[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
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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
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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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