[Congressional Record Volume 149, Number 147 (Monday, October 20, 2003)]
[Senate]
[Pages S12866-S12884]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          CLASS ACTION FAIRNESS ACT OF 2003--MOTION TO PROCEED

  The PRESIDING OFFICER. Under the previous order, the hour of 2:35 
having arrived, the Senate will resume consideration of the motion to 
proceed to the consideration of S. 1751, which the clerk will report.
  The assistant legislative clerk read as follows:

       Motion to proceed to consideration of S. 1751, a bill to 
     amend the procedures that apply to consideration of 
     interstate class actions to assure fairer outcomes of class 
     members and defendants, and for other purposes.
  Mr. HATCH. Mr. President, I note that Senator Cornyn is here. I ask 
unanimous consent he be permitted to

[[Page S12867]]

speak, and then I be granted the floor thereafter.
  The PRESIDING OFFICER. The distinguished Senator from Texas is 
recognized.
  Mr. CORNYN. Mr. President, I thank the distinguished chairman of the 
Judiciary Committee, the Senator from Utah. It is because of his 
leadership on this issue, that of class action fairness, it has reached 
this stage in the proceedings. He is a true gentleman in the finest 
traditions of the Senate. He also happens to be the iron fist and the 
velvet glove who helps make things happen in the Senate Judiciary 
Committee, a place where, unfortunately, things do not always happen 
the way they should, notwithstanding his heroic, Herculean efforts.
  Mr. CORNYN. Mr. President, I ask unanimous consent I be added as a 
cosponsor to the Class Action Fairness Act of 2003.
  The PRESIDING OFFICER (Mr. Coleman). Without objection, it is so 
ordered.
  Mr. CORNYN. Mr. President, this bill is important for so many 
reasons. I will generally lay out what I believe to be some of the 
important reasons the Senate should take up this bill that was voted 
out of the Senate Judiciary Committee on a bipartisan basis, why the 
Senate should take this bill up, vote it out, and do everything in our 
power to see it is enacted into law.
  My colleague, the Senator from Iowa, Mr. Grassley, deserves a great 
deal of credit for his hard work on this issue and for promoting this 
important legislation. I publicly acknowledge his leadership on the 
issue as well.

  Like a number of the Members of this body, I have been a member of 
the bar, a lawyer, for a number of years. I have seen the ways in which 
the law and lawyers have contributed in a tremendous fashion both to 
the public administration of justice and to that maxim, that saying, 
that is engraved into the edifice of the U.S. Supreme Court, which is 
really a national value and ideal: Equal justice under law.
  That is indeed one of the fundamental values upon which this Nation 
was founded. But I do not think it is news to anyone that that 
aspiration, that value, that we all agree is important, has suffered in 
the administration when it comes to class action lawsuits.
  I wish to make clear, I believe class actions do have an important 
role in the administration of justice. In other words, the class action 
was created so that individuals with relatively small claims and who 
would not be able to bring those claims forward in an economical way--
indeed, the economics would discourage them from doing so--would not be 
denied access to the courts and access to justice simply because their 
claims were rather small because, indeed, if in fact that were the case 
and there were no mechanism to bring those small claims forward, there 
would be those who would abuse individuals and who would know they 
could continue in that posture because individuals would not be able to 
economically bring those claims forward.
  So the class action mechanism provides a means for aggregating or 
collecting those claims so that it can be done in an economical 
fashion, in a way that will not deny those individuals who are 
aggrieved access to the courts so they may have access to that justice 
that I mentioned a moment ago.
  So the intent of the class action mechanism was to provide consumers 
with access to the courts. The problem is, today, the reality is that 
our system has turned into one that now benefits the few at the expense 
of the many. In other words, the people who benefit from class actions 
today, too often, are the lawyers who bring those lawsuits rather than 
the consumers for whose benefit this whole procedure was first 
conceived.
  I think it ought to be our goal in the policy of the U.S. Government 
and our courts to see that those with valid claims have a means to 
vindicate those claims, but it should not be a means by which the few 
can be enriched at the expense of consumers who may not even know they 
are involved in a class action lawsuit, where they receive token 
compensation whereas the class action lawyer receives millions, 
literally, in attorney's fees.
  Modern class action litigation has brought forward what we have now 
come to recognize as the entrepreneurial lawyer. That is a lawyer who 
may not have a client but if they are smart enough to try to figure out 
a way to create a claim or find somebody who arguably has a claim, then 
they can go out and seek a class representative; that is, somebody 
whose claim is representative of perhaps hundreds or thousands or even 
millions of other people who might be in a similar situation and, thus, 
seek certification of a class action and settle the case because, 
frankly, class action lawsuits are almost never tried because the 
consequences of a trial and the loss are so devastating that the person 
who has been sued or the company that has been sued does not really 
want to risk an adversarial proceeding in a court of law.
  So class action lawsuits are filed to be settled and to use the 
economic pressure that is created thereby because the number of claims 
that are aggregated and the amount of money that is at stake is 
literally a bet-the-ranch lawsuit or, I should say, bet-the-company or 
bet-your-life-savings lawsuit.
  The problem is, our system of class action litigation is not just 
broken; it is falling apart. That is not right, and that is not 
justice, and that cries out for reform. I believe this bill is an 
important step forward in providing that reform.
  Now, the truth is, as great as I believe this bill is that has passed 
out of the Judiciary Committee, it, frankly, is not all we should 
strive for when it comes to class action fairness.
  For example, many people find out only after they receive a coupon or 
something in the mail that they were, indeed, a member of a class; in 
other words, they were a party to a lawsuit, and they did not know it 
until they received some token compensation, whether it be a coupon or 
perhaps a few pennies.
  I think if we were to engage in the sort of class action reform that 
I think would genuinely address part of the problem, we would have a 
system not where people are asked to opt out of a class but literally 
where consumers are given an opportunity to opt in; that is, I do not 
think we ought to presume somebody wants to be a party to a lawsuit 
unless they say: Count me in.
  I do not think that is too much to ask. But that is not what this 
bill does yet. But that is where I think we need to go ultimately.
  What this bill does is provide a means of access to a court and the 
kind of careful review of a legal claim that I think is important in 
order to preserve the goal of class action litigation; that is, to 
serve the interests of consumers and not the interests of 
entrepreneurial class lawyers.
  I want to give just one or two examples from my own experience. As I 
said, like many in this body, I have been a practicing lawyer. I also 
happen to have been a judge in my earlier life and exposed to some of 
the abuses of class action litigation. And of one I will never forget, 
I want to just mention a few of those details.
  Well, it seems that General Motors created a sidesaddle gasoline tank 
pickup truck, one that was the subject of or involved in a rather 
spectacular explosion and terrible injury and death in Georgia, which 
was obviously a personal injury and a wrongful death claim.
  What happened in Texas, and elsewhere, was we saw that some lawyers 
realized this was perhaps a product design over which consumers may 
have a potential claim. So they brought a lawsuit, not for personal 
injury or death but for the economic loss incurred by consumers who 
owned sidesaddle gasoline tank pickup trucks.
  Of course, they had a couple of problems. One, they had the problem 
of being able to establish a true measure of loss as a result of merely 
owning them because, in fact, the evidence seemed to be that there was 
no actual loss in value just by driving a truck that had a sidesaddle 
gasoline tank. But, moreover, what ultimately happened in this case was 
that the consumers got a coupon, redeemable upon the purchase of a new 
General Motors pickup truck, and the lawyers who filed the lawsuit got 
nearly $10 million in cash.
  As it turned out, the court on which I served, the Texas Supreme 
Court, unanimously reversed that decision--

[[Page S12868]]

that settlement really, the approval of that settlement, saying: Look, 
we have gotten this exactly backward. Class action lawsuits are brought 
for the benefit of consumers, not for the benefit of the lawyers who 
file them.
  So in order to correct this abuse represented by the settlement, we 
said: Look, the consumers have to get something of value, and it has to 
be more than a coupon redeemable upon the purchase of a new General 
Motors pickup truck.
  Now, frankly, what happened was, it looked as though the class 
lawyers, the class counsel, cut a deal that was good for them, and 
General Motors agreed to a deal that was pretty good for them under the 
circumstances, although I am sure they would have rather not been 
there. But they were able to basically effectuate a marketing scheme 
for the sale of more GM pickup trucks; in other words, make lemonade 
out of this lemon. The problem was, consumers in the process got 
nothing. Indeed, many consumers, because they were constrained by 
bidding requirements--for example, trucks owned in a motor pool by a 
municipality or otherwise constrained by those requirements--could not 
even take advantage of the coupon. Of course, others didn't have the 
money to buy a new pickup truck and so they couldn't use the coupon 
which gave them some money as against the purchase of another truck.

  We can all testify, based on our own experience, how we have perhaps 
received a notice in the mail. I remember not too long ago when my wife 
and I went to a Blockbuster video rental store. We got an extra long 
tape when we rented our video that had a notification of a class action 
settlement attached to it. Of course, after reading the fine print, we 
found out that we had, unbeknownst to us, been involved in a lawsuit 
and had some nominal claim we could make to a few pennies, while the 
lawyers in the case received $9 million in cash. The consumers got a 
coupon for about a buck, and the lawyers got $9 million in cash.
  I don't want to take long today because the chairman of the committee 
has graciously allowed me to say a few words now. I know we will be 
continuing to talk about this issue for some time this week, as well we 
should. But there is another part of class actions that we need to be 
careful about. It is not just the entrepreneurial lawyers who settle 
for cash while consumers get a coupon. Class actions can also be used 
by defendants--that is, people being sued for various claims--to 
preempt or to stop future claims by those who have them because there 
is what we lawyers call res judicata. That is, no one else can bring 
another claim if, in fact, they were notified they had a potential 
claim and failed to object and thus were included in the class. So some 
defendants will potentially go out and collude with an entrepreneurial 
lawyer in order to get a final class action settlement which meets 
their bottom line but which basically precludes future claims by others 
who genuinely are aggrieved and harmed and whose rights are totally cut 
off.
  This is not lawyer bashing, I assure you, as a lawyer myself. People 
need to have access to the courts. Consumers need to have a means to 
vindicate their just claims. But it cannot be through a method which 
rewards entrepreneurial lawyers with millions in cash and consumers 
with a coupon. It cries out for reform. I believe the class action 
liability reform bill Chairman Hatch has navigated through the 
Judiciary Committee, which enjoys bipartisan support in that committee, 
is a big step in the direction of reform.
  With that, I thank the Senator from Utah for allowing me to say a few 
words. I will relinquish the floor from whence it came.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I ask unanimous consent that Senator Breaux 
be recognized and then I be recognized immediately following his 
remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Louisiana.
  Mr. BREAUX. Mr. President, I thank the chairman of the Judiciary 
Committee for yielding to me.
  I will take a few moments to explain my position on this important 
legislative effort and point to the fact that I have worked on a 
substitute amendment that has the ability to bring both sides together 
in a way we have not yet achieved.
  It is clear that in all difficult legislative areas, when you have a 
very closely divided Senate, the only way we will actually get 
legislation adopted and passed and sent to the President for his 
signature is if we aggressively work together to limit our differences 
and maximize the things we have in common in order to produce a 
legislative package that can sustain the rules of the Senate and allow 
a bill to actually pass and become law.
  There is room for reform in class action litigation. I do not think 
it is as bad as some portray the situation to be, but it is probably a 
problem that does need to be addressed. For those who think we should 
do nothing in this area, I would say there are some things we can do 
that improve the situation and, most importantly, get us a product that 
can actually become law.
  Many times we in the Senate are faced with the question of, do I want 
to try to do everything I would like to do and risk getting nothing 
done, or would I like to try to reach a legitimate compromise and 
actually get something passed that may not be everything I would like 
but would be far superior to doing nothing at all. That is the 
situation we face with regard to the question of class action 
litigation.
  My substitute bill, which would be offered, hopefully, as an 
amendment, does the following: It builds on the committee report in the 
sense that what we do is say to those plaintiffs who file a class 
action case in a particular State, where one-third or less of the 
plaintiffs, the people who are injured in a State, happen to be from 
that State, that like the committee bill, that case would clearly be a 
matter of Federal jurisdiction. Where two-thirds or more of the 
plaintiffs who are injured or alleged to be injured reside in a 
particular State--say Louisiana--where the injuries were alleged to 
have occurred, if two-thirds or more of those injured citizens who have 
filed a case, two-thirds or more, happen to be from my State of 
Louisiana, then it is a State court in which the action should be 
brought.
  As the committee bill, my bill also says that when you have a 
situation between one-third and two-thirds of the plaintiffs coming 
from a State, a particular State where the injury occurred, then the 
Federal judge would look at the circumstances, as the committee bill, 
and make a determination of whether that case more appropriately 
belongs in the Federal court or belongs in the State court.
  What is the difference between the two approaches? One big difference 
is that in the committee bill it says, that even if two-thirds or 
three-fourths or 98 percent of the injured people reside in Louisiana, 
where the alleged injury occurred, if the defendant happens to be a 
citizen of some other State, as so many corporations are, then the case 
goes automatically to the Federal court to interpret as best they can 
the State laws, such as my State of Louisiana.
  That is incorrect. If the majority of the injuries are in the State 
of Louisiana--say it is a meatpacking company that has sales in 
Louisiana and it has caused injuries in my State of Louisiana by 
selling tainted products of meat that cause real injuries in 
Louisiana--and 75 percent of the injured people are in Louisiana but 
because the company may be domiciled or a citizen of the State of 
Delaware, that all of a sudden the Federal court is better situated to 
handle that case. That defies logic. If the injured people are in my 
State, two-thirds or more, then logic says the case can best be handled 
and interpreted by the State courts and the State supreme court which 
would be interpreting the State tort law that the State legislature 
passed.
  Why should we say merely because one defendant's cause for alleged 
injuries happened to be in Delaware, where so many companies are 
incorporated, that automatically means it should be in the Federal 
court? The Federal court does a great job of interpreting Federal law, 
but I suggest when it comes to interpreting State law, on which these 
plaintiffs would be judged, the State court is better situated to make 
those determinations. I will have more to say about that particular 
aspect.

[[Page S12869]]

  Let me mention briefly when it comes to the so-called coupon 
settlements the distinguished Senator from Texas mentioned, our 
legislation addresses that, to the extent that we can, by saying where 
coupons are issued to many plaintiffs who may have bought a defective 
product, the situation in the past has been many plaintiffs' attorneys 
would have their fees set not on the number of coupons that were 
actually redeemed, but only on the number of coupons that were actually 
issued in terms of the settlement.
  For instance, people buy a defective product and many times the 
resolution of the case is based on each plaintiff getting a coupon or 
discount on a future purchase. The problem was many attorneys were 
getting paid on the total number of coupons issued rather than the ones 
redeemed. Our legislation says their fees would only be based on the 
number of coupons actually redeemed, and I think that makes a great 
deal of sense as well. It also says you cannot run a merry-go-round and 
continue trying to take cases from one court to the next. Under our 
legislation, we say defendants have a right to try to remove a case to 
the Federal court, but they cannot do it an unlimited amount of times. 
Our legislation simply says such removal would occur in a timely 
fashion, and we suggest within 30 days after filing of the complaint. 
Surely the defendants know whether they want to be in Federal court or 
State court. They cannot wait up until the end of the case in the State 
court, after years of litigation, and say, oops, we want to move it to 
Federal court and have that as an absolute right. They ought to do it 
in a timely fashion. Our legislation addresses that as well.
  Mr. President, I will conclude my remarks by saying the good Senator 
from Utah is a very respected chairman of the committee. I think he 
wants legislation to pass. My fear is, unless we sit down and work 
together, we are going to have a stalemate. Both sides will have an 
argument. Democrats will have one argument and Republicans will have 
another argument, but the result will be nothing will pass.
  My approach is simply that we can say don't proceed to this bill 
until we have had serious discussions between both sides, such as we 
have done on asbestos. I think those asbestos cases have made progress. 
It is not quite there yet, but they have made progress. Why? Because 
they have been willing to sit and talk among all the parties. I think 
we should do the same thing with the class action litigation. We can 
say we are not going to proceed to this bill until we have had an 
opportunity to sit down and have good, legitimate discussions.
  I think we can come to an agreement so that we will not have the bill 
passed by just one vote or lose by one vote, but rather have it pass by 
75 or more votes in this body. I think that is possible, but it is 
going to take, first of all, saying we are not going to proceed to the 
legislation until we have had those discussions. We are going to share 
what we have just outlined with my good friend, the chairman of the 
Judiciary Committee. Hopefully, they can look at it and see if there is 
room for legitimate talks and legitimate compromise. I think there is. 
The alternative is to do nothing. I think that is unacceptable.
  I thank the chairman for yielding me a few moments to make some 
comments. I yield back my time.
  The PRESIDING OFFICER. The Senator from Utah is recognized.
  Mr. HATCH. Mr. President, I thank my colleague for his kind remarks. 
We will certainly look at whatever he has to offer in this matter. We 
will keep an open mind and see if we can get together.
  I rise in strong support of S. 1751, Class Action Fairness Act of 
2003. It used to be S. 274, but now it is renumbered to S. 1751. This 
bill represents a carefully balanced legislative solution in response 
to the widespread abuse of the class action lawsuits in our State 
courts. Over the past decade, it has become painfully obvious that 
class action abuses have reached epidemic proportions. What began as 
occasional outrageous class action settlements, drawing light humor, 
has now become a routine occurrence that is just not funny anymore. It 
has become equally clear that the true victims of this epidemic have 
been every-day consumers who represent the silent majority of unnamed 
class members throughout the country.
  It has become too common where plaintiff class members are not 
adequately informed of their rights or the terms and practical 
implications of a proposed class action settlement. Making matters 
worse, judges too often approve settlements that primarily benefit 
class counsel, the attorneys, rather than the class members or the 
victims. That is turning the law on its head.
  In the coming days, we will hear numerous examples of egregious State 
court settlements, where class members habitually receive little or 
nothing of value, while their attorneys receive millions of dollars in 
fees. The cases are numerous, but just too extensive to list.
  To put these settlements in perspective, allow me to share a recent 
class action settlement that one of my own staff members recently 
actually received in the mail. This settlement notice comes from a 
State court in Jefferson County, TX. It involves the settlement of a 
class action lawsuit brought on behalf of purchasers of Bridgestone and 
Firestone tires. This technical legal document informs my staffer--an 
apparent class member by virtue of owning a set of Firestone tires--of 
a proposed class action lawsuit settlement that will award the lawyers 
$19 million in fees and costs. That is not a bad payday for lawyers 
when compared to what the clients get: a promise from defendants that 
they will make safer tires and initiate a safety program.
  It strikes me these class members are getting a so-called benefit 
they should be getting, anyway. It seems to me they should try to have 
safer tires and the benefit of a safety program.
  But the laughable settlement terms don't end there. Unlike the 
unnamed class members who do not stand to gain a single penny, those 
lucky enough to be named plaintiffs get to walk away with a $2,500 cash 
bounty. This proposed settlement, which will likely be approved by the 
State court, represents everything wrong with the class action system 
today and underscores the importance of reform--$19 million, where no 
one really gets any benefits except a few they choose to be named 
plaintiffs, who get $2,500. The attorneys walk off wealthy, happy, fat, 
and laughing.
  The need to reform our class action system is not a new issue to the 
Senate. The Judiciary Committee conducted hearings in the 105th, 106th, 
and 107th Congresses, reporting a similar bill out of committee in the 
106th Congress on a bipartisan basis. We have received mountains of 
evidence demonstrating the drastically increasing injustices caused by 
class action abuses.
  After working extensively with numerous legislative proposals 
throughout the various Congresses, the committee reported a bill--again 
with bipartisan support--which I believe provides a measured response 
to the underlying class action problem.
  This being said, I would not be surprised to hear somebody deny the 
existence of any problem at all. Others will try to confuse the issue 
with dubious claims that proposed reforms would somehow disadvantage 
victims with legitimate claims or further worsen class action abuses. 
Others may even contend past legislative reforms have contributed to 
recent financial debacles and that the proposed reforms will encourage 
more. Rest assured, Mr. President, such claims are nothing more than 
red herrings intended to divert the debate from the real issues.
  In this regard, let me emphasize a few points regarding this bill. 
First, this bill doesn't eliminate all State court class action 
litigation. Class action suits brought in State courts have proven in 
many contexts to be an effective and desirable tool for protecting 
consumer interests and rights. Nor do the reforms we will discuss today 
in any way diminish the rights or practical ability of victims to band 
together to pursue claims against large corporations. In fact, we have 
included several consumer protection provisions in our legislation that 
I believe will substantially improve plaintiffs' chances of achieving a 
fair result in any settlement proposal.
  There are three key components to our legislation. First, the bill 
implements consumer protections against abusive settlements by:

[[Page S12870]]

  No. 1, requiring simplified notices that explain to class members the 
terms of proposed class action settlements and their rights with 
respect to the proposed settlement in ``plain English.''
  No. 2, enhancing judicial scrutiny of the abhorrent coupon 
settlements.
  No. 3, providing a standard for judicial approval of settlements that 
would result in a net monetary loss to plaintiffs.
  No. 4, prohibiting bounties to class representatives.
  No. 5, prohibiting settlements that favor class members based upon 
geographic proximity to the courthouse.
  And No. 6, requiring notice of class action settlements be sent to 
appropriate State and Federal authorities to provide them with 
sufficient information to determine whether the settlement is in the 
best interest of the citizens they represent.
  Second, the bill corrects a flaw in the current diversity 
jurisdiction statute that now prevents most interstate class actions 
from being adjudicated in Federal courts. Specifically, the Class 
Action Fairness Act amends the diversity-of-citizenship jurisdiction 
statute to allow larger interstate class actions to be adjudicated in 
Federal court by granting original jurisdiction in class actions where 
there is ``minimal diversity'' and the aggregate amount in controversy 
among all class members exceeds $5 million.
  The bill balances the State's interest in local disputes by providing 
that class actions filed in the home State of the primary defendants 
would remain in State court subject to a triple-tiered formula that 
looks at the composition of the plaintiffs' class membership. This 
formula has become known as the Feinstein Compromise.
  To enforce the jurisdictional changes, the bill modifies the Federal 
removal statutes to ensure that qualifying interstate class actions 
initially brought in State courts may be heard by Federal courts if any 
of the real parties in interest so desire.
  Although some critics have argued this amendment to diversity 
jurisdiction somehow violates the principles of federalism or is 
inconsistent with the Constitution, I think their concerns miss wide of 
their mark. I fully agree with Mr. Walter Dellinger, former Solicitor 
General, who previously testified at one of our Judiciary Committee 
hearings that it is ``difficult to understand any objection to the goal 
of bringing to the Federal court cases of genuine national importance 
that fall clearly within the jurisdiction conferred on those courts by 
article III of the Constitution.''
  Finally, I wish to express my appreciation to the many individuals 
who have shared with me the details of their experiences of class 
action litigation. In particular, I am grateful to those victims of 
various abuses of the current system who have come forward and told 
their stories in the hope that something positive might come out of 
their terrible experiences.
  Among those who have come forward is Irene Taylor of Tyler, TX, who 
was bilked out of approximately $20,000 in a telemarketing scam that 
defrauded senior citizens out of more than $200 million. In a class 
action brought in Madison County, IL, a notorious county for these 
cases, a forum shop county where attorneys forum shop to get these big 
verdicts and these favorable court rulings, the attorneys purportedly 
representing Mrs. Taylor negotiated a proposed settlement which will 
exclude her from any recovery whatsoever.
  Martha Preston of Baraboo, WI, provides another excellent example. 
Ms. Preston was involved in the famous BancBoston case brought in 
Alabama State court which involved the bank's alleged failure to post 
interest to mortgage escrow accounts in a prompt manner.
  Although Ms. Preston received a settlement of about $4, approximately 
$95 was deducted from her account to help pay the class action 
counsel's legal fees of $8.5 million. Notably, Ms. Preston testified 
before my committee 5 years ago asking us to stop these abusive class 
action lawsuits, but it appears that at least thus far her plea has not 
been heard. So I urge my colleagues to support this modest effort to 
reform the abuses in the current system, abuses that are actually 
hurting those the system is supposed to help.

  Mr. President, I wish to take a minute or two with some charts to 
show how bad the system is. Under current law, in many State class 
action lawsuits, all of the money--every stinkin' dime--goes to the 
attorneys. I am not against attorneys. I am one myself. I think they 
deserve to be paid reasonable fees, but in these class action suits 
every bit of the money goes to attorneys.
  In the BancBoston case, lawyers got $8.5 million. In the case I just 
mentioned, some of the plaintiffs had to pay the attorneys additional 
moneys, getting nothing out of it, but the attorneys got $8.5 million.
  I don't know, but that just smells to me a little bit. Maybe I am 
just too critical, but when the attorneys who represent the clients get 
$8.5 million and the clients have to again pay the attorneys even more, 
there is something wrong with that.
  Take the second one, the Blockbuster case. The lawyers got $9.25 
million. What did the plaintiffs get? One dollar off their next movie. 
Come on. Doesn't that seem a little disproportionate to you, $9.25 
million for attorneys and $1 for the client? Now, true, there are many 
clients, but it doesn't seem too right to me.
  Take the frequent flier case. The lawyers got $25 million. The 
plaintiffs got a coupon worth $25 to $75. Again, now I understand in 
that particular case--I may have it mixed up with another case--after 
getting a huge settlement, they then turned around and sued the 
plaintiffs for more money.
  Take the Coca Cola sweetener case. The lawyers got $1.5 million and 
the plaintiffs get a 50-cent, a 50-penny coupon. I don't know about 
you, but that also smells to me. Again, I am not against attorneys 
getting reasonable fees, but it seems to me these are scams more than 
anything else. They will say they are correcting societal wrongs, but 
why then do they get all the money and the plaintiffs who have to put 
their names on the line get relatively nothing? Talk about class action 
abuse.
  Let's go to that Blockbuster Video case. 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 . . . while attorneys are reported 
to receive around $9.2 million in fees. That is according to the 
RockyMountainNews.com. It just does not seem right. But that is the way 
it is.
  The class action abuse I mentioned in the BancBoston settlement over 
disputed accounting practices produced $8.5 million in attorneys fees 
and actually cost class members around $80 each. Later plaintiffs' 
attorneys in this case also sued the class members--the individuals who 
they brought the suit for--they sued them for an additional $25 
million. There is something wrong with that. I don't care what anybody 
says.
  Take this one. This is a class action abuse, something this bill 
would correct. There was a settlement with Cheerios over food additives 
that produced $2 million in attorneys fees while class members only 
received coupons for more Cheerios, something they complained about to 
begin with. I happen to like Cheerios. I have nothing against Cheerios. 
I eat them. But why would attorneys get $2 million while class members 
get a coupon for another box of Cheerios? It does not seem right to me.

  As my colleagues can see, this is a policy that is being abused, and 
we are only mentioning a few of the abuses. I have no problems with 
legitimate, honest class action suits where attorneys are acting in the 
best interests of their clients. But I do have problems with some of 
these phony approaches that it seems to me are blatantly wrong on their 
face, where the attorneys get huge fees and the class members get 
virtually nothing. That is what is happening in these particular cases.
  This bill will correct some of those ills without taking away the 
right to pursue class actions, and in certain cases they will have to 
be pursued in Federal court. I remember when I practiced law--that was 
a long time ago, before I became a Senator--we would die to get into 
Federal court because everybody knew it was a more important case, that 
the Federal courts handle more important cases, people thought, and 
still do think that.

[[Page S12871]]

  For some reason, these class action lawyers do not want to go to 
Federal courts. Now, why is that? Because they can forum shop into 
Madison County, IL, where they get judges and jurors to hammer the 
defendants with outrageous verdicts that benefit basically only the 
attorneys. Now, that is wrong.
  There are at least five States in this Nation where they forum shop 
class action cases. Grisham wrote a book about this. He is a great 
storyteller, but I can almost name every fictionalized attorney in that 
book.
  Some of them are great lawyers. Some of them are leaders in bringing 
litigation to correct societal wrongs. Some of them deserve credit for 
doing that. But this is a system that is out of control. This bill will 
help to straighten it out, and I think resuscitate the respect for my 
profession because attorneys who bring these actions will have to do so 
pursuant to fairness and rules that make sense rather than forum shop 
to areas where they can get big verdicts and big legal fees but do 
injustice.
  Now I will speak about ``Let's Play Class Action Monopoly.'' Go. Come 
up with an idea for a lawsuit, it states on the top of the board. Find 
a plaintiff to pay off, or a set of plaintiffs. Make allegations. You 
do not need any proof to make allegations. Get out of rule 23 free. So 
you get out of the rule. Convince your magnet State court judge to 
certify the class, which is also another scam in some of these 
jurisdictions where the judges do not seem to appreciate the law or 
abide by the law.
  File copycat lawsuits in State courts all over the country. Sue as 
many companies in as many States as possible even if they have no 
connection to the State.
  It states in the bottom right: Who gets the money? Go left on the 
bottom. Columbia House case, $5 million for lawyers, discount coupons 
for plaintiffs; Blockbuster case, $9.25 million for lawyers, free movie 
coupons for plaintiffs, and not too many of them; BancBoston case, $8.5 
million for lawyers. Some plaintiffs pay more fees rather than get 
anything out of it.
  So in the bottom left, what happens to me? Your employer takes a hit, 
maybe lays you off. Next one, your health and car insurance premiums go 
up. The lawyers win. You lose.
  I have tried cases on both sides of the table. I started out as a 
defense lawyer, and I defended these types of cases. Then in the latter 
years of my practice, I became primarily a plaintiff's lawyer where I 
brought cases for and on behalf of individuals who were injured. I 
brought cases for injured people and got them big verdicts they 
deserved. They walked away with the bulk of the money, which is only 
right. Yes, they were happy to pay my fees because they always came out 
well.
  In some of these cases, this is a scam. Now, there are legitimate 
class action cases, but there are many of them out there today that are 
not. It is a disgrace to our profession. This bill will clarify and 
straighten out some of the wrongs that are going on. It is high time we 
do this. The only reason we might not do it is because there is a 
filibuster on the motion to proceed. Normally, we never have a 
filibuster on a motion to proceed. Normally, we just go to the bill, 
and then if somebody wants to filibuster, they filibuster the bill, 
especially if they have the votes. Why not?

  But a filibuster is happening even on the motion to proceed. Why is 
that? Why a filibuster to begin with, on something that really makes 
sense? Because there are trial lawyers in this country who pay big 
premiums. That is why they make a lot of this money, so they can pay 
big premium dollars to politicians who will vote for them no matter 
what the rules are.
  I want to make it clear, not all class action lawyers are bad. Some 
of them do what is right, and they are not afraid to go to Federal 
court. They know they can get their big verdicts in Federal courts as 
well because they have cases where they should get verdicts. When we 
have these forum shop cases, something is wrong.
  Why is it that we have to have a filibuster on the motion to proceed, 
or require a cloture vote on the motion to proceed to a bill? Why do 
they not just let us bring the bill up, and then if they want to 
filibuster, filibuster the bill? Because we are at the end of a session 
where every minute counts, every second counts, every hour counts, 
every day counts. By delaying, those who do not want this bill can help 
their trial lawyer friends who are very involved in the political 
process because they have millions of dollars that, in many cases, they 
do not deserve; that they can give for political purposes to keep these 
types of injustices going. That is why this bill is important. That is 
why there is a huge bipartisan vote for this bill.
  The question is: Can we get 60 votes? I personally believe we can. I 
believe it would be a disgrace for this body to not overwhelmingly vote 
for this bill. It is a bipartisan bill. It has been well thought out. 
We have worked hard to accommodate various members on both sides of the 
aisle. I think it will redeem our profession from those fly-by-nights 
who are just in it for the money, without regard to helping their real 
clients.
  I would like to see that happen because the law profession is a great 
profession, but in recent years it has been steadily eroded by people 
who are not doing what is right in the profession. These are just some 
egregious cases that are all too often happening because some lawyers 
do not do what is right.
  I am for the good lawyers. But I am against those who are just in it 
for the money and not really helping their clients. This bill will not 
stop them from bringing litigation, but it will even up the situation 
so at least there will not be the same amount of forum shopping, and 
better, more honest judges will be deciding these cases along with 
better and more honest juries.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. LEAHY. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Bennett). Without objection, it is so 
ordered.
  Mr. LEAHY. Mr. President, we have heard discussion of the so-called 
Class Action Fairness Act. I oppose the Class Action Fairness Act for 
the simple reason that it is not fair. Actually, the legislation makes 
it more difficult for citizens to protect themselves against violations 
of State civil rights, consumer, health, and environmental protection 
laws. The way it would hurt them is it would force these cases out of 
convenient State courts, which have experience with the legal facts and 
issues involved in such cases; instead, it would push them into Federal 
courts with new barriers to lawsuits, with new burdens on plaintiffs.
  For the many Americans who are watching this debate, we have to at 
least mention the first, basic question that scheduling this debate 
right now raises. Here we are, 3 weeks beyond October 1. October 1, of 
course, is the beginning of the new fiscal year. It is a deadline for 
passing the appropriations bills that fund the basic work of the 
Federal Government. It is the law that the House and the Senate must 
pass the 14 appropriations bills that fund our Nation and do it by 
October 1. We have not done that. The Congress has not lived up to the 
responsibility the law mandates. We are in the final few weeks, if not 
days, of this congressional session, but here we are, 3 weeks past the 
legal deadline to do what we are required to do, and what we are paid 
to do, and instead we are devoting these precious days not to acting on 
the people's priorities, but we will spend several days debating a bill 
which is a priority of some special interests.
  Over the past several weeks, I have received call after call from 
Vermonters who are more and more anxious over Congress's ability--in 
fact, Congress's willingness--to finish appropriations for fiscal year 
2004. I know other Senators, both Republicans and Democrats, are 
getting similar calls. I have told those Vermonters who call me to hang 
in there. I assure them that Congress will eventually get around to 
doing its work.
  Then the Republican leadership decides to have us consider 
controversial special interest legislation such as this bill. 
Apparently the special interests can go to the front of the line. The 
people's interests go to the back of the line. I suggest we have it the 
wrong way around. Do the people's legislation first; do the 
appropriations bills first;

[[Page S12872]]

do the things we are required to do by law. Do the work that we go back 
home and tell everybody we are going to do, and if there is time left 
over for the special interests, let them come up then; don't put them 
ahead of the people.
  My colleagues and I who serve on the Appropriations Committee worked 
long and hard to get the fiscal year 2004 bills voted out of our 
committee. We got them all out. They could go anytime they wanted. The 
Republican leadership has decided not to. The House has passed all 13 
of the regular appropriations bills. They are waiting for the Senate to 
act. We are not acting. Instead, we are bringing up special interest 
legislation.
  The new fiscal year began 3 weeks ago, but the Senate has not even 
bothered to take up the appropriations bills that fund Agriculture or 
Commerce, Justice, State, and, our Federal law enforcement, the FBI, 
the Department of Justice, the actions we take to counter terrorism.

  As for Commerce, we might do that, so we might actually get us some 
jobs in this country at a time when we are losing a million a year.
  Foreign operations? That hasn't been brought up.
  Transportation? We all know our roads and bridges and rail system are 
falling apart. We ought at least to be voting. We may vote not to give 
any money to fix any of the problems of the Nation. We did vote, 
incidentally, to send $87 billion to Iraq and we will fix their roads; 
we will fix their electrical system; we will fix their communication 
system; we will fix their postal system; we will even give them a new 
ZIP Code. But maybe we could take a few minutes and bring up those 
things that might actually pay for roads and transportation and 
electrical grids and ZIP Codes in the United States.
  Veterans Affairs is in there. The administration is cutting veterans 
benefits all over the country. They are cutting our veterans hospitals. 
They are cutting out what is available to our veterans. At the same 
time we are asking our men and women to serve in Iraq, we are cutting 
out their money. We ought at least to bring that up. Let's vote on it.
  We voted to send money to the veterans of the Iraqi army. We voted to 
send money there. We ought to spend some time here voting on veterans 
in the United States.
  We have the Housing and Urban Development appropriations bills. We 
have a great housing shortage in this country. We just spent billions. 
We had plenty of time to vote billions of dollars to build houses in 
Iraq. We can't even bring up the housing bill for the United States, 
but this special interest legislation we do make time to address.
  What I would say is: OK, we voted to do all these things now for the 
Iraqi people. Can we at least spend a day or two voting on the same 
bills that might help the American people at the national, State, and 
local levels?
  Let me tell you about a few of these programs that are being pushed 
aside so we can take up this special interest legislation.
  In the area of agriculture, there is more than $1 billion in 
conservation assistance for farmers to help them improve water quality 
and stop sprawling development. Last year, the aid was delayed by more 
than 4 months. Each month is critical. The men and women who farm in 
this country are just barely getting by.
  They stalled the Justice spending bill so we could get money as 
quickly as we possibly could to the police forces of Iraq. But because 
we stalled it, there is no money for the Bulletproof Vests Partnership 
Program which helps State and local police agencies buy armored vests 
to protect the lives of their officers. This is a good bipartisan 
program that Senator Ben Nighthorse Campbell and I put together.
  I have had police officers come up to me all over the country, people 
I have never met, who want to shake hands and say, We really want to 
thank you and Senator Campbell and those who joined you to help us get 
this money. Now I am going to have to tell them it is stalled. We had 
to wait to get the money for Iraq, that is fine, but now we have to 
stall again because we have special interest legislation that comes up.
  Take the COPS Program; this puts new police officers on the community 
streets and in our schools; the Violence Against Women Act programs 
that provide services for victims of domestic violence, sexual assault 
and stalking. Those were all set aside so we could bring up this 
special interest legislation.
  All funding for transportation and critical infrastructure projects 
was bottled up. In fact, the Senate has failed to pass the 
transportation reauthorization bill. We don't have time to bring that 
up. We can bring up special interest legislation, we can bring up 
highways in Iraq, but we can't bring up the highway transportation bill 
here in the United States. And what is the cost to us? It is 90,000 
jobs here in America.
  All foreign assistance to nations other than Iraq and Afghanistan are 
on hold. In fact, all the funding to combat HIV/AIDS and other 
infectious diseases is also on hold.
  We have another group of Americans awaiting action by Congress. Those 
are our veterans. They need Congress to make basic decisions about 
their medical care and benefits, decisions that are being held in 
limbo, and they have no idea where we are going to go.
  These are priorities. American priorities are being set aside, and we 
will take care of Iraq. We will take care of the special interest 
legislation. In fact, the special interest legislation is going to do 
more harm than help.
  I think the American people are entitled to ask why we are bogged 
down considering this controversial and unfair class action bill when 
the Senate has yet to take up and debate five important appropriations 
bills amounting to $301 billion.
  I hope the Senate gets down to the business of the people and carries 
out the responsibilities given to us by the Constitution: taking up, 
debating, and passing the remaining appropriations bills. And we can 
pass them. There will be a bipartisan majority of both Republicans and 
Democrats working together to pass them, if we are even allowed to vote 
on them. We were allowed to vote on Iraq and special interest 
legislation. Can we take a little bit of time to vote on legislation 
that actually helps the people of America?
  The American people and the people around the world depend upon the 
funds and services supplied through the spending measures that are now 
held hostage. Let us do our job. Let us move these bills. Let us spend 
a couple of weeks on the floor of the Senate legislating for the people 
of America. It would be a nice refreshing time. We could pass these 
bills.
  Earlier this year, I joined with Senators Kennedy, Biden, Feingold, 
Durbin, and Edwards in requesting a hearing on class action litigation 
in order to help the Judiciary Committee develop consensus reforms--
something that we could have done. Republicans and Democrats could have 
joined on it. But our request was ignored. Actually, our letter went 
unanswered.
  I ask unanimous consent that the letter be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                      U.S. Senate,


                                   Committee on the Judiciary,

                                   Washington, DC, March 25, 2003.
     Hon. Orrin Hatch,
     Chairman, Senate Judiciary Committee, Senate Dirksen 
         Building, Washington, DC.
       Dear Chairman Hatch: We were surprised by your announcement 
     in last week's Executive Business Meeting of the Judiciary 
     Committee that S. 274, the Class Action Fairness Act of 2003, 
     would be marked up ``in the next couple of weeks.'' This 
     bill, and indeed the entire subject on the proper scope and 
     disposition of class actions cases, has been the topic of 
     intense and inconclusive debate for years. In fact, 
     legislation similar to S. 274 has failed repeatedly to pass 
     the Senate.
       In light of this history and the far-reaching impact of 
     this legislation, we respectfully request that the Committee 
     hold a hearing on class action litigation to help the 
     Committee develop consensus reforms to better serve 
     defendants and plaintiffs before the Committee proceeds to a 
     markup on the Class Action Fairness Act, S. 274. We look 
     forward to working with you and other Members of the 
     Committee on this effort, and appreciate your consideration 
     of our request.
           Sincerely,
     Patrick Leahy.
     Joe Biden.
     Dick Durbin.
     Ted Kennedy.
     John Edwards.
     Russell D. Feingold.

  Mr. LEAHY. Mr. President, I had hoped that the Judiciary Committee 
would undertake a deliberate and careful review of information from 
parties

[[Page S12873]]

actually involved in class action litigation to provide a realistic 
picture of the benefits and problems with class actions. But instead of 
doing the work for America, we are proceeding with a special interest 
piece of legislation which has repeatedly failed to pass the Senate in 
recent years. Our Judiciary Committee did not carry out the kind of 
thorough and thoughtful legal analysis of this difficult issue it 
should have. The committee did not provide our fellow Senators with the 
assistance that they may want and need in this complex area.
  I acknowledge the hard work and dedication of my friend, the senior 
Senator from California, Mrs. Feinstein, who took on an enormous task, 
attempting with her amendment to rectify some of the harms created by 
this bill. I appreciate the sincerity of her concern. I appreciate the 
genuine effort she made. But her amendment touches on only a sliver of 
the class action cases which this bill would affect--only when 
plaintiffs and primary defendants are from the same State--and even 
then it could cause harm.
  At its core, this bill deprives citizens of the right to sue on State 
law claims in their own State courts if the principal defendant is a 
citizen of another State, even if that defendant has a substantial 
presence in the plaintiff's home State, and even if the harm done was 
in the plaintiff's home State. The amendment does not remedy that 
problem. It burdens the plaintiff even more.
  I also want to recognize the sincere efforts made by my friend from 
Wisconsin, Senator Kohl. I may disagree with him about the nature of 
the problem. I may disagree with the appropriate solution in this area. 
But I do so respectfully. He has worked very hard, and I appreciate his 
efforts.
  I would like to note the significant changes in the bill since it 
passed out of committee.
  As originally drafted, this bill included mass tort claims along with 
class actions. It actually treated them like they were class actions.
  One improvement the Judiciary Committee did manage to make to the 
bill was to strike that provision. We struck it. We voted on that, and 
we struck it. But somehow, mysteriously, after the bill left the 
committee with nobody voting, that was reversed. Now mass tort actions 
are again included in this bill.
  Just in case anybody says this is what we voted out of committee, it 
is not. We changed that.
  Now we find out how we actually get things changed in the committee 
because, apparently, our friends on the other side of the aisle could 
care less about what we actually did in committee. They just change it 
in the draft on the way over here. It is fascinating. I have never seen 
that in 29 years here. But I guess we live under new rules.
  In the old days, we just lived under the Senator rules. But now we 
have rules outside the Senate rules. In fact, this bill is not the bill 
reported by the Judiciary Committee, S. 274. It is another bill--S. 
1751--which was introduced last week. We didn't have hearings on that. 
We didn't have votes on that. I guess the special interest says, OK, as 
soon as you finish with the roads in Iraq, as soon as you finish the 
schools in Iraq, as soon as you finish giving the power grid to Iraq, 
as soon as you finish paying for the police officers in Iraq, as soon 
as you are finished with veterans' benefits for Iraq, before you do 
anything for American citizens, give us our special interest 
legislation, and we can just drop it in and go forward.

  The special interest legislation will be subjected to the same 
shunting to a Federal court, and plaintiffs will endure the same 
unnecessary difficulties in making their claims and pursuing their 
remedies. But these mass tort cases are not class actions. They have 
not been analyzed under rule 23 standards or State law.
  Mass tort actions have entirely different procedural vehicles to 
reach justice than class actions. They shouldn't be lumped in with 
class actions in any kind of class action bill, either this misguided 
attempt or a better wrought piece of legislation.
  Some special interest groups are distorting the state of class action 
litigation by relying on a few anecdotes and an ends-oriented attempt 
to impede plaintiffs bringing class action cases. If we really want to 
correct things, we can and should take necessary steps to correct the 
problems in class action litigation. But simply shoving most suits into 
Federal court with the new one-sided rules isn't going to correct the 
real problems faced by plaintiffs and defendants. It will clog up the 
Federal courts, but it won't accomplish anything.
  We forget that our State-based tort system remains one of the 
greatest and post powerful vehicles for justice anywhere in the world--
no doubt around the world--as a vehicle for justice. It lets ordinary 
people ban together to take on powerful corporations--sometimes even 
their own government.
  Defrauded investors, deceived consumers, victims of defective 
products, and environmental torts, and thousands of other ordinary 
people have been able to rely on class action lawsuits in their State 
court systems to seek and receive justice.
  I remember when the Soviet Union broke up. A group of legislators 
from the Duma came in to see me, as they did several other Senators. 
One of them asked a question. They said: We have heard it is actually 
possible that citizens in your country can ban together and sue the 
government. I said that is true.
  They said: We have heard further that not only do they sometimes sue 
the government, but there are times the government loses. They win.
  I said: Oh, yes.
  They said: You mean you don't fire the judge and make him do it over 
again?
  I said: You don't understand our system. It is not the Soviet Union. 
Here in the United States, we are able to ban together to take on the 
government. If the government is wrong, the government is going to 
lose.
  It was an eye-opener to them. Actually, it was a bit of an eye-opener 
to me because I realized those things we take for granted other 
countries haven't had the opportunity to have.
  I am old enough to remember the civil rights battles of the 1950s and 
the 1960s and the impact of class actions in vindicating basic rights 
through our courts. When Congress sat back and did nothing, when 
Presidents sat back and did nothing, it was class action lawsuits that 
won.
  The landmark Supreme Court decision of Brown v. Board of Education 
was a culmination of appeals from four class action cases, three from 
Federal court decisions in Kansas, South Carolina, and Virginia, and 
one from a decision of the Supreme Court of Delaware.
  Only the Supreme Court of Delaware, the State court, got the case 
right by deciding for the African-American plaintiffs.
  The State court justices understood they were constrained by the 
existing Supreme Court law but nonetheless held that the segregated 
schools of Delaware violated the 14th amendment. The Federal courts did 
not get it right; before any Federal court did so, a State court 
rejected separate and unequal schools. The U.S. Supreme Court, to their 
credit, joined in a unanimous decision in Brown v. Board of Education 
and closed down the highly discredited separate but equal idea, Plessie 
v. Ferguson. There was no separate but equal in the schools and they 
knew it--separate and unequal. The State courts realized that first in 
a class action suit and then the U.S. Supreme Court followed.
  Many civil rights advocates, including the Lawyers' Committee for 
Civil Rights Under Law, Leadership Council on Civil Rights, Mexican 
American Legal Defense and Education, and the National Asian Pacific 
Legal Consortium have written to Senators in opposition to this 
legislation. The civil rights advocates conclude this legislation 
``would discourage civil rights class actions, impose substantial 
barriers to settling class actions and render federal courts unable to 
provide swift and effective administration of justice.''
  I ask their letter, dated September 16, 2003, be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:


[[Page S12874]]


                                             Leadership Conference


                                              on Civil Rights,

                               Washington, DC, September 16, 2003.

 Oppose the Class Action Fairness Act of 2003: It Would Impose New and 
      Substantial Limitations on Access to Courts for Victims of 
                             Discrimination

       Dear Senator: We, the 42 undersigned civil rights 
     organizations, write to express the opposition of the civil 
     rights community to S. 274, the Class Action Fairness Act to 
     2003, a bill that would substantially alter the 
     constitutional distribution of judicial power. If passed, 
     this bill would: remove most state law class actions into 
     federal court; clog the federal courts with state law cases 
     and make it more difficult to have federal civil rights cases 
     heard; deter people from bringing class actions; and impose 
     barriers and burdens on settlement of class actions.
       Class actions are essential to the enforcement of our 
     nation's civil rights laws. They are often the only means by 
     which individuals can challenge and obtain relief from 
     systemic discrimination. Indeed, federal class actions were 
     designed to accommodate, and have served as a primary vehicle 
     for, civil rights litigation seeking broad equitable relief.
       There are several reasons why the civil rights community is 
     troubled by this particular legislation:
       This bill will overburden and create further unnecessary 
     delay in our federal courts. This bill will amend federal law 
     to extend federal jurisdiction to most state class actions, 
     overloading federal courts and inevitably delaying the 
     resolution of all cases in federal court, including many 
     civil rights claims. The effect of these provisions will be 
     particularly damaging in cases where civil rights plaintiffs 
     are seeking immediate injunctive relief to prohibit 
     discriminatory practices of a defendant.
       The bill will burden the federal judiciary, rendering it a 
     less effectual mechanism by which plaintiffs may seek access 
     to justice. We strongly believe that S. 274 is an unnecessary 
     attempt to impose federal judicial regulation on matters of 
     law clearly committed to the states under our Constitution. 
     Indeed, the determination of state law tort, contract and 
     consumer cases is, unequivocally, not the responsibility of 
     the federal judiciary under the Constitution. The imposition 
     of such substantial new responsibilities on the federal 
     courts will further impair the ability of those courts to 
     carry out the essential functions they are intended to serve 
     under the  Constitution--the determination of matters 
     involving Federal interests, rights and responsibilities. 
     In short, true access to the Federal courts and to the 
     class action device to secure justice in matters where 
     Federal issues are at stake would be severely curtailed by 
     enactment of this legislation.
       The bill could discourage people from bringing class 
     actions by prohibiting settlements that provide named 
     plaintiffs full relief for their claims. Now, for example, a 
     named plaintiff who sues an employer can receive a full award 
     of back pay, and in a proper case, obtain an order placing 
     him or her in the job denied because of discrimination, while 
     also affording all members of the class the opportunity to 
     share in available relief. However, under the guise of 
     protecting class members, the language of the proposed bill 
     prohibits courts from approving settlements that ``provide[] 
     for the payment of a greater share the award to a class 
     representative . . . than that awarded to the other class 
     members.'' This language is susceptible to the interpretation 
     that it prevents the award of positions or ``rightful place'' 
     seniority to class representatives where the number of 
     vacancies for which class members were prevented from 
     competing by discrimination is less than the total number of 
     class members. If the price of trying to protect others is 
     the loss of the full measure of individual relief, 
     individuals will be deterred from becoming a class 
     representative. Thus, this provision would hinder, rather 
     than reform, civil rights class actions.
       The bill could impose new, burdensome, and unnecessary 
     requirements on litigants and the Federal courts. It seeks to 
     impose inordinately difficult and costly notice requirements, 
     which will needlessly complicate and delay the settlement of 
     class actions. Specifically, the proposed bill would require 
     notice to Federal and state officials based on the residence 
     of all class members and would require a 120-day waiting 
     period. These additional, substantial and costly notice 
     requirements and built-in delays are not a matter of due 
     process, but are overly burdensome and improperly assume that 
     Federal and state officials have both proper interest in, and 
     a capacity to respond to, each and every class action.
       For the reasons stated above, the proposed Class Action 
     Fairness Act of 2003 could discourage civil rights class 
     actions, impose substantial barriers to settling class 
     actions, and render Federal courts unable to provide swift 
     and effective administration of justice. The bill also 
     compromises delicate Federal/State relations by questioning 
     the competency of the state judiciary and overburdening our 
     already overworked Federal courts. In short, we believe the 
     impact of this legislation would be profound, and would 
     result in new and substantial limitations on access to the 
     courts for victims of discrimination. We, therefore, urge you 
     to reject this harmful legislation. If you have any 
     questions, or need further information, please contact Nancy 
     Zirkin, LCCR Deputy Director/Director of Public Policy, at 
     202/263-2880.
           Sincerely,
     Leadership Conference on Civil Rights
      ADA Watch/National Coalition for Disability Rights
      AFL-CIO
      Alliance for Justice
     American Association of University Women
     American Civil Liberties Union
     American Federation of Government Employees
     American Federation of State, County and Municipal Employees
     American-Arab Anti-Discrimination Committee
     Americans for Democratic Action
     Bazelon Center for Mental Health Law
     Center for Women Policy Studies
     Commission on Social Action of Reform Judaism
     Disability Rights Education and Defense Fund
     Federally Employed Women
     Jewish Labor Committee
      Lawyers' Committee for Civil Rights Under Law
      Mexican American Legal Defense and Educational Fund
      NAACP Legal Defense and Educational Fund
      National Alliance of Postal and Federal Employees
      National Association for the Advancement of Colored People
      National Association for Equal Opportunity in Higher Ed
      National Bar Association
      National Center on Poverty Law
      National Coalition on Black Civic Participation
      National Committee on Pay Equity
      National Employment Lawyers Association
      National Fair Housing Alliance
      National Gay and Lesbian Task Force
      National Legal Aid and Defender Association
      National Organization for Women
      National Partnership for Women and Families
      National Women's Law Center
      NOW Legal Defense and Education Funds
      People For the American Way
      Project Equality
      Religious Coalition for Reproductive Choice
      Sierra Club
      UNITE!
      United Food and Commercial Workers International Union
      United Steelworkers of America
      Women Employed

  Mr. LEAHY. We all know without consolidating procedures, such as 
class action lawsuits, it might be impossible for plaintiffs to receive 
effective legal representation. Lawyers tend to be paid by the hour. 
They are well paid. But lawyers usually hope they get a portion of the 
proceedings to take on either the governmental or culprit defendants. 
They have to do so on a case-by-case individual basis. Sometimes that 
is what cheaters count on. That is how the cheaters get by on their 
schemes. If you cheat thousands of people just a little bit, you still 
cheat; if you only cheat them by $3 or $4, nobody will sue them. But if 
you are cheating a million people of $3 or $4 each, it adds up.
  Class actions allow the little guys to band together and get a 
competent lawyer and address wrongdoing. The best class action made it 
possible for individual tobacco victims to take on the powerful tobacco 
conglomerates in ways individuals could not. It allows stockholders and 
small investors to join together and go after investment scams.
  Another example of a class action litigation serving the public 
interest is the Firestone tire debacle. The national tire recall was 
started in part by the disclosure of internal corporate documents on 
consumer complaints of tire defects and design errors that were 
discovered in the litigation against Bridgestone/Firestone, Inc. Then 
the plaintiff's attorneys turned this information over to the National 
Highway Safety Administration. That started a Government investigation.
  Months later, because some people had banded together, Bridgestone/
Firestone finally did what they should have done right from the 
beginning: They recalled 6.5 million tires--but not until after there 
were 101 fatalities, 400 injuries, and 2,026 consumer complaints.
  As reported by Time magazine at the time, it is doubtful that the 
internal corporate consumer complaint information would have ever seen 
the light of day absent the civil rights justice discovery process.
  The bill before the Senate creates unique risks and obstacles to 
plaintiffs that are not in the current system. A particularly troubling 
aspect of S. 1751 is it allows the removal of a case at any time. 
Anybody who has ever practiced law, anybody who has ever litigated 
cases--and I, as many other Senators, have--knows the possibilities for 
abusing this provision are obvious.

[[Page S12875]]

  As more than 100 legal experts, law professors, noted in a letter to 
the distinguished Republican leader and the distinguished Democratic 
leader, Senators Frist and Daschle, they said:

       This would give a defendant the power to yank a case away 
     from a state-court judge who has properly issued pretrial 
     rulings the defendant does not like, and would encourage a 
     level of forum-shopping never before seen in this country. 
     Moreover, this provision would allow an unscrupulous 
     defendant, anxious to put off the day of judgment so that 
     more assets could be hidden, to remove a case on the eve of a 
     state-court trial, resulting in automatic delay of months or 
     even years before the case would be tried in Federal courts.

  I ask unanimous consent that the letter of the 100 law professors be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                     June 3, 2003.
     Hon. William Frist,
     Majority Leader, Dirksen Senate Office Building, U.S. Senate, 
         Washington, DC.
     Hon. Tom Daschle,
     Minority Leader, Hart Senate Office Building, U.S. Senate, 
         Washington, DC.
       Dear Senators Frist and Daschle: We are professors of 
     constitutional law, civil procedure, and other subjects, at 
     law schools across the nation. We are writing this letter 
     because of grave concerns over the so-called ``Class Action 
     Fairness Act'' (S. 274) and its House counterpart (H.R. 
     1115), specifically the effect these bills would have on the 
     administration of justice in the United States and on the 
     ability of American consumers, small businesses, and others 
     to obtain relief for injuries done to them. We also have 
     serious questions about the constitutionality of the Act. We 
     urge the Senate to reject this legislation.


             practical effect of enacting the bill into law

       As approved by the Senate Judiciary Committee, S. 274 would 
     result in transferring to the federal courts jurisdiction 
     over most class actions filed in state courts, under state 
     law. The Federal courts do not have the resources to 
     administer justice to both their present dockets and the 
     large number of complex state-court cases that would be added 
     if S. 274 or its House counterpart were to become law. 
     Passage of the bill would lead to significant delays in all 
     the business of the federal courts, harming the ability of 
     the federal courts to decide cases that only they can decide, 
     or in which there is a strong federal interest.


 enactment of the bill would harm the ability of plaintiffs to obtain 
                                justice

       We believe that several specific provisions in the bill 
     would be very unwise. The federal courts have responded to 
     claims of abuse in class-action procedures by studying the 
     claims, inviting comments from bar associations, attorneys 
     and others, carefully considering the comments, proposing 
     draft rules, receiving comments on the drafts, and fine-
     tuning their proposals. If a reform is inadequate to meet the 
     need, they can propose refinements. A substantial set of 
     changes to Rule 23, the class action rule, are expected to go 
     into effect on December 1, 2003, in the event that Congress 
     does not direct otherwise. All of these changes were made 
     pursuant to the Rules Enabling Act, the process Congress 
     created to try to keep politics out of the process of setting 
     rules for the judiciary. Sec. 3 of S. 274 would override some 
     of these changes, and elminate the ability of the Advisory 
     Committee on the Civil Rules to deal with others. If it is 
     enacted in its present form, the rulemaking process would 
     become politicized, and lobbyists' demands would replace 
     the careful consideration now given to these matters. In 
     the event that Congress deems it necessary to legislate as 
     to areas traditionally covered by court rules, we urge 
     that the legislation be as limited as possible, that this 
     part of the legislation be in the form of rules rather 
     than freestanding statutes, and that the legislation 
     expressly preserve the ability of the Advisory Committee 
     on the Federal Rules, the U.S. Judicial Conference, and 
     the Supreme Court to amend the new rules or procedures to 
     the extent necessary to accomplish their purposes more 
     effectively or to cure any unanticipated problems. 
     Congress would, as always, have the final say under the 
     Rules Enabling Act.
       The administration of justice would also be harmed by 
     removing much of the ability of state courts to construe 
     their own laws. Many important questions are most likely to 
     arise when the stakes make it worthwhile to litigate them, 
     i.e., in class actions or other large cases. When the case is 
     removed to federal court, the federal court cannot give a 
     definitive interpretation of state law, but can only predict 
     what the state supreme court would find state law to be, if 
     the state supreme court had the same case. If there are other 
     cases from other parts of the country against the same 
     defendant, even without any overlapping classes, the Judicial 
     Panel on Multidistrict Litigation may assign the case--and 
     the task of interpreting state law--to a federal court 
     thousands of miles away. Not every state has adopted 
     procedures allowing a federal court to certify state-law 
     questions so there may be no practical means by which a 
     federal court in Topeka, for example, may be able to obtain 
     guidance as to the law of California.
       A further unwarranted provision in S. 274 would allow a 
     defendant to remove state-law cases filed against it in the 
     courts of its own home state, where it chose to be 
     incorporated or chose to have its principal place of 
     business. This type of removal has long been considered an 
     abuse, and is forbidden by current law.
       Equally troubling is a provision in S. 274 that allows 
     removal of a case at any time. This would give a defendant 
     the power to yank a case away from a state-court judge who 
     has properly issued pretrial rulings the defendant does not 
     like, and would encourage a level of forum-shopping never 
     before seen in this country. Moreover, this provision would 
     allow an unscrupulous defendant, anxious to put off the day 
     of judgment so that more assets can be hidden, to remove a 
     case on the eve of a state-court trial, resulting in an 
     automatic delay of months or even years before the case can 
     be tried in federal courts. The House bill creates an even 
     further opportunity for delay, by overruling Rule 23(f)'s 
     provision for obtaining permission from a court of appeals to 
     appeal a class certification ruling, and providing for a 
     right to trigger an automatic appeal and for an automatic 
     stay of discovery while the appeal is pending, even if there 
     is no legal basis for an appeal.


            Lack of Justification for a Remedy This Sweeping

       We understand that the supporters of the bill base its 
     justification on assertions that the courts in one or two 
     counties in the United States have too freely granted class 
     certifications in some cases. The bill is not limited to 
     curing claimed abuses in one or two counties, but applies 
     equally to the 3,066 counties in which there is not even a 
     claimed problem. In general, courts have been very responsive 
     to complaints of abuses, and have instituted corrective 
     measures, such as allowing petitions for interlocutory appeal 
     from orders granting or denying class certification. The 
     Federal courts have adopted Rule 23(f) of the Federal Rules 
     of Civil Procedure, and many State courts have followed suit.
       The need for a state court to interpret the law of a 
     different state has never been seen as an adequate 
     justification for removal. Article III of the Constitution 
     does not recognize this as a basis for federal-court 
     jurisdiction and the Full Faith and Credit clause already 
     requires state courts to accord respect to the laws of their 
     sister states. As a practical matter, state courts frequently 
     have to interpret the law of different states even in 
     individual cases properly brought in state courts. This is 
     part of the normal business of the state courts, not a reason 
     for federal jurisdiction.


                         Constitutional Issues

       There is substantial cause to doubt the constitutionality 
     of a massive transfer of state-court cases to federal courts. 
     This transfer would effectively substitute federal-court Rule 
     23 class certification standards for the class certification 
     standards set forth in the statutes, court rules, and case 
     law of the various states. Unbelievably, such a substitution 
     would provide for dismissal of cases that do not meet the 
     federal standards even though they may meet the standards of 
     the states, and even though the standards of the states may 
     meet every requirement of due process. The Supreme Court has 
     not devoted nearly as much attention to construing the Tenth 
     Amendment to the Constitution as it has devoted to the 
     Eleventh Amendment, but passage of S. 274 or its House 
     counterpart may change that comparative lack of attention.
       Similarly, the ``minimal diversity'' trigger for removal 
     under S. 274 and its House counterpart creates an untested 
     and unprecedented expansion of diversity jurisdiction under 
     Article III of the Constitution. Congress certainly has the 
     power to expand diversity jurisdiction to reach cases in 
     which one party on one side of a case is diverse from any 
     adverse party, see 28 U.S.C. Sec. 1335(a)(1) (the 
     interpleader statute). There is, however, substantial cause 
     to doubt the constitutionality of these bills' approach, in 
     which diversity is based on the citizenship of any potential 
     class members. We say ``potential'' because the bill allows 
     removal of a case before the state court has even decided 
     that the case should go forward as a class action, or what 
     the scope of the class should be. While class members are to 
     be protected by the court, and while their rights may be 
     determined by the class action, they are not full parties to 
     the action. Prior to the determination of liability and a 
     proceeding on class members' individual remedies, unless 
     they intervene and become parties, they do not 
     individually have the right to take discovery from the 
     defendants, to file motions in court, to question 
     witnesses, to introduce evidence, or even to take an 
     appeal from an adverse ruling. Yet, under this legislation 
     they would be allowed to remove a complex state law class 
     action into federal court.
       At the very least, litigation over the constitutionality of 
     the bill is likely to embroil the courts for years and is yet 
     a further reason to oppose the enactment of this misguided 
     legislation. We urge you to consider our concerns about the 
     unwarranted changes this legislation mandates as well as the 
     very troubling aspects of the legislation that undermine fair 
     administration of justice in the federal and state judicial 
     systems in the United States.
       Respectfully submitted.


[[Page S12876]]


  Mr. LEAHY. Added to the ``removal-at-any-time'' problems in the 
legislation are the hurdles established by Senator Feinstein's 
amendment adopted in committee. I know it is well intentioned, but the 
amendment does set up cumbersome requirements for determining whether 
an action is to be heard in State or Federal court. It provides that a 
Federal judge may use five factors in deciding jurisdiction of a class 
action where between one-third and two-thirds of the plaintiffs are 
from the same State as primary defendants; and if two-thirds of the 
plaintiffs are from the same State as the primary defendants, then the 
case will stay in State court.
  The bill fails to determine when this measurement takes place during 
the litigation. It has been my experience that membership in class 
actions frequently changes. So the two-thirds provision or the middle-
third provision which is subject to judicial discretion could open up 
easily to judicial gamesmanship. The defendant could try to remove a 
case from State court at the discovery stage. Someone takes a 
deposition and finds, oops, this is going against us, let's get it out 
of here. Or the judge has made a ruling they do not like and they know 
they can never win on appeal, let's get it out of here, even after all 
the evidence is presented, or after closing arguments.
  Actually, the way the bill is currently written, it could be done 
while the jury is deliberating. Considering the vast resources of 
defendants in many class actions as compared to plaintiffs, it will 
make it more difficult for class members to ever have a final ruling, 
where the bill will cause unnecessary and expensive litigation. It 
favors corporate defendants.
  I like to think the scale of justice is even. This tilts the scale of 
justice and it will bounce right off the stand.
  If there were ever a time to think about protecting the consumers, 
the investors, and the employees, think of Enron, WorldCom, and other 
corporate scandals. Think of the employees who worked so hard and were 
told to put their money in the corporate pension program. Look what has 
happened. Look at the employee investors. I am not too concerned about 
some of the leaders of a company like that. They might have to sell one 
of the $50 million homes or they no longer will have several billions 
of dollars but rather several hundred million, but I am worried about 
the people who truly had their lifesavings or their pension destroyed 
or their company destroyed.
  This bill does nothing to make the Enrons of the world more 
accountable for their actions. Actually, the bill undercuts Congress's 
other efforts to make the companies more responsible or accountable for 
their misdeeds or more susceptible to penalties when they do wrong. The 
legislation makes it more difficult for the victims of corporate 
wrongdoing to join to make those companies accountable. It seems to me 
that is the exact opposite to the approach we should be taking.
  Now, not surprisingly, consumers and those representing consumers 
object strongly to the enactment of this legislation.
  I ask unanimous consent to have printed in the Record letters from 
numerous consumer advocates in opposition to this bill.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

         Consumers Union, Consumer Federation of America, U.S. 
           Public Interest Research Group,
                                                 February 5, 2003.
       Dear Senator: we are writing to you as organizations 
     dedicated to working on behalf of the rights and interests of 
     consumers to express our opposition to S. 274, the ``Class 
     Action Fairness Act of 2003.'' This legislation will deny 
     consumers access to adequate redress against corporate 
     wrongdoers and will undermine the ability of state courts to 
     hear cases primarily concerned with their own citizens. While 
     class actions are an important and efficient legal tool for 
     consumers to use in order to obtain redress from wrong doing, 
     we are concerned about abuses of the class action process and 
     agree that these abuses should be curtailed. However, S. 274 
     will not eliminate these abuses, but rather would create 
     barriers to a consumer's effort to obtain redress. S. 274 is 
     unfair to consumers and we urge you to oppose it.
       Congress should work to prevent unjust enrichment by 
     lawyers at the expense of consumers in class action 
     settlements. This legislation however, will not solve this 
     problem. Instead, while purporting to curtail class action 
     abuses, S. 274 will virtually wipe out state class actions 
     and thus remove an important venue for redress of injury or 
     fraud for consumers. The bill will make it more difficult for 
     consumers to obtain effective and efficient judicial relief 
     for injuries caused by defective products, fraud in the 
     marketplace, or discrimination.
       Congress should seek to hold negligent wrongdoers 
     accountable for their actions. Yet this bill does just the 
     opposite: it places obstacles to accountability by providing 
     fewer incentives for companies to keep their products safe 
     and their action fair.
       S. 274 will create numerous barriers to participating in 
     class actions by permitting defendants to remove most state 
     class action suits to federal court. This removal from state 
     court to federal court would leave consumers shuttling back 
     and forth between state and federal court because while a 
     consumers' class could meet state law class certification 
     requirements, it could fail to meet the class certification 
     requirements set forth in federal law. This will result in 
     the federal courts' denial of class certification and 
     dismissal (not remand) of the case. A consumer would not have 
     two options, none of which would result in access to a court 
     proceeding. A consumer could bring the claim in state court 
     as an individual action. However, individual cases would be 
     impractical to litigate, would not have the same deterrent 
     effect, and would have the potential to overwhelm state 
     courts. In the alternative, consumers could re-file an 
     amended class certification in state court. This re-filing 
     again opens the door created by S. 274 for the defendant to 
     remove the case to federal court.
       S. 274 will also clog an already overburdened and 
     understaffed federal judiciary and slow the pace of 
     certifying class action cases. This considerable delay will 
     likely result in the denial of justice to injured consumers. 
     In addition, this removal to federal court takes away an 
     important and traditional function of state courts and will 
     slow--and in some cases thwart--the continual interpretation 
     of state law. Federal court decisions on issues of state law 
     solve the narrow legal issue of the particular case without 
     providing legal precedent for future state court cases of the 
     particular state law in question. Further, class actions are 
     among the most resource-intensive cases before the federal 
     judiciary. U.S. Supreme Court Chief Justice William Rehnquist 
     has expressed concern that this bill will result in further 
     overloading an already-backlogged federal docket.
       We agree that class actions can be made a more effective 
     means of consumer redress; we support changes to the class 
     action system that would prevent unjust enrichment and act as 
     a deterrent to future wrongdoing, including modification of 
     notice requirements and simplification of certification 
     procedures and standards; but the jurisdictional changes 
     mandated by S. 274 are designed to impede class actions, not 
     to make them fairer or more efficient.
       This class action ``reform'' legislation is especially 
     inappropriate in light of recent events. Just last year in 
     the scandals of Enron, WorldCom and others, we saw how 
     corporations need to be held accountable for their actions. 
     Class actions effectively hold corporations accountable.
       S. 274 does not provide the right solution to a class 
     action system in need of reform; rather it makes it more 
     difficult for consumers to obtain redress, to hold bad actors 
     accountable for the harms they caused, and to deter future 
     misconduct. The Class Action Fairness Act will substantially 
     reduce the effectiveness of one of the most important legal 
     tools consumers now have.
       We strongly urge you to oppose S. 274. We urge you to do 
     the right thing for American consumers.
           Sincerely,
     Sally Greenberg,
       Senior Product Safety Counsel, Consumers Union.
     Rachel Weintraub,
       Assistant General Counsel, Consumers Federation of America.
     Chris Peterson,
       Consumer Attorney, U.S. Public Interest Research Group.
                                  ____

                                            Judicial Conference of


                                            the United States,

                                   Washington, DC, March 26, 2003.
     Hon. Orrin G. Hatch,
     Chair, Committee on the Judiciary, U.S. Senate, Dirksen 
         Senate Office Building, Washington, DC.
       Dear Chairman Hatch: I write to provide you with the 
     recently adopted views of the Judicial Conference of the 
     United States, the policymaking body for the Federal 
     judiciary, on class action legislation, including S. 274, the 
     ``Class Action Fairness Act of 2003,'' introduced by you and 
     other cosponsors.
       On March 18, 2003, the Judicial Conference unanimously 
     adopted the following recommendation: ``That the Judicial 
     Conference recognize that the use of minimal diversity of 
     citizenship may be appropriate to the maintenance of 
     significant multi-State class action litigation in the 
     Federal courts, while continuing to oppose class action 
     legislation that contains jurisdictional provisions that are 
     similar to those in the bills introduced in the 106th and 
     107th Congresses. If Congress determines that certain class 
     actions should be brought within the original and removal 
     jurisdiction of the Federal

[[Page S12877]]

     courts on the basis of minimal diversity of citizenship and 
     an aggregation of claims, Congress should be encouraged to 
     include sufficient limitations and threshold requirements so 
     that Federal courts are not unduly burdened and States' 
     jurisdiction over in-State class actions is left undisturbed, 
     such as by employing provisions to raise the jurisdictional 
     threshold and to fashion exceptions to such jurisdiction that 
     would preserve a role for the State courts in the handling of 
     in-State class actions. Such exceptions for in-State class 
     actions may appropriately include such factors as whether 
     substantially all members of the class are citizens of a 
     single State, the relationship of the defendants to the forum 
     State, or whether the claims arise from death, personal 
     injury, or physical property damage within the State. 
     Further, the Conference should continue to explore additional 
     approaches to the consolidation and coordination of 
     overlapping or duplicative class actions that do not unduly 
     intrude on State courts or burden Federal courts.''
       The Conference in 1999 opposed the class action provisions 
     in legislation then pending (S. 353; H.R. 1875, 106th Cong.). 
     That opposition was based on concerns that the provisions 
     would add substantially to the workload of the Federal courts 
     and are inconsistent with principles of Federalism. The March 
     2003 position makes clear that such opposition continues to 
     apply to similar jurisdictional provisions.
       The Conference recognizes, however, that Congress may 
     decide to base a statutory approach to remedy current 
     problems with class action litigation by using minimal 
     diversity jurisdiction. The Conference position recognizes 
     that the use of minimal diversity may be appropriate to the 
     maintenance of significant multi-State class action 
     litigation in the Federal courts. The use of the term 
     ``significant multi-State class action litigation'' focuses 
     on the possibility of multi-State membership within the 
     plaintiff class. The actions to which this term applies are 
     nationwide class actions, as well as class actions whose 
     members include claimants from States within a smaller region 
     or section of the country. Minimal diversity in these cases 
     would facilitate the disposition of litigation that affects 
     the interest of citizens of many States and, through their 
     citizens, affects the many States themselves.
       Parallel in-State class actions in which the plaintiff 
     class is defined as limited to the citizens of the forum 
     State are not included within the term ``significant multi-
     State class action litigation.'' Parallel in-State class 
     action might share common questions of law and fact with 
     similar in-State actions in other States, but would not, as 
     suggested herein, typically seek relief in one State on 
     behalf of the citizens living in another State. Accordingly, 
     parallel in-State class actions would not present, on a broad 
     or national scale, the problems of State projections of law 
     beyond its borders and would present few of the choice of law 
     problems associated with nationwide class action litigation. 
     In addition, to the extent problems arise as a result of 
     overlapping and duplicative in-State class actions within a 
     particular State, the State legislative and judicial branches 
     could address the problem if they were to create or utilize 
     an entity similar to the Judicial Panel on Multidistrict 
     Litigation, as some States have done.
       Further, the position seeks to encourage Congress to 
     include sufficient limitations and threshold requirements so 
     as not to unduly burden the Federal courts and to fashion 
     exceptions to the minimal diversity regime that would 
     preserve a role for the State courts in the handling of in-
     State class actions. The position identifies three such 
     factors that may be appropriately considered in crafting 
     exceptions to minimal diversity jurisdiction for class 
     actions. These factors are intended to identify those class 
     actions in which the forum State has a considerable interest, 
     and would not likely threaten the coordination of significant 
     multi-State class action litigation through minimal 
     diversity. (The factors do recognize certain situations where 
     plaintiffs from another State may be included in an otherwise 
     in-State action.)
       The first factor would apply to class actions in which 
     citizens of the forum State make up substantially all of the 
     members of the plaintiff class. Such an in-State class action 
     exception could include consumer class action claims, such as 
     fraud and breach of warranty claims. The second factor would 
     apply to a class action in which plaintiff class members 
     suffered personal injury or physical property damage within 
     the State, as in the case of a serious environmental 
     disaster. It would apply to all individuals who suffered 
     personal injuries or losses to physical property, whether or 
     not they were citizens of the State in question. The third 
     factor recognizes that it may be appropriate to consider the 
     relationship of the defendants to the forum State. Such 
     consideration is not intended to embrace the term ``primary 
     defendants'' (or a similar term), which language has been 
     used in past and present class action bills as part of an 
     exception to minimal diversity. Such a reading could extend 
     minimal diversity jurisdiction to cases in which a single 
     important defendant lacked in-State citizenship. While the 
     relationship of the defendant to the forum may have some 
     bearing on State adjudicatory power, an insistence that all 
     primary defendants maintain formal in-State citizenship is 
     too limiting and may preclude in-State class actions where a 
     defendant has sufficient contacts with the forum State, 
     regardless of citizenship.
       We would appreciate your consideration of these comments 
     and the position of the Judicial Conference. Should you or 
     your staff have any questions, please contact Michael W. 
     Blommer, Assistant Director, Office of Legislative Affairs, 
     Administrative Office of the U.S. Courts, at (202) 502-1700.
           Sincerely,
                                            Leonidas Ralph Mecham,
                                                        Secretary.

  Mr. LEAHY. Last year a group of investors recovered millions of 
dollars in lost investments under State corporate fraud laws and a 
State class action case in Baptist Foundation of Arizona v. Arthur 
Andersen. These investors, mostly elderly, banded together to 
successfully recoup $217 million from Arthur Andersen. Why? Because of 
questionable accounting practices surrounding an investment trust. The 
case is just one example of how a State-based class action litigation 
holds corporate wrongdoers accountable and helps defrauded investors 
recoup their losses.
  Like most Vermonters, I am a strong supporter of the environment. But 
I look at this bill and I think, what a green light for polluters and 
others responsible for environmental damages to avoid accountability in 
court. So many polluters, who would fear class action suits if they 
were to violate the law, now know they could get caught. With this 
legislation, they might take the old idea of: Go ahead and pollute; 
nobody gives a hoot. They are going to get away with it.
  This legislation removes almost all important environmental class 
actions from State to Federal court. Not only does this deny State 
courts the opportunity to interpret their own State's environmental 
protection laws, but it also hampers and deters plaintiffs in pursuing 
important environmental litigation. It means we Vermonters would not 
have a say in our own courts--or those in Utah or in any other State.
  Under this bill, environmental class action suits may not get 
litigated, reducing the incentive to keep our environment clean. 
Plaintiffs' attorneys may not be willing to take these high-risk, high-
cost, and time-consuming cases, particularly when what they are looking 
for is injunctive relief. That is an injunction to stop the polluter 
from polluting. Intentionally or not, this bill protects polluters and 
ignores innocent victims of their negligence.
  Just a few months ago, as I recall, we read about a horrible toxic 
dumping situation in Alabama and a monumental settlement in State court 
to clean up an entire community. It was in State court, though--in 
State court.
  In Anniston, AL, the Monsanto Company manufactured PCBs--
carcinogens--from 1929 to 1971. For more than 40 years, in arrogant--
arrogant--disgusting disregard of people's health and the environment, 
Monsanto dumped untreated, unfiltered waste from its PCB plant into the 
streams and landfills of Anniston. They never let the residents--many 
of whom actually worked, and worked very hard, for Monsanto--they never 
let them know of the horrific risk to their environment and their 
health.
  When the undeniable truth of Monsanto's malfeasance became clear, 
several thousand residents of Anniston sued in State court. They 
recently won a liability jury verdict. When the case moved into the 
damages phase, Monsanto was not out there defending and saying: Well, 
we did not do something bad. They knew they did something terrible. 
They did not start arguing about: Well, people were not injured by it. 
They knew they were injured by it.
  So what did they do? They tried to get the judge removed. That is 
what they tried to do. Although the Alabama Supreme Court, a 
conservative supreme court, had already held that the trial judge was 
acting properly, Monsanto continued to oppose his participation. They 
tried everything they possibly could do to confuse people and escape 
facing up to the issues. They then had to focus on the merits of the 
case and settled with the local residents for $600 million and pledged 
to pay additional cleanup costs for the town.

  The Alabama Supreme Court, the Alabama State court, did this very 
well. Not under this bill. Under this bill, it would have been yanked 
away from those courts, yanked away from the Alabama State court, 
yanked away from the Alabama Supreme Court, and stuck into Federal 
court.
  Why? More than 100 people lived in Anniston. Even though all the 
people

[[Page S12878]]

suffered, they lived just a block or a driveway from each other. We, 
those of us who say we really care about States having their rights, 
would reach down and yank it right out of the State and say: You are 
not good enough to handle the case that involves your own people.
  Cases such as this one would provide hard evidence that our State-
based civil justice system is working--it is working--to protect the 
environment and to protect victims of polluters, and there is no reason 
to prefer a Federal reform for resolution of their claims. State 
courts, unlike the Federal courts, have a sound understanding of 
evolving local law and the open dockets to resolve conflicts in a 
manner that would protect our society from polluters.
  In fact, we ought to at least ask, Do the Federal courts want this? 
The Judicial Conference, headed by Chief Justice William Rehnquist, 
wrote a letter in March of this year opposing this bill because its 
``provisions would add substantially to the workload of the federal 
courts and are inconsistent with principles of federalism.''
  They singled out serious environmental disasters as an example of 
class actions that should remain in State courts.
  Chief Justice Rehnquist and the Judicial Conference said: What are 
you doing to us? Why are you sending these cases over there? State 
courts can handle them better.
  I would be a very wealthy person if I had a couple dollars for every 
time I heard speeches or statements from my fellow Senators about how 
we have to better respect our individual States. After all, that is why 
we have a Senate. Each one of the 50 States has equal representation 
here to make sure the States are not subsumed in the Federal system. 
Those who would support this bill are giving the back of their hand to 
their States and saying: You are not smart enough, you are not good 
enough to take care of the laws of your own State.
  Numerous organizations devoted to the protection of the environment 
oppose this bill, including Clean Water Action, Earthjustice, the 
Environmental Working Group, Friends of the Earth, Greenpeace, the 
Mineral Policy Center, the Natural Resources Defense Council, the 
Sierra Club, and the U.S. Public Interest Research Group.
  These advocates conclude, in a letter, this bill ``would benefit 
polluters at the expense of people and communities harmed by public 
health and environmental disasters.'' I ask unanimous consent their 
letter be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                    April 2, 2003.
     Hon. Orrin Hatch, Chair,
     Hon. Patrick Leahy, Ranking Member,
     Committee on the Judiciary, U.S. Senate, Washington, DC.
       Dear Chairman Hatch and Ranking Member Leahy: We are 
     writing to express our opposition to S. 274, the so-called 
     ``Class Action Fairness Act of 2003.'' This legislation would 
     not be fair to citizens bringing class action cases based on 
     state environmental or public health protection laws who wish 
     to have their cases heard by their state's courts. The bill 
     would allow corporate defendants in pollution class actions 
     to remove virtually any type of state environmental law case 
     from state court to federal court, placing such cases in a 
     forum that could be more costly, less timely, and 
     disadvantageous to the citizen plaintiffs. We urge you to 
     oppose this anti-environmental legislation.
       Class actions protect the public's health and the 
     environment by allowing people with similar injuries to join 
     together for more efficient and cost-effective adjudication 
     of their cases. All too often, hazardous spills or toxic 
     contamination from one source affects large numbers of 
     people, not all of whom may be citizens of the same state. In 
     such cases, a class action lawsuit based on state common law 
     doctrines of negligence or nuisance, or upon rights and 
     duties created by state statutes, is often the best way of 
     resolving the claims. Recent examples of such incidents 
     include the Asarco lead contamination in eastern Omaha, the 
     Nicor Gas mercury spills in suburban Chicago, and emissions 
     from an illegally operated rock quarry in San Rafael, 
     California--incidents that harmed thousands of people--as 
     well as many cases in which injured plaintiffs have sought 
     access to medical monitoring in the wake of a community's 
     toxic exposure.
       S. 274 would benefit polluters in state environmental class 
     actions by allowing them to remove these claims from state 
     courts that may be better equipped to handle them to federal 
     courts where the judges are likely to be less familiar with 
     state law. This removal could occur even if the citizen 
     plaintiffs object.
       The bill would even allow polluters to remove to federal 
     courts cases brought by more than one hundred plaintiffs even 
     if the citizens do not seek certification as a class. One 
     such case is underway now in Anniston, Alabama, where a state 
     court jury is currently deciding damages to be paid by 
     Monsanto and Solutia for injuring more than 3,500 people the 
     jury found were exposed, with the companies' knowledge, to 
     cancer-causing PCBs over many years. There is little doubt in 
     the Anniston case that, had S. 274 been law, the defendants 
     would have tried to remove the case from the state court 
     serving the community that suffered this devastating harm.
       Allowing defendants to remove to cases such as these that 
     properly belong in state court--even cases based solely on 
     state law--is not only unfair to the injured parties in the 
     state law cases, it will needlessly delay justice for all in 
     the overburdened federal courts, creating delays for those 
     parties in environmental cases whose claims must be heard in 
     federal court, as well as for other parties who require a 
     federal forum.
       Last month, the Judicial Conference of the United States 
     wrote to your committee stating the continued opposition of 
     the Judicial Conference to broadly written class action 
     removal legislation. Their letter states that, even if 
     Congress determines that some ``significant multistate class 
     actions'' should be brought within the removal jurisdiction 
     of the federal courts, Congress should include certain 
     limitations and exceptions, including for class actions ``in 
     which plaintiff class members suffered personal injury or 
     personal property damage within the state, as in the case of 
     a serious environmental disaster.'' The letter explains that 
     this ``environmental harm'' exception should apply ``to all 
     individuals who suffered personal injuries or losses to 
     physical property, whether or not they were citizens of the 
     state in question.'' S. 274 does not provide any exception 
     for environmental harm cases.
       As U.S. Supreme Court Chief Justice Rehnquist has stated in 
     the past, ``Congress should commit itself to conserving the 
     federal courts as a distinctive judicial forum of limited 
     jurisdiction in our system of federalism. Civil and criminal 
     jurisdiction should be assigned to the federal courts only to 
     further clearly defined national interests, leaving to the 
     state courts the responsibility for adjudicating all other 
     matters.'' The so-called ``Class Action Fairness Act'' does 
     not conserve the federal forum but would allow corporate 
     polluters who harm the public's health and welfare to exploit 
     that forum whenever they perceive an advantage to defending 
     class actions in federal court, regardless of whether the 
     class action would be better adjudicated in a state court.
       We urge you to oppose S. 274, legislation that would 
     benefit polluters at the expense of people and communities 
     harmed by public health and environmental disasters.
           Sincerely,
       Joan Mulhern, Senior Legislative Counsel, Earthjustice 
     Legal Defense Fund.
       Debbie Sease, Legislative Director, Sierra Club.
       Lexi Shultz, Legislative Director Mineral Policy Center.
       Sara Zdeb, Legislative Director, Friends of the Earth.
       Paul Schwartz, National Campaigns Director, Clean Water 
     Action.
       Richard Wiles, Senior Vice President, Environmental Working 
     Group.
       Erik Olson, Senior Attorney, Natural Resources Defense 
     Council.
       Anna Aurilio, Legislative Director, U.S. Public Interest 
     Research Group.
       Rick Hind, Legislative Director, Greenpeace.

  Mr. LEAHY. Mr. President, as colleagues may have gathered, I am not 
in favor of this piece of legislation, the Class Action Fairness Act. 
Man, I have heard things. There ought to be a law against misleading 
labels on legislation we pass because this would break the law. These 
many injured parties who have valid claims would have no effective way 
to seek relief. Class action suits have helped win justice and expose 
wrongdoing by the polluters, the big tobacco companies, and the civil 
rights violators, and brought about Brown v. Board of Education, as I 
said earlier. It gives average Americans at least a chance for justice. 
We should not take that chance for justice away from the American 
people.
  So I hope Senators will consider the harm this bill would do the 
American people and to their constituents and join me in opposition.
  Lastly, Mr. President, as I said, we found time to get highway money 
for Iraq, but we do not have time to pass the highway bill for America. 
We had time to get money to improve police departments and law 
enforcement in Iraq, but we do not have time to pass a bill to do the 
same here for Americans.
  We had time to pass legislation to help military veterans in Iraq, 
but we can't find time to pass legislation for veterans in the United 
States.
  Mr. REID. Will the Senator yield for a question?
  Mr. LEAHY. Of course, I yield to my friend from Nevada.

[[Page S12879]]

  Mr. REID. As I am here in the Chamber today, there are four members 
of the Appropriations Committee: The Presiding Officer, the senior 
Senator from Vermont, the Senator from Nevada, and the Senator from 
Illinois. This morning I asked, Why aren't we able to do appropriations 
bills? The House has gone home. They are AWOL. So matters that we have 
to resolve in conference we can't do either. We have six that have not 
passed this body. The Senator from Vermont hit the nail on the head.
  I commented this morning, we can think of a lot of reasons that the 
bills haven't passed. One is what the President has done with the 
monetary functions of this country. The economy is in disastrous shape. 
If we did these appropriations bills now, there would be a focus on 
each bill. The people of America would say: Well, they can't do that 
for us. Look at what they have just done for Iraq with $21 billion.
  So the Senator from Vermont hit the nail on the head. I compliment 
him for recognizing the problem we have. What are we going to do? I 
think the Senator from Vermont will agree, we are going to have an 
omnibus bill with as many as 10 appropriations bills jammed into it.
  Mr. LEAHY. Did the Senator say omnibus or ominous?
  Mr. REID. The Senator is correct. We are going to have an ominous 
omnibus bill. It is too bad we are going to do that because it will be 
a massive document. It will be done at the last minute. There will be a 
lot of little things jammed in there by the leadership. And then, of 
course, as the Senator knows, conferences that we do have are just one-
sided. They don't include us in them. It is a funny way to run the 
country. This decision has been made by a Republican President, a 
Republican-controlled House and Senate.
  I appreciate very much the Senator yielding.
  Mr. LEAHY. I appreciate the comments of my friend from Nevada. I 
can't think of any person who has worked harder to help get legislation 
through. The senior Senator from Nevada has a good reputation of 
working with both Republicans and Democrats. There are two primary 
reasons. One is the fact that he knows legislation better than anybody 
else around here. Secondly, he is totally honest and truthful to 
everybody.
  It is frustrating because, again, there is legislation for highways 
in Iraq, but not in the United States, all these other things. We 
passed a transportation bill. That would mean 90,000 jobs right there 
that we could put Americans back to work.
  I thank him for saying that. I don't care if people want to spend 
time on this bill. It is a terrible bill. If they want to spend time on 
it, let's at least get the appropriations bills done. Let's answer the 
questions of our veterans, whether the benefits will be there or not; 
answer the questions police officers have about benefits; answer the 
questions those in education have, whether the money will be there.
  I see my good friend, the senior Senator from Illinois. I yield the 
floor.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, I thank the ranking Democrat in the Senate 
Judiciary Committee, Senator Leahy, as well as Senator Reid of Nevada, 
for coming to the floor today to discuss the agenda of Congress. It is 
worthy of reflection.
  Some of us went home last week after the vote dispirited because this 
administration was afraid to offer the Iraq reconstruction package as 
an up-or-down vote. They believed--and I think they were right--they 
couldn't pass it. So many Members of Congress had so many questions and 
reservations, the only way it could pass was to combine it with the 
money for our troops. Many of us, looking at this terrible Faustian 
bargain, had to vote for the bill to support the troops, believing 
that, frankly, if it were my child, someone near or dear to my family, 
as it is for so many people in Illinois, I wouldn't want to shortchange 
the troops one penny. So we ended up passing about $15 or $16 billion 
in reconstruction for Iraq.
  Trust me, stories are already pouring in about some of the 
questionable contracting that is going on over there. There is real 
doubt among some as to whether this money will achieve the goal we are 
seeking. We want peace in Iraq. We want stability. We want our troops 
to come home. But we want to do it in the right way.
  So far, this administration, since the declaration of the military 
victory, has seen a long string of embarrassments and defeats and 
setbacks. There have been pretty pictures painted by some on the other 
side who have gone there, but they can't overcome the reality of every 
morning's newscast which tells about another soldier being killed or 
another 10 soldiers being maimed.
  I have visited with some of those soldiers who have returned from 
Iraq. Their lives will never be the same. To say they got by because 
they were simply wounded is to overlook the obvious. Many of them will 
carry scars for the rest of their lives because of a policy of this 
administration which, frankly, has not stood the test of time.
  The reason I think it is important to reflect on that is to consider 
where we are today. Now that we have moved from the issue of Iraq, we 
are back on an issue which is near and dear to the Republican 
leadership in Congress as well as to the White House. Take a look at 
the agenda of this Congress and particularly what we are discussing 
today. It is an agenda which attempts to slow down the legitimate 
responsibilities of government directly through Executive orders and 
indirectly with historic deficits.
  Yes, this fiscal conservative, compassionate Republican President has 
stood by and watched as we have reached record depths in terms of debt 
in America. Although he can point to a recession which he blames on the 
previous President, which is fair game in Washington, he can point to a 
war on terrorism, the fact is, most of this deficit is his own 
creation.
  President Bush's tax policy, his economic plan has been a failure for 
America's economy. But it has been a dramatic success for those who 
were praying for a bigger deficit. I don't know who that might be, but 
if you were looking for a President to deliver the biggest deficit in 
the history of the United States, this President has done it. That 
deficit, of course, shortchanges us when we need to really pursue the 
valuable and vital functions of government.
  There are some things which only government can do. I know my friends 
from the conservative side of the political spectrum hate to concede 
this point, but there are certain things only government can do. 
Certainly military defense is one. Defense against terrorism is 
another. But there are others, and they will come to our attention as 
we consider the debate before us on a bill related to class action 
lawsuits.

  The agenda of the Republicans in Congress and the President is one 
that is guided by the naive belief that the balance of power within our 
Government is outdated. It is an agenda which would close the 
courthouse doors to ordinary Americans in the name of penalizing trial 
lawyers but continue to protect the most politically powerful. This is 
nothing new in government. The people who have the power to line the 
Halls of Congress with their lobbyists in their three-piece suits and 
fancy shoes are well represented. They are the voices you hear when you 
come to vote for a bill.
  The voices that are not heard are those of consumers and families and 
working people who are disadvantaged time and again by these special 
interests. The Class Action Fairness Act is a special interest piece of 
legislation designed exclusively to protect those who are wealthy and 
powerful from even being held accountable in court.
  When you look at the options available to us, if you have a President 
who really doesn't care to work for consumers and working families, and 
a Government which is unresponsive because of that President or the 
lack of funds, and a Congress unwilling to address these same issues, 
there is only one place for an American to turn. That is the court 
system. So what this Congress tries to do time and time again is to 
close the doors of the courthouse so that that family, that consumer, 
that small business, that individual doesn't have a chance to go into 
the courthouse and ask for justice. They are doing that with this class 
action bill.
  Whether the agenda is driven by the White House, the leadership of 
the House of Representatives, the committees on the floor of the 
Senate, the not

[[Page S12880]]

so invisible hand of the right-wing agenda is busily at work. We see it 
in the nominees sent up for lifetime appointments to the Federal 
judiciary, men and women who are not even close to the center stripe of 
political thinking, in the hopes that if you cannot close the 
courthouse door, make sure there is a judge on the bench who will rule 
consistently on behalf of the wealthy and powerful in America.
  Some will say what I am saying sounds a lot like class warfare. I can 
recall what Warren Buffet, one of the wealthiest men in America, told 
us a few weeks ago. He came to a luncheon on Capitol Hill and spoke to 
a group of Senators and talked about President Bush's tax cuts for the 
wealthy. This wealthy man from Omaha, NE, said, ``Some people say this 
is class warfare.'' He said, ``I want to tell you something. It is 
true, and my class is winning the war.''
  That is a fact. They have won the war with the President's tax cuts. 
They will continue to win the war when it comes to closing the 
courthouse doors. The agenda is being driven by President Bush and his 
gang of compassionate conservatives. It is not just this issue of 
litigation and tort reform. It stretches in so many directions. This is 
an administration that wants to drill for oil in the Arctic National 
Wildlife Refuge rather than to demand that automobile manufacturers in 
Detroit make more fuel-efficient cars, which they can do. The 
technology is available. But this administration would much rather 
invade a pristine wildlife refuge set aside by President Eisenhower 50 
years ago than pick up the phone and say to the Big Three in Detroit 
that you have to do better. We need more fuel-efficient cars and we are 
going to support legislation to make it happen.
  That shows you where they are coming from. They would much rather 
drill in a wildlife refuge than to ask for more fuel efficiency from 
the automobile manufacturers. This is an administration that cuts 
education funding for schoolchildren to pay for tax benefits for the 
wealthiest people in America. It is an administration that would 
restrict background checks on gun purchasers while protecting gun 
manufacturers from liabilities. Rather than to make certain that we 
keep guns out of the hands of people with criminal records or a history 
of mental illness, they say instead, in the name of a second amendment, 
we cannot ask those questions and, if we do, we cannot keep the records 
long enough for law enforcement to use them. It is a constitutional 
right as far as they are concerned under the second amendment.
  Yet when it comes to gun manufacturers making defective products and 
dangerous products and selling them, this administration falls over 
backward in an effort to protect them from any liability in court, this 
administration which would cap the compensation of injured victims of 
medical negligence, medical malpractice, and never question the 
insurance companies that continually make mistakes and charge the most 
outrageous premiums. Now we are forced to debate a bill that divides 
instead of unifies us.
  It is especially troubling at a time when so many appropriations 
bills have not even been considered in the Senate and we are going to 
work on this bill for special interest groups. The majority leader 
brought this bill before us instead of an appropriations bill. Here we 
are after October 1, at a time when we should have passed all of our 
appropriations bills, but instead of addressing the immediate needs of 
Government, we are going to address the immediate needs of the special 
interest groups.

  I find it interesting that the bill before us is not the bill that 
passed the Judiciary Committee, which I served on a little earlier this 
year. There is a provision back in the bill called a mass tort 
provision. I will not go into all the details of it other than to tell 
you the special interests have won again. There was a bipartisan motion 
in the Judiciary Committee--I am not sure there was debate--to delete a 
section of the bill for so-called mass tort actions. It was a motion by 
Senator Specter, a Republican, and Senator Feinstein, a Democrat. It 
was removed without controversy.
  Guess what happened. That bill was thrown away. The bill before us 
today reinstates this prohibition against mass tort actions. That is 
fundamentally unfair, and we knew that. The special interest groups 
prevailed again.
  How fair is the Class Action Fairness Act before us? It is not about 
fairness or justice. It is about protecting the powerful against legal 
challenges from the little guy. Who wants this bill? Who wants this 
class action bill? I will tell you those who line up on the side of 
this bill. It is the major tobacco companies, including Philip Morris, 
which is sick and tired of being sued by those who have been damaged by 
their deadly tobacco products. They have come to the Republican 
Congress and prevailed on them to make it more difficult for the 
victims of those tobacco products to come to court. So the tobacco 
companies want this bill to pass. Gun manufacturers, understanding 
their exposure to liability by selling defective guns, selling them in 
quantities where they knew or should have known they would fall in the 
hands of criminals, don't want to be sued in court anymore. Even though 
the death rate in America--on the streets of Chicago, New York, and 
Washington--continues to climb from gun murders, this bill says the 
victims are going to have a tougher time suing the gun manufacturers.
  Those who pollute want this bill. Those involved in environmental 
pollution are less likely to be sued because of this bill.
  Others include the pharmaceutical companies, every insurance company 
in America that I know of, the National Association of Manufacturers, 
and Financial Services Roundtable. The list of special interest groups 
is very lengthy.
  There is another group on the other side who oppose this bill--an 
interesting coalition. Listen to those who have come out in opposition 
to the bill. The first name on the list may be the most curious. It is 
Chief Justice of the U.S. Supreme Court, William Rehnquist. Why? 
Because this bill shifts a lot of class action lawsuits from State 
courts to Federal courts. Chief Justice Rehnquist understands that the 
Federal courts are not in a position to deal with these lawsuits. He 
said this is a bad bill; it is bad for the administration of justice in 
America. He is not a bleeding heart when it comes to consumer cases. 
His precedents and rulings will speak for themselves. But he says this 
bill is bad, and he is right.
  Then the list of organizations--which I will not read--is two pages 
long. These groups are a clear indication of why it should not be 
passed. I will say generically that many of the leading medical groups, 
including the American Cancer Society, the Heart and Lung Society, many 
leading environmental groups in America, and almost every one of the 
major consumer groups in America, say this is a bad bill. It will keep 
ordinary Americans from having their day in court.
  I ask unanimous consent that the list be printed in the Record.

   National Organizations Opposed to Federal Class Action Legislation

       AARP.
       AFL-CIO.
       Alliance for Justice.
       Alliance for Retired Americans.
       American Association of People with Disabilities.
       American Cancer Society.
       American Heart Association.
       American Lung Association.
       Brady Campaign to Prevent Gun Violence United with the 
     Million Mom March.
       Campaign for Tobacco Free Kids.
       Center for Disability and Health.
       Center for Responsible Lending.
       Clean Water Action.
       Coalition to Stop Gun Violence.
       Consumer Federation of America.
       Consumers for Auto Reliability and Safety.
       Consumers Union.
       Earthjustice.
       Environmental Working Group.
       Families USA.
       Friends of the Earth.
       Gray Panthers.
       Greenpeace.
       Homeowners Against Deficient Dwellings.
       Lawyers' Committee for Civil Rights Under Law.
       Leadership Conference on Civil Rights.
       Mexican American Legal Defense and Educational Fund.
       Mineral Policy Center.
       National Asian Pacific Legal Consortium.
       National Association for the Advancement of Colored People.
       National Association of Consumer Advocates.
       National Association of Protection and Advocacy Systems.
       National Campaign for Hearing Health.

[[Page S12881]]

       National Partnership for Women & Families.
       Natural Resources Defense Council.
       National Workrights Institute.
       National Women's Health Network.
       National Women's Law Center.
       People for the American Way.
       Public Citizen.
       Service Employees Union International.
       Sierra Club.
       Tobacco Control Resource Center.
       Tobacco Products Liability Project.
       USAction.
       U.S. Public Interest Research Group.
       Violence Policy Center.
       Women Employed.
                                  ____


  Government Organizations Opposed to Federal Class Action Legislation

       Judicial Conference of the United States.
       Conference of Chief Justices.
       Attorney General of California, Bill Lockyer.
       Attorney General of Illinois, Lisa Madigan.
       Attorney General of Maryland, J. Joseph Curran, Jr.
       Attorney General of Minnesota, Mike Hatch.
       Attorney General of Missouri, Jeremiah W. Nixon.
       Attorney General of Montana, Mike McGrath.
       Attorney General of New Mexico, Patricia A. Madrid.
       Attorney General of New York, Eliot Spitzer.
       Attorney General of Oklahoma, W.A. Drew Edmondson.
       Attorney General of Vermont, William H. Sorrell.
       Attorney General of West Virginia, Darrell Vivian McGraw, 
     Jr.

  Mr. DURBIN. This is a classic battle between the biggest companies in 
America, that don't want to face legal responsibilities, and the most 
vulnerable people in America, who have no other recourse but the 
courts. Consumers, environmentalists, gun control advocates, and civil 
rights champions often turn to the class action process of our civil 
justice system because the Government--beholden to the special interest 
groups and the corporate agenda--simply is unwilling to take on these 
same big corporations.
  Unfortunately, when you pit these two sides together on Capitol Hill, 
consumers don't have a chance. This bill is a clear indication of that.
  The bill is fundamentally unfair and unnecessary. How can you be sure 
it is only the plaintiffs who are guilty of abusing forum shopping but 
never the defendant? That is the argument being made. They say we have 
to restrict the people who can bring lawsuits in court.
  The argument on the other side is that there are so many frivolous 
lawsuits. The honest answer is that there are some frivolous lawsuits, 
and there always will be in a system open for any individual to file a 
lawsuit. On the other hand, we know many of these lawsuits--and I will 
recount several later on--give clear indications and evidence of the 
fact that many people who are sued in class action lawsuits have a real 
responsibility to the consumers and the American people that they don't 
meet.
  I am concerned when they tell me the bill will restrict their ability 
to fight for rights of consumers and victims of corporate malfeasance, 
and I hope the sponsors can carry their burden in explaining to the 
American people why they believe this bill will not tilt the advantage 
to the corporate defendants.
  To the extent there are abuses in the class action process, it should 
be addressed with a scalpel, not a sledgehammer, which this bill does. 
If the problem is concentrated only in a handful of State courts, the 
solution isn't to remove every case to Federal court. That is what this 
bill does.
  The American Tort Reform Association, which represents all of the 
special interest groups that would close the courthouse doors, 
obviously championed this bill. They released a study recently which I 
find amazing and, in a way, offensive.
  In their report, entitled, ``Bringing Justice to Judicial Hellholes 
2002,'' this organization identified 13 counties or cities that they 
define as ``judicial hellholes,'' because they supposedly attract 
lawsuits from around the Nation to plaintiff-friendly courts.
  What does that mean? If you are a lawyer in some part of the country 
and want to file a class action suit, this association argues that you 
can shop around to find the friendliest judges who will certify your 
class. That is the first step in a class action suit. The court has to 
basically certify under State law whether you can gather together the 
individuals you call your ``plaintiffs' class'' to sue a defendant. 
They argue that in some parts of America it is more likely to be 
certified than not. They characterize those as judicial hellholes. One 
of them is near and dear to me because it is in my home State, in 
Madison County, IL. I was born in St. Clair County, the adjoining 
county. I am familiar with Madison County and most of the people who 
practice law there and the judges on the bench.
  Well, with all of their valiant and well-funded national research, 
the American Tort Reform Association came up with about a dozen 
``hellhole'' counties, and a few more they call ``honorable mentions.''
  That is about a total of 20 counties they have identified out of over 
3,000 counties in the United States and more than 18,000 cities, 
villages, and towns--20 problem counties out of 21,000 cities and 
counties. That is fewer than .0001 percent of all the counties and 
cities in the country.
  Clearly, if that is where the problem lies, with 20 places, why would 
we pass Federal legislation to affect every county and every city in 
America? Yet the solution the sponsors seek is exactly that.
  Let me speak for a moment about the real story of Madison County 
because it has been recounted over and over by the advocates of tort 
reform as an outrageous, out-of-control situation.
  It is said there have been hundreds of consumer class action cases 
filed in the last few years and rarely are any not certified for trial. 
That is what the American Tort Reform Association says. Yet while the 
number of filings increased, the number of consumer class action 
certifications in that county has actually declined over the last 2 
years.
  State judges, including those in Madison County, are disposing of 
frivolous consumer class action cases by refusing to certify them for 
trial. Moving them to Federal court simply transfers the responsibility 
for making that determination.
  Let me give some numbers so we can get a feel for one of these 
judicial ``hellholes'' from the groups that advocate this legislation.
  Madison County, IL: Consumer class actions filed--1999, 12; 2000, 39; 
2001, 60; 2002, 76; 2003, 44 as of July 2.
  Let's go back for each of those years and find out how many were 
actually certified to go forward and be tried. In 1999, 12 were filed, 
6 were certified; in 2000, 39 filed, 14 certified; in 2001, 60 filed, 2 
certified; in 2002, 76 filed, 1 certified; in 2003 so far, 44 filed, 
none certified.
  Does this sound like a situation out of control? The sum total of all 
the class action lawsuits for these 5 years so far is 23 over 5 years--
23 class action lawsuits in Madison County, IL, the so-called judicial 
``hellhole.'' Frankly, the arguments made on the floor just are not 
borne by the facts.
  Additionally, of 166 verdicts that were reached in all cases filed in 
Madison County, 55 resulted in no monetary verdicts to plaintiffs. Only 
11 verdicts in the 166 cases tried resulted in verdicts in excess of $1 
million. The median verdict for all cases in Madison County, IL, is 
$28,649.
  If there are problems in any jurisdiction or any State, they can be 
solved there. In Alabama, for example, one of the favorite targets for 
criticism by tort reformers, the State supreme court reprimanded a few 
State judges who had certified numerous classes.
  In Mississippi, another jurisdiction frequently mentioned by 
supporters of class action reform, the State legislature recently 
repealed Mississippi's venue and joinder statutes, making it more 
difficult to bring mass tort claims.
  Removing these cases to Federal court does not solve the problem. In 
fact, it is going to heap more of a burden and demand for more 
specialization and responsibility on our Federal courts, many of which 
are already overburdened.
  I see my colleagues are on the floor. I am going to take a few 
minutes to point out the kinds of lawsuits about which we are talking.
  When the average person hears ``class action lawsuit,'' they may not 
have an idea of what it is about. I would like to give a few examples 
of class action lawsuits and understand, I hope, for a moment that 
those who are coming to the floor trying to restrict the rights of 
plaintiffs to come into a class and file

[[Page S12882]]

a lawsuit have to face the reality of the history of class action 
legislation. We will find in these cases some recurring themes, but the 
most recurring theme is this:

  The plaintiffs in a class action lawsuit were usually damaged a very 
slight amount or in a very limited way individually or as families, but 
when you take together the sum total of all the damage done by the 
defendant, it becomes substantial. If someone--Senator Leahy used this 
example in committee--if someone overcharges a person 2 cents a gallon 
for gasoline so that each time they fill up they lose 40 cents, there 
is not a great loss to an individual. But when you put that together in 
terms of the millions of people buying gasoline, one can understand 
that if the defendant corporation has been guilty of fraud or wrong 
dealing, they have made millions of dollars at the expense of 40 cents 
a fill-up of individual consumers. So class action lawsuits bring all 
these consumers in one group against a corporation that may have harmed 
them only a slight amount individually.
  Let me give some examples. Foodmaker, Inc., the parent company of 
Jack-in-the-Box restaurants, agreed to pay $14 million in a class 
action settlement in the State of Washington. The class included 500 
people, mostly children, who became sick in early 1993 after eating 
undercooked hamburgers tainted with E. coli. 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 in 1996. So 500 individual families, instead of suing Jack-in-
the-Box and its parent company Foodmaker, came together as a class 
because that corporation was selling products so tainted and 
adulterated that it led to death and serious illness--500 people, $14 
million, but deaths were involved in the process.
  Let me give another example. General Chemical of Richmond, CA. On 
July 26, 1993, the chemical oleum, a sulfuric acid compound, leaked 
from a railroad tank car. The leak caused a cloud to spread directly 
over North Richmond, CA, a heavily populated community. Over 24,000 
people sought medical treatment because of that leak. General Chemical 
entered into a $180 million settlement with 60,000 northern California 
residents who were injured and sought treatment for the effects of that 
pollution. Individual plaintiffs received up to $3,500.
  What is the likelihood that if you personally or a member of your 
family ended up going to a hospital or a doctor and had $500 or $600 or 
$1,000 in medical bills that you would turn around and hire a lawyer 
and sue General Chemical responsible for that illness in your family? I 
don't think the likelihood is very strong. But when they brought 
together the 60,000 people who were damaged because of this 
environmental leak of a sulfuric acid compound, the company agreed to 
pay $180 million to some 60,000 people.
  Let me give another example. Beech-Nut Corporation, and its parent 
company Nestle, were accused of deceptive business practices, guilty of 
selling--listen to this--Beech-Nut and Nestle were found guilty of 
selling sugar water labeled as pure apple juice for infants. After 
passing blame back and forth between companies and suppliers, they 
eventually agreed to settlements of $3.5 million to reimburse consumers 
who unknowingly fed their babies sugar water instead of apple juice. Is 
that the kind of thing that merits a lawsuit? In an individual 
situation you may ask, How sick is the baby?

  The bottom line is, these companies were trying to make money by 
deceiving parents into believing they were selling a nutritious product 
and ended up paying $3.5 million because of it.
  Class action lawsuits by consumers who as individuals would never 
have a day in court, but coming together finally found justice in their 
State courts, a justice which is threatened by the so-called class 
action fairness bill which is before us today.
  There was a class action lawsuit brought against Ford Motor Company 
for defective ignition systems in millions of cars that stalled on 
highways, and Mobile Corporation paid a $14 million settlement because 
of a class of residents in New Orleans who, after a fire at a Mobile 
Oil refinery and scattered debris sent volatile and hazardous compounds 
in the air, were forced to evacuate. The settlement was $13.4 million 
to those exposed to this pollution from the Mobil Oil refinery.
  It was a class action lawsuit against a corporate giant. How many of 
those individual families would stand together seeking justice? In this 
case, they did stand together successfully. Individually would they 
have gone to court? Highly unlikely.
  Blue Cross and Blue Shield of Iowa paid a $14.6 million settlement in 
three class action lawsuits because of fraudulent billing practices. 
Blue Cross apparently negotiated secret discounts with hospital and 
providers and failed to pass those along to those who should have 
received them--their customers. The list goes on and on.
  I see several of my colleagues on the floor. I will close and say I 
am sure we are going to return to this issue in a short time. I ask my 
colleagues in the Senate who may not have practiced law, who may not be 
familiar with class action lawsuits to please do the following: Read 
these cases. Understand class action lawsuits are not always frivolous 
ideas.
  I can recall some that were. There was a lawsuit brought by a class, 
not certified, for all the people who bought Milli Vanilli records, and 
then came later to learn that those two people were not even singing on 
the records. To me, that is a joke, a bad one. It is a fraud on the 
public but certainly not deserving of a class action suit.
  How can one compare that to companies that sell tainted and 
adulterated food, to companies that deceive parents about the 
nutritious value of the foods they sell, or companies that are engaged 
in pollution that endangers the lives of individuals? Those companies 
need to be held accountable.
  This bill tries to absolve them from liability, to move the cases to 
Federal court, to make it more difficult to push the classes together, 
and make it more difficult to recover. These are real live stories of 
ordinary families and people who will ultimately lose if this bill 
passes.
  I hope the Senate has the good sense to stop this in its tracks, 
stand up for consumers and working families who need a voice in this 
Chamber even if they cannot afford a lobbyist in the hallway.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Sununu). The Senator from Illinois.
  Mr. FITZGERALD. Mr. President, I thank my colleague from Illinois for 
yielding the floor for a few moments. The Senator may wish to resume 
debate following my remarks.
  I want to present a counterpoint, I guess, to the opinions of my 
distinguished colleague. I think he made a very eloquent case in favor 
of why we should have class action lawsuits in this country, and I 
would simply point out to my colleagues that this bill does not in any 
way diminish our ability to have worthwhile class action lawsuits. In 
fact, I think the intent of the bill that is passed out of the 
Judiciary Committee and which Senator Hatch spoke about earlier this 
afternoon is, in fact, to make the process for class action suits 
better, fairer, and more beneficial to the plaintiffs.
  One of the things the bill would do is create a consumer bill of 
rights to protect the class action plaintiffs, the actual clients of 
the class action lawyers. We have all heard about cases in which a 
class action lawsuit is filed, and in the end, the defendant 
corporation settles for millions of dollars paid to the lawyer and all 
the clients, or the plaintiffs get a coupon or something of 
insignificant value. So contrary to the impression created by Senator 
Durbin, I want to make it clear to my colleagues that this bill does 
not in any way seek to do away with class action lawsuits. In fact, we 
seek to make them better and more beneficial to the plaintiffs, the 
clients themselves, and cut down on some of the abuses.
  I rise to support S. 1751, the Class Action Fairness Act of 2003, and 
I do so today with a special interest in the commonsense fairness of 
this legislation. There is, in my State of Illinois, as mentioned by 
Senator Durbin, one of the infamous venues that have come to be 
commonly described as ``judicial hellholes,'' State courts where 
plaintiffs' lawyers know they can file abusive, frivolous, and even 
extortionate class action lawsuits against defendant companies 
operating nationwide and

[[Page S12883]]

get results they could not get in the vast majority of fair 
jurisdictions elsewhere in the United States.
  It is an abuse that must stop. Under S. 1751, every person's right to 
file a lawsuit is preserved. Every current legal theory for relief may 
still be advanced. Under S. 1751, a class action lawsuit can be filed 
just as easily as it can be today. S. 1751 is a limited and commonsense 
approach to a widely recognized abuse in our judicial system. It simply 
makes truly national lawsuits easier to hear in Federal court, and it 
simply requires judges to take a close look before approving some of 
the greedier and more abusive features of class action litigation, such 
as coupon settlements that I mentioned at the outset, where lawyers get 
millions of dollars and class action members get virtually worthless 
coupons.
  My State has the dubious distinction of hosting one of the judicial 
hellholes to which Senator Durbin was referring. In fact, if anyone has 
been following the editorial page in the Wall Street Journal, they have 
written several editorials about this county. It is Madison County, IL. 
It is in southwestern Illinois, across the Mississippi River from St. 
Louis. If my colleagues have never been to Madison County, it is a 
suburban county with a surge in shuttered plants and steel mills and a 
new cottage industry in abusive class action litigation.

  Several recent studies have looked at class actions in the Madison 
County courts, and here is what they found: Over a 2-year period, the 
number of class actions in the county increased by 1,850 percent. In 
1998, there were only two class actions filed in Madison County, a 
number consistent with a community with Madison County's size and 
economic base.
  During 2000, the number rose to 39. During 2001, 43 new class action 
lawsuits were filed, another 10-percent increase, and the upward trend 
is increasing.
  As of the middle of this year, Madison County was already up to 39--I 
think Senator Durbin said 43 cases--as of July of this year. That puts 
it on pace to break its own record.
  These findings suggest that Madison County has one of the highest 
class action filing rates in the country. Indeed, according to an 
article in the St. Louis Post Dispatch, Madison County has developed a 
nationwide reputation as the place to file nationwide class actions, 
even though it only has one-tenth of 1 percent of the U.S. population. 
It has about 259,000 people.
  Here is another troubling statistic: In recent years, only a few 
thousand class actions were filed annually in the entire Federal court 
system. That amounts to a per capita rate of about 7.6 class actions 
for every million residents. In Madison County in 1999, the per capita 
rate of State court class actions was nearly 9 times higher, with about 
61 class actions filed per million people.
  These are not local disputes. The vast majority of class actions in 
Madison County were brought on behalf of nationwide classes. The 
percentage seeking nationwide class action status is a whopping 81 
percent. In Madison County, lawyers have sought to certify classes over 
the last 3 years that included all Sprint customers nationwide who have 
ever been disconnected on a cell phone call--I am sure that has 
happened to all of us--all RotoRooter customers nationwide whose drains 
were repaired by allegedly unlicensed plumbers, and all consumers in 
the Nation who purchased limited edition Barbie dolls that were later 
allegedly offered for a lower price elsewhere.
  Why were all these suits filed in Madison County? Why were they not 
filed in Utah, Idaho, Arizona, or State courts elsewhere in Illinois? 
Well, because a few lawyers have figured out that the judges in Madison 
County are very friendly to plaintiffs. It is no surprise that the same 
five firms appeared as counsel in approximately 45 percent of the cases 
filed during the 1999-to-2000 period, and that most of these firms are 
not located in Madison County.
  Of the 66 plaintiffs' firms that appeared in the Madison County cases 
filed during 1999 and 2000, 56, or 85 percent, listed office addresses 
outside of Madison County.
  These studies present a real mystery. Lawyers from all over the 
country are flocking to Madison County, IL, to file class actions on 
behalf of people who do not live in Madison County, against companies 
that do not reside in Madison County, concerning events that did not 
occur in Madison County.
  What is wrong with this picture? Does anybody really think that it is 
just an accident that these lawyers from all over the country are 
flocking into Madison County with their cases?
  As the Washington Post recently noted in an editorial criticizing 
class action abuses, 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.
  Large, nationwide class actions should be in Federal court, not in 
some small county court in some remote location that has nothing to do 
with the parties or the case. This is an abuse of the system, plain and 
simple. We are nowhere near the outer perimeter of tort reform here. 
This is an easy one. This is common sense, a simple, honest, 
straightforward reform narrowly tailored to achieve fairer results in 
cases of truly national significance.
  I urge you, Mr. President, and all my colleagues, to support S. 1751.
  I yield the floor.
  If none of my other colleagues wishes to speak at this time, I 
suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. BENNETT. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BENNETT. Mr. President, it was my privilege to be in the chair 
during the exchange of views between the two Senators from Illinois. I 
could not resist the opportunity to take the floor now and add my 
experience to that which has been referred to.
  The senior Senator from Illinois spoke of those who did not have a 
legal background, and I fit into that category. I have never been in 
court, except as a juror and occasionally as a witness. I have never 
been to law school. However, I would just share this one experience 
with the Senate with respect to class action lawsuits and how they can 
be abused.
  When my father left the Senate, he was invited, as is often the case 
for those who have senior experience in business, to serve on a number 
of boards of directors. He went on one particular board, thinking it 
was a relatively safe kind of activity for him, only to be distressed 
at the beginning of the next calendar year when he was served with this 
pile of papers. There was a lawsuit being filed on behalf of the 
shareholders of that particular company, and my father was named as the 
principal defendant.
  Somewhat disturbed by this, he called the general counsel of the firm 
and asked what was going on.
  Oh, said the general counsel, nothing to worry about. You are named 
because members of the board of directors are listed alphabetically and 
Bennett comes ahead of any other name. So you are named: Bennett et al. 
Don't worry, we will take care of this.
  He said: Of what am I being accused? Of what is the board being 
accused?
  Well, said the general counsel, this happens every year. He said: The 
members of the board have a compensation plan that is tied to the 
profitability of the company. Whenever the company increases its 
profitability by formula, the directors' pay increases by a similar 
formula amount.

  My father said: That's very clear. It's outlined. What is the cause 
of this class action lawsuit being brought on behalf of all of the 
shareholders of the company?
  Well, said the general counsel, this lawyer every year files a 
lawsuit on behalf of the shareholders, claiming that the board of 
directors is looting the company for its own purposes. That is, members 
of the board are trying to enrich themselves on the basis of this 
increase in compensation at the expense of the shareholders.
  My father said: What do we do? Do you go to court and prove that this 
is a legitimate activity?
  No, said the general counsel, that costs too much money. For us to go 
to court would cost us more in legal fees than the amount the lawyer 
will settle for.
  What amounts are we talking about, my father asked.
  He was told by the general counsel: The lawyer who files this suit 
will settle for $100,000. It would cost us more

[[Page S12884]]

than $100,000 to defend our position, so every year when the formula 
kicks in and the directors' compensation is increased, the lawyer files 
his lawsuit, we send him a check for $100,000, the lawsuit goes away, 
and we forget this until the next year.
  That is extortion, plain and simple. Yet the general counsel would 
say, with some accuracy, the shareholders are better served if we 
simply pay him his $100,000 than if we go to court and defend 
ourselves. Even though we would win, we would end up paying $200,000 or 
$250,000 or some number like that. So, he said, we have come to the 
conclusion the best thing to do for the shareholders is simply settle 
this class action lawsuit every year for $100,000. The lawyer knows we 
will do that. So every year he files the lawsuit, we send him the 
check, the plaintiffs in whose behalf he is suing get nothing because 
his legal fee for filing the suit is $100,000, and we simply go through 
this charade every year.
  I am happy to report that this particular lawyer, as I understand it, 
decided to do this in some other instances and Merrill Lynch, the large 
brokerage firm, took him to court. They spent close to $1 million in 
legal fees proving he was wrong and, furthermore, proving he had acted 
in a frivolous manner and ultimately put him out of business. The 
shareholders of Merrill Lynch were paying for an action that benefited 
the shareholders of the company on whose board my father sat, and many 
others.
  We can be grateful that Merrill Lynch was willing to accept that 
financial burden in order to put a stop to this practice. But it 
demonstrates that standing on the floor of the Senate and deciding how 
valuable class action lawsuits are does not properly address the 
problem that this, and similar legislation, has sought to solve.
  I wanted to add that personal experience to the debate that has been 
going on here so anybody who is following the debate will understand 
that it is not a question of whether one should allow class action 
lawsuits. It is not a question of whether plaintiffs are entitled to 
relief as a result of joining a class. It is a question of cleaning up 
abuses that are carried on by lawyers who say, in the words of one of 
them: I have a perfect law practice. I have no clients.
  They file class action lawsuits on behalf of classes, but they are 
not in fact real clients. The lawyers benefit, ultimately to the 
detriment of the shareholders of the companies that are being sued. 
These shareholders are individuals. We are not talking about companies 
as if they were abstract entities. They are individuals who are being 
hurt by improper practices. Those are the kinds of practices this 
legislation seeks to resolve.
  I yield the floor.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. THOMAS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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