[Congressional Record Volume 150, Number 91 (Tuesday, July 6, 2004)]
[Senate]
[Pages S7563-S7570]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   CLASS ACTION FAIRNESS ACT OF 2004

  The PRESIDING OFFICER. The clerk will report S. 2062.
  The legislative clerk read as follows:

       A bill (S. 2062) to amend the procedures that apply to 
     consideration of interstate class actions to assure fairer 
     outcomes for class members and defendants, and for other 
     purposes.

  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I rise today to express my strong support 
for the Class Action Fairness Act of 2004, which is now renumbered S. 
2062, to accommodate the bipartisan compromise we reached last November 
with Senators Dodd, Schumer, and Landrieu. This improved bill embodies 
a carefully balanced legislative solution that responds to some of the 
most outrageous abuses of the class action litigation device in some of 
our State courts.
  As anyone who has read the bill knows, it restores fairness to the 
class

[[Page S7564]]

action system. Among other things, it eliminates the opportunity that 
exists in the current system for unscrupulous lawyers to profit by 
victimizing injured parties with sham settlements. It takes away the 
opportunity for those lawyers to use the system to extort legitimate 
businesses for their personal financial gain.
  Throughout the years, Congress has received powerful evidence showing 
an extraordinary concentration of large interstate class action 
lawsuits in a handful of outlier State courts--certain county courts, 
to be precise. The evidence further shows these outlier courts operate 
in a manner that deprives the rights of truly injured individual 
plaintiffs, as well as defendants. In too many cases, the families have 
fallen prey to the manipulation, and in some cases outright evasions, 
by certain plaintiffs' lawyers of the settled rules supposed to ensure 
basic fairness during the major interstate class action disputes. Too 
often, judges approve settlements that primarily benefit the class 
action attorneys rather than the injured class members.
  Indeed, it has become all too common for certain State courts to 
approve proposed settlements where class members receive little or 
nothing of value, such as meaningless coupons, while their attorneys 
rake in millions of dollars in fees.
  It is one of the new games in litigation practice in America. It is a 
disgrace caused by a relatively small few in the legal profession but 
enough to make it a matter of great concern. This bill would clarify 
and solve some of these problems.
  To make matters worse, multiple class action lawsuits asserting the 
same claims on behalf of the same plaintiffs are routinely filed in 
different State courts, thus creating judicial inefficiencies and 
encouraging collusive settlement behavior. Unfortunately, the injuries 
caused by these abuses are not confined to the parties who are named in 
the class action complaint. Rather, they extend to everyday consumers 
who unwittingly get dragged into these lawsuits as unnamed class 
members simply because they purchased a cell phone, bought a box of 
cereal, drove a car fitted with a certain brand of tires, or rented a 
video. What we are talking about is a system that impacts the vast 
majority of people who live in this country, not only lawyers and some 
businesses, as some have wrongly suggested.

  We are talking about people such as Irene Taylor of Tyler, TX, who 
was cheated out of approximately $20,000 in a telemarketing scam that 
defrauded senior citizens out of more than $200 million.
  This is a picture of Irene Taylor. In a class action brought in 
Madison County, IL, the attorneys purportedly representing Ms. Taylor 
negotiated a proposed settlement which excluded her from any recovery 
whatsoever.
  We are talking about people such as Martha Preston of Baraboo, WI, as 
evidenced by this picture of her. Martha was involved in the infamous 
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. Ms. Preston received a settlement of about $4. 
Approximately $95 was deducted from her account to help pay the class 
action fees of $8.5 million.
  This is the Bank of Boston chart, a perfect illustration of class 
action abuses going on in this country as we speak. A Bank of Boston 
settlement over disputed accounting practices produced $8.5 million in 
attorneys' fees--costing the class members as much as $95, which was 
deducted from their accounts. The plaintiffs' attorneys in this case 
later sued class members for an additional $25 million. I do not care 
who you are, you have to say that is outrageous.
  Ms. Preston testified before the Judiciary Committee 5 years ago 
asking us to halt these abusive class action lawsuits, but it appears 
that, at least so far, her plea has fallen on very deaf ears.
  Class action abuses are far-reaching, so far-reaching that they 
affect nonconsumers as well. Take, for instance, Hilda Bankston, a 
hard-working American, shown in this picture, who came to this country 
seeking to fulfill the American dream. Hilda found that instead of 
reaping the rewards that normally come with hard work, she was 
unmercifully dragged into hundreds of lawsuits filed by personal injury 
lawyers in the State of Mississippi. Why? She owned the only drugstore 
in Jefferson County--a county known for hosting one of the most 
notorious magnet courts in the country.
  Her small business became a prime target for forum-shopping personal 
injury lawyers in pharmaceutical cases, not because her business 
committed acts of negligence, and certainly not because her business 
had deep pockets to pay a large jury award or a lucrative settlement. 
To the contrary, they were sued, in this particular case, for the sole 
purpose of evading Federal court jurisdiction so the class action 
lawsuit could remain in State court.
  Why would personal injury lawyers go to such trouble to keep a class 
action in State court? Because unlike our Federal courts which have 
judges who are insulated from political influence through lifetime 
appointments, many State court judges are elected officials who answer 
through the political process itself.
  Even though Ms. Bankston no longer owns the drugstore, she continues 
to be named a defendant in these lawsuits today and is buried under a 
mountain of discovery requests because of the litigation. On a more 
personal level, Ms. Bankston told us about how this ordeal has affected 
her both personally and professionally. She testified that:

       [N]o small business should have to endure the nightmares I 
     have experienced. . . . I have spent many sleepless nights 
     wondering if my business would survive the tidal wave of 
     lawsuits cresting over it.

  Critics have argued the Senate should vote this bill down because it 
amounts to nothing more than special interest legislation. These 
critics are dead wrong and stand in desperate need of a reality check. 
To be perfectly clear, it is because of the wrongs committed against 
everyday American consumers such as Irene Taylor and Martha Preston 
that the time has come for the Senate to pass class action reform. It 
is because of the victimization of innocent people like Hilda Bankston 
that the Senate needs to act now, and it is because of the public's 
collapsing confidence in our civil justice system that we need to pass 
this bill without further delay. Arguments being raised to the contrary 
are red herrings that distort the real truth of the matter. The class 
action problem is real and significantly affects the general public.
  The Class Action Fairness Act represents a modest and balanced 
solution to the class action problems. There are two core features to 
the legislation.
  First, the bill implements consumer protections against abusive 
settlements by, No. 1, valuing attorneys' fees in coupon settlements to 
those coupons that are actually redeemed by class members; No. 2, 
providing a standard for judicial approval of settlements that would 
result in a net monetary loss to plaintiffs; No. 3, prohibiting 
settlements that favor class members based upon geographic proximity to 
the courthouse; and, No. 4, 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 Federal diversity 
jurisdiction statute so the class actions with a truly interstate 
impact are adjudicated where they originally should be adjudicated, and 
that is in our Federal courts. Specifically, S. 2062 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 also balances the States' interest in adjudicating local 
disputes by providing that class actions filed in the home State of the 
primary defendants remain in State court subject to a triple-tiered 
formula that looks at the composition of the plaintiffs' class 
membership. This formula become known as the Feinstein compromise, 
which we were able to reach with Senator Feinstein during the Judiciary 
Committee markup on the bill.
  Moreover, after negotiations with Senators Dodd, Schumer, and 
Landrieu last November, we were able to reach consensus on further 
refinements that allow truly local disputes

[[Page S7565]]

involving principal injuries within the forum State to be adjudicated 
in the State courts.

  Now that I have summarized what the bill does, let me explain what it 
does not do. First, this bill does not 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 rights, nor do the proposed reforms in any way 
diminish the rights or practical ability of victims to band together to 
pursue their 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 proposed settlement.
  My summary of the bill should not come as a surprise to anyone here 
because these reform efforts have an extensive history in this body. 
Most importantly, this bill maintains strong support from several 
Members on the other side of the aisle. In this regard, I extend a 
special thanks to Senators Carper, Kohl, and Miller for their tireless 
efforts in pushing for class action reform. Their commitment has helped 
us to get where we are today with this bill, and I look forward to 
their efforts in the coming days to keep the focus on passing this 
much-needed compromise legislation without becoming mired in extraneous 
amendments.
  I also thank my colleagues--Senators Schumer, Dodd, and Landrieu--for 
working with us in good faith to build a stronger bipartisan consensus 
for this bill. As you may know, we fell one vote shy of invoking 
cloture, on getting 60 votes, last year. These three Members, who 
originally voted against the bill presented us with a detailed list of 
issues they wanted resolved before they could support class action 
reform legislation. After extensive discussions last November, we 
responded in good faith to each and every concern they raised by making 
the appropriate changes that are now embodied in S. 2062.
  I look forward to continuing the good faith that was displayed last 
November as we proceed on this bill.
  Opponents of this legislation would, no doubt, like to derail it by 
bogging it down in the amendment process. I look to the leadership of 
my Democratic colleagues who have worked with me on getting this 
legislation to where it is, and to others who are serious about ending 
the victimization of American consumers, to do all they can to prevent 
this from happening.
  Above all, I look to the leadership of Senator Grassley, who was the 
original sponsor of this bill and who deserves a lot of credit for 
having fought this bill through in such a magnificent way through all 
of these years. He is a gutsy guy. He stands for what he believes. He 
deserves a lot of the credit for this bill.
  In the coming days, I fully expect that some Members will offer 
numerous amendments to the bill, many of which will have nothing to do 
with the subject of class action. Look, we know this bill is going to 
be used as an attempt to bring up all kinds of political amendments for 
the purpose of scoring political points. I wish my colleagues wouldn't 
do that on a bill this important. Naturally, some of them want to adopt 
some of these amendments so they can kill this bill. Others just want a 
shot at making Senators vote on political issues that they think will 
be embarrassing to them. I would hope we would concentrate on the bill 
because it is important, and if there are legitimate amendments, 
certainly we will give every consideration to them.
  While I understand the desire to follow regular order, I would like 
to note that this bill rests on a delicate bipartisan compromise that 
at least on paper commands a supermajority of votes--beyond 60--to 
overcome a Democratic filibuster. But with each controversial measure 
added to this bill, we all know it is less likely to become law. That 
is after 5 years of very hard work and an agreement by 62 Members of 
this body who have signed on to this bill up front to see that it 
passes. As such, I urge my colleagues, especially those who have 
supported class action reform, to limit and oppose amendments so we can 
move an important bipartisan measure through the Senate.
  Again, while I expect opponents of this bill to do everything in 
their power to gut and weaken the bill, I trust that my Democratic 
colleagues who support class action reform will remain faithful to the 
bipartisan deal by vigorously opposing these amendments that will 
likely be offered in the coming days. That is what we do when we agree 
to a settlement. We agree to work to stop all poison pill amendments, 
and we agree to work to stop amendments that those who made the 
agreement to begin with do not agree with.
  Class action reform is long overdue, and it is now time for us to 
act. We have considered legislation for many years now, and the pattern 
of abuse has become clear. What once began as an occasional outrageous 
class action settlement has now become a routine occurrence. There are 
jurisdictions in this country, State jurisdictions and local 
jurisdictions, that border on corruption, that literally don't care 
what the facts are, don't care what the law is. They are just going to 
give the plaintiffs' attorneys whatever they want. The plaintiffs' 
attorneys have caught on to it, so they forum shop to these outrageous 
jurisdictions so they can get judgments and verdicts far beyond what 
they could ever get in a jurisdiction that treated the law with 
respect.
  The legislation we are considering would fix all of these problems. I 
would consider it a shame if we allowed partisan politics to kill much-
needed reform of the abuses in the current system, abuses that are 
actually hurting those in the system we are supposed to help.
  This is an important bill. We have worked long and hard to get to 
this point. I hope with all my heart that our colleagues on both sides 
will live up to the commitments they have made and that we can pass 
this bill and solve some of these terrible problems.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. LEAHY. Mr. President, the current version of class action 
legislation has undergone a number of changes since it was reported by 
the Judiciary Committee. Some of these changes have been improvements. 
I want to note that. Some have not. I know that Senators Dodd, 
Landrieu, Schumer, Kohl, and Carper negotiated some procedural 
improvements to S. 1751. I believe these do help. I appreciate their 
efforts to rein in some of the worst aspects of the bill.
  For example, these improvements restricted the use of worthless 
coupon settlements. I agree with that. To hear some of the commentators 
about this bill, you would think that was not in there, but I want 
everybody to know it is. They also eliminated some provisions that were 
harmful to civil rights and consumer plaintiffs who endure hardships as 
a result of initiating and pursuing litigation.
  But in other aspects, the compromise failed to achieve their intended 
goals. For example, one provision seeks to reduce the delay plaintiffs 
can experience when a case is removed to Federal court. It sets a time 
limit for appeals and remand orders. But there is not a concomitant 
measure that would set a timeline for the district court to rule on the 
actual remand motion.
  This may seem like a bit of arcane lawyer's jargon, but it is a lot 
more than that. It means that you could be a plaintiff, be in State 
court legitimately. You suddenly get plucked out of State court. But 
then they could put you on the Federal docket. Somebody could say, OK, 
we are just going to leave it there year after year after year after 
year, and there is nothing you could do about it. There is no recourse. 
I understand that Senator Feingold will offer an amendment to set a 
reasonable time limit for the district court to rule on these remand 
orders. It seems like common sense. Rule them up or rule them down, but 
have a time to do it. I hope all Senators will support him.
  In addition, I am disturbed the bill may deny justice to consumers 
and others in class actions involving multiple State laws. The recent 
trend in the Federal courts is to not certify class actions if multiple 
State laws are involved; thus, the class action bill could force 
nationwide class actions into Federal court and then just be dismissed 
for involving too many State laws. It is kind of a way of making sure 
that you never reach the merits of the

[[Page S7566]]

case, whether in Federal courts or State courts, because you could get 
rid of it on a technicality. I understand Senator Bingaman has an 
amendment to prevent this from happening. I would support that.
  I am also concerned with provisions contained in the most recent 
iteration of this class action bill before the Senate. I try to keep up 
with it, but it keeps undergoing so many changes. But this latest part 
would deprive Vermonters of the right to band together to protect 
themselves against violations of State civil rights, consumer, health, 
and environmental protection laws in their own State courts. What it is 
saying is, we here in the Senate can make a far better judgment than 
the people of Vermont going into State courts on State matters or the 
people of Tennessee going into Tennessee court on a Tennessee matter.
  I hear so many speeches about how we have to protect our States and 
keep the heavy hand of government from them, but basically we are 
saying that if a group of people, say, in Iowa, want to band together 
to protect themselves against a violation of State civil rights or 
consumer or health or environmental protection laws, and do it just in 
their own State courts, they can't do it because the U.S. Senate has 
figured we know a lot better than the people of Iowa or Tennessee or 
Vermont.

  This bill continues to deprive 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. In other words, you might have somebody 
from State A, but they have invested a huge amount in the second State. 
They are involved in things in that second State. They do something in 
that second State. They may deprive citizens of their rights in that 
second State, and they can't sue in that State. I understand that 
Senator Breaux intends to offer an amendment to keep these in-State 
class actions in State courts. They should be.
  I am also troubled by the scope of the legislation in that it 
federalizes a lot more than class actions. This goes way beyond class 
actions. Despite the fact that such a provision was struck from the 
bill during markup in the Judiciary Committee, mass torts now again are 
included in the bill. This expansion simply amplifies the harm done to 
citizens' rights and to the possibility of vindicating those rights in 
their own State courts.
  Some special interest groups are distorting the state of class action 
litigation by relying on a few anecdotes in an ends-oriented attempt to 
impede plaintiffs bringing class action cases. It will make a lot of 
money in radio and TV stations. The ads are designed to actually be 
seen or heard only by 535 people--Members of Congress.
  I think we should take steps to correct actual problems in class 
action litigation where they occur. But simply shoving most suits into 
Federal court will not correct the real problems faced by plaintiffs 
and defendants. We have done something like this by taking a whole lot 
of criminal matters that should easily be handled in State courts and 
put them into the Federal courts, and the Federal courts are so 
overloaded they don't get to either the criminal or civil cases.
  Our State-based tort system has grown over 200 years. It remains one 
of the greatest and most powerful vehicles for justice anywhere in the 
world. One reason for that is the availability of class action 
litigation to let ordinary people band together to take on powerful 
corporations or, in some cases, even their own Government. Nobody has 
the money by themselves to take on the Government. Nobody has the money 
by themselves to take on some multibillion-dollar corporation. Banding 
together, sometimes they can.
  Defrauded investors, deceived consumers, victims of defective 
products, environmental torts, and thousands of other people are 
currently able to access class action lawsuits in their State court 
system to seek and receive justice. They can band together to afford a 
competent lawyer. Whether they are getting together to force 
manufacturers to recall products or to clean up after devastating 
environmental harm or to vindicate basic civil rights, they are using 
class action. We should not try to make it more difficult or costly for 
them to right those wrongs, although many people who cause the wrongs 
would love us to put roadblocks in the way.
  So the so-called Class Action Fairness Act falls short in the 
expectation set by its title. It is going to leave many injured parties 
who have valid claims with no way to seek relief. Class action suits 
have enabled our citizens to receive justice and expose wrongdoing by 
corporations and their own Government. It has given the average 
American a local venue and a chance.
  This legislation may be the last authorization bill the Senate 
considers this year. We have only passed one appropriations bill for 
the upcoming fiscal year. The Senate has so few days left. Can you 
imagine that? There are 14 appropriations bills and we have only passed 
1. We have not passed a budget yet. I think that is supposed to be done 
in March or April. We are not going to do our appropriations bills. 
Everybody knows that. Someone will write a huge omnibus bill with the 
White House and try to cram it through. So I think because this is the 
last authorization bill, you are going to have Senators on both sides 
of the aisle with both germane and nongermane amendments.
  So we will vote and see where we go. There were improvements made. We 
showed we could make improvements. But as soon as it started really 
being improved, the doors got slammed shut.
  I ask unanimous consent that a letter on behalf of the attorneys 
general of California, Illinois, Iowa, Maine, Maryland, Massachusetts, 
Minnesota, Montana, New Mexico, New York, Oklahoma, Vermont, and West 
Virginia in opposition to S. 2062 be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                State of New York,


                               Office of the Attorney General,

                                        Albany, NY, June 22, 2004.
     Hon. Bill Frist,
     Majority Leader, U.S. Senate, Dirksen Senate Office Building, 
         Washington, DC.
     Hon. Tom Daschle,
     Minority Leader, U.S. Senate, Hart Senate Office Building, 
         Washington, DC.
       Dear Mr. Majority Leader and Mr. Minority Leader: On behalf 
     of the Attorneys General of California, Illinois, Iowa, 
     Maine, Maryland, Massachusetts, Minnesota, Montana, New 
     Mexico, New York, Oklahoma, Vermont, and West Virginia, we 
     are writing in opposition to S. 2062, the so-called ``Class 
     Action Fairness Act,'' which reportedly will be scheduled for 
     a vote in the next few weeks. Although S. 2062 has been 
     improved in some ways over similar legislation considered 
     last year (S. 274), it still unduly limits the right of 
     individuals to seek redress for corporate wrongdoing in their 
     state courts. We therefore strongly recommend that this 
     legislation not be enacted in its present form.
       As you know, under S. 2062, almost all class actions 
     brought by private individuals in state court based on state 
     law claims would be forced into federal court, and for the 
     reasons set forth below many of these cases may not be able 
     to continue as class actions. All Attorneys General 
     aggressively prosecute violations of our states' laws through 
     public enforcement actions filed in state court. Particularly 
     in these times of state fiscal constraints, class actions 
     provide an important ``private attorney general'' supplement 
     to our efforts to obtain redress for violations of state 
     consumer protection, civil rights, labor, public health and 
     environmental laws.
       We recognize that some class action lawsuits in state and 
     federal courts have resulted in substantial attorneys' fees 
     but minimal benefits to the class members, and we support 
     targeted efforts to prevent such abuses and preserve the 
     integrity of the class action mechanism. However, S. 2062 
     fundamentally alters the basic principles of federalism, and 
     if enacted would result in far greater harm than good. It 
     therefore is not surprising that organizations such as AARP, 
     AFL-CIO, Consumer Federation of America, Consumers Union, 
     Leadership Conference on Civil Rights, NAACP and Public 
     Citizen all oppose this legislation in its present form.
       1. Class Actions Should Not Be ``Federalized''
       S. 2062 would vastly expand federal diversity jurisdiction, 
     and thereby would result in most class actions being filed in 
     or removed to federal court. This transfer of jurisdiction in 
     cases raising questions of state law will inappropriately 
     usurp the primary role of state courts in developing their 
     own state tort and contract laws, and will impair their 
     ability to establish consistent interpretations of those 
     laws. There is no compelling need for such a sweeping change 
     in our long-established system for adjudicating state law 
     issues. Indeed, by transferring most state court class 
     actions to an already overburdened federal court system, this 
     bill will delay (if not deny) justice to substantial numbers 
     of injured citizens. The federal judiciary faces a serious 
     challenge in managing

[[Page S7567]]

     its current caseload, and thus it is no surprise that the 
     Judicial Conference of the United States has opposed the 
     ``federalization'' of class action litigation.
       S. 2062 is fundamentally flawed because under this 
     legislation, most class actions brought against a defendant 
     who is not a ``citizen'' of the state will be removed to 
     federal court, no matter how substantial a presence the 
     defendant has in the state or how much harm the defendant has 
     caused in the state. While the amendments made last fall give 
     the federal judge discretion to decline jurisdiction in some 
     cases if more than one-third of the plaintiffs are from the 
     same state, and place additional limitations on the exercise 
     of federal court jurisdiction if more than two-thirds of the 
     plaintiffs are from a single state, even in those 
     circumstances there are additional hurdles that frequently 
     will prevent the case from being heard in state court.
       2. Many Multi-State Class Actions Cannot Be Brought in 
     Federal Court
       Another significant problem with S. 2062 is that many 
     federal courts have refused to certify multi-state class 
     actions because the court would be required to apply the law 
     of different jurisdictions to different plaintiffs--even if 
     the laws of those jurisdictions are very similar. Thus, cases 
     commenced as state class actions and them removed to federal 
     court may not be able to be continued as class actions in 
     federal court.
       In theory, injured plaintiffs in each state could bring a 
     separate class action lawsuit in federal court, but that 
     defeats one of the main purposes of class actions, which is 
     to conserve judicial resources. Moreover, while the 
     population of some states may be large enough to warrant a 
     separate class action involving only residents of those 
     states, it is very unlikely that similar lawsuits will be 
     brought on behalf of the residents of many smaller states. We 
     understand that Senator Jeff Bingaman will be proposing an 
     amendment to address this problem, and that amendment should 
     be adopted.
       3. Civil Rights and Labor Cases Should be Exempted
       Proponents of S. 2062 point to allegedly ``collusive'' 
     consumer class action settlements in which plaintiffs' 
     attorneys received substantial fee awards, while the class 
     members merely received ``coupons'' towards the purchase of 
     other goods sold by defendants. If so, then this ``reform'' 
     should apply only to consumer class actions. Class action 
     treatment provides a particularly important mechanism for 
     adjudicating the claims of low-wage workers and victims of 
     discrimination, and there is no apparent need to place 
     limitations on these types of actions. Senator Kennedy 
     reportedly will offer an amendment on this issue, which also 
     should be adopted.
       4. The Notification Provisions Are Misguided
       S. 2062 requires that federal and state regulators be 
     notified of proposed class action settlements, and be 
     provided with copies of the complaint, class notice, proposed 
     settlement and other materials. Apparently this provision is 
     intended to protect against ``collusive'' settlements between 
     defendants and plaintiffs' counsel, but those materials would 
     be unlikely to reveal evidence of collusion, and thus would 
     provide little or no basis for objecting to the settlement. 
     In addition, class members could be misled into believing 
     that their interests are being protected by their government 
     representatives, simply because the notice was sent to the 
     Attorney General of the United States and other federal and 
     state regulators.
       Equal access to the American system of justice is a 
     foundation of our democracy. S. 2062 would effect a sweeping 
     reordering of our nation's system of justice that will 
     disenfranchise individual citizens from obtaining redress for 
     harm, and thereby impede efforts against egregious corporate 
     wrongdoing. Although the Attorneys General of California, 
     Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, 
     Montana, New Mexico, New York, Oklahoma, Vermont, and West 
     Virginia oppose S. 2062 in its present form, we fully support 
     the goal of preventing abusive class action settlements, and 
     would be willing to provide assistance in your effort to 
     implement necessary reforms while maintaining our federal 
     system of justice and safeguarding the interests of the 
     public.
           Sincerely,
     Eliot Spitzer,
       Attorney General of the State of New York.
     W.A. Drew Edmondson,
       Attorney General of the State of Oklahoma.

  Mr. LEAHY. Mr. President, I ask unanimous consent that an editorial 
in today's New York Times in opposition be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the New York Times, July 6, 2004]

                        Class-Action Unfairness

       A mischievous bill masquerading as an effort to reform the 
     system of class-action lawsuits is headed for the Senate 
     floor this week. The bill would tilt the civil justice system 
     in favor of corporations and against consumers, the 
     environment and public health. Democrats blocked a nearly 
     identical measure by just one vote last October, Since then, 
     three Democratic senators--Mary Landrieu of Louisiana, 
     Christopher Dodd of Connecticut and Charles Schumer of New 
     York--have agreed to switch sides to support the bill in 
     exchange for certain improvements in it.
       Unfortunately, those improvements would not cure the bill's 
     core defect: namely, that it would move almost all major 
     class-action lawsuits to overburdened federal courts from 
     state courts. Such a shift is likely to delay or deny justice 
     in numerous instances, and, ultimately, to dilute the impact 
     of the strong consumer protection laws in many states.
       A letter to Congress representing the views of 13 state 
     attorneys general, including Eliot Spitzer of New York, makes 
     this point emphatically. It goes on to note that the bill's 
     sweeping provisions moving state class actions to federal 
     courts would not only threaten individual plaintiffs but 
     would also trespass on traditional principles of federalism.
       Should the Senate measure be passed, it would have to be 
     reconciled with an even more damaging House bill, which would 
     apply retroactively to pending class-action cases. The best 
     result would be for the Senate to defeat the bill and go back 
     to the drawing board. At the very least, however, it should 
     limit the damage by approving corrective amendments being 
     offered by Senator Jeff Bingaman and others to lessen the 
     disadvantage to plaintiffs.
       No one disputes that certain provisions of the bill address 
     real class-action abuses, foremost among them the collusive 
     settlements that benefit plaintiffs' lawyers while 
     shortchanging their clients. But taken as a whole, the bill 
     before the Senate isn't genuine tort reform. It is mostly a 
     gift to wealthy special interests that is mislabeled as 
     reform.

  Mr. LEAHY. Mr. President, I see other Senators seeking the floor. I 
will probably have an opportunity to say a few words tomorrow. I find 
that the summertime laryngitis is coming back, and I see my dear friend 
from Iowa on the floor.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. GRASSLEY. Mr. President, I am pleased that Majority Leader Frist 
has called up the Class Action Fairness Act. I have been working on 
this bill since the 105th Congress, so I think it is about time the 
Senate completes action on this bill.
  My colleagues will recall that in October of last year Senator Frist 
brought this bill to the floor, but we were not able to proceed to the 
bill because of filibuster, and we lost the vote on cloture on the 
motion to proceed by just a one-vote margin. A supermajority of 60 
votes was needed. We had 59 votes which, obviously, means that last 
fall we had enough votes to pass the legislation but could not get 
around the filibuster.
  When you are up against a filibuster, you have to work out issues 
because nothing in the Senate gets done that is not done in a fairly 
broad bipartisan way. Since then, I have worked in good faith with 
Senator Hatch, chairman of the Judiciary Committee, and our lead 
Democratic cosponsors, Senator Kohl and Senator Carper, to modify the 
bill to address a number of concerns raised by their colleagues on the 
Democratic side, Senators Dodd, Landrieu, and Schumer.
  These Senators are now satisfied with the changes we made to this 
bill. We reintroduced the legislation this year as S. 2062. So the bill 
before us goes even further in terms of compromising on the issues than 
were brought before the Senate last October--enough action, I hope, 
that we can get to finality within a few days.
  As many colleagues may already know, this bill has gone through many 
changes and mostly changes to accommodate the minority in the Senate, a 
few Democratic Senators. I have worked in good faith with my colleagues 
on the other side of the aisle to bring people together and to address 
valid concerns to increase support for this bill, especially to get 
over the hurdle of the supermajority of 60 to get to stop debate and 
get to finality.
  To tell you the truth, Mr. President, I really didn't think we needed 
to make any changes in this class action bill that we originally 
introduced this Congress--in other words, last year. I thought then, 
and I think now, that the original introduction was a pretty good bill. 
But, of course, being a pretty good bill in my judgment doesn't mean it 
has enough votes to get that supermajority and get the compromise that 
is necessary to get to finality. So in order to move the class action 
bill forward, I did my best to listen to the issues raised and to make 
modifications to the bill where there was room for compromise.
  Yet S. 2062 still retains the goals I wanted to achieve and other 
cosponsors

[[Page S7568]]

wanted to achieve; that is, to fix some of the more egregious problems 
that we are seeing in the class action system, and to provide a more 
legitimate forum for nationwide class action lawsuits.
  The deal we have struck is a very carefully crafted compromise that 
should not need any further modifications. So I am asking my colleagues 
to withhold offering amendments to avoid disrupting the balance we have 
achieved. I also hope we will not see a lot of nongermane amendments 
offered to this bill--meaning nothing to do with this legislation. 
Under the rules of the Senate, they can be offered but they are very 
distracting. We ought to keep our focus upon the class action system 
reform. Instead, we should focus on the germane amendments, get this 
bill done, and move on. We should not get all caught up in message 
amendments that will do nothing but play politics and delay all the 
hard work that we put into this bipartisan compromise bill. So I hope 
we can pass this bipartisan class action bill without changes and 
without any further delay.
  The reality is that the class action system is broken and we should 
do something about it. The current class action system is rife with 
problems which have undermined the rights of both plaintiffs and 
defendants. Class members are often in the dark as to what their rights 
are, with the class lawyers, driving the lawsuits and the settlements, 
with their interests as much in mind as those of members of the class.
  Class members receive court and settlement notices in hard-to-
understand legalese. The notices are written in small print and in 
confusing legal jargon so class members often do not understand their 
rights or, more importantly, the consequences of their actions with 
respect to the class action lawsuit of which they are a part.
  Furthermore, many class action settlements only benefit lawyers, with 
little or nothing going to the members who have been harmed. We are all 
familiar with class action settlements where the members get a coupon 
of little or no value, and the lawyers get all the money available in 
the settlement agreement. We know that is not protecting the consumers 
of America.
  In addition, the current class action rules are such that the 
majority of the large nationwide class action lawsuits can only proceed 
in State court when they are clearly the kinds of cases that should be 
decided in our Federal courts because they have nationwide 
implications.
  At least these class action lawsuits should have had an opportunity 
to be heard in Federal court because usually they are the cases that 
involve the most amount of money, citizens from all across the country, 
and issues of nationwide concern.
  Why should a State court or a county court be deciding these kinds of 
class action cases that are going to impact people all across our 
country? Those cases ought to be decided in a Federal jurisdiction. 
This present system has never made sense to me.
  To further compound the problem, the present rules are easily gamed 
by unscrupulous lawyers who steer class action cases to certain State-
preferred courts where judges are quick to certify a class and approve 
settlements with little regard to class members' interests and the 
parties' due process rights.
  We have heard of class action lawyers manipulating case pleadings to 
avoid removal of a class action lawsuit to Federal court, claiming that 
their clients suffered under $75,000 in damages, in order to avoid the 
Federal jurisdiction amount threshold in existing law.
  We have also heard of class action lawyers crafting lawsuits in such 
a way to defeat the complete diversity requirements by ensuring that at 
least one named class member is from the same State as one of the 
defendants, even if every other class member is from a different State.
  These are only a couple of the gamesmanship tactics that we hear 
lawyers like to utilize to bring down an entire class action legal 
system. The fact is, many of these class action cases are just 
frivolous lawsuits that are cooked up by lawyers to make a quick buck, 
with little benefit to class members whom the lawyers are supposed to 
be representing.
  This is a real drag on the economy. Many a good business is being 
hurt by frivolous litigation costs. Unfortunately, the current class 
action rules are contributing to the cost of businesses across America 
and particularly hitting hard small businesses that get caught up in 
the class action web.
  Too many frivolous lawsuits are being filed and too many good 
companies and consumers are having to pay for lawyer greed. We need to 
restore some commonsense reform to our legal system, and this 
legislation does it. It should have been done years ago.
  So my colleagues understand, then, why Senator Kohl of Wisconsin and 
I originally joined forces several Congresses ago--too long ago--to do 
something about these runaway abuses, and the only thing standing 
between us and success several years ago was the powerful influence of 
personal injury lawyers within our political system.
  The Class Action Fairness Act will address some of the more egregious 
problems within our class action system, and it will, at the same time, 
preserve class action lawsuits as an important tool to bring 
representation to the unrepresented.
  I remind my colleagues of all the time that was spent working on 
finding a fair solution to the class action problem. For the past four 
Congresses, Senator Kohl, Senator Hatch, and others have joined me in 
studying the abuses in the class action system and working to solve 
these problems. Over the years, both the House and Senate Judiciary 
Committees have convened numerous hearings on these class action abuses 
and, more importantly, highlighting the need for reform. The House 
passed similar versions of class action bills in several Congresses 
with very strong bipartisan support.
  In the Senate, in the 105th Congress, I held a hearing on class 
action abuse in the Judiciary Committee's Administrative Oversight 
Subcommittee. In the 106th Congress, my subcommittee held another 
hearing on class action, and the Judiciary Committee, at that time, 
marked up and reported out our class action legislation. The Judiciary 
Committee held a hearing on class action abuse again in the 107th 
Congress and again in this 108th Congress. The Judiciary Committee 
marked up the bill which is before the Senate.
  Chairman Hatch, Senator Kohl, and I worked closely with Senator 
Feinstein to make sure that more in-State class actions stayed in State 
court. That was a compromise to garner a little more bipartisan support 
at that time.
  We also worked closely with Senator Specter, albeit a Republican but 
a person who had some questions about this legislation, to make sure 
that his concerns relative to class actions were addressed.
  The bill was approved by the Judiciary Committee with solid 
bipartisan support. Late last year, we worked with Senators Schumer, 
Dodd, and Landrieu to address concerns they raised and to get them on 
board. Those Senators joined us in the introduction of the numbered 
bill before us, S. 2062, in February of this year in a bipartisan show 
of support for class action reform.
  I wanted to elaborate on the history of this bill so my colleagues 
were aware of the tremendous amount of time, over almost a decade, that 
Congress has spent studying the problem with our class action system 
and all the work and compromises that we put into this bipartisan bill 
to hopefully now get it passed.
  I will highlight some of the changes that we made to the bill to 
increase bipartisan support since Senator Kohl and I introduced the 
first Class Action Fairness Act several years ago.
  The bill, as was originally introduced, did several things. It 
required that notice of proposed settlements in all class actions, as 
well as all class notices, be in clear, easily understood English and 
include all material settlements and the terms of those settlements, 
including amount and source of attorney's fees. Mr. President, you 
should not have to be a lawyer to understand what you are suing about 
and what your cause is and what is going to happen to attorney's fees 
and other issues in the settlement. Presently, it is pretty complicated 
to understand that situation.
  Because plaintiffs give up their right to sue by joining a class 
action, they have a right to understand the ramifications of their 
actions in joining a class.

[[Page S7569]]

  Then our bill required that State attorneys general, or other 
responsible State government officials, be notified of any proposed 
class settlement that would affect the residents of their States.
  We included this provision to help protect class members because such 
notices would provide State officials with an opportunity to object if 
the settlement terms were unfair to the citizens of their particular 
State. Somebody at the State level ought to be reviewing that for the 
populations of their States.
  Our bill also requires that courts closely scrutinize class action 
settlements where the plaintiffs only receive a coupon or some other 
noncash award while, as I have said before, the lawyers get the bulk of 
the money.
  Our bill required the Judiciary Committee to report back to Congress 
on the best practices in class action cases and how to best ensure 
fairness of class action settlements.
  Finally, the bill allowed more class action lawsuits to be removed 
from State court to Federal court. The bill eliminated the complete 
diversity rule for class action cases but left in State court those 
class actions with fewer than 100 plaintiffs, class actions that 
involved less than $5 million, and class actions in which the State 
government entity, like the attorney general--well, no that is not 
right--where a State government entity is a primary defendant. Our bill 
still does many of these things, but we have made a number of 
modifications to get broader bipartisan support.
  In the Judiciary Committee last year, we incorporated the Feinstein 
amendment, which would leave in State court class action cases brought 
against a company in its home State where two-thirds or more of the 
class members are also residents of that State. We also incorporated 
changes to address issues raised by Senator Specter relative to how 
mass actions should be treated under the bill.
  In our negotiations in late 2003 with Senators Schumer, Dodd, and 
Landrieu, we made numerous changes. I am only going to mention a few of 
those important compromises reached. Examples: We made changes to the 
coupon settlement provisions in the bill, providing that attorneys fees 
must be based either on the value of the coupons actually redeemed by 
class members or the hours actually billed in prosecuting the case.
  We deleted the bounties provision because of concern that it might 
harm civil rights plaintiffs.
  We deleted provisions in the bill that dealt with specific notice 
requirements because the Judicial Conference has already approved 
similar notice requirements to the Federal Rules of Civil Procedure.
  To address questions about the merry-go-round issue, we eliminated a 
provision dealing with the dismissal of cases that failed to meet rule 
23 requirements so that existing law continues to apply.
  We deleted a provision allowing plaintiff class members to remove 
class action because of gaming concerns.
  We placed reasonable time limitations on appellate review of remand 
orders in the bill.
  We clarified that citizenship of proposed class members is to be 
determined on the date plaintiffs file the original complaint or when 
plaintiffs amend that complaint.
  We made modifications to the Feinstein compromise that I have already 
referred to and to the class actions language referred to.
  We clarified that nothing in the bill restricts the authority of the 
Judicial Conference to promulgate rules with respect to class actions.
  Finally, we crafted a new local class action exception which would 
allow class actions to remain in State court if, No. 1, more than two-
thirds of the class members are citizens of the forum State; No. 2, 
there is at least one in-State defendant from whom significant relief 
is sought by members of the class and whose conduct forms a significant 
basis of the plaintiffs' claims; No. 3, principal injuries resulting 
from the alleged conduct or related conduct of each defendant were 
incurred in the State where the action was originally filed; and 
lastly, no other class action asserting the same or similar factual 
allegations against any of the defendants on behalf of the same or 
other persons has been filed during the preceding 3 years. We did this 
to ensure that truly local class action cases, such as a plant 
explosion or some other localized event, would be able to stay in the 
State court where the harm took place.
  So we have made significant concessions to get our Democratic 
colleagues on board the Class Action Fairness Act. They have been 
telling us they are ready to support the bill and to get it passed. 
Both sides have been asking the leader to bring up this bill. Now that 
we have an agreement to proceed to the bill, hopefully no partisan 
politics will be played and we will get down to business and finally 
get this job done. It is time to make real progress on the class action 
bill and get it passed.
  Again, I want to remind my colleagues that we crafted a carefully 
balanced bill that consists of all of these compromises and more that I 
have mentioned. I believe we have done a pretty good job of addressing 
legitimate concerns with the bill, and I am hopeful we will not see 
lots of amendments to disrupt this compromise.
  I urge my colleagues to refrain from offering nonrelevant amendments, 
amendments that have nothing to do with this bill, because this is a 
bill that should not be bogged down with everyone's pet project, for 
which the Senate is so famous. All of our hard work of forging a 
bipartisan compromise bill should not go down the drain.
  The bottom line is class action reform is badly needed. Both 
plaintiffs and defendants alike are calling for change. The Class 
Action Fairness Act will help curb many problems that have plagued the 
class action system.
  The bill will increase class member protections and ensure the 
approval of fair settlements. It will allow nationwide class actions to 
be heard in the proper forum--the Federal courts--but keep primarily 
State class actions in State court. It will preserve the process but 
put a stop to the more egregious abuses. It will also help to put a 
stop to the frivolous lawsuits that are a drag on our economy and 
especially harmful to small business.
  Now that we have worked out a delicate compromise, we should be able 
to get this bipartisan bill done without any changes.
  A lot of my colleagues listening will say: Well, the gall of the 
Senator from Iowa to say that we have such a perfect bill before the 
Senate that we should not have any amendments. Well, over the course of 
several years, this has been a bipartisan bill in sponsorship. We 
developed more broad bipartisan consensus last year to get this bill 
out of committee. We just about had enough consensus to move the bill, 
one vote short of a supermajority, last October, of 60 votes, to move 
this bill.

  Then there were further compromises made to get over that hurdle. You 
can quantify in this body, what it takes, as a measure of 
bipartisanship. It is whether you get that 60-vote supermajority to 
stop debate and to get to finality. That is where the power of the 
minority comes into play in this body. They can say they need further 
compromise to move this bill to finality. We did that between last 
October and now.
  Some people do not want class action reform and they have a right to 
vote against it. But it seems when the Senate process has worked to 
bring about the necessary votes, and those necessary votes are gotten 
by the proper bipartisan compromises being worked out, then we ought to 
be able to let the Senate work its will. The rights of the minority 
have been protected.
  Have the rights of every last Senator been protected? No. But if we 
had to wait for that to happen, no bill would pass. But if it did pass, 
it would pass by a 100-to-0 margin.
  We are there. Hopefully this bill will pass the way it has been 
worked out and be done in a short period of a few days. We do not have 
a lot of time to spend on it. Of course, that works to the advantage of 
those who do not want anything because they represent the interests, 
they would say, of the consumers, and I don't doubt that is what they 
are concerned about. But they are also, intended or not, representing 
the interests of the selfish personal injury lawyers who want to play 
games with picking this county in this State, or that county in that 
State--some Podunk county where they can win their case.
  It would be OK if that case were only pertinent to the people of that 
State,

[[Page S7570]]

but you find this forum shopping with national implications. Something 
of national implication should not be decided in one Podunk county in 
one State but should be decided by our Federal courts.
  I yield the floor.
  Mr. CARPER. Will the Senator yield?
  Mr. GRASSLEY. Yes. I yielded the floor, but if you want me to hold 
the floor----
  Mr. CARPER. I would appreciate it. If the Senator will yield, I would 
like to make a comment.
  Mr. GRASSLEY. Yes.
  Mr. CARPER. I want to thank the chairman, as the prime sponsor of 
this bill, for his willingness to entertain changes and ideas from our 
side of the aisle, from Democrats who had what we thought were ideas to 
improve this legislation. I think as the bill has gone through its 
introduction, its markup and debate in the Judiciary Committee, been 
reported out of the Judiciary Committee--the bill was sort of 
rereported out of the Judiciary Committee with some further changes, 
there was the adoption of the changes and incorporation of the changes 
that were negotiated with a number of us, including Senators Schumer, 
Dodd, Landrieu, Kohl, and myself--I think one of the reasons why we are 
here tonight with a bill we can go forward with, that is going to get 
pretty good bipartisan support, has been your willingness to not only 
listen to some other ideas but to incorporate them into this bill.
  As I listened to the Senator go through the bill and talk about it, 
particularly to talk about the changes that have been made in it, I was 
struck how far we have come in the course of the last year or two. I 
want, while you are still here, to express my thanks for the way you 
approached this subject and the openminded way you have enabled us to 
move forward.

  Mr. GRASSLEY. Mr. President, if I could say this before I yield the 
floor, and I am going to yield the floor right away, first of all, I 
appreciate the statement by the Senator from Delaware. He may have 
missed it, but sometime in my remarks tonight I made some commentary 
about his efforts to help work a compromise and bring up issues that 
were very important to get settled in order to move to finality.
  Also, Mr. President, I want to tell you as well as other Members of 
this body, this bill is where it is because of the urgency Senator 
Carper has put on this legislation, to get it passed, because he knows 
of the need. He also understands the need of bipartisanship.
  I hope I have given him proper credit in this way. So many times as 
we Senators do, we go to breakfasts or lunches to speak to groups that 
are interested in legislation, and they are always asking us about this 
bill or that bill. More often than not, particularly when I am talking 
to small business groups, I am often asked about when are we going to 
get class action reform. I say, under certain circumstances we will get 
it. Sometimes people compliment me because I was the prime sponsor of 
this legislation. But I say at every one of these meetings, they need 
to thank Senator Carper whenever they see him, because no person in the 
Senate is trying move this bill along and do it in a bipartisan way, no 
one more than Senator Carper.
  I can say to Senator Carper, I thank him very much for what he has 
done and I yield the floor.
  The PRESIDING OFFICER (Mr. Talent). Who seeks recognition?
  Mr. CARPER. I do.
  The PRESIDING OFFICER. The Senator from Delaware is recognized.
  Mr. CARPER. I thank Senator Grassley for what he said. I understand 
Senator Grassley may need to do some wrap-up here. I am not sure. If he 
does, I will be happy to yield.
  Mr. GRASSLEY. Yes. I guess I didn't understand that was part of my 
responsibility. I will do that right away.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.

                          ____________________