following after line 20 and redesignate
the succeeding section accordingly:
``Sec. 1716. Disclosure of attorney's fees
``Any court with jurisdiction over a plaintiff class action
shall require that, if there is a settlement of the class
action or a judgment for the plaintiffs, the attorneys for
the plaintiffs shall disclose to each plaintiff--
``(1) at the time when any payment or other award is
transmitted to the plaintiff in accordance with the
settlement of judgment, or
``(2) in a case in which no such payment or award is made
to a plaintiff, at the time when notice of the final
settlement or judgment is transmitted to such plaintiff,
the full amount of the attorney's fees charged by the
attorneys for services rendered in the action.
Page 6, in the matter preceding line 1, strike the item
relating to section 1716 and insert the following:
``1716. Disclosure of attorney's fees.
``1717. Definitions.''.
Amendment No. 4, As Modified, Offered by Mr. Keller
Mr. KELLER. Mr. Chairman, I ask unanimous consent to modify the
amendment and further request that such modification be considered as
read.
The CHAIRMAN pro tempore. Is there objection to the request of the
gentleman from Florida?
There was no objection.
The text of the amendment, as modified, is as follows:
Amendment No. 4, as modified, offered by Mr. Keller:
Page 10, insert the following after line 4 and redesignate
the succeeding section accordingly:
``Sec. 1716. Disclosure of attorney's fees
``Any court with jurisdiction over a plaintiff class action
shall require that, if there is a settlement of the class
action or a judgment for the plaintiffs, the attorneys for
the plaintiffs shall disclose to each plaintiff--
[[Page H864]]
``(1) at the time when any payment or other award is
transmitted to the plaintiff in accordance with the
settlement of judgment, or
``(2) in a case in which no such payment or award is made
to a plaintiff, at the time when notice of the final
settlement or judgment is transmitted to such plaintiff,
the full amount of the attorney's fees charged by the
attorneys for services rendered in the action.
Page 6, in the matter preceding line 7, strike the item
relating to section 1716 and insert the following:
``1716. Disclosure of attorney's fees.
``1717. Definitions.''.
The CHAIRMAN pro tempore. Pursuant to House Resolution 367, the
gentleman from Florida (Mr. Keller) and a Member opposed each will
control 10 minutes.
The Chair recognizes the gentleman from Florida (Mr. Keller).
Mr. KELLER. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, this is a straightforward amendment relating to the
disclosure of attorneys' fees. Simply put, if there is a settlement or
a judgment for the plaintiffs in a class action suit, the plaintiffs'
attorneys shall be required to disclose to their own clients the full
amount of the attorneys' fees they are charging.
Why is this necessary? Too often, lawyers cash in while the client
gets a coupon or a de minimis cash payment.
For example, in a class action suit against General Mills over a food
additive in Cheerios cereal, lawyers were paid $2 million in fees while
their clients received a coupon for a free box of cereal. In a class
action lawsuit against Chase Manhattan Bank, the lawyers reached a
settlement which provided the lawyers with $3.6 million in attorneys'
fees and provided their clients with 33 cents each.
In another settlement agreement reached last year with Blockbuster,
the trial lawyers received $9.25 million in attorneys' fees and their
clients got two free movie rentals and $1-off coupons.
In a Texas class action suit against two auto insurance companies,
the lawyer who filed the suit got $8 million in attorneys' fees. The
policyholders got $5.50.
In a class action suit brought against manufacturers of computer
monitors, the trial lawyers settled the case for $6 million in
attorneys' fees for themselves and $6 for their clients. The list
literally goes on and on.
This amendment simply brings some much-needed sunlight to this
situation by requiring attorneys to disclose their own fees. It does
not tell them how much to charge, how little to charge, but whatever
they charge they are going to have to disclose to their clients.
I ask my colleagues to vote ``yes'' on the Keller amendment and vote
``yes'' on final passage of the Class Action Fairness bill.
Mr. Chairman, I reserve the balance of my time.
The CHAIRMAN pro tempore. Does the gentleman from Texas rise in
opposition?
Mr. SANDLIN. Mr. Chairman, I rise in opposition.
The CHAIRMAN pro tempore. The gentleman from Texas is recognized for
10 minutes.
Mr. SANDLIN. Mr. Chairman, I yield myself such time as I may consume.
Everyone is interested in fairness. Everyone is interested in
transparency. I think no one has any opposition to making sure that
both sides in the litigation and the court know about the amount of
attorneys' fees, and that is fine.
But this amendment is one-sided, Mr. Chairman, because this amendment
requires only that the plaintiffs' attorney reveal the amount of fees
to the clients. That is fair to neither the plaintiffs nor the
defendants.
Also, our friends on the other side of the aisle forget to note that
courts already review fees with a long laundry list of issues and
criteria such as time and labor involved, novelty and difficulty of the
questions, skill requisite to perform the employment, the customary
fees and things such as that. So our position is that what is good for
the goose is good for the gander. If we want to have transparency and
we want to know what the fees are, let us talk about the fees on both
sides so everyone knows where we are.
I wonder if the gentleman from Florida would be willing to consider
requiring equal treatment for both sides, require the disclosure of
fees for both defense attorneys and plaintiffs' attorneys.
Request to Offer Modification to Amendment No. 4
Mr. SANDLIN. Mr. Chairman, I ask unanimous consent that the Keller
amendment be amended by inserting the words ``and the defendants''
after ``plaintiffs'' in line 5 of the amendment.
The CHAIRMAN pro tempore. The Chair only would recognize that
unanimous-consent request to make a modification if it was made by the
amendment's sponsor himself.
Mr. SANDLIN. Mr. Chairman, as I said before, this amendment is one-
sided and unfair. If the other side was really interested in letting
consumers and the court and the public know about fees, the other side
would say the defense should reveal the fees that the defense attorneys
are charging, too. That is fair. That is equitable. They know it.
The change I offered to this amendment, which was rejected by the
gentleman from Florida, would have corrected that inequality. I would
support a fair and equitable disclosure of all attorneys' fees, and
those on the other side would not.
I would note that later today the gentlewoman from Pennsylvania (Ms.
Hart) will offer an amendment to commission a study to look at, among
other things, attorneys' fees and get recommendations from experts on
how best to ensure that they are fair and reasonable. Let us not put
the cart before the horse. Let us not make change and then do a study.
If we want to see if fees are fair, if they are equitable, if they are
based upon the law, let us do the study and see what the study says;
then we can look at the changes.
The change should be applicable to the plaintiffs, the change should
be applicable to the defendants. I think the gentlewoman from
Pennsylvania's approach would better ensure that we are addressing the
real problems.
I urge my colleagues to defeat this amendment. If you want to review
attorneys' fees on both sides, then support Hart, support the study.
But do not support one-sided legislation and then have the nerve to get
up here and put the word ``fairness'' in the name of the bill. We know
there is nothing fair about this bill.
Mr. Chairman, I reserve the balance of my time.
The CHAIRMAN pro tempore. The Chair would note that the gentleman
from Texas is not a member of the committee. Therefore, the gentleman
from Florida has the right to close.
Mr. KELLER. Mr. Chairman, I yield 3 minutes to the gentleman from
Virginia (Mr. Goodlatte).
Mr. GOODLATTE. Mr. Chairman, I thank the gentleman from Florida for
yielding me this time. I commend him for offering this amendment and I
strongly support it. Let me tell you why.
To the gentleman from Texas, the plaintiffs in a class action lawsuit
do not pay the defendants' attorneys' fees, but they sure do in some
class actions. How about the Bank of Boston settlement? Would it not
have been a good idea for all the plaintiffs in that case if they knew,
after the attorneys in the case were paid $8.5 million in attorneys'
fees, that the members of the class would then be sued by their own
attorneys to pay $25 million more? Would that not have been a useful
thing for the plaintiffs to have had in that case, when they decide
whether or not they want to support this particular proposed settlement
of the class?
Or how about the plaintiffs in the airline case where the attorneys
received $16 million in fees, and the plaintiffs themselves received
coupons for $25 off a $250 or more airline flight, in other words, a 10
percent reduction? Many of those plaintiffs may have said the attorneys
are getting $16 million and I am getting a coupon, no, I do not want
that settlement. They ought to know that ahead of time.
How about the case against the National Football League, where the
attorneys received $3.7 million and the subscribers got somewhere
between $8 and $20? Maybe they would like that, maybe they would not,
but they ought to know ahead of time before they vote on the
settlement.
How about the Blockbuster case? Twenty-three class action lawsuits in
[[Page H865]]
which the class members got dollar-off coupons and buy-one-get-one-free
coupons; and the attorneys are estimated, we do not know for sure
because we do not have this disclosure requirement, are estimated to
get $9.2 million in attorneys' fees. I think disclosure would be good
in that case as well.
And then, of course, my favorite again, this case where, against
Chase Manhattan Bank, the attorneys get $4 million in fees and the
plaintiffs get a check for 33 cents. But, of course, I remind you again
they had to mail in that acceptance, so it cost them 34 cents to mail
it in to get their 33 cents. I bet people who knew that the attorneys
in this case were getting $4 million would not vote to get a penny off
which is what the net result of that is.
Again, that is the actual check from Chase Manhattan Bank. They cut
all these checks. It cost 33 cents apiece to issue the check plus more
than that to mail the checks to the plaintiffs. The attorneys, of
course, their check is $4 million and I think if the plaintiffs knew
that, they would vote against these settlements. They would let the
court know, do not approve a settlement where all we get is a 33-cent
check and the plaintiffs' attorneys get a $4 million fee.
I urge my colleagues to support this very good amendment.
Mr. SANDLIN. Mr. Chairman, I yield myself such time as I may consume.
The statement from our last speaker shows a gross misunderstanding of
these suits and the way the fees are paid. He indicated that the
plaintiffs do not pay the attorneys. They fail to recognize that there
is only so much money in these suits.
What are the defendants scared of? What are the Enrons of the world
trying to hide? What are the accounting firms trying to hide? What do
the chemical manufacturers want to hide from the public? Why will they
not accept fair and reasonable disclosure of the fees charged by
defense counsel? That is because defense counsel is charging $750 an
hour, $500 an hour, $450 an hour, countless hours with scores of
attorneys, most of them not doing any work.
If we are going to have transparency, if you are really interested in
good public policy, if you really want to know how much fees are being
paid, you should stand up there and do the right thing and say, we
agree that the defense should reveal and show how much the defense is
getting in addition to what the plaintiffs are getting.
Mr. Chairman, I reserve the balance of my time.
Mr. KELLER. Mr. Chairman, I yield myself such time as I may consume.
The gentleman from Texas says, well, let us have the defense
attorneys reveal how much they are charging. What he does not point out
is that the class members themselves in this plaintiffs' suit are bound
to class actions unless they affirmatively opt out.
Defendants, in contrast, actually hire and fire their attorneys.
There is a stark difference. They get those bills on an hourly basis
every month. They know precisely what they are being charged and how
much the attorneys make. It is the poor guy who gets the Cheerios
coupon and then sees the attorney get several million dollars who is a
little bit upset. And he is the one who needs some sunlight here; there
already is sunlight on the other side.
Mr. Chairman, I reserve the balance of my time.
Mr. SANDLIN. Mr. Chairman, I yield such time as he may consume to the
gentleman from Michigan (Mr. Conyers), the ranking member.
Mr. CONYERS. Mr. Chairman, I would like to ask my friend on the
committee, the author of the amendment, the gentleman from Florida (Mr.
Keller). Is he not aware of the fact that in most of these settlements,
the court requires that the amounts of recovery or payment to the
lawyers is revealed in the settlement?
Mr. KELLER. If the gentleman will yield, I am aware that if that is
the case, then he should have no objection to my amendment.
Mr. CONYERS. Is he aware or is he not?
Mr. KELLER. I am aware that a lot of people who are members of the
class are shocked and appalled to find out.
Mr. CONYERS. I know they are shocked, but are you aware? You know
that, do you not?
Mr. KELLER. I am not aware of that most of the time.
Mr. CONYERS. You do not know that.
I thank the gentleman very much. He is not aware of it.
Mr. KELLER. I am aware of the opposite.
Mr. CONYERS. Just a moment, sir. I am not yielding you any more time.
Mr. KELLER. You asked me a question.
Mr. CONYERS. Now that we do understand that this is revealed
frequently in the court, even though the gentleman did not know it
before, the courts make this matter public.
The other thing is, and this is a question I am going to yield to you
on. Are you aware that in section 1715 of this bill that there is the
same provision that you are now offering as an amendment?
I yield to the gentleman.
Mr. KELLER. To answer your first question?
Mr. CONYERS. Just answer this one, please. Are you aware or are you
not?
You are not. Then I suggest you look at section 1715, and you will
see that this request that you are making, as one-sided as it is, is
already in the bill that I guess you are supporting; and so it is
redundant.
I am impressed by the fact that defense attorneys' fees are not to be
revealed, but plaintiffs' attorneys' fees are to be revealed, giving up
yet another secret of the practice, namely, that defense lawyers
frequently get far more than plaintiffs' lawyers.
So thanks a lot for public disclosure. This is a very helpful
amendment in trying to get what we call the vengeance of the ex-trial
lawyers in Congress on their former profession.
{time} 1415
Mr. KELLER. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I was asked several questions and really did not get a
chance to respond to them, but I will go ahead and respond to them now.
I was asked are you aware you already have this identical language in
section 1715? First, I would make the point if the language really were
there, then the gentleman, of course, would have no objection to this
amendment, which he obviously does, so that is a little bit of a
supercilious argument.
Second, having looked directly at section 1715, I can say that
language is not there. There is language talking about on the front end
providing notice to members of the class as to a perspective amount of
payment. My amendment deals with the actual payment that the attorney
has received after there has been a judgment or a settlement. So it is
distinctly different and is worthy of support.
Mr. Chairman, I reserve the balance of my time.
Mr. SANDLIN. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, as was indicated by my friend, the gentleman from
Michigan, fees are already revealed in settlements. Fees are a matter
of public record; and they are approved, the fees, by the court based
upon certain criteria that has been set out and is of long standing
approval by the courts.
There are two basic methods, the percentage method and the load star
method. They have many of the same elements; but they consider things,
such as an evaluation of the number of hours worked, benefits secured,
the nature and complexity of the issues involved, the amount of money
or value of property, the extent of the responsibilities assumed by the
attorney, or that the attorney lost employment as a result of being
employed in this case, novelty and difficulty of the questions, time
limitations, experience, reputation and ability of counsel,
undesirability of the case, awards in similar cases and customary fees.
That is the general rundown. Those things are considered by the court
and fees are placed against that standard when they are approved, and
that is placed in the approval.
Now, true enough, attorneys do get fees and do get paid; but our
friends on the other side do not want the defense to reveal that. Why
not? What are they scared of? What are they hiding? Answer me why the
defense will not do it.
In one case, Food Maker, Inc., as we heard today, killed three
people. The attorneys got paid in a class action, and they got paid
under the criteria that I read to you.
In another case, a sulfuric acid compound leaked from a car in a
General
[[Page H866]]
Chemicals Richmond, California, plant; 24,000 people sought medical
treatment. The attorneys were paid, and they were paid based upon this
criteria.
There was another case where we had $50 million to a class of 3,500
people living near a pesticide plant contaminated in New Orleans. The
amount paid to each plaintiff depended on the years they lived in the
area, the extent of exposure, whether they owned their land, what
illnesses arose, did they increase in severity, all reasonable things.
The attorneys were paid. They were paid based on the criteria approved
by the court and by the law.
Lawyers recently filed assault in New Jersey on behalf of by
diabetics who used the prescription drug Rezulin to lower blood sugar
levels. It was marketed as safe, but later it was showed that it caused
severe liver damage, liver failure or death in 100 cases. It was shown
the manufacturer knowingly concealed facts about the dangers of the
drug from the consumers and the FDA in order to increase sales and make
more money. They reached a settlement, and, you know what? The
attorneys were paid, as they should have been, based upon the criteria
approved by the law.
It is transparent, it is clear. Everyone knows what the plaintiff
gets. Everyone knows what they are paid. And the people here that are
hiding something are over on that side of the aisle that say we refuse
to let you know what defense gets; we refuse to let you know what the
insurance lawyers are paid; we refuse to let you know what corporate
America's attorneys get paid, because it would offend people such as
Enron.
If you want to protect corporate wrongdoers, you need to just get up
there and say it and say that is what we are doing, because there is no
excuse to say it should be transparent on one side but not transparent
on the other. If you want to be fair, be fair; stand up, be fair about
it. If you want to be partisan, if you want to protect corporate
wrongdoers, just get up there and say it, because that is exactly what
you are doing.
Mr. Chairman, I yield back the balance of my time.
Mr. KELLER. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, this is a straightforward amendment. We are just
shedding some sunlight on the situation and requiring that the
plaintiffs' attorneys tell their clients the full amount of fees they
are charging. It is as simple as that. We are not saying how much they
can charge, how little they can charge, just shed some sunlight on the
situation.
We have heard three principal objections to this amendment. First, we
hear that some class actions may have merit, and you hear about the
Enron case. Well, I agree. I think the Enron class action probably does
have merit and probably think there are other class actions that have
merit. This has nothing to do with the merit or lack of merit or any
particular class action. It has nothing to do with how much they can
charge. It simply relates to disclosure of attorney fees, shedding some
sunlight on the situation.
The second thing we have heard is this language of the Keller
amendment is already in the bill. Well, it is not in the bill; but even
if it were, then so be it. That would be great news. Vote for final
passage.
The third thing we hear is, well, defense attorneys should be
required to tell their clients how much they charge. In fact, they do.
In fact, defense attorneys, unlike the poor people in the class,
actually hire and fire their attorneys. They get a monthly statement as
to how much they are being charged. There already is full disclosure on
that side. So there is a clear distinction.
Mr. Chairman, I urge my colleagues to vote ``yes'' on the Keller
amendment. Let us bring some much-needed sunlight to this situation to
require attorneys to disclose their fees.
Mr. KELLER. Mr. Chairman, I yield back the balance of my time.
The CHAIRMAN pro tempore (Mr. Sweeney). The question is on the
amendment, as modified, offered by the gentleman from Florida (Mr.
Keller).
The amendment, as modified, was agreed to.
Withdrawal of Request for Recorded Vote on Amendment No. 2, as
Modified, Offered by Mr. Nadler
Mr. NADLER. Mr. Chairman, earlier I asked for a recorded vote on
amendment No. 2, as modified. I ask unanimous consent to withdraw that
request.
The CHAIRMAN pro tempore. Without objection, the recorded vote
requested by the gentleman from New York (Mr. Nadler) on amendment No.
2, as modified, is withdrawn.
There was no objection.
The CHAIRMAN pro tempore. The amendment is agreed to pursuant to the
voice vote taken earlier today.
It is now in order to consider amendment No. 5 printed in House
Report 107-375.
Amendment No. 5 Offered by Ms. Lofgren
Ms. LOFGREN. Mr. Chairman, I offer an amendment.
The CHAIRMAN pro tempore. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 5 offered by Ms. Lofgren:
Page 15, line 6, strike ``if--'' and all that follows
through line 17 and insert the following: ``if monetary
relief claims in the action are proposed to be tried jointly
in any respect with the claims of 100 or more other persons
on the ground that the claims involve common questions of law
or fact.''.
Page 15, line 21, strike ``The'' and all that follows
through ``subparagraph (A).'' on line 24.
Page 16, line 2, strike ``subparagraph (B)'' and insert
``this paragraph''.
Modification of Amendment No. 5 Offered by Ms. Lofgren
Ms. LOFGREN. Mr. Chairman, I ask unanimous consent to modify
amendment No. 5 so that the page numbers comport with the report this
morning.
The CHAIRMAN pro tempore. The Clerk will report the amendment, as
modified.
The Clerk read as follows:
Amendment No. 5, as modified, offered by Ms. Lofgren:
Page 15, line 15, strike ``if--'' and all that follows
through page 16, line 2, and insert the following: ``if
monetary relief claims in the action are proposed to be tried
jointly in any respect with the claims of 100 or more other
persons on the ground that the claims involve common
questions of law or fact.''.
Page 16, line 6, strike ``The'' and all that follows
through ``subparagraph (A).'' on line 9.
Page 16, line 12, strike ``subparagraph (B)'' and insert
``this paragraph''.
Ms. LOFGREN (during the reading). Mr. Chairman, I ask unanimous
consent that the modification be considered as read and printed in the
Record.
The CHAIRMAN pro tempore. Is there objection to the request of the
gentlewoman from California?
There was no objection.
The CHAIRMAN pro tempore. Without objection, the modification is
agreed to.
There was no objection.
The CHAIRMAN pro tempore. Pursuant to House Resolution 367, the
gentlewoman from California (Ms. Lofgren) and a Member opposed each
will control 10 minutes.
The Chair recognizes the gentlewoman from California (Ms. Lofgren).
Ms. LOFGREN. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, there is no doubt that there have been problems in the
area of class action lawsuits. We have heard some reference to those
problems here today, and certainly the Committee on the Judiciary heard
testimony about some of the issues that do need to be addressed.
However, the fact that there are problems with coupon settlements
does not mean that we can adopt any old thing as a remedy. In fact,
this bill has some flaws, and the amendment before the body now is a
very important amendment because it cures one of those flaws.
This is an amendment that is very important for local prosecutors.
H.R. 2341, oddly enough, prevents district attorneys from taking civil
actions to benefit the public under the guise of ``class action
reform.''
This provision of the bill is opposed by the California District
Attorneys' Association, and that is because this provision of the bill
is not limited to consumer protection class actions brought by
plaintiff attorneys. It has a far-more reaching effect. It federalizes
any State cause of action that is brought on behalf of the general
public.
California, like many other States, has enacted strong antitrust laws
that prohibit unfair combinations and unlawful restraints of trade, and
Californians have chosen to allow their district attorneys, in addition
to the State attorney general, to enforce
[[Page H867]]
these laws in State courts. This bill would usurp California's choice
with an expansive definition of ``class action'' that includes any case
brought on behalf of the general public.
The Federal Government should not force a local prosecutor to try
State antitrust lawsuits in Federal court. Nor should the Federal
Government force local prosecutors to comply with Federal class
certification requirements that they likely cannot comply with, and if
they fail to comply, their cases will be dismissed and very likely they
will not be able to refile in State court.
This bill would have a chilling effect on State and local antitrust
law enforcement, as well as consumer protection actions in the civil
side that are undertaken by district attorneys.
The ability to bring these suits is a powerful tool for local
district attorneys, many of whom, including in my own county of Santa
Clara, have set up consumer protection units. In fact, one such unit in
the San Francisco District Attorney's Office successfully settled a
major consumer protection action against Providian Financial
Corporation that netted $300 million for consumers.
I would note that in addition to standing up for consumers, local
district attorneys can also generate revenue for local government in
their very modest fees that do not match the fees that we have heard
talked about on this floor.
Now, some have asked me, how can this bill do what I have described?
I would simply direct Members to page 15 of the bill where class action
is defined in this way: ``The named plaintiff purports to act for the
interests of its members (who are not named parties to the action) or
for the interests of the general public, seeking a remedy of damages,
restitution, disgorgement, or any other form of monetary relief, and is
not a State attorney general.''
Well, I think the drafters of the bill have understood that State
attorneys general bring civil actions. They just apparently have not
understood that district attorneys and city attorneys can bring those
same kinds of actions. It does not make any sense at all to force those
district attorneys into Federal court, where they are going to then be
asked to comply with rule 23, and the district attorneys will not be
able to comply with rule 23 because they are not bringing a class
action lawsuit, and, then, according to the bill, their lawsuits made
on behalf of the people, most mandatory, will be dismissed.
So this amendment offered by myself and the gentleman from California
(Mr. Schiff), a former prosecutor in California, would remedy this
serious defect in the bill.
I urge its adoption.
Mr. Chairman, I reserve the balance of my time.
The CHAIRMAN pro tempore. Does the gentleman from Wisconsin (Mr.
Sensenbrenner) rise in opposition to the amendment?
Mr. SENSENBRENNER. I do, Mr. Chairman.
The CHAIRMAN pro tempore. The gentleman is recognized for 10 minutes.
Mr. SENSENBRENNER. Mr. Chairman, I yield myself such time as I may
consume.
Mr. Chairman, I rise in strong opposition to this amendment, which
effectively excludes private attorney general claims from the
provisions of H.R. 2341.
Allowing citizens to use private rights of actions as a class is an
enormous loophole in this law that can be easily accessed and lead to
continued abuses in local courts, even in California.
Now, let me say when we are talking about diversity jurisdiction as
established in the Constitution, we are talking about claims between
plaintiffs in different States and defendants in different States, so
if all the plaintiffs lived in California and the defendant was living
in California, there would be no Federal diversity jurisdiction
whatsoever and the case would be tried in the California court.
However, the Federal courts were intended by the Framers in diversity
jurisdiction to get away from having a State court be the hometown
umpire and thus favoring litigants from the State where the court sat.
So if I had a claim and were potentially a member of a class as a
citizen of the State of Wisconsin, I really would not appreciate very
much one of these private attorney general actions litigating my claim
in a California court which is 1,500 miles away from my State. I would
end up having my rights litigated and my remedies extinguished as a
citizen of Wisconsin in a court that I might not think I would get a
fair trial in.
Now, under H.R. 2341, I, as a citizen of Wisconsin, if I were a
defendant in this action, would have the right to remove the case into
a Federal court and even the playing field.
Mr. Chairman, I think we ought to realize that every case that arises
under diversity jurisdiction arises under State law. Cases that arise
under Federal law jurisdiction, the jurisdiction is in the Federal
courts, and they can automatically be removed simply because a Federal
question is posed. So diversity jurisdiction applies where no Federal
question is posed, but you have plaintiffs and defendants who live in
different States and are citizens of different States.
Now, I think that in order to protect the nonresident litigants,
there ought to be a procedure to remove those types of private attorney
general class action claims into Federal court. The bill provides that
procedure. The gentlewoman from California wants to eliminate that
procedure, and that means that those of us who happen to be either
plaintiffs in a class action or a defendant in one of these private
attorney general actions in a State like mine that does not allow them
will end up having the case litigated in a court that might be
thousands of miles away from where we live and would have the hometown
bias.
{time} 1430
That is not what this bill should be about, and that is why I hope
this amendment will be defeated.
Mr. Chairman, I reserve the balance of my time.
Ms. LOFGREN. Mr. Chairman, I yield myself 45 seconds to note that in
the Providian case I mentioned where the district attorney in San
Francisco pursued a remedy for the citizens, the public, the people in
San Francisco, obtaining a $300 million benefit for consumers, there
was incomplete diversity and it was not removed because one of the
subsidiary defendants was from out of State. However, under this act,
that action would have to be removed and would have to be dismissed,
because rule 23 relative to class actions cannot possibly be complied
with by district attorneys acting on behalf of the people, and I think
that this is a very stealthy way to eliminate jurisdiction of district
attorneys and city attorneys acting in their civil capacity on the part
of the people. I would urge that this amendment be adopted to cure this
fatal defect.
Mr. Chairman, I reserve the balance of my time.
Mr. SENSENBRENNER. Mr. Chairman, I yield such time as he may consume
to the gentleman from Virginia (Mr. Goodlatte).
Mr. GOODLATTE. Mr. Chairman, I thank the gentleman for yielding me
this time. I too oppose this amendment.
A rose by any other name would smell as sweet; a class action by any
other name is still a class action. This legislation is designed to
treat all similar types of actions similarly, and it is totally unfair
to place parties in other States at the mercy of those who would have
an exception to this rule that if it were brought by a local prosecutor
or other attorney, that they would then be able to keep these cases in
State court.
As to the concern raised by the gentlewoman regarding the bringing of
these actions in Federal court, no, they do not have to be moved to
Federal court; and if they are, the Federal court judge has wide
latitude to remand cases to State court where the judge finds that an
inequity would result or where it would be better to bring that case in
State court in the first place.
So there is no reason to draw a distinction. There are many, many
class action lawsuits that can and should be heard in the State courts.
If they meet the criteria of the law, they should do it.
This bill is simply designed to make sure that cases that otherwise
could be brought in Federal court because of diversity of jurisdiction
can indeed be
[[Page H868]]
brought for that reason and not bogged down under a $75,000 per
plaintiff limitation, which in so many, many of these class actions
involving peanuts, being the amount of the settlement for the
plaintiffs, could not be brought in Federal court and, instead, gets
brought in that favorite jurisdiction, whether it is in California or
any other State. This levels the playing field and makes sure that all
of these actions are treated fairly and equally. There is no reason to
make a distinction for this type of action.
Mr. Chairman, I would encourage my colleagues to oppose this
amendment.
Mr. SENSENBRENNER. Mr. Chairman, I reserve the balance of my time.
Ms. LOFGREN. Mr. Chairman, I yield 2 minutes to the gentleman from
California (Mr. Schiff).
Mr. SCHIFF. Mr. Chairman, I rise in support of the amendment proposed
by the gentlewoman from California (Ms. Lofgren).
The gentleman who just spoke quoted that a rose by any other name is
still a rose, and I would like to talk about one of those roses that we
talk about frequently in this House, and that is the rose of
federalism, that is the rose of State rights. Because State rights and
deferring to the legislatures of the 50 States is as pure and as
beautiful as a rose, both in this context, as it is in so many other
contexts that our colleagues remind us of from time to time.
What does that mean in the case of this amendment? It means that when
a legislature like that in California passes a law to protect the
consumers of that State by empowering individuals to act as private
attorneys general, rather than simply expanding the attorney general's
office and hiring more and more attorneys general, California has
chosen to protect consumers by empowering individuals to act as the
attorney general when the attorney general lacks the resources to do
it. Maybe the case is too small to impose upon the attorney general, so
private citizens can bring these actions to protect their rights.
This is exactly what the States are supposed to do; they are supposed
to innovate. They are supposed to use new methods of attacking old
problems. So California has used this new method of private attorneys
general to attack unfair business practices.
What is the Congress doing in this bill right now by opposing this
amendment? It is saying that, well, we are fine with federalism, we are
fine with State rights except when the rights are about protecting
consumers; except when we do not like the direction where the State may
be headed.
I served in the California legislature for 4 years. We have very
strong consumer protections. Large corporations that do business in
California, they take advantage of those protections in a positive way.
They take advantage of all of the benefits of California law, and we
should not pass a bill today that basically says that these large, out-
of-state companies that want to take advantage of the good economic
environment in California and sell goods and products and services to
Californians, to take advantage of that forum should be somehow immune,
be able to remove from California courts, maybe remove from California
completely, any action that consumers might bring or a private attorney
general might bring on their behalf. That simply is not right.
A rose by any other name is a rose, and the rose of federalism
supports this amendment. I urge an ``aye'' vote.
Ms. LOFGREN. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman
from Michigan (Mr. Conyers), the ranking member of the full committee.
Mr. CONYERS. Mr. Chairman, I want to compliment the gentlewoman from
California (Ms. Lofgren) on this amendment because the State of
Michigan has precisely the same provision as the State of California.
The gentleman from California (Mr. Schiff) and the gentlewoman from
California (Ms. Lofgren) have explained it perfectly. I just had a
Committee on the Judiciary staffer, Scott Deutchman, call the attorney
general, Jennifer M. Granholm, in Michigan to confirm with her before I
made the statement in support of the Lofgren provision that the
Michigan attorney general is totally supportive and is stunned by the
notion that anything in our laws, our procedures here would require her
or citizens to go into a Federal court to seek a remedy that is
uniquely available to them under State procedures.
So I am very pleased to indicate that our attorneys general and like
those of California are totally in support of the Lofgren amendment. I
hope that the Members will appreciate the significance of this
provision.
Ms. LOFGREN. Mr. Chairman, do I have the right to close?
The CHAIRMAN pro tempore (Mr. Sweeney). The gentleman from Wisconsin
(Mr. Sensenbrenner) has the right to close. The gentlewoman from
California has 1\1/4\ minutes remaining.
Ms. LOFGREN. Mr. Chairman, I yield myself the remaining time.
I have heard the comments that the provision in the bill is fine
because it is diversity jurisdiction, and I just do not buy that
argument. I will tell my colleagues why.
Take a look at the provision that creates sort of class action
coverage for the actions of district attorneys, our local prosecutors.
It specifically exempts State attorneys general. So the argument my
colleagues are making that these cases need to be brought and heard in
Federal court when there is diversity of any sort at all does not wash
if we are exempting the State attorneys general from the provisions of
these consumer protection actions.
I called yesterday, I was ill last week and I wish I had called him
before yesterday, but I called the district attorney in Santa Clara
County. He was stunned to see this provision and adamantly opposes it.
He put me in touch with the California State Attorneys General
Association. They could not believe that this provision would be
proposed; and they were absolutely amazed that it would seriously be
considered, that their divisions that act in behalf of the people would
essentially be shut down because they could never comply with rule 23.
Please, support this amendment and cure this serious problem in the
bill.
Mr. SENSENBRENNER. Mr. Chairman, I yield myself the balance of my
time.
Mr. Chairman, the reason there is an exemption for State attorneys
general in this bill is because the State attorney general is the chief
law enforcement officer of the State. In most States, the attorney
general is an elected official.
Now, if the attorney general is not doing his job, then it is up to
the voters to choose a new attorney general in the next election. But
just because attorneys general might not be able to do their job is no
reason why we should empower a whole host of other people to file
pseudo class actions, which is what the amendment of the gentlewoman
from California seeks to do.
Now, again, diversity jurisdiction interprets State law. Federal
questions are automatically removable to Federal court. The reason the
Framers put diversity jurisdiction into the Constitution was to prevent
a State judge from being a hometown umpire to the prejudice against
citizens of other States who happen to be litigants.
So very simply, what we do in this bill is to provide a better way of
protecting litigants who come from other States. For that reason, I
would urge that this amendment be rejected.
Mr. SENSENBRENNER. Mr. Chairman, I yield back the balance of my time.
The CHAIRMAN pro tempore. The question is on the amendment, as
modified, offered by the gentlewoman from California.
The question was taken; and the Chairman pro tempore announced that
the noes appeared to have it.
Ms. LOFGREN. Mr. Chairman, I demand a recorded vote.
The CHAIRMAN pro tempore. Pursuant to clause 6 of rule XVIII, further
proceedings on the amendment offered by the gentlewoman from California
(Ms. Lofgren) will be postponed.
It is now in order to consider Amendment No. 6 printed in House
report 107-375.
Amendment No. 6 Offered by Mr. Conyers
Mr. CONYERS. Mr. Chairman, I offer an amendment.
The CHAIRMAN pro tempore. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 6 offered by Mr. Conyers:
Page 16, line 2, strike the quotation marks and second
period.
[[Page H869]]
Page 16, insert the following after line 2:
``(10)(A) For purposes of this subsection and section 1453
of this title, a foreign corporation which acquires a
domestic corporation in a corporate repatriation transaction
shall be treated as being incorporated in the State under
whose laws the acquired domestic corporation was organized.
``(B) In this paragraph, the term `corporate repatriation
transaction' means any transaction in which--
``(i) a foreign corporation acquires substantially all of
the properties held by a domestic corporation;
``(ii) shareholders of the domestic corporation, upon such
acquisition, are the beneficial owners of securities in the
foreign corporation that are entitled to 50 percent or more
of the votes on any issue requiring shareholder approval; and
``(iii) the foreign corporation does not have substantial
business activities (when compared to the total business
activities of the corporate affiliated group) in the foreign
country in which the foreign corporation is organized.''.
Amendment No. 6, as Modified, Offered by Mr. Conyers
Mr. CONYERS. Mr. Chairman, I ask unanimous consent to modify the
amendment, and I further request that such modification be considered
as read.
The CHAIRMAN pro tempore. Is there objection to the request of the
gentleman from Michigan?
There was no objection.
The text of amendment No. 6, as modified, is as follows:
Page 16, line 12, strike the quotation marks and second
period.
Page 16, insert the following after line 12:
``(10)(A) For purposes of this subsection and section 1453
of this title, a foreign corporation which acquires a
domestic corporation in a corporate repatriation transaction
shall be treated as being incorporated in the State under
whose laws the acquired domestic corporation was organized.
``(B) In this paragraph, the term `corporate repatriation
transaction' means any transaction in which--
``(i) a foreign corporation acquires substantially all of
the properties held by a domestic corporation;
``(ii) shareholders of the domestic corporation, upon such
acquisition, are the beneficial owners of securities in the
foreign corporation that are entitled to 50 percent or more
of the votes on any issue requiring shareholder approval; and
``(iii) the foreign corporation does not have substantial
business activities (when compared to the total business
activities of the corporate affiliated group) in the foreign
country in which the foreign corporation is organized.''.
The CHAIRMAN pro tempore. Pursuant to House Resolution 367, the
gentleman from Michigan (Mr. Conyers) and a Member opposed each will
control 10 minutes.
The Chair recognizes the gentleman from Michigan (Mr. Conyers).
Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I begin by hoping that this amendment may be accepted;
but moving on, I would describe the amendment to my colleagues.
This is an amendment designed to help adjust the problem that is
happening with increasing frequency where our domestic United States
corporations reincorporate at an office somewhere abroad, out of the
United States, for the purpose of, one, avoiding United States taxes;
and, two, avoiding legal liability.
Now, in the 6 months of our fight against terrorism at home or
abroad, it would seem to me the last thing that we should be doing
would be to pass legislation which would in any way aid, help, or
assist what I would call these corporate tax traitors.
With increasing frequency, there are U.S. companies setting up shell
companies in places like Bermuda, and the company continues to be owned
by United States shareholders, continues to operate in the United
States and do business in the USA and all its locations. The only
difference is that the new foreign company escapes substantial tax
liability and, under the provisions of this bill, could more easily
avoid legal liability in State class action cases.
{time} 1445
The actions of these companies are a slap in the face to every
citizen who works hard and pays their taxes in this country. Our
amendment responds to this egregious behavior by treating the former
United States companies as a domestic corporation for class action
purposes.
Now, apologists for these financial outlaws may attempt to argue that
our amendment may not be necessary because the bill only deals with
national class actions. But, Mr. Chairman, nothing could be further
from the truth.
Under this bill, actions involving State consumer protection laws
brought by residents who all reside in one State could be removable to
a Federal court simply because the financial outlaws tried to abscond
from the State. This is not a national class action. This is a State
class action that belongs in a State court, the fact that a financial
corporate outlaw engaged in a sham transaction should be irrelevant as
far as the legal liability in these cases would be concerned.
So the bottom line is simple: as presently written, the bill gives a
liability windfall to these foreign tax evaders. Today we have an
opportunity to send a message that it is wrong to pretend one is a U.S.
corporation when one is incorporated in Bermuda. It is wrong to seek
the benefits of corporate citizenship without responsibility. It is
wrong to engage in sham offshore transactions which leave hard-working
United States citizens paying more taxes because they are paying less.
Mr. Chairman, I urge support for this Conyers-Jackson-Lee-Neal
amendment.
Mr. Chairman, I reserve the balance of my time.
The CHAIRMAN pro tempore (Mr. Sweeney). Does any Member rise in
opposition?
Mr. GOODLATTE. Mr. Chairman, I claim the time in opposition.
The CHAIRMAN pro tempore. The gentleman from Virginia (Mr. Goodlatte)
is recognized for 10 minutes.
Mr. GOODLATTE. Mr. Chairman, I yield myself such time as I may
consume.
Mr. Chairman, I rise in strong opposition to this amendment. This is
a red herring if there ever was one. There is nothing in this
legislation that has anything to do with the tax liability of
corporations that may have been moved offshore. To raise it in this
class action lawsuit is a big mistake. It would provide more
jurisdiction over larger cases to State courts and undermine our effort
to allow Federal courts jurisdiction over large, interstate class
actions, the very point of bringing this legislation forward. The most
complex cases should be heard in the courts designed to hear them: the
Federal courts.
Attempting to redefine the home base of a corporation just for the
purposes of class action lawsuits will not affect any other lawsuits
brought against the corporation. It certainly will not affect their tax
liability. If this amendment is about tax loopholes, then that is
something that should be dealt with by the Committee on Ways and Means.
This amendment is intended to prevent nationwide, even international,
class actions having national implications then plaintiffs from many
States from being heard in Federal court.
The premise of H.R. 2341 is to allow Federal courts to resolve these
large class actions in a balanced and fair way. That is why the
Founding Fathers created article III courts, to resolve Federal
questions and issues of a wide degree of diversity. That is what class
actions are by their very nature.
The fact of the matter is that a dispute between two individuals from
different States for slightly more than $75,000 can be resolved by a
Federal court, but with a national class action worth billions of
dollars, in the case of this amendment a foreign corporation, the case
cannot be heard in Federal court. That is wrong.
I urge my colleagues to oppose this amendment. It is something that
would give State courts jurisdiction over cases that involve U.S.
companies that have been purchased by foreign companies. These are
generally large, nationwide lawsuits that we are talking about. They
are precisely the kind of cases that should be brought and heard in
Federal court.
I urge my colleagues to oppose the amendment.
Mr. Chairman, I reserve the balance of my time.
Mr. CONYERS. Mr. Chairman, I am pleased to yield 2 minutes to the
gentleman from Massachusetts (Mr. Neal), who has worked on this subject
matter for many years.
Mr. NEAL of Massachusetts. Mr. Chairman, I thank the gentleman from
Michigan (Mr. Conyers) for yielding time to me and certainly
acknowledge some of the questions that have been raised by a former
constituent of mine, the gentleman from Virginia (Mr. Goodlatte).
[[Page H870]]
But I want to call attention to this issue. The gentleman from
Colorado (Mr. McInnis) is sitting on the floor, as well. I know that he
has filed similar legislation to the bill that I filed last week.
Let me, if I can, Mr. Chairman, outline the nexus of this problem.
Last week the Defense Department announced that the U.S. was sending
military advisers to Yemen, the Philippines, and Georgia, in the former
USSR. This is going to be expensive, but we acknowledge it is a
necessary defensive action.
And as we prosecute this war on terrorism, Mr. Chairman, one U.S.
corporation next week will vote on whether or not to leave the United
States solely to avoid U.S. income taxes, taxes which our constituents
and I will have to pay more of to fund this war against evil.
Today I am urging the Members to support a commonsense amendment
telling these corporate expatriates, these financial deceivers, that
they should not enjoy special legal protections. This amendment is
based on bipartisan legislation that surely at some point is going to
see the light of day and make it to the floor of this House.
But, Mr. Chairman, one accountant, a very aggressive accountant, I
might add, advised her clients just 3 months ago to sneak out of the
United States; just leave in the dark of night to avoid paying American
income taxes. The Treasury Department just stated 2 weeks ago: ``We are
seeing a marked increase in the size and frequency of these
transactions.'' For a mere $27,000, a corporate expatriate can rent a
post office box offshore and avoid $40 million in Federal income taxes.
If individuals were doing this, the American people would be
outraged. As our Senate colleague from Iowa, the ranking Republican on
the Finance Committee, said last week, it is a slap in the face to
individual taxpayers who bear the brunt of the total Federal tax burden
when the business community buys into these deals. Support this
amendment today denying a liability windfall to these corporations that
shelve the Stars and Stripes to simply save on the bottom line.
Mr. GOODLATTE. Mr. Chairman, it is my pleasure to yield 3 minutes to
the gentleman from Colorado (Mr. McInnis).
Mr. McINNIS. Mr. Chairman, I thank the gentleman for yielding time to
me.
First of all, I agree with the comments of the gentleman from
Michigan (Mr. Conyers). I agree with most of the comments of the
gentleman from Massachusetts (Mr. Neal). I think it would be
beneficial, and we would ask the gentleman to merge his bill with our
bill.
Mr. NEAL of Massachusetts. Mr. Chairman, will the gentleman yield?
Mr. McINNIS. I yield to the gentleman from Massachusetts.
Mr. NEAL of Massachusetts. Mr. Chairman, perhaps the gentleman from
Colorado (Mr. McInnis) would merge his bill with my bill. We are only 5
percent different.
Mr. McINNIS. Mr. Chairman, as the first in order of number, we will
take the gentleman on our bill.
Mr. Chairman, the point is, we agree on the substance of the abuse
that is taking place out there, and we want to close the loophole. This
is not the bill to close the hole. This is not the Committee on Ways
and Means, and this is not the Committee on Ways and Means' bill.
What has happened here is they put this amendment out, I think,
simply to express our disdain, properly express our disdain with what
is going on out there and with what some of the corporations are doing,
including Stanley Tool Corporation and some others that I think ought
to be held publicly accountable.
In fact, I would say to the gentleman from Massachusetts, I was at a
dinner last weekend with several hundred blue-collar workers,
mechanics; and I urged every one of them not to buy Stanley tools as a
result of what Stanley Tool Corporation is attempting to do. While our
American young people fight overseas, we have these corporations that
enjoy the protection of this putting up a post office box in Bermuda.
This simply has nothing to do with it. This amendment deals with
diversity. This amendment deals with standing. To try and link, to make
that leap, we are not making the link. So the issue is right and the
platform is wrong.
Mr. CONYERS. Mr. Chairman, will the gentleman yield?
Mr. McINNIS. I yield to the gentleman from Michigan.
Mr. CONYERS. Mr. Chairman, I just want to compliment the gentleman on
his support for the theory behind this.
I would just point out to him that escaping legal liability is not a
function of any other committee but the Committee on the Judiciary. So
we are not trying to get to the tax prosecution, sir. We are just
getting to those who are escaping, to escape the kind of jurisdiction
of class action suits.
Mr. McINNIS. Reclaiming my time very quickly, Mr. Chairman, I am not
trying to take jurisdiction from the gentleman's committee, obviously.
I disagree that this amendment is going to do what the gentleman is
saying it is going to do. I say that with all due respect. I think this
amendment out there is simply to bring up this discussion.
We ought to have lots of discussion and public exposure, I say to the
gentleman from Massachusetts (Mr. Neal), on what is going on out there.
It is wrong. But this is not the platform to do it. This amendment does
not accomplish what the sponsors say it will as far as the legal
corporation for standing in class suits and diversity. I think it is a
good discussion, wrong place.
Mr. GOODLATTE. Mr. Chairman, will the gentleman yield?
Mr. McINNIS. I yield to the gentleman from Virginia.
Mr. GOODLATTE. Mr. Chairman, would the gentleman from Colorado (Mr.
McInnis) agree that not only is this not the right place to do this,
but this amendment does not cure the problem that the gentleman is
talking about? It has nothing to do with changing the tax laws of these
corporations.
Mr. McINNIS. Reclaiming my time, Mr. Chairman, the gentleman from
Virginia is absolutely correct. This does not accomplish what the
intent behind it may be, and the proper discussion that is taking place
here really will take place in great detail in front of the Committee
on Ways and Means with both of our bills, and I urge that is where we
move it back to and get on with the business at hand.
Mr. CONYERS. Mr. Chairman, I yield such time as she may consume to
the gentlewoman from Texas (Ms. Jackson-Lee), who is a cosponsor of the
amendment.
(Ms. JACKSON-LEE of Texas asked and was given permission to revise
and extend her remarks.)
Mr. CONYERS. Mr. Chairman, will the gentlewoman yield?
Ms. JACKSON-LEE of Texas. I yield to the gentleman from Michigan.
Mr. CONYERS. Mr. Chairman, I just wanted to go back to the comments
of the gentleman from Colorado (Mr. McInnis), who I more frequently see
on Special Orders at night in my home than I do on the floor. I am
happy to find he and I in agreement.
But he asked the question, will this amendment accomplish what we say
it will. Well, we have talked with the American Law Division, and they
agree that, in its current form, the measure offers new abilities, this
bill, to remove cases to Federal court for companies that engage in
corporate repatriation transactions that are not available under
present law.
So, in other words, the only place we can stop this is in the
Committee on the Judiciary in terms of this jurisdictional opportunism.
Ms. JACKSON-LEE of Texas. Mr. Chairman, I thank the gentleman for
yielding to me, and I would like to pursue the argument he just made. I
think that is the crux of the difference of opinion that we have in
opposing this legislation but supporting this amendment. That is, where
there is a benefit, there has to be a burden.
I think that the Committee on the Judiciary in this jurisdiction is
frankly the appropriate place for this amendment to be placed, because
what we are suggesting is that if one is absconding from the United
States, absconding from paying taxes, then one should not have the
benefit of going into the Federal courts where they will be able to, in
essence, block petitioners who are in a class action litigation.
We are opposed to this particular legislation because it does
undermine
[[Page H871]]
class actions that have been successful in State courts. Let me cite an
example: Foodmaker, Inc., the parent company of Jack-in-the-Box
restaurants, agreed to pay $14 million in a class action settlement in
Washington. The class included 500 people, mostly children, who became
sick early in 1993 after eating undercooked hamburgers tainted with e.
Coli bacteria.
The victims suffered from a wide range of illnesses, from more benign
sicknesses to those that required kidney dialysis. Three children died.
The settlement was approved on September 25, 1996, in King County,
Washington Superior Court.
If, for example, this legislation was in place, there is clear
opportunity, possibly if one of the plaintiffs had just moved over to
Oregon or had been visiting from Oregon, that case would have been in a
Federal court.
We are suggesting that if one absconds from the United States in
order not to pay taxes, if this legislation were to have passed, we do
not believe they should have any right to the benefit of moving the
case, a class action case, to the Federal courts. That is the crux of
this. This is the bill that is moving through the House now.
I certainly appreciate the legislation of the gentleman from
Massachusetts (Mr. Neal), and I want to support the legislation. I
appreciate his support. He is on the Committee on Ways and Means.
{time} 1500
That bill can move of its own legs, and we will support it, but this
bill is moving, and we are only talking about legal liability, the
inability to access the Federal court, a benefit that one would secure
if this legislation passed. We want to block that benefit because we
need to protect consumers on this.
Let me just simply say, we are standing here today to say to
Americans, who have just gone through a traumatic experience with the
collapse of a major corporation, that we are going to smack them in the
face and go against the rights of consumers. We are also going to allow
someone who absconds to another island, another place to establish a
foreign corporation, to now not only access the Federal courts and
benefit from the presence of that legislation, but also not pay taxes.
This is a common-sense, good-sense consumer protection amendment, and
I believe my colleagues, if they look at it, will understand it is
appropriately tracking this legislation which is under the jurisdiction
of the Committee on the Judiciary, because we are preventing them from
having a legal benefit when they abscond from the United States and
desire not to pay taxes.
Thank you Mr. Chairman and Ranking Member Conyers.
I am proud to join Mr. Conyers in offering the Conyers Jackson-Lee
Neal amendment which would deny corporations who relocate to foreign
countries simply to avoid paying income taxes from enjoying the
benefits of this bill.
As the saying goes, ``death and taxes are the only guarantees in
life''. You and I could never avoid paying taxes, but we try to
minimize them to the best of our ability. The same philosophy applies
to companies.
However, there is a growing trend in this country where American
companies are incorporating Bermuda, or other countries that do not
have income taxes, to avoid paying taxes altogether while maintaining
the benefits and security of doing business in the United States. But
these companies don't actually relocate to Bermuda. Rather, they are a
Bermuda corporation only on paper.
But the tax benefits are profound. Tyco International, a diversified
manufacturer headquartered in New Hampshire but incorporated in
Bermuda, saved more than $400 million last year in taxes alone. And
Stanley Works, a Connecticut manufacturer for 159 years, will cut its
tax bill by $30 million a year to about $80 million.
Although it is a growing trend, some companies hesitate to
incorporate in Bermuda because of patriotism issues, especially after
the tragedies of September 11. But low and behold, ``profits trump
patriotism''.
Enron Corp had set up an estimated 2,800 to 3,000 ``special purpose
entities'' (SPEs) in an attempt to hid amounting debt and losses and to
avoid paying taxes. As a matter of fact, Enron had not paid any income
taxes in the last five years. And due to the nature of these
transactions, and the fact that these SPEs were created as a separate
entity from Enron, government officials have been unable to acquire
more information to determine the extent of liability.
Allowing companies who relocate to foreign countries simply to avoid
paying taxes and still benefit from class actions in a federal forum
would enable a defendant corporation to avoid accountability and result
in the plaintiff class having a more difficult time seeking redress.
Again, this amendment would attempt to bring justice within the reach
of the victims aggrieved by these corporate giants. I ask my colleagues
to support this amendment.
Mr. CONYERS. Mr. Chairman, I yield back the balance of my time.
The CHAIRMAN pro tempore (Mr. Sweeney). The gentleman from Virginia
(Mr. Goodlatte), who has the right to close, has 4 minutes remaining.
Mr. GOODLATTE. Mr. Chairman, I yield myself the balance of the time.
Mr. Chairman, frankly this amendment is not just wrong, it does not
make any sense at all. What the other side is proposing to do here will
not have the effect that they are suggesting. They are limiting the
options of those who would bring class action lawsuits against some of
these corporations that they refer to.
There are many instances now in which a case cannot be brought in
Federal court because of this diversity rule which could be brought
against those corporations; in my State of Virginia, for example, a
State that does not recognize class action lawsuits, so making it
easier to bring actions in Federal court is not something that is going
to harm these corporations whatsoever.
As explained during the Committee on the Judiciary markup, the
purpose of this amendment is to discourage companies from moving their
parent entities offshore, to turn them into foreign corporations in
order to achieve tax advantages. Thus, although this amendment does not
seek to derail enactment of the core provision of the bill, that is,
the provisions expanding Federal diversity jurisdiction over interstate
class actions, it would preclude companies owned by foreign or offshore
companies from exercising that change.
This effort to establish tax policy through procedural and
jurisdictional rules applicable to civil litigation is truly bizarre,
the ultimate non sequitur.
As stated by its authors, the purpose of the amendment is to punish
companies with offshore owners by forcing them to litigate class
actions brought against them in State court, while companies that have
U.S. parents may remove their cases to Federal court under the expanded
Federal jurisdiction of provisions of this bill.
Obviously, making this sort of distinction among companies based on
foreign ownership is a constitutionally suspect policy, but equally
important is the fundamental premise of the amendment, that forcing
parties to litigate interstate class actions in State courts
constitutes a sort of punishment.
Thus, although this amendment should be defeated, it does suggest
agreement on the key predicate for H.R. 2341: State courts are not an
ideal place for parties to litigate class actions.
This amendment should be defeated, but this amendment should be
remembered as confirming the key reasons why the overall bill, the
fundamental provisions of H.R. 2341, should be enacted.
Let us not limit the choice that is involved here where these cases
can be considered. Let us make the Federal diversity rules work. That
is what this bill is about. That is what this amendment would defeat,
and I urge my colleagues to oppose the amendment.
Mr. Chairman, I yield back the balance of my time.
The CHAIRMAN pro tempore. The question is on the amendment, as
modified, offered by the gentleman from Michigan (Mr. Conyers).
The question was taken; and the Chairman pro tempore announced that
the noes appeared to have it.
Mr. CONYERS. Mr. Chairman, I demand a recorded vote.
The CHAIRMAN pro tempore. Pursuant to clause 6 of rule XVIII, further
proceedings on the amendment offered by the gentleman from Michigan
(Mr. Conyers) will be postponed.
Sequential Votes Postponed In Committee Of The Whole
The CHAIRMAN pro tempore. Pursuant to clause 6 of rule XVIII
proceedings will now resume on those amendments on which further
proceedings were postponed in the following order: Amendment No. 3
offered
[[Page H872]]
by the gentlewoman from California (Ms. Waters); Amendment No. 5
offered by the gentlewoman from California (Ms. Lofgren); and Amendment
No. 6 offered by the gentleman from Michigan (Mr. Conyers).
The Chair will reduce to 5 minutes the time for any electronic vote
after the first vote in this series.
Amendment No. 3, As Modified, Offered by Ms. Waters
The CHAIRMAN pro tempore. The pending business is the demand for a
recorded vote on Amendment No. 3, as modified, offered by the
gentlewoman from California (Ms. Waters) on which further proceedings
were postponed on which the noes prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
Recorded Vote
The CHAIRMAN pro tempore. A recorded vote has been demanded.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 174,
noes 251, not voting 9, as follows:
[Roll No. 56]
AYES--174
Abercrombie
Ackerman
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Becerra
Berkley
Berman
Berry
Bishop
Bonior
Borski
Boswell
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Carson (OK)
Clay
Clayton
Clement
Clyburn
Conyers
Costello
Coyne
Crowley
Cummings
Davis (CA)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Doyle
Edwards
Engel
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frost
Gephardt
Gilman
Gonzalez
Gordon
Green (TX)
Gutierrez
Hall (OH)
Harman
Hastings (FL)
Hilliard
Hinchey
Hoeffel
Holt
Honda
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lowey
Luther
Lynch
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Moore
Moran (VA)
Murtha
Nadler
Neal
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Ross
Rothman
Roybal-Allard
Rush
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Smith (WA)
Solis
Spratt
Stark
Strickland
Stupak
Tanner
Thompson (CA)
Thompson (MS)
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wynn
NOES--251
Aderholt
Akin
Allen
Armey
Bachus
Baker
Ballenger
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blumenauer
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Boucher
Boyd
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Chambliss
Coble
Collins
Combest
Condit
Cooksey
Cox
Cramer
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis (FL)
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frank
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (TX)
Hansen
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill
Hilleary
Hobson
Hoekstra
Holden
Hooley
Horn
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
John
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
Kind (WI)
King (NY)
Kingston
Kirk
Kleczka
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lofgren
Lucas (KY)
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McKeon
McNulty
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Mollohan
Moran (KS)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Oberstar
Osborne
Ose
Otter
Oxley
Paul
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Sabo
Sanchez
Saxton
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Snyder
Souder
Stearns
Stenholm
Stump
Sullivan
Sununu
Sweeney
Tancredo
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Thurman
Tiahrt
Tiberi
Toomey
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Wu
Young (AK)
Young (FL)
NOT VOTING--9
Barrett
Bentsen
Blagojevich
Davis (IL)
Eshoo
Hinojosa
Kilpatrick
Napolitano
Traficant
{time} 1527
Messrs. SKEEN, BOEHNER, GREENWOOD, EHLERS, HILL, BOOZMAN, Ms. PRYCE
of Ohio, Ms. GRANGER, and Mrs. THURMAN changed their vote from ``aye''
to ``no.''
Mr. TIERNEY changed his vote from ``no'' to ``aye.''
So the amendment was rejected.
The result of the vote was announced as above recorded.
Stated for:
Ms. NAPOLITANO. Mr. Chairman, I was in the Chamber intending to vote
``yes'' on rollcall 56. Had I voted I would have voted ``aye'' on
rollcall 56.
Announcement by the Chairman Pro Tempore
The CHAIRMAN pro tempore (Mr. Sweeney). Pursuant to clause 6 of rule
XVIII, the Chair announces that he will reduce to a minimum of 5
minutes the period of time within which a vote by electronic device
will be taken on each amendment on which the Chair has postponed
further proceedings.
Amendment No. 5, As Modified, Offered by Ms. Lofgren
The CHAIRMAN pro tempore. The pending business is the demand for a
recorded vote on the amendment, as modified, offered by the gentlewoman
from California (Ms. Lofgren) on which further proceedings were
postponed and on which the noes prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
Recorded Vote
The CHAIRMAN pro tempore. A recorded vote has been demanded.
A recorded vote was ordered.
The CHAIRMAN pro tempore. This is a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 194,
noes 231, not voting 9, as follows:
[Roll No. 57]
AYES--194
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Becerra
Berkley
Berman
Berry
Bishop
Blumenauer
Bonior
Borski
Boswell
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Carson (OK)
Clay
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Cramer
Crowley
Cummings
Davis (CA)
Davis (FL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley
Doyle
Edwards
Engel
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank
Frost
Gephardt
Gilman
Gonzalez
Gordon
Green (TX)
Gutierrez
Hall (OH)
Harman
Hastings (FL)
Hill
Hilliard
Hinchey
Hoeffel
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kind (WI)
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Luther
Lynch
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
[[Page H873]]
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Ross
Rothman
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Strickland
Stupak
Tanner
Tauscher
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Watson (CA)
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NOES--231
Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Boucher
Boyd
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Chambliss
Coble
Collins
Combest
Cooksey
Cox
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (TX)
Hansen
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hilleary
Hobson
Hoekstra
Holden
Horn
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
John
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Stenholm
Stump
Sullivan
Sununu
Sweeney
Tancredo
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Upton
Vitter
Walden
Walsh
Wamp
Waters
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NOT VOTING--9
Barrett
Bentsen
Blagojevich
Davis (IL)
Eshoo
Hinojosa
Kilpatrick
Pelosi
Traficant
{time} 1536
So the amendment, as modified, was rejected.
The result of the vote was announced as above recorded.
Amendment No. 6, As Modified, Offered by Mr. Conyers
The CHAIRMAN pro tempore. The pending business is the demand for a
recorded vote on amendment No. 6, as modified, offered by the gentleman
from Michigan (Mr. Conyers) on which further proceedings were postponed
and on which the noes prevailed by voice vote.
The Clerk will designate the amendment.
The Clerk designated the amendment.
Recorded Vote
The CHAIRMAN pro tempore. A recorded vote has been demanded.
A recorded vote was ordered.
The CHAIRMAN pro tempore. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 202,
noes 223, not voting 9, as follows:
[Roll No. 58]
AYES--202
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Becerra
Berkley
Berman
Berry
Bishop
Blumenauer
Bonior
Borski
Boswell
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Carson (OK)
Castle
Clay
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Crowley
Cummings
Davis (CA)
Davis (FL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dingell
Doggett
Dooley
Doyle
Duncan
Edwards
Engel
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank
Frost
Gephardt
Gilman
Gonzalez
Gordon
Green (TX)
Gutierrez
Hall (OH)
Harman
Hastings (FL)
Hilliard
Hinchey
Hoeffel
Holden
Holt
Honda
Hooley
Hoyer
Hunter
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson (CT)
Johnson (IL)
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kind (WI)
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Luther
Lynch
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Ross
Rothman
Roybal-Allard
Royce
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NOES--223
Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Boucher
Boyd
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Chabot
Chambliss
Coble
Collins
Combest
Cooksey
Cox
Cramer
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Dicks
Doolittle
Dreier
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (TX)
Hansen
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill
Hilleary
Hobson
Hoekstra
Horn
Hostettler
Houghton
Hulshof
Hyde
Isakson
Issa
Jenkins
John
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roukema
Ryan (WI)
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Stenholm
Stump
Sullivan
Sununu
Sweeney
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
[[Page H874]]
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NOT VOTING--9
Barrett
Bentsen
Blagojevich
Davis (IL)
Eshoo
Hinojosa
Istook
Kilpatrick
Traficant
{time} 1544
So the amendment, as modified, was rejected.
The result of the vote was announced as above recorded.
{time} 1545
The CHAIRMAN pro tempore (Mr. Shimkus). It is now in order to
consider amendment No. 7 printed in House Report 107-375.
Amendment No. 7 Offered by Ms. Jackson-Lee of Texas
Ms. JACKSON-LEE of Texas. Mr. Chairman, I offer an amendment.
The CHAIRMAN pro tempore. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 7 offered by Ms. Jackson-Lee of Texas:
Page 18, line 14, strike the quotation marks and second
period.
Page 18, insert the following after line 14:
``(g) Certain Actions Not Removable.--A party to a class
action may not remove the class action to a district court
under this section if that party has been found by a court to
have knowingly altered, destroyed, mutilated, concealed,
falsified, or made a false entry in, any record, document, or
tangible object in connection with that class action.''.
Modification of Amendment No. 7 Offered by Ms. Jackson-Lee of Texas
Ms. JACKSON-LEE of Texas. Mr. Chairman, I ask unanimous consent to
modify the amendment, and further request that such modification be
considered as read.
The CHAIRMAN pro tempore. Is there objection to the request of the
gentlewoman from Texas?
There was no objection.
The text of the amendment, as modified, is as follows:
Amendment No. 7, as modified, offered by Ms. Jackson-Lee of
Texas:
Page 18, line 25, strike the quotation marks and second
period.
Page 18, add the following after line 25:
``(g) Certain Actions Not Removable.--A party to a class
action may not remove the class action to a district court
under this section if that party has been found by a court to
have knowingly altered, destroyed, mutilated, concealed,
falsified, or made a false entry in, any record, document, or
tangible object in connection with that class action.''.
The CHAIRMAN pro tempore. Pursuant to House Resolution 367, the
gentlewoman from Texas (Ms. Jackson-Lee) and a Member opposed each will
control 10 minutes.
The Chair recognizes the gentlewoman from Texas (Ms. Jackson-Lee).
Ms. JACKSON-LEE of Texas. Mr. Chairman, I yield myself such time as I
may consume.
Mr. Chairman, we have before the House today the Class Action
Fairness Act of 2002, and what those of us who believe this legislation
could either be made better or in fact does not really speak to the
interests of consumers are trying to do is to ensure that those who are
fraudulent, those who misrepresent, those who would abscond and not pay
taxes, not have the benefit of an action or legislation that is
proposed to be in the Class Action Fairness Act.
The amendment I offer today strikes at the very heart of consumer
protection. It strikes at the very heart of the ability of any litigant
to go into court with a fair opportunity to pursue their case.
This amendment would prohibit the removal provision in section 5 of
this bill from applying if a party to a class action suit destroys
material relating to the subject matter of the class action or makes a
misrepresentation with respect to the existence of such materials.
The destruction of documents, particularly in contemplation of
litigation, is already a sanctionable act. Destroying such documents
prohibits the discovery of truth and justice. If a party participates
in such activity, they should not have the benefit of removing a class
action suit to Federal court jurisdiction, where this bill makes it
more difficult for the class to be certified. Justice requires that
these parties remain under State jurisdiction, where the playing field
will be more level.
It is obvious that when you are trying to put together a massive
class action case, there is nothing more daunting and devastating to
your case than losing, the destruction of, or misrepresentation over,
documents. An example of this would be the collapse of Enron, the
Texas-based energy trading giant, that once was America's seventh
largest company, now undergoing America's largest-ever bankruptcy.
On behalf of Enron employees, both existing and those who are no
longer Enron employees, the fact that there are documents that no
longer exist undermines probably the bankruptcy case and any other
matter that they would be pursuing. It is certainly a case that when
you lose documents, you lose a part of your case.
Mr. Chairman, this amendment seeks not to give giant corporate
defendants in a class action lawsuit more benefits in defending their
suit. They have deep pockets for such expenses as legal fees, travel
and expert witnesses, which the class does not have.
Again, how daunting it would be to find out that documents that you
might be able to secure no longer exist. So the information has been
retained by the defendant; but you, the petitioner in the class action,
have no way of accessing it.
We must maintain the spirit to which class action lawsuits were
developed, to efficiently bring justice to a large group of people
victimized by historically large, giant, multiconglomerate
corporations.
In addition, Mr. Chairman, I might say that the court of equity was
the first place the State class actions was to go based on common law,
common sense, equity and fairness. To destroy documents strikes at the
very heart of the access of the little person to get in the courtroom.
This amendment would prohibit the removal provision in Section 5 of
this bill from applying if a party to a class action suit destroys
material relating to the subject matter of the class action, or makes a
misrepresentation with respect to the existence of such materials.
The destruction of documents, particularly in contemplation of
litigation, is already a sanctionable act. Destroying such document
prohibits the discovery of truth and justice. If a party participates
in such activity, they should not have the benefit of removing a class
action suit to federal court jurisdiction where this bill makes it more
difficult for the class to be certified. Justice requires that these
parties remain under state jurisdiction where the playing field will be
more level.
An example of this would be the collapse of Enron Corporation, the
Texas-based energy-trading giant that was once America's seventh-
biggest company, now undergoing America's largest ever bankruptcy
proceeding. Enron is based in my District--the 18th District of Texas.
Enron's former accounting firm, Arthur Andersen, in light of
approaching litigation, organized the destruction of tons of Enron-
related documents that may have been potentially harmful and would have
subjected Andersen to civil as well as criminal liability.
Mr. Chairman, this amendment seeks to not give giant corporate
defendants in a class action lawsuit more benefits in defending their
suit. They have deep pockets for such expenses as legal fees, travel,
expert witnesses, for which the class does not have. And we must
maintain the spirit to which class action lawsuits were developed--to
efficiently bring justice to a large group of people victimized
historically by corporate giants.
I ask my colleagues to support this amendment.
Mr. Chairman, I reserve the balance of my time.
The CHAIRMAN pro tempore. Does the gentleman from Wisconsin (Mr.
Sensenbrenner) rise in opposition to the amendment?
Mr. SENSENBRENNER. I rise in opposition to the amendment.
The CHAIRMAN pro tempore. The gentleman from Wisconsin is recognized
for 10 minutes.
Mr. SENSENBRENNER. Mr. Chairman, I yield myself such time as I may
consume.
Mr. Chairman, if the civil and criminal law did not provide for
sanctions against those who deliberately destroy documents, I believe
that the arguments of the gentlewoman from Texas would be valid. But
they do. Adopting the amendment that she proposes will simply allow the
trial lawyers to have another tool to game the system and to prevent
the removal of cases that really should be removed as a result of the
changes in the diversity of citizenship requirements that are contained
in this bill.
Let me point out that in many instances, the destruction of
subpoenaed
[[Page H875]]
documents is a criminal obstruction of justice. The gentlewoman from
Texas keeps on bringing up the case of Enron. There is a criminal
investigation going on whether Enron and Arthur Andersen and other
people who are involved in this obstructed justice by altering or
destroying documents. I hope that that investigation is thorough, and,
if there is probable cause to believe that such misconduct happened,
that the Justice Department will seek indictment, prosecute those who
are responsible, the jury will convict them, and I hope that the judge
sentences them to jail for a long, long time, because destroying
documents that are needed to fairly administer justice is something
that cannot be tolerated, and it goes to the very heart of the ability
of the courts to fairly mete out justice. We wish the gentlewoman were
on the other side when we were talking about that when President
Clinton was accused of destroying documents a few years ago.
But on the civil side, there are plenty of sanctions that can be
imposed by a court if discovery is being thwarted, up to and including
the court ordering a default judgment entered against a defendant that
destroys documents and completely obstructs the discovery that the
Federal Rules of civil procedure allow.
Mr. Chairman, I will tell you what will happen if the Jackson-Lee
amendment becomes a part of this bill and the bill becomes law, and
that is there will be repeated allegations of misconduct through the
destruction of documents. When an allegation is made, the court is
going to have to hold a hearing on it and take testimony and make a
determination on whether removal can be thwarted because of the
provision of the Jackson-Lee amendment. As a result, it ends up being
tried in the State court, because the Federal court will not be able to
determine whether or not a case is removable.
Now, that is ridiculous. If this type of amendment was put into law,
if there was a civil action filed alleging a civil rights violation in
a State court with a redneck judge anywhere in the country, this game
could be played to prevent the Federal court from getting jurisdiction
over it, and that would be equally ridiculous in terms of thwarting the
administration of justice.
Now, this bill, in section 1716(C)(2), provides that discovery should
not proceed while a motion to dismiss an action is pending and also
during appeals from class certification rulings.
But the bill flatly states that in these circumstances, discovery
shall proceed where necessary to preserve evidence and to prevent undue
prejudice. Thus the bill anticipates and deals with document
destruction risk and gives the Federal court the authority to prevent
documents that are necessary to find out what the true facts are from
being altered or mutilated or destroyed.
According to the Manual for Complex Litigation, third edition, courts
normally issue orders requiring the preservation of documents at the
outset of litigation of such cases. Thus any document-destruction risk
is addressed by such orders. So we do not need additional laws, civil
laws, statutory laws or criminal laws, to protect against the
destruction and mutilation of documents.
The amendment of the gentlewoman from Texas merely gives the trial
lawyers' bar another tool to game the system. It is unnecessary because
of the other provisions of law and rule that I stated and should be
rejected.
Mr. Chairman, I reserve the balance of my time.
Ms. JACKSON-LEE of Texas. Mr. Chairman, I yield myself 30 seconds.
Mr. Chairman, first of all, I totally agree with my chairman in that
I hope that all those who have misrepresented and destroyed documents
in the present ongoing protracted episode of Enron and Arthur Andersen
are in fact brought to justice. That we agree on.
With respect to my position on the Clinton documents, my amendment
responds to that by indicating that it should be a court-determined
destruction of documents. That was not the case in the Clinton
situation.
So I would hope that we recognize that if you are court determined to
have destroyed documents, then you do not need the benefit of this
legislation.
Mr. Chairman, I yield 1\1/2\ minutes to the distinguished gentleman
from Washington (Mr. Inslee).
(Mr. INSLEE asked and was given permission to revise and extend his
remarks.)
Mr. INSLEE. Mr. Chairman, we hope that the first legislation passed
in this House in the post-Enron world should not be to make the world
safer for Enron.
My friend, the gentleman from Wisconsin (Mr. Sensenbrenner),
challenged me earlier when I said that this could make the world safer
for Enron. Well, we just did a little bit of research about that over
the lunch hour and found a case called Bullock v. Arthur Andersen, et
al. It is a case in Washington County, Texas. If it were to be
certified as a class action under this legislation, the defendants, who
include some names Andrew Fastow, Kenneth Lay and Jeffrey Skilling,
would be given the privilege by your legislation to force this to be
removed to Federal court away from Washington County.
Now, that is exactly one of the reasons why we think this is the
wrong approach. And even if you exempted Enron in its entirety, Enron
is an example of why we are going the wrong way because of all the
other companies that potentially could be liable.
Mr. SENSENBRENNER. Mr. Chairman, will the gentleman yield?
Mr. INSLEE. I yield to the gentleman from Wisconsin.
Mr. SENSENBRENNER. Mr. Chairman, do the three gentlemen that the
gentleman mentioned live in Texas?
Mr. INSLEE. Mr. Chairman, reclaiming my time, I do not know the
residence. I cannot tell the gentleman offhand. But I can say this is
subject to your bill if it is a class action, and therefore it is
wrong.
Mr. SENSENBRENNER. Mr. Chairman, if the gentleman will yield further,
if they all live in Texas, the case is not removable because there is
not diversity.
Mr. INSLEE. Mr. Chairman, reclaiming my time, the point I bring to
the gentleman's attention is this is exactly the kind of case that is
subject to removal if there is diversity. They plead fraud, they pled
negligence; and under your statute, you want to give them the right to
get out of Texas into Federal court. We think that is wrong.
Ms. JACKSON-LEE of Texas. Mr. Chairman, I yield myself 10 seconds to
say that some the defendants in the case that the gentleman from
Washington (Mr. Inslee) was speaking of dealing with Enron are not from
Texas.
Mr. Chairman, I yield 2 minutes to the distinguished gentleman from
Texas (Mr. Sandlin), a former State district court judge in the State
of Texas.
Mr. SANDLIN. Mr. Chairman, in the law we have a doctrine called the
``clean hands doctrine.'' Courts express it by saying he who seeks
equity must do equity.
We have seen precious little equity today. First, our friends want to
reveal plaintiffs' fees and what they receive, but when we ask to
reveal the exorbitant fees of the corporate attorneys and insurance
attorneys and defense attorneys, they said no.
I have got a question: What are you hiding? What are you hiding?
You said the recovery in Cheerios is not enough. You forgot to tell
us that the expensive litigation is between the insurance companies.
The defendants have been indicted, tried and sent to prison.
You are outraged that the plaintiffs have received too little money
in one case, but there is absolutely no outrage in your position when a
major American company, Nestle, put sugar water in bottles and sold it
to American mothers to give to children. You got no outrage in that,
other than the attorneys got paid.
Well, surely, surely you can support legislation that says if you
destroy evidence, if you commit a crime, if you do things that you are
not supposed to do, you do not get the benefit of the law. If you
commit a crime, you do not have clean hands. If you destroy evidence,
you do not get the benefit of the legislation. Surely you can support
something as clean as that.
{time} 1600
Mr. SENSENBRENNER. Mr. Chairman, I yield myself 15 seconds.
Mr. Chairman, if the gentleman from Texas was so interested in
disclosing defendant's fees, he could have gone to the Committee on
Rules and asked
[[Page H876]]
them to make in order an amendment for the disclosure of defendant's
fees. He failed to do so, and that is why we are not considering this
today under the structured rule.
Mr. Chairman, I yield such time as he may consume to the gentleman
from Virginia (Mr. Goodlatte).
Mr. GOODLATTE. Mr. Chairman, I thank the gentleman for yielding me
this time. I also strongly oppose this amendment.
This amendment is doing what those offering amendments have already
done on two other occasions in this debate so far, and that is to try
to obscure what this legislation is all about with unrelated issues.
Whether or not a case is heard in Federal court or State court has
nothing to do with whether or not documents have been destroyed.
In the earlier debate with regard to the Waters amendment, we pointed
out all of the tools that are available to a Federal court judge when
documents are destroyed in a case. It could very well be much better
that the case is in Federal court rather than State court, and we
should not write law based upon unrelated matters.
That is exactly what has been offered here repeatedly today to try to
obfuscate the issue here, which is a very simple one, and that is that
our Federal diversity rules are written in such a way that the most
complex litigation in the country cannot get into the courts that were
not designed to handle diversity cases and designed to handle more
complex litigation and designed to consolidate class actions brought in
various parts of the country related to the same issue.
When we create these artificial barriers to removing the case, we are
not accomplishing justice for the plaintiff or the defendant. Somebody
in the case has to have the ability to remove the case to Federal
court. What we say is that any party in the case should be able to do
that. If they have unclean hands, address that with the Rules of
Procedure that exist in the Federal Rules.
Ms. JACKSON-LEE of Texas. Mr. Chairman, will the gentleman yield?
Mr. GOODLATTE. I yield to the gentlewoman from Texas.
Ms. JACKSON-LEE of Texas. Mr. Chairman, I appreciate the gentleman's
argument.
The crux of these amendments that we have been offering on this
legislation is to talk about benefit and burden. This amendment
specifically says if the court has determined that documents have been
destroyed, what we are doing is undermining the plaintiffs' case, which
typically are little people who have come together in a class action.
That defendant who has destroyed documents should not be allowed to
take the benefit of this legislation if it passes. That is all we are
saying.
Mr. GOODLATTE. Mr. Chairman, reclaiming my time, there are a
multitude of Federal Rules of Civil Procedure, and I do not know of
other ones, in which the law says in advance that because somebody did
something else somewhere else unrelated to the issue of whether the
case belongs in Federal court or State court would be prohibited from
raising that issue. It is a matter of fairness for everybody involved,
but that is particularly true of the plaintiffs.
We are trying to create an environment here where cases can be heard
in such a way that uniform fairness applies. If we start drawing
distinctions between domestic corporations and foreign corporations and
somebody who may have shredded documents for a good reason or for a bad
reason and deciding whether or not they can remove cases to court, that
is simply bad public policy and should not be the measure upon which
this bill is voted upon; and certainly this amendment should be
opposed.
Ms. JACKSON-LEE of Texas. Mr. Chairman, I am delighted to yield 2\1/
2\ minutes to the distinguished gentleman from Texas (Mr. Doggett), a
former member of the Texas Supreme Court.
Mr. DOGGETT. Mr. Chairman, I thank the gentlewoman for yielding me
this time.
How truly typical it is, sad though it is, that the first piece of
legislation dealing with the Enron-Andersen fiasco that our House
Republican leadership permits us to discuss here on the floor of the
United States Congress is a bill designed to protect the wrongdoer and
to place more burdens on the victims. This is exactly the opposite of
where our priorities should be; yet that is the approach that is taken
with this piece of legislation.
It is rather fundamental that a right without a remedy, is rather
meaningless. People do not choose to come together in class actions
because they like to be in a class with many other people; they come
together in class actions because often, that is the only way, given
the complexities of our legal system and the tremendous imbalance in
power between one individual who has been defrauded and one of the
largest corporations in the world, to equalize the power. If they are
working together in a class, they may have a chance, difficult as it
may be, to equate in our courts of justice their rights against those
who have wronged them.
All this bill is designed to do is to help those, who committed
wrongs to avoid responsibility for their wrongdoing. This bill seeks to
ensure that wrongdoers are not held personally accountable for their
misconduct, if they just took a little from everybody instead of a
great deal from a few.
As for the importance of the gentlewoman's amendment in the debate on
this particular bill, the only thing that has been faster than those
shredding machines shredding up the documents of misconduct at Enron
and Andersen, the only thing faster than those shredders is the spin
machine running here in Washington today, spinning that this bill to
help some avoid responsibility has anything to do with helping American
families. Get serious.
The judges of the States of the United States, our State court
judges, have not asked for this. Our Federal court judges, upon whom
the burden will be placed of handling these cases, are already
overburdened; they have not asked for it. The National Conference of
State Legislatures opposes it. This is the wrong thing to do at the
wrong time. It is being done only to protect wrongdoers like Enron and
Andersen, and it ought to be rejected.
To aid even those who tear up documents and give them additional
rights in our courts is particularly outrageous.
I commend the gentlewoman for attempting to resolve this problem, and
I recommend her amendment.
Mr. SENSENBRENNER. Mr. Chairman, how much time is remaining on each
side?
The CHAIRMAN pro tempore (Mr. Shimkus). The gentleman from Wisconsin
(Mr. Sensenbrenner) has 1\1/2\ minutes remaining; the gentlewoman from
Texas (Ms. Jackson-Lee) has 1 minute remaining.
Parliamentary Inquiry
Ms. JACKSON-LEE of Texas. Mr. Speaker, I have a parliamentary
inquiry.
The CHAIRMAN pro tempore. The gentlewoman will state it.
Ms. JACKSON-LEE of Texas. As the proponent of the amendment, do I
have the right to close?
The CHAIRMAN pro tempore. The Member on the committee opposing the
amendment has the right to close.
Ms. JACKSON-LEE of Texas. I thank the Chair.
The CHAIRMAN pro tempore. Does the gentleman from Wisconsin wish to
close?
Mr. SENSENBRENNER. The gentleman does wish to close.
The CHAIRMAN pro tempore. The Chair recognizes the gentlewoman from
Texas (Ms. Jackson-Lee).
Ms. JACKSON-LEE of Texas. Mr. Chairman, I yield myself the remaining
time, although I was hoping to hear the distinguished chairman's
representation of the Cheerio box.
But let me say this, in all sincerity: We have come into some very
troubling times in the litigation history of America. With Enron as a
backdrop, and Firestone that knowingly sold defective tires where tread
separation caused more than 800 injuries, and Monsanto, which hid 40
years' worth of dumping toxic PCBs, there is great opportunity for
documents to be destroyed, because people want to win. The only
opportunity for the little guy to achieve victory sometimes is to
organize a class action.
They have been successful in State courts, but they cannot be
successful under this legislation, nor can they be
[[Page H877]]
successful when those will go knowingly into the courthouse, who have
destroyed documents, fraudulently misrepresented and disadvantaged
their cases.
This amendment will prevent that kind of action, allowing those who
have been found to have destroyed documents not to take advantage of
this legislation. This is consumer protection legislation. I cannot
imagine any of my colleagues that would not support this amendment.
I ask my colleagues to support the Jackson-Lee amendment.
Mr. SENSENBRENNER. Mr. Chairman, I yield myself the balance of the
time.
Mr. Chairman, I am really disappointed in the argument of the
gentleman from Texas (Mr. Doggett), who is a distinguished former
member of the State Supreme Court, saying that this has to do with
Enron. Enron is in bankruptcy. Bankruptcy is a Federal law. The Federal
bankruptcy court will determine the rights of all people who have got
claims against Enron, and there is an automatic stake that is entered
by the Federal court when a bankruptcy is filed against proceeding in
any other court, State or Federal, besides the bankruptcy court.
Now, I think what we are really getting down to is, how are consumers
being protected? I do not think most consumers really care whether a
class action suit is litigated in State court or Federal court; they
care what kind of recompense they get, should the class action suit be
resolved.
I have this box of Cheerios here, because General Mills, which owns
Cheerios, was sued in a class action suit alleging that there were
harmful additives in Cheerios. When the case was settled, what did all
the members of the class get? A coupon to buy another box of Cheerios.
If Cheerios had food additives that were so damaging, that caused
millions of dollars in lawyers' fees to settle this suit out, then why
would the lawyers sign off to require people who wanted to cash in on
their settlement to eat more Cheerios? It does not make any sense.
The amendment ought to be rejected.
The CHAIRMAN pro tempore. The question is on the amendment, as
modified, offered by the gentlewoman from Texas (Ms. Jackson-Lee).
The question was taken; and the Chairman pro tempore announced that
the noes appeared to have it.
Ms. JACKSON-LEE of Texas. Mr. Chairman, I demand a recorded vote.
The CHAIRMAN pro tempore. Pursuant to clause 6 of rule XVIII, further
proceedings on the amendment offered by the gentlewoman from Texas (Ms.
Jackson-Lee) will be postponed.
It is now in order to consider Amendment No. 8 printed in House
report 107-375.
Amendment No. 8 Offered by Mr. Frank
Mr. FRANK. Mr. Chairman, I offer an amendment.
The CHAIRMAN pro tempore. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 8 offered by Mr. Frank:
Page 18, line 14, strike the quotation marks and second
period.
Page 18, insert the following after line 14:
``(g) Procedure After Removal.--If, after an action is
removed under this section, the court determines that any
aspect of the action that is subject to its jurisdiction
solely under the provisions of section 1332(d) may not be
maintained as a class action under Rule 23 of the Federal
Rules of Civil Procedure, the court shall remand all such
aspects of the action to the State court from which the
action was removed. In such event, the State court may
certify the action or any part thereof as a class action
pursuant to the laws of that State, and such action may not
be removed to Federal court unless it meets the requirements
of section 1332(a).''.
Modification to Amendment No. 8 Offered by Mr. Frank
Mr. FRANK. Mr. Chairman, I was informed, and perhaps I should have
been paying closer attention, that there was some line number item
alteration and I, therefore, in compliance with what has happened, ask
unanimous consent to modify the amendment, and I request that the
modification be considered as read.
The CHAIRMAN pro tempore. Is there objection to the request of the
gentleman from Massachusetts?
There was no objection.
The text of Amendment No. 8, as modified, is as follows:
Page 18, line 25, strike the quotation marks and second
period.
Page 18, insert the following after line 25:
``(g) Procedure After Removal.--If, after an action is
removed under this section, the court determines that any
aspect of the action that is subject to its jurisdiction
solely under the provisions of section 1332(d) may not be
maintained as a class action under Rule 23 of the Federal
Rules of Civil Procedure, the court shall remand all such
aspects of the action to the State court from which the
action was removed. In such event, the State court may
certify the action or any part thereof as a class action
pursuant to the laws of that State, and such action may not
be removed to Federal court unless it meets the requirements
of section 1332(a).''.
The CHAIRMAN pro tempore. Pursuant to House Resolution 367, the
gentleman from Massachusetts (Mr. Frank) and a Member opposed each will
control 10 minutes.
The Chair recognizes the gentleman from Massachusetts (Mr. Frank).
Mr. FRANK. Mr. Chairman, I yield myself such time as I may consume.
When I originally heard of this bill, I was inclined to be
supportive. It was described to me several years ago as a bill that
would more accurately determine, in fact, whether a class action was
multistate or unistate in its real focus. I was told, and I think there
is some accuracy, that the technical way in which the diversity rules
operated resulted in some class actions that really were national in
scope being tried in particular State courts when, under our system of
government, they would more appropriately be tried in Federal court;
and I thought that was reasonable, and I supported a bill that would do
that, and I still would, unlike some of my colleagues here.
When I read the bill, though, it became clear that the bill does not
simply say that certain class actions will be tried in Federal court
rather than State court; much of its attraction, I believe, to its
proponents is that it will make sure that certain potential class
actions are never tried at all. That is the way the bill reads.
If a class action is brought in State court, and under the
liberalized removal procedures of this bill, it is then removed to
Federal court, and a Federal judge finds that he or she does not
believe that it meets the requirements for a Federal class action, it
is dismissed, in effect, with prejudice. That is, it cannot ever again
be tried as a class action. If it was restarted in State court, it
would go back again to Federal court, which would again dismiss it, so
that would be fruitless. An individual case could obviously be brought.
So I have been asked if this is an amendment that guts the bill. I do
not think it guts the bill. I think it does something of which I am
generally more in favor. I think it outs the bill. What it does is to
say, let us stop pretending to be something we are not. Let us not
claim simply to be a bill that is about which jurisdiction tries the
case. Let us be clear that its impetus is to reduce the number of class
actions, because people believe that some States imprudently and
improvidently allow class actions and because some Members in the
majority, many of them, do not trust all of the State courts to
honestly apply class action rules; they want to be able to go into
Federal court so the Federal court can, in some cases, prevent the
class action from being maintained anyway.
Again, under the proposal that I advance in my amendment, if, in
fact, the case meets the criteria set forward in this bill for removal,
it is removed, and the Federal court can go forward with it. The only
change I make is, the Federal court does not have the option of saying,
this can never be tried as a class action.
So I hope the Members will adopt it.
Mr. Chairman, I reserve the balance of my time.
Mr. SENSENBRENNER. Mr. Chairman, I yield myself such time as I may
consume, and I rise in opposition to the amendment and claim the time
in opposition.
Mr. Chairman, this can be called the two-or-more-kicks-at-the-cat
amendment, because what the gentleman is proposing is that when the
Federal court refuses to certify a class, then it goes back to State
court and the State court looks at it again and may certify a class.
While most States have got class action rules similar to rule 23 of the
Federal Rules of Civil Procedure, they are not always uniformly
applied, and that is why there is all this forum shopping that is going
around that has caused this bill to come before the House of
Representatives today.
[[Page H878]]
{time} 1615
So I think that we really should not allow two kicks at the cat. They
can have their day in court. If the Federal court determines that the
Federal rules do not allow for the certification of a class, then we
should not go back to square one and have the plaintiffs' lawyers shop
around to a friendly State judge that may very well certify that the
class that is not allowed in the Federal rules ends up getting
certified and the trial ends up proceeding.
So I think that everybody should have one day in court, not more than
one day in court. For that reason, I would urge that the amendment be
rejected.
Mr. Chairman, I reserve the balance of my time.
Mr. FRANK. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, the very purpose of that amendment is to guarantee that
as a class action you will get one day in court. Without that
amendment, the bill gives no days in court.
Mr. Chairman, I ask unanimous consent that the gentleman from
California (Mr. Berman) be allowed to control the time.
The CHAIRMAN pro tempore (Mr. Shimkus). Is there objection to the
request of the gentleman from Massachusetts?
There was no objection.
Mr. BERMAN. Mr. Chairman, I yield myself 3 minutes.
Mr. Chairman, just on the good chairman's last point, he wants to
give people a day in court. As the gentleman from Massachusetts (Mr.
Frank), the author of the amendment, just pointed out, without this
amendment, there is no day in court. They file their class action in
State court, the defendants remove it to Federal court, the Federal
court refuses to certify it, remanding it back to the State court, they
pursue it in State court, and they remove it again back to Federal
court. They never get a chance to try it.
If this bill is about trying to have cases, legitimate Federal class
action cases, heard in Federal court and not in State courts, then the
amendment does nothing to destroy the focus of this bill.
If this bill is about removing the ability of local judges, rather
than Federal judges, to give hometown kinds of decisions and rulings,
there is nothing in this amendment that hurts this bill.
It is only if one accepts, which I believe is true, that the only
purpose of this bill is to eliminate any State or any of the 50 States'
ability to decide there are certain kinds of class actions they want to
hear that come outside the scope of rule 23, and that, in effect, this
bill wipes out the right of all 50 States to make that decision, and
defines rule 23 in the Federal courts as the only place to ever bring a
class action, that is the only reason to oppose this amendment.
It is hard for me to believe that States' rights-loving adherents to
federalism who see a role for the Federal courts and the State courts
could, with a straight face, promote this bill, which, in effect,
preempts and sucks up all class action rights, forces them into Federal
court, eliminates a State legislature and a State judiciary's ability
to decide that, there are situations and circumstances where we want a
State class action body of law to exist that go beyond the Federal rule
23.
I urge an ``aye'' vote for this amendment. I think it is essential.
With this amendment, this bill truly becomes an effort to get the true
Federal class action cases into Federal court and still allows the
States to decide if there are areas left out where they want to allow
at least some jurisdiction so that the person can have his day in at
least one court.
Mr. Chairman, I reserve the balance of my time.
Mr. SENSENBRENNER. Mr. Chairman, I yield 2 minutes to the gentleman
from Ohio (Mr. Chabot).
Mr. CHABOT. I thank the gentleman for yielding time to me, Mr.
Chairman.
I rise in strong support of the bill and in opposition to this
particular amendment. It undermines the principles of H.R. 2341, which
is that large interstate class actions should be allowed in Federal
court because many State courts are not effectively processing these
lawsuits.
As chairman of the Subcommittee on the Constitution, I welcome the
opportunity to address the criticism that this legislation would
diminish State court authority or otherwise offend basic federalism
principles.
Opponents of this bill have suggested that removing a lawsuit filed
in State court to Federal court deprives the State court of its right
to decide matters of State law. But all State law-based actions do not
presumptively belong in State court. Federal diversity jurisdiction,
established by no less than the Framers of the United States
Constitution, allows State law-based claims to be moved from local
courts to Federal courts to ensure that all parties will be able to
litigate on a level playing field and that interstate commerce
interests will be protected.
Additionally, the expansion of diversity included in the Class Action
Fairness Act is consistent with current diversity laws, since it allows
Federal courts to hear large cases which have interstate implications.
By nature, class actions fulfill these requirements.
Mr. Chairman, in most State law-based class actions, the proposed
classes encompass residents of multiple States. Thus, the trial court,
regardless of whether it is a State or Federal court, must interpret
and apply the laws of multiple jurisdictions. It is far more
appropriate for a Federal court to interpret the laws of various States
as opposed to having one State court dictate the substantive laws of
other States.
For that and other reasons, I would oppose this particular amendment,
and I urge my colleagues to oppose the amendment.
Mr. FRANK. Mr. Chairman, I ask unanimous consent to reclaim my time.
The CHAIRMAN pro tempore. Is there objection to the request of the
gentleman from Massachusetts?
There was no objection.
Mr. FRANK. Mr. Chairman, I yield 2\1/2\ minutes to my colleague, the
gentleman from Massachusetts (Mr. Meehan).
Mr. MEEHAN. Mr. Chairman, I rise in strong support of this amendment.
Let us be clear: the vote on this amendment will tell us whether this
is a bill aimed at giving Federal courts the chance to deal with class
actions that they currently cannot, or whether this is a bill aimed at
just shutting down all class actions. That is what this is about.
Under this amendment, a class action originally filed in State court
could still be removed to Federal court. But let us say that a Federal
court will not certify that class. That is where the rubber meets the
road. The failure to get class certification in Federal court does not
mean that the suit lacks merit. It does not mean this case will be
decided on the merits. It simply means it does not meet rule 23.
But the sponsors of this bill would shut down class actions right
there, just shut them all down, whether they have merit or whether they
do not, saying that if it is refiled in State court, it gets shunted
back out to the Federal court that has already said it will not hear
it. So what is the result? There is a merry-go-round that begins. It is
nothing more than a merry-go-round. Justice is delayed, and then it is
denied.
So this bill goes beyond giving Federal courts a chance to hear and
use their powers to consolidate class actions that they currently
cannot touch. It blocks class actions that were capable of being
certified under State law. This amendment would stop the merry-go-round
by letting that class action, sent back to State court, move forward on
the merits.
There was a letter by a well-known outside group in support of this
bill in 1998. This is what the outside group said. I think it kind of
gets to the meat of what we are talking about here: ``This bill would
enable class action suits filed in State courts to be moved to Federal
court, where such wasteful lawsuits can easily be dismissed.''
That is what an outside group said. We should not let that happen. If
this is a bill about taking any kind of lawsuit and saying that they
are all wasteful and dismissing them early, then let us say that is
what this is about. That is what the group said earlier.
This amendment allows the framers of the bill, the authors of the
bill, to get their way in terms of having Federal courts to deal with
these, but lets the State courts hear these actions on the merits if
they do not meet the
[[Page H879]]
technical definition of a class action suit.
We should not let this happen. We want to support this bill. This
bill should not be about killing class action. Support this amendment.
Mr. SENSENBRENNER. Mr. Chairman, I yield 3 minutes to the gentleman
from Virginia (Mr. Boucher).
(Mr. BOUCHER asked and was given permission to revise and extend his
remarks.)
Mr. BOUCHER. Mr. Chairman, I thank the gentleman from Wisconsin for
yielding time to me.
Mr. Chairman, I will be brief in stating my opposition to this
amendment. If the amendment is adopted, the basic reforms that we are
seeking to achieve simply will not be achieved. Some cases simply
should not be certified as class actions, either in the Federal or the
State courts.
Federal Rule of Civil Procedure 23 is narrowly drawn so as to protect
the rights of both plaintiffs and defendants to traditional due process
as their rights are litigated. Under rule 23, cases that are overly
broad because of conflicting laws that establish the rights of
individual class members, or because of the factual differences in the
circumstances of the plaintiffs, will not be certified as class
actions. Only through denial of certification can the rights of the
plaintiff class members be protected.
When cases are denied class action status, all of the individual
plaintiffs are then free to file their individual claims, no one is
denied a right to recover damages, and another class action can be
instituted in State court if it is reconfigured to be a state-centered
class action.
I want to stress that denial of class action status in Federal court
when the case is removed does not mean an end to the litigation. It
does not preclude recovery by the plaintiffs, either in individual
actions or in a reconfigured class action proceeding.
But if the gentleman's amendment is adopted, any case which, because
of its broad scope, cannot meet the requirements of Federal Rule 23,
and therefore is dismissed as a class action in Federal court, could
then be certified as a class action in State court from which it was
removed. The case would be free to proceed as a State class action, and
no further removal to Federal court would then be allowed.
Under the amendment, the cases that are truly national in scope would
still be heard in State court, and some States would continue to apply
their often unique laws to govern the rights of plaintiffs who live in
States that have laws that would dictate that an opposite result be
reached.
This extraterritorial application of State law does serious damage to
our traditional principles of federalism. It is a kind of reverse
federalism that should not continue. But under the amendment that is
now pending, it would continue. Our basic reform would not be achieved.
The amendment is a recipe for a continuation of the status quo, and I
urge that it not be accepted.
Mr. FRANK. Mr. Chairman, I yield myself such time as I may consume.
I thank the gentleman from Virginia for the honesty with which he
acknowledged that the effect of the bill without the amendment, and
indeed the purpose, is to prevent many cases from being class actions
at all.
I differ with one aspect of his argument when he said that some truly
national cases will then be, under my amendment, brought to State
court. No, I think that is not true. If they are truly national and
they truly represent a national class, they will be tried in Federal
court, because under this bill, the Federal court can, under the terms
of this bill, take the case from the State court if somebody moved it
and try it in the Federal court. So we are not saying that truly
national ones cannot be done in Federal court.
What this bill does is to say very simply, in modern slang, rule 23
rules. What it says is this: rule 23 of the Federal Rules of Civil
Procedure describing class actions is now, by this bill, the rule for
every State in America. No State can deviate from rule 23, because if
you have a different description of what class action ought to be, then
you will lose to the Federal people.
Now, I find it particularly odd that my friends who pretend to be for
States' rights, and excuse me, I do not want to violate the rules, who
assert that they are for States' rights, now want to say that rule 23
will preempt any State law to the contrary, because that is what this
bill does. This bill says the Federal standard for class action will be
the standard to govern everywhere.
Mr. SENSENBRENNER. Mr. Chairman, I yield the balance of my time to
the gentleman from Arizona (Mr. Flake).
The CHAIRMAN pro tempore. The gentleman from Arizona (Mr. Flake) is
recognized for 3\1/2\ minutes.
Mr. FLAKE. Mr. Chairman, I thank the gentleman for yielding time to
me.
Mr. Chairman, what this boils down to is if we believe there is a
need for reform, it is with class action or not. If Members do not
believe there is a need for reform, then this amendment is fine,
because under this amendment we have no change at all. There is no
reform, because anything that goes to the Federal court can come right
back to the State court, where the abuse occurred in the first place.
The examples of abuse are rampant here. We have gone through them
before, but it serves us well to go through a few of them again.
In this case, trial lawyers, $2 million; the plaintiffs, a coupon for
a box of Cheerios. That kind of abuse, if allowed by this amendment,
would go up to the Federal court. If the Federal court says under rule
23 it does not qualify as a class action, it goes back to the State
court, where the abuse can occur again.
{time} 1630
The other example, trial lawyers get over $100,000; the plaintiffs,
four golf balls.
If my colleagues do not think that that is abuse, then this amendment
is fine. If Members do, strike down the amendment; do not vote for the
amendment because we need reform, and we need it now.
Next example, where the attorneys were awarded $4 million, what did
the plaintiffs get? Thirty-three cents, only after they sent in for it,
costing them 34 cents. So a net loss of one cent.
If Members do not think there is at least a need for reform, vote for
the amendment. If Members agree that there is abuse, then they had
better vote for the amendment because it will occur regardless
otherwise. If it goes to State court or Federal court, goes back to
State court, we have the abuse again. It does not solve anything.
I urge my colleagues to vote against the amendment. It is the only
way reform will occur. Vote against the amendment. If Members vote for
the amendment, no reform occurs. If Members believe that we have
fraudulent abuse as it stands, Members have to vote against the
amendment.
If Members believe the situation, the status quo is fine, then
certainly vote for the amendment.
The CHAIRMAN pro tempore (Mr. Shimkus). All time for debate has
expired.
The question is on the amendment, as modified, offered by the
gentleman from Massachusetts (Mr. Frank).
The question was taken; and the Chairman pro tempore announced that
the noes appeared to have it.
Mr. FRANK. Mr. Chairman, I demand a recorded vote.
The CHAIRMAN pro tempore. Pursuant to clause 6 of rule XVIII, further
proceedings on the amendment, as modified, offered by the gentleman
from Massachusetts will be postponed.
It is now in order to consider Amendment No. 9 printed in House
Report 107-375.
Amendment No. 9 Offered by Ms. Hart
Ms. HART. Mr. Chairman, I offer an amendment.
The CHAIRMAN pro tempore. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 9 offered by Ms. Hart:
Page 19, insert the following after line 11 and redesignate
the succeeding section accordingly:
SEC. 7. REPORT ON CLASS ACTION SETTLEMENTS.
(a) In General.--Not later than 12 months after the date of
the enactment of this Act, the Judicial Conference of the
United States, with the assistance of the Director of the
Federal Judicial Center and the Director of the
Administrative Office of the United States Courts, shall
prepare and transmit to the Committees on the Judiciary of
the Senate and House of Representatives a report on class
action settlements in the Federal courts.
(b) Content.--The report under subsection (a) shall
contain--
[[Page H880]]
(1) recommendations on the best practices that courts can
use to ensure that proposed class action settlements are fair
to the class members whom the settlements are supposed to
benefit;
(2) recommendations on the best practices that courts can
use to ensure that--
(A) the fees and expenses awarded to counsel in connection
with a class action settlement appropriately reflect the
extent to which counsel succeeded in obtaining full redress
for the injuries alleged and the time, expense, and risk that
counsel devoted to the litigation; and
(B) the class members on whose behalf the settlement is
proposed are the primary beneficiaries of the settlement; and
(3) the actions that the Judicial Conference of the United
States has taken and intends to take toward having the
Federal judiciary implement any or all of the recommendations
contained in the report.
(c) Authority of Federal Courts.--Nothing in this section
shall be construed to alter the authority of the Federal
courts to supervise attorney's fees.
Modification of Amendment No. 9 Offered by Ms. Hart
Ms. HART. Mr. Chairman, I ask unanimous consent to modify the
amendment and further request that such modification be considered as
read.
The CHAIRMAN pro tempore. Is there objection to the request of the
gentlewoman from Pennsylvania?
There was no objection.
The text of the amendment, as modified, is as follows:
Page 19, insert the following after line 21 and redesignate
the succeeding section accordingly:
SEC. 7. REPORT ON CLASS ACTION SETTLEMENTS.
(a) In General.--Not later than 12 months after the date of
the enactment of this Act, the Judicial Conference of the
United States, with the assistance of the Director of the
Federal Judicial Center and the Director of the
Administrative Office of the United States Courts, shall
prepare and transmit to the Committees on the Judiciary of
the Senate and House of Representatives a report on class
action settlements in the Federal courts.
(b) Content.--The report under subsection (a) shall
contain--
(1) recommendations on the best practices that courts can
use to ensure that proposed class action settlements are fair
to the class members whom the settlements are supposed to
benefit;
(2) recommendations on the best practices that courts can
use to ensure that--
(A) the fees and expenses awarded to counsel in connection
with a class action settlement appropriately reflect the
extent to which counsel succeeded in obtaining full redress
for the injuries alleged and the time, expense, and risk that
counsel devoted to the litigation; and
(B) the class members on whose behalf the settlement is
proposed are the primary beneficiaries of the settlement; and
(3) the actions that the Judicial Conference of the United
States has taken and intends to take toward having the
Federal judiciary implement any or all of the recommendations
contained in the report.
(c) Authority of Federal Courts.--Nothing in this section
shall be construed to alter the authority of the Federal
courts to supervise attorney's fees.
The CHAIRMAN pro tempore. Pursuant to House Resolution 367, the
gentlewoman from Pennsylvania (Ms. Hart) and a Member opposed each will
control 10 minutes.
The Chair recognizes the gentlewoman from Pennsylvania (Ms. Hart).
Ms. HART. Mr. Chairman, I yield myself such time as I may consume.
The editorial that many have referred to today that appeared in last
Saturday's Washington Post supporting the passage of H.R. 2341 did get
it right. Too often our current class action system allows trial
lawyers to enrich themselves without benefiting those that those
lawyers represent.
As presented, though, H.R. 2341 would have corrective influence on
this problem, particularly by allowing the removal of more interstate
class actions from the State courts to the Federal courts. Empirical
data indicate that this problem of attorneys getting the biggest piece
of class action settlements is fundamentally a State court problem. Our
Federal courts have done a far better job of ensuring that that does
not happen.
Though I do support the bill in all its respect, I would like to add
one modest piece to the legislation that I believe would aid in
ensuring that these class actions do benefit to serve the class
members, not just the attorneys.
The amendment is a request by Congress that the Judicial Conference
of the United States, our Federal judges, prepare for the House and
Senate Committees on the Judiciary a report on class action
settlements. As envisioned by my amendment, that report would have
several parts.
First, it would contain the judges' recommendations on best practices
that the court will use to ensure that these proposed class action
settlements are fair to the class members, that is, the plaintiffs.
After all, these class members are the people that the settlements are
supposed to benefit, but as we have seen, have not been benefiting. We
need to find ways to make sure that they are not forgotten when their
claims are being settled.
Second, this report will contain recommendations on best practices
that the courts would use first to ensure that attorneys' fees in class
settlements appropriately reflect the results that the attorneys get
for the class members; and also the report would contain
recommendations to ensure that class members, and not the lawyers, are
the primary beneficiaries of a settlement.
Finally, the report would indicate the Judicial Conference's plans
for implementing the good practices recommendations.
I believe that the value of this amendment is obvious, Mr. Chairman,
but let me make two points about its purposes.
First, I want to stress that this amendment is not intended in any
way to be an intrusion on the judicial branch of our government. I
offer this amendment because I have been advised that the Judicial
Conference, particularly through its Advisory Committee on Civil Rules,
is already devoting considerable time and energy to this important
issue. The committee has held public hearings already, they have
conducted research, they have drafted and proposed civil rules
amendments, and these are all intended to bring more rationality to
class settlements.
I believe that we should applaud the efforts of our Federal judges in
this regard. Thus, I offer this amendment not to give our diligent
Federal judges a new homework assignment, but rather I offer it to
recognize their effort and suggest that they continue their
investigation in this arena and encourage them to complete this
project.
Second, Mr. Chairman, I wish to emphasize this amendment would not
directly regulate attorneys' fee awards. I truly believe that the
attorneys' fees lie at the root of the key problems in what the
Washington Post editorial referred to as the ``sorry world of class
action litigation here in the United States.'' I also recognize an
effort by this body to regulate directly the award of such fees could
be very divisive.
The bill that we presently have before us is worthy of, and actually
has, healthy bipartisan support. So my proposal on the fees issue is a
very limited one. It would simply encourage the completion of the work
that our Federal judges have undertaken to develop best practices on
this issue, all within the current framework of the attorneys' fee
awards.
For all of these reasons, I urge my colleagues to adopt the
amendment.
Mr. SENSENBRENNER. Mr. Chairman, will the gentlewoman yield?
Ms. HART. I yield to the gentleman from Wisconsin.
Mr. SENSENBRENNER. Mr. Chairman, I think that this is a very
constructive amendment, and I would urge the House to adopt it.
Ms. HART. Mr. Chairman, I reserve the balance of my time.
The CHAIRMAN pro tempore. Does any Member claim the time in
opposition?
Ms. JACKSON-LEE of Texas. Mr. Chairman, I rise in opposition to the
amendment.
The CHAIRMAN pro tempore. The gentlewoman from Texas (Ms. Jackson-
Lee) is recognized.
Ms. JACKSON-LEE of Texas. Mr. Chairman, it is my pleasure to yield
4\1/2\ minutes to the distinguished gentleman from Massachusetts (Mr.
Markey).
Mr. MARKEY. Mr. Chairman, I thank the gentlewoman from Texas (Ms.
Jackson-Lee) for yielding me the time.
There is kind of a breathtaking level of temerity that the
Republicans are engaging in today. As the Enron case and many others
hang over our country's financial marketplace, as Arthur Andersen
basically struggles for survival of all of the fraudulent activity that
was perpetrated on investors, on
[[Page H881]]
workers, on consumers across this country, the Republican response to
it is to bring out yet another bill that will make it difficult for
those ordinary investors and workers to bring suits against the big
guys, the people who play games with the books.
It is almost like there is no shame whatsoever, and I would almost
understand it if they kind of snuck this through in July or August when
the coast was clear on the Enron and Arthur Andersen case, that had
kind of died down a little bit.
What they are doing today is putting in place a dangerous
anticonsumer, anti-investor and antiworker piece of legislation. They
are standing with the Enrons of the world, the Arthur Andersens of the
world against the consumer, against the investors in our country, and
it is just incredible to me.
However, remember, the first article of the Republican Contract with
America back in 1995 was passing out on this floor the Private
Securities Litigation Reform Act of 1995. Amongst other things, that is
making it very difficult for people to sue Arthur Andersen right now
because they no longer have joint and several liability. They only have
proportionate liability. Even as their auditors and consultants are
together playing the game and keeping score, because of that 1995 Act
it is hard to make them liable, and everyone knows that they were part
of this game.
Today, we see the results of their fine handiwork. Just a few weeks
ago, Members may have read press reports about Arthur Andersen reaching
a $217 million settlement in a class action lawsuit brought under State
law in the State of Arizona against Arthur Andersen in connection with
a fraud involving a charity organization. According to the testimony
delivered to the Committee on the Judiciary at around the same time the
State class action was filed, a Federal class action was also filed,
same case, same facts, State court, Federal court.
Guess what happened to the Federal class action. It was thrown out of
court because the Republicans in 1995 changed the pleading standards in
the Federal securities laws to favor wrongdoers. So these poor people
who have been defrauded could not even get into Federal court.
What happens? We have a controlled experiment seeing what happens in
Federal and State court. The same people now go to the State court with
the same case, same facts. In the State court, the plaintiffs win. They
can win. They do win. Same case, same events, same facts. In Federal
court, under the 1995 Republican Act, wrongdoers are protected. They
cannot recover, they are out $217 million. In the State courts, the
plaintiffs won. The wrongdoers lost.
What is the Republican vision of the future? They now want to do that
for all classes of all plaintiffs. They want to take the public's legal
rights away, and that is what this bill would do. So we have to defeat
this bill. It is terrible. It says we cannot trust the States, we
cannot trust local courts, we cannot give local people a chance to
decide whether or not local, fraudulent, big companies have hurt the
investors and the workers in their community.
That is a vision of the past, not of the future. Defeat this bill.
Ms. HART. Mr. Chairman, I yield 2 minutes to the gentlewoman from
Oregon (Ms. Hooley).
Ms. HOOLEY of Oregon. Mr. Chairman, I rise today in complete support
of the idea behind my colleague from Pennsylvania's amendment to H.R.
2341.
It seems perfectly logical to want to know exactly whether or not
this legislation is really needed by requesting a report on Federal
class action settlements. We need to know what we are doing.
This report would include recommendations on how to ensure
settlements are fair, that they are in the best interests of the
plaintiffs, and that the expenses awarded to the lawyers are
appropriate.
I end up asking myself, why are we considering this as an amendment?
Why not its own legislation? Why would we pass legislation and then
amend it with a requirement that we be told whether or not the
legislation was actually necessary in the first place? That makes no
sense.
I propose today that we work together and pass this amendment as
stand-alone legislation and then revisit this whole area of class
action reform when we have the recommendations from the report and can
act accordingly.
To date, we have not been provided with comprehensive data justifying
the changes proposed in this legislation. The report would give
Congress a chance to really understand whether or not these reforms are
even necessary.
I offer today to spearhead an effort in this body to quickly adapt
stand-alone legislation introduced by the gentlewoman from Pennsylvania
(Ms. Hart) that would require such a report.
Mr. CONYERS. Mr. Chairman, will the gentlewoman yield?
Ms. HOOLEY of Oregon. I yield to the gentleman from Michigan.
Mr. CONYERS. Mr. Chairman, could we hold up this bill till we get the
report?
Ms. HOOLEY of Oregon. Mr. Chairman, I would either withdraw this
proposal today so that, in fact, we could do this amendment as a stand-
alone bill.
Ms. JACKSON-LEE of Texas. Mr. Chairman, I reserve the balance of my
time.
Ms. HART. Mr. Chairman, I yield 2 minutes to the gentleman from
California (Mr. Cox).
Mr. COX. Mr. Chairman, I thank the author of this amendment for
yielding me the time.
One of the previous speakers referred to something he called the 1995
Republican Act. Specifically, he was talk about the Securities
Litigation Reform Act of 1995.
{time} 1645
First, it was not the 1995 Republican Act. It was passed
overwhelmingly by Democrats and Republicans, including such well-known
Democrats as the chairman of the Democratic National Committee, Chris
Dodd from Connecticut, who supported this in the Senate, in the other
body; Ted Kennedy, from the Member's own State who made these remarks;
my own Senator Feinstein, and so on. And it was supported by all these
Democrats and Republicans because it benefits the plaintiffs in these
cases.
The Enron case is the best example. In the old days, before this law,
the first plaintiff to file would have been able to pick who the lead
plaintiff in the case is and collusion between the lawyers and the
favored class member through bonus payments, which were also outlawed
in that legislation, resulted in cents on the dollar. But now the
University of California Regents have been selected as the lead
plaintiff in the Enron case, and they will be a real lead plaintiff and
stand up for the rights of all the plaintiffs. That is the kind of
reform that both Democrats and Republicans supported.
Mr. TAUZIN. Mr. Chairman, will the gentleman yield?
Mr. COX. I yield to the gentleman from Louisiana, the chairman of the
Committee on Energy and Commerce.
Mr. TAUZIN. Mr. Chairman, I thank the gentleman for yielding to me.
The Security Litigation Reform Act, passed in 1995, was indeed passed
by a great overwhelming majority of the House and Senate Democrats and
Republicans. It was the first class action reform, and it stopped the
strike suits that were filed against American corporations not to win
judgments for fraud but just to shake them down.
Ninety-five percent of those cases were being settled at 10 cents on
the dollar. They were shake-down lawsuits designed to defraud the
companies. These class action lawsuits before the 1995 act were not
real efforts to find fraud, and those reforms have indeed protected
constituents across America.
The class action suit brought against Enron now is the best example.
Where there is real evidence of fraud, those suits go forward. The
strike suits, on the other hand, have ended; and they should have ended
a long time ago. That is good reform, just like this bill before us.
Announcement by the Chairman Pro Tempore
The CHAIRMAN pro tempore (Mr. Shimkus). Members are reminded to avoid
inappropriate references, under House rules, to Members of the other
body.
Ms. JACKSON-LEE of Texas. Mr. Chairman, may I inquire about how much
time I have remaining.
The CHAIRMAN pro tempore. The gentlewoman from Texas (Ms. Jackson-
Lee) has 5\1/2\ minutes remaining,
[[Page H882]]
and the gentlewoman from Pennsylvania (Ms. Hart) has 1\1/2\ minutes
remaining.
Ms. JACKSON-LEE of Texas. Mr. Chairman, I yield 1 minute to the
gentleman from Michigan (Mr. Conyers), the distinguished ranking member
of the Committee on the Judiciary.
Mr. CONYERS. Mr. Chairman, the distinguished chairman of the
Committee on Energy and Commerce was talking about sham class action
lawsuits. I do not know which ones he was talking about, but he was not
talking about the Firestone case, the Monsanto case, the W.R. Grace
case, all the tobacco company cases, the asbestos cases, the black lung
case, air bags, Pinto, and it goes on and on.
None of those were sham lawsuits settled at 10 cents on the dollar.
And I am sorry he is not here to further explain which cases he had in
mind.
Ms. HART. Mr. Chairman, I yield myself the balance of my time.
The debate, unfortunately, around this amendment has not really dealt
with this amendment. I would like to clarify that this amendment has
absolutely nothing to do with Enron, Mr. Chairman.
This amendment has to do with doing what is right. It has to do with
Congress requesting facts, requesting the Judicial Conference to
prepare a report for us, for the House and Senate Committees on the
Judiciary, so that we know and we have better information about class
action settlements.
The report would contain recommendations from the judges on best
practices to ensure that attorneys' fees in class settlements actually
reflect the results of those class actions, that is, that the attorneys
get appropriate fees, the class action members, the plaintiffs,
actually get a settlement instead of 33 cents.
It is a simple amendment that complements the work our Federal judges
have already begun. It urges them to complete their report 12 months
after the bill is passed so that we will make sure that we are not just
paying lip service to our constituents who believe that class actions
have become a joke in this country. It is to make sure that class
action lawsuits are real and really provide a real answer to the
concerns that were brought to the court.
Mr. Chairman, I urge adoption of the amendment.
Ms. JACKSON-LEE of Texas. Mr. Chairman, I yield myself such time as I
may consume.
I certainly attribute to the gentlewoman from Pennsylvania her
concern about the consumers, inasmuch as she has offered an amendment
to determine the facts of how this legislation would impact those
consumers or individuals petitioning the courts. I would have liked
this amendment to precede the passage of this legislation. And, in
fact, in the discourse just had with the gentleman from Michigan (Mr.
Conyers) and a proponent of the amendment, it was just noted that the
proponent of the amendment would have rather and would liked for this
to be a stand-alone amendment and leave the class action legislation
off to the side. Leave it where it is right now. Do not proceed with
it. Let us get a study to find out if in fact there is a problem with
class actions in State courts versus Federal courts.
I am confused about a study after the fact. I believe those who
oppose this legislation have been asking repeatedly to be given the
data to suggest there is a premise for denying plaintiffs, that is the
little guy, to get into State court. In fact, Mr. Chairman, I will
later submit for the Record letters from the Federal courts that
absolutely oppose the underlying legislation.
I am concerned that we would make light of the decisions in State
courts when I have already noted for the record the Foodmaker, Inc.
case, the parent company of the Jack-in-the-Box, where three children
died and 500 people were part of a class. Most of these children were
made sick by undercooked hamburgers. I believe this case was in a State
court. The settlement was approved on September 25, 1996; and it was a
reputable settlement for people who had no other opportunity to address
their grievances other than to go into Washington Superior Court in
King County.
This legislation, Mr. Chairman, is one that does not protect the
consumers. The gentlewoman would do well to have her amendment
presented singly, standing alone, to provide us with the data so that
we might make an intelligent decision not on behalf of special
interests but on behalf of the consumers of America, the children that
died from the tainted hamburger at the Jack-in-the-Box, those impacted
by asbestos, and those impacted by the Firestone tires. Those are the
people we should be trying to impact in this House today, particularly
in light of the ups and downs that we have had in corporate America
over the last couple of months.
I would ask my colleagues to recognize that this amendment may have a
good underlying basis; but in fact, the question is why not have it do
the job without this legislation. I ask my colleagues to oppose the
underlying legislation.
The CHAIRMAN pro tempore. The question is on the amendment, as
modified, offered by the gentlewoman from Pennsylvania (Ms. Hart).
The amendment, as modified, was agreed to.
Sequential Votes Postponed In Committee Of The Whole
The CHAIRMAN pro tempore. Pursuant to clause 6 of rule XVIII,
proceedings will now resume on those amendments on which further
proceedings were postponed in the following order: amendment No. 7
offered by the gentlewoman from Texas (Ms. Jackson-Lee) and amendment
No. 8 offered by the gentleman from Massachusetts (Mr. Frank).
The Chair will reduce to 5 minutes the time for any electronic vote
after the first vote in this series.
Amendment No. 7, As Modified, Offered by Ms. Jackson-Lee of Texas
The CHAIRMAN pro tempore. The pending business is the demand for a
recorded vote on amendment No. 7 offered by the gentlewoman from Texas
(Ms. Jackson-Lee) on which further proceedings were postponed and on
which the noes prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
Recorded Vote
The CHAIRMAN pro tempore. A recorded vote has been demanded.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 177,
noes 248, not voting 9, as follows:
[Roll No. 59]
AYES--177
Abercrombie
Ackerman
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Becerra
Berkley
Berman
Berry
Bishop
Bonior
Borski
Boswell
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Clay
Clayton
Clement
Clyburn
Conyers
Costello
Coyne
Crowley
Cummings
Davis (CA)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Doyle
Duncan
Edwards
Engel
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frost
Gephardt
Gilman
Gonzalez
Green (TX)
Gutierrez
Hall (OH)
Harman
Hastings (FL)
Hilliard
Hinchey
Hoeffel
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lowey
Luther
Lynch
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Mollohan
Moore
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Paul
Payne
Pelosi
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Ross
Rothman
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Slaughter
Smith (WA)
Solis
Spratt
Stark
Strickland
Stupak
Tanner
Thompson (MS)
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NOES--248
Aderholt
Akin
Allen
Armey
Bachus
Baker
Ballenger
Barr
Bartlett
Barton
Bass
Bereuter
[[Page H883]]
Biggert
Bilirakis
Blumenauer
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Boucher
Boyd
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Carson (OK)
Castle
Chabot
Chambliss
Coble
Collins
Combest
Condit
Cooksey
Cox
Cramer
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis (FL)
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Dooley
Doolittle
Dreier
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frank
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Goode
Goodlatte
Gordon
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (TX)
Hansen
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill
Hilleary
Hobson
Hoekstra
Holden
Horn
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
John
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
Kind (WI)
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lofgren
Lucas (KY)
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McKeon
McNulty
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Moran (VA)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Roemer
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Skelton
Smith (MI)
Smith (NJ)
Smith (TX)
Snyder
Souder
Stearns
Stenholm
Stump
Sullivan
Sununu
Sweeney
Tancredo
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thornberry
Thune
Thurman
Tiahrt
Tiberi
Toomey
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NOT VOTING--9
Barrett
Bentsen
Blagojevich
Davis (IL)
Eshoo
Hinojosa
Kilpatrick
Murtha
Traficant
{time} 1719
Messrs. LEACH, SIMPSON and BASS, Mrs. JOHNSON of Connecticut and Mrs.
BONO changed their vote from ``aye'' to ``no.''
So the amendment, as modified, was rejected.
The result of the vote was announced as above recorded.
Announcement By The Chairman Pro Tempore
The CHAIRMAN pro tempore (Mr. Shimkus). Pursuant to clause 6 of rule
XVIII, the Chair announces that he will reduce to a minimum of 5
minutes the period of time within which a vote by electronic device
will be taken on the remaining amendment on which the Chair postponed
further proceedings.
Amendment No. 8, as Modified, Offered by Mr. Frank
The CHAIRMAN pro tempore. The pending business is the demand for a
recorded vote on amendment No. 8, as modified, offered by the gentleman
from Massachusetts (Mr. Frank), on which further proceedings were
postponed and on which the noes prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
Recorded Vote
The CHAIRMAN pro tempore. A recorded vote has been demanded.
A recorded vote was ordered.
The CHAIRMAN pro tempore. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 191,
noes 234, not voting 9, as follows:
[Roll No. 60]
AYES--191
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Becerra
Berkley
Berman
Berry
Bishop
Blumenauer
Bonior
Borski
Boswell
Brady (PA)
Brown (FL)
Brown (OH)
Cannon
Capps
Capuano
Cardin
Carson (IN)
Carson (OK)
Clay
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Crowley
Cummings
Davis (CA)
Davis (FL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Doyle
Edwards
Engel
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank
Frost
Gephardt
Gilman
Gonzalez
Gordon
Green (TX)
Gutierrez
Hall (OH)
Hall (TX)
Harman
Hastings (FL)
Hill
Hinchey
Hoeffel
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Istook
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Luther
Lynch
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Mollohan
Moore
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Ross
Rothman
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Snyder
Solis
Spratt
Stark
Strickland
Stupak
Tauscher
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Watson (CA)
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NOES--234
Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Boucher
Boyd
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cantor
Capito
Castle
Chabot
Chambliss
Coble
Collins
Combest
Cooksey
Cox
Cramer
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hansen
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hilleary
Hilliard
Hobson
Hoekstra
Holden
Horn
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Jenkins
John
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
Kind (WI)
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Moran (VA)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Souder
Stearns
Stenholm
Stump
Sullivan
Sununu
Sweeney
Tancredo
Tanner
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Upton
Vitter
Walden
Walsh
Wamp
Waters
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NOT VOTING--9
Barrett
Bentsen
Blagojevich
Davis (IL)
Eshoo
Hinojosa
Kilpatrick
Murtha
Traficant
[[Page H884]]
{time} 1728
So the amendment, as modified, was rejected.
The result of the vote was announced as above recorded.
Stated against:
Mr. CANNON. Mr. Chairman, on rollcall No. 60, I inadvertently voted
``aye'' but I meant to vote ``no.''
The CHAIRMAN pro tempore. The question is on the committee amendment
in the nature of a substitute, as amended.
The committee amendment in the nature of a substitute, as amended,
was agreed to.
The CHAIRMAN pro tempore. Under the rule, the Committee rises.
Accordingly, the Committee rose; and the Speaker pro tempore (Mr.
Gilchrest) having assumed the chair, Mr. Shimkus, Chairman pro tempore
of the Committee of the Whole House on the State of the Union, reported
that that Committee, having had under consideration the bill (H.R.
2341) to amend the procedures that apply to consideration of interstate
class actions to assure fairer outcomes for class members and
defendants, to outlaw certain practices that provide inadequate
settlements for class members, to assure that attorneys do not receive
a disproportionate amount of settlements at the expense of class
members, to provide for clearer and simpler information in class action
settlement notices, to assure prompt consideration of interstate class
actions, to amend title 28, United States Code, to allow the
application of the principles of Federal diversity jurisdiction to
interstate class actions, and for other purposes, pursuant to House
Resolution 367, he reported the bill back to the House with an
amendment adopted by the Committee of the Whole.
The SPEAKER pro tempore. Under the rule, the previous question is
ordered.
Is a separate vote demanded on any amendment to the committee
amendment in the nature of a substitute adopted by the Committee of the
Whole? If not, the question is on the amendment.
The amendment was agreed to.
The SPEAKER pro tempore. The question is on the engrossment and third
reading.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
{time} 1730
Motion to Recommit Offered by Mr. Sandlin
Mr. SANDLIN. Mr. Speaker, I offer a motion to recommit.
The SPEAKER pro tempore (Mr. Gilchrest). Is the gentleman opposed to
the bill?
Mr. SANDLIN. Yes, Mr. Speaker, I am opposed to the bill in its
present form.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:
Mr. Sandlin moves to recommit the bill H.R. 2341 to the
Committee on the Judiciary with instructions that the
Committee report the same back to the House with the
following amendment:
Page 19, add the following after line 25:
Any defendant who is a knowing participant in any
conspiracy to hijack any aircraft or commit an act of
terrorism shall not be entitled to remove a class action to
federal court pursuant to section 1332(d) of title 28, as
added by section 4 of this Act.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Texas (Mr. Sandlin) is recognized for 5 minutes in support of his
motion.
Mr. SANDLIN. Mr. Speaker, by matter of correction, retraction and
addition, the reference is section 1332(d).
Mr. Speaker, today's debate has illustrated a number of very serious
problems with the bill before us. By federalizing class actions, it
would make it far more burdensome, expensive, and time-consuming for
groups of injured victims to obtain access to justice and far more
difficult to protect our citizens against violations of fraud, consumer
health, safety, and environmental laws.
The legislation goes so far as to prevent State courts from
considering class actions which involve solely violations of State laws
such as State consumer protection laws. In the post-Enron world, when
we are trying to hold corporate wrongdoers accountable for their
actions, this bill takes us in exactly the wrong direction.
The motion to recommit responds to another very serious problem with
this legislation: the fact that it would permit parties who engage in
terrorism to remove a class action brought against them in Federal
court. As the bill is presently written, if a terrorist released a
nuclear device or an anthrax cloud, the harmed victims could very well
lose their ability to seek redress as a class in their local State
court.
For example, if a class composed of mostly New Yorkers, but some
citizens in New Jersey and Connecticut, want to pursue a terrorist in
New York State court, I believe they should have that option. It is a
matter of national security. This bill today prevents that.
The language in the motion would eliminate this problem by removing
terrorists from the party defendants whose rights are enhanced by the
bill. The language is based on the text of the airline bailout bill and
the airport security bill we approved last fall. Any defendant who is a
knowing participant in any conspiracy to hijack any aircraft or commit
terrorist acts should not get the benefits of the bill.
The bills we passed previously provided for protections and
limitations on liability to protect airlines, airplane manufacturers,
the City of New York, and others, but we agreed on a bipartisan basis
that nothing in the reform should in any way assist terrorist
defendants. We should do the same thing in this bill.
Let me repeat, since September 11, every single liability bill we
have passed has included an exclusion for terrorists based on the
language of this motion. We have excluded terrorists. The last thing we
should be doing today is anything that will make the terrorists lives
easier.
Let us vote yes on the motion, send the bill back to committee, and
let us fix this bill.
Mr. SENSENBRENNER. Mr. Speaker, I rise in opposition to the motion to
recommit.
Mr. Speaker, this is not the usual motion to recommit that this House
considers at the end of legislation. Those motions direct the committee
of jurisdiction to report the legislation back to the House forthwith
with an amendment. The motion to recommit of the gentleman from Texas
omits the word ``forthwith,'' and that means that if this motion is
adopted, the bill will go back to the Committee on the Judiciary and
will come out sometime in the future to be brought up under another
rule where the House will spend another day listening to the same
arguments that we have debated and rejected repeatedly through the
amendment process.
So for that reason alone, the motion to recommit should be rejected.
Now, secondly, litigation resulting from a massive terrorist attack
is precisely the type of complex legislation envisioned to be decided
in our Federal courts. That type of litigation involves multiple
parties from different districts asserting multiple laws, but having
the same set of facts that the court will decide.
The House has already dealt with this issue when, earlier last year,
it passed H.R. 860 by voice vote. This was supported by Members on both
sides of the aisle and unanimously reported by the Committee on the
Judiciary. This legislation is known as the multi-multi-multi bill,
which is in direct response to air crash cases and multiple tort cases
such as a terrorist attack, and it directs which Federal court those
types of cases can be consolidated in. So the House has already dealt
with that issue.
The amendment is unnecessary because it does not require the bill to
be brought back forthwith. It is a sneaky way to attempt to kill the
bill by referring it to the committee, and I would urge Members to
oppose this motion simply to get rid of this issue and to send it on
its way to the other body.
Mr. Speaker, I yield the balance of the time to the gentleman from
Virginia (Mr. Goodlatte).
Mr. GOODLATTE. Mr. Speaker, I thank the chairman of the Committee on
the Judiciary for yielding me this time, and for his leadership in
moving this legislation through the House.
This is a good, bipartisan bill. I was pleased to introduce it with
the gentleman from Virginia (Mr. Boucher) and the gentleman from
Virginia (Mr. Moran). We need bipartisan support to pass this
legislation.
We have all day long from the opponents of this bill seen
obfuscation. This
[[Page H885]]
bill is not about terrorists, it is not about Enron, it is not about
shredding documents; what it is about is good, common-sense class
action lawsuit reform to end this kind of abuse, where the lawyers get
$2 million in attorneys' fees and the plaintiffs, the American
families, get a box of Cheerios.
It is about a case where the plaintiffs get a $25 coupon off a $250
future plane flight, a 10 percent reduction, and the attorneys get $16
million in attorneys' fees.
It is about this great case wherein the Bank of Boston, the attorneys
got $8.5 million in fees and then sued, sued their own clients for an
additional $25 million.
It is about this Blockbuster case, 23 class action lawsuits settled
for $1-off coupons; the attorneys got an estimated $9.2 million in
attorneys' fees.
Here is my favorite one. The attorneys got $4 million in their suit
against Chase Manhattan Bank; the plaintiffs, including this plaintiff,
33 cents. But there is a catch to the 33 cents. There it is, 33 cents;
the catch is that in order to accept the settlement, you had to use a
34-cent stamp to send in the acceptance, and so you came out 1 penny
short.
Our friends at the Washington Post summed it up best when they said,
Having invented a client, the lawyers also get to choose a court. Under
the current absurd rules, national class actions can be filed in just
about any court in the country. This bill changes that. This bill
treats American families with more than pennies; it restores integrity
to our judicial system. Vote against this obfuscating motion to
recommit and for this good legislation.
Again, the Washington Post: That it is controversial at all reflects
less on the merits of the proposal than on the grip that the trial
lawyers have on many Democrats.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Recorded Vote
Mr. SANDLIN. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair
will reduce to 5 minutes the minimum time for any electronic vote on
the question of passage.
The vote was taken by electronic device, and there were--ayes 191,
noes 235, not voting 8, as follows:
[Roll No. 61]
AYES--191
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Becerra
Bentsen
Berkley
Berman
Berry
Bishop
Blumenauer
Bonior
Borski
Boswell
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Carson (OK)
Clay
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Crowley
Cummings
Davis (CA)
Davis (FL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Doyle
Edwards
Engel
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank
Frost
Gephardt
Gonzalez
Gordon
Green (TX)
Gutierrez
Hall (OH)
Harman
Hastings (FL)
Hill
Hilliard
Hinchey
Hoeffel
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Luther
Lynch
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Mollohan
Moore
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Ross
Rothman
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Strickland
Stupak
Tauscher
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NOES--235
Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barcia
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Boucher
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Chambliss
Coble
Collins
Combest
Cooksey
Cox
Cramer
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (TX)
Hansen
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hilleary
Hobson
Hoekstra
Holden
Horn
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
John
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
Kind (WI)
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Moran (VA)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Stenholm
Stump
Sullivan
Sununu
Sweeney
Tancredo
Tanner
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NOT VOTING--8
Barrett
Blagojevich
Davis (IL)
Eshoo
Hinojosa
Kilpatrick
Murtha
Traficant
{time} 1802
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore (Mr. Gilchrest). The question is on the
passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. SENSENBRENNER. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--yeas 233,
nays 190, not voting 11, as follows:
[Roll No. 62]
YEAS--233
Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barcia
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Boucher
Boyd
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Chambliss
Coble
Collins
Combest
Cooksey
Cox
Cramer
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
[[Page H886]]
Gibbons
Gilchrest
Gillmor
Goode
Goodlatte
Gordon
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (TX)
Hansen
Harman
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hilleary
Hobson
Hoekstra
Holden
Horn
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
John
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Larson (CT)
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Moran (VA)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Roukema
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Stenholm
Stump
Sullivan
Sununu
Sweeney
Tancredo
Tanner
Tauzin
Taylor (MS)
Taylor (NC)
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NAYS--190
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Becerra
Bentsen
Berkley
Berman
Berry
Bishop
Blumenauer
Bonior
Borski
Boswell
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Carson (OK)
Clay
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Crowley
Cummings
Davis (CA)
Davis (FL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Diaz-Balart
Dicks
Dingell
Doggett
Doyle
Edwards
Engel
Etheridge
Evans
Farr
Filner
Ford
Frank
Frost
Gephardt
Gilman
Gonzalez
Green (TX)
Gutierrez
Hall (OH)
Hastings (FL)
Hill
Hilliard
Hinchey
Hoeffel
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kind (WI)
King (NY)
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Luther
Lynch
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Mollohan
Moore
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Ros-Lehtinen
Ross
Rothman
Roybal-Allard
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Strickland
Stupak
Tauscher
Terry
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NOT VOTING--11
Barrett
Blagojevich
Davis (IL)
Eshoo
Fattah
Fletcher
Hinojosa
Kilpatrick
Murtha
Rush
Traficant
{time} 1812
Ms. BROWN of Florida changed her vote from ``yea'' to ``nay''.
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________