[Congressional Record Volume 151, Number 5 (Tuesday, January 25, 2005)]
[Senate]
[Pages S450-S452]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. GRASSLEY (for himself, Mr. Kohl, Mr. Hatch, Mr. Carper,
Mr. Frist, Mr. Chafee, Mr. Dodd, Mrs. Feinstein, Mr. Hagel, Mr.
Kyl, Ms. Landrieu, Mrs. Lincoln, Mr. Lugar, Mr. McConnell, Mr.
Schumer, Mr. Thune, Mr. Vitter, Mr. Voinovich, Mr. Lott, Mr.
Alexander, Ms. Snowe, Mr. Sessions, Mr. DeMint, Mr. Lieberman,
Mr. Martinez, and Mr. Ensign):
S. 5. A bill 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; to the Committee on the
Judiciary.
Mr. KOHL. Mr. President, I rise today to join Senators Grassley,
Hatch, Carper, and many others in introducing the Class Action Fairness
Act of 2005. This legislation addresses the continuing problems in
class action litigation, particularly unfair and abusive settlements
that shortchange consumers across America.
The time for this bill has come. We have worked together on a
bipartisan basis on this legislation in past Congresses. In fact,
versions of this bill have passed the House of Representatives on two
occasions in the past. In the Senate, we passed this bill through the
Judiciary Committee in each of the last two Congresses and came within
one vote of gaining cloture on the bill.
We worked successfully to substantially improve this bill during the
last Congress. As a result of the interest of Senators Feinstein, Dodd,
Schumer and Landrieu, we have changed the bill in important ways. Now,
only cases that are truly national in scope will be tried primarily in
the Federal courts. Cases that primarily involve people from only one
State and that interpret State law will remain in State court. These
changes will ensure that class action cases are handled efficiently and
in the appropriate venues and that no case that has merit will be
turned away.
We have a simple story to tell. Consumers are too often getting the
short end of the stick in class action cases, recovering coupons or
pocket change, while their lawyers reap millions. Many of these complex
class action cases proceed exactly as we would hope. Injured parties,
represented by strong advocates, get their day in court or reach a
positive settlement that is good for the parties and handled well by
their attorney.
Unfortunately, this is not how it always works. Rather, more and more
frequently, some are taking advantage of the system and, as a result,
consumers are getting the short end of the stick, recovering coupons or
pocket change, while the real reward is going to others. The Washington
Post put it clearly, ``no portion of the American civil justice system
is more of a mess than the world of class actions.''
Our remedy is straightforward. Consumers deserve notices that are
written in plain English so they can understand their rights and
responsibilities in the lawsuit. Too many of the class action notices
are designed to be impossible to comprehend. Further, if the cases are
settled, the notice to the class members must clearly describe the
terms of the settlement, the benefits to each plaintiff and a summary
of the attorneys' fees in the case and how they were calculated. We are
grateful that the Federal Judicial Conference has adopted our idea and
has already begun to improve the notices provided to class action
plaintiffs.
Second, State attorneys general should be notified of proposed class
action settlements to stop abusive cases if they want. This encourages
a neutral third party to weigh in on whether a settlement is fair and
to alert the court if they do not believe that it is. The Attorney
General review is an extra layer of security for the plaintiffs and is
designed to ensure that abusive settlements are not approved without a
critical review by one or more experts.
Third, a class action consumer bill of rights will help limit coupon
or other unfair settlements.
Finally, we allow many class action lawsuits to be removed to Federal
court. This is only common sense. These are national cases affecting
consumers in 50 States. If the court rules were being drafted today,
these are exactly the types of cases which we would want and expect to
be tried in Federal court.
Stories of nightmare class action settlements that affect consumers
around the country are all too frequent. For example, a suit against
Blockbuster video yielded dollar off coupons for future video rentals
for the plaintiffs while their attorneys collected $9.25 million. In
California State court, a class of 40 million consumers received $13
rebates on their next purchase of a computer or monitor--in other words
they had to purchase hundreds of dollars more of the defendants'
product to redeem the coupons. In essence, the
[[Page S451]]
plaintiffs received nothing, while their attorneys took almost $6
million in legal fees. We could list many, many more examples, but let
me discuss just one more case that is almost too strange to believe.
I am speaking about the Bank of Boston class action suit and the
outrageous case of Martha Preston from Baraboo, WI. She was an unnamed
class member of a class action lawsuit against her mortgage company
that ended in a settlement. The plaintiffs' lawyers were supposed to
represent her. Instead, the settlement that they negotiated for her was
a bad joke. She received $4 and change in the lawsuit, while her
attorneys pocketed $8 million.
Yet, the huge sums her attorneys received were not the worst of the
story. Soon after receiving her $4, Ms. Preston discovered that her
lawyers took $80, 20 times her recovery, from her escrow account to
help pay their fees. Naturally shocked, she and the other plaintiffs
sued the lawyers who quickly turned around and sued her in Alabama, a
State she had never visited, for $25 million. Not only was she $75
poorer for her class action experience, but she also had to defend
herself against a $25 million suit by the very people who took
advantage of her in the first place.
No one can argue with a straight face that the class action process
is not in serious need of reform.
Comprehensive studies support the anecdotes we have discussed. For
example, a study on the class action problem by the Manhattan Institute
demonstrates that class action cases are being brought
disproportionately in a few counties where plaintiffs expect to be able
to take advantage of lax certification rules.
The study focused on three county courts--Madison County, IL;
Jefferson County, TX; and Palm Beach County, FL--that have seen a steep
rise in class action filings over the last several years that seems
disproportional to their populations. They found that rural Madison
County, IL, ranked third nationwide, after Los Angeles County, CA, and
Cook County, IL, in the estimated number of class actions filed each
year, whereas rural Jefferson County and Palm Beach County ranked
eighth and ninth, respectively. As plaintiff attorneys found that
Madison County was a welcoming host, the number of class action suits
filed there rose 1,850 percent between 1998 and 2000.
Another trend evident in the research was the use of ``cut-and-
paste'' complaints in which plaintiffs'' attorneys file a number of
suits against different defendants in the same industry challenging
standard industry practices. For example, in one situation, six law
firms filed nine nearly identical class actions in Madison County in
the same week alleging that the automobile insurance industry is
defrauding Americans in the way that they calculate claims rates for
totaled vehicles.
The system is not working as intended and needs to be fixed. The way
to fix it is to move more of these cases currently being brought in
small State courts like Madison County, IL, to Federal court.
The Federal courts are better venues for class actions for a variety
of reasons articulated clearly in a RAND study. RAND proposed three
primary explanations why these cases should be in Federal court.
``First, federal judges scrutinize class action allegations more
strictly than state judges, and deny certification in situations where
a state judge might grant it improperly. Second, state judges may not
have adequate resources to oversee and manage class actions with a
national scope. Finally, if a single judge is to be charged with
deciding what law will apply in a multistate class action, it is more
appropriate that this take place in federal court than in state
court.''
We all know that class actions can result in significant and
important benefits for class members and society, and that most class
lawyers and most State courts are acting responsibly. Class actions
have been used to desegregate racially divided schools, to obtain
redress for victims of employment discrimination, and to compensate
individuals exposed to toxic chemicals or defective products. Class
actions increase access to our civil justice system because they enable
people to pursue claims that collectively would otherwise be too
expensive to litigate.
The difficulty in any effort to improve a basically good system is
weeding out the abuses without causing undue damage. The legislation we
propose attempts to do this.
Let me emphasize the limited scope of this legislation. We do not
close the courthouse door to any class action. We do not require that
State attorneys general do anything with the notice they receive. We do
not deny reasonable fees for class lawyers. And we do not mandate that
every class action be brought in Federal court. Instead, we simply
promote closer and fairer scrutiny of class actions and class
settlements.
Right now, people across the country can be dragged into lawsuits
unaware of their rights and unarmed on the legal battlefield. What our
bill does is give back to regular people their rights and
representation. This measure may not stop all abuses, but it moves us
forward. It will help ensure that unsuspecting people like Martha
Preston don't get ripped off.
We believe this is a moderate approach to correct the worst abuses,
while preserving the benefits of class actions. It is both pro-consumer
and pro-defendant. We believe it will make a difference.
By Ms. COLLINS (for herself, Mr. Carper, Mr. Voinovich, Mr.
Feingold, Mr. Akaka, and Mr. Lieberman):
S. 21. A bill to provide for homeland security grant coordination and
simplification, and for other purposes; to the Committee on Homeland
Security and Governmental Affairs.
Ms. COLLINS. Mr. President I rise with my good friend Senator Carper
to offer the Homeland Security Grant Enhancement Act in order to
streamline and strengthen the way we help our States, communities, and
first responders protect our homeland.
Three years ago, the Senate spent nearly three months on the Homeland
Security Act, yet the law contains virtually no guidance on how the
Department is to assist State and local governments with their homeland
security needs. In fact, the 187-page Homeland Security Act mentions
the issue of grants to first responders in but a single paragraph. The
decisions on how Federal dollars should be spent or how much money
should be allocated to whom were left for another day. That day has
come.
During the 108th Congress, Senator Carper and I introduced similar
legislation to more than double the proportion of homeland Security
funding distributed based on risk, while also helping all States
achieve a baseline level of preparedness and an ability to respond. The
Senate Committee on Homeland Security and Governmental Affairs held
three hearings at which first responders, State and local officials,
and Secretary Ridge all testified that the grant distribution system
needs fixing. The 9/11 Commission also urged that the system be
changed. It is therefore time for Congress to finally address this
critical issue.
The bill that we introduce today is identical to legislation that
passed the Senate by voice-vote as an amendment to the Intelligence
reform bill at the end of the last Congress.
That measure was supported by Senators from big States--like Michigan
and Ohio--and small States like Maine, Delaware and Connecticut. The
wide breadth of support in the Senate is indicative of the fact that
this bill takes a balanced approach to homeland security funding.
It recognizes that threat-based funding is a critical part of
homeland security funding. It also recognizes that first responders in
every State and territory stand at the front lines of securing the
homeland.
This legislation will also coordinate government-wide homeland
security funding by promoting one-stop-shopping for homeland security
funding opportunities. It would establish an information clearinghouse
to assist first responders and State and local governments in accessing
homeland security grant information and other resources within the new
department. This clearinghouse will improve access to homeland security
grant information, coordinate technical assistance for vulnerability
and threat assessments, provide information regarding homeland security
best practices, and compile information regarding homeland security
equipment purchased with Federal funds.
[[Page S452]]
Establishment of these programs will mean first responders can spend
more time training to save lives and less-time filling out paper work.
The inflexible structure of past homeland security funding, along with
shifting federal requirements and increasing amounts of paperwork,
poses a number of challenges to State and local governments as they
attempt to provide these funds to first responders.
The legislation would provide greater flexibility in the use of those
unspent funds. It would give the Department of Homeland Security
flexibility to allow States, via a wavier from the Secretary, to use
funds from one category, such as training, for another purpose, such as
purchasing equipment.
The Senate Committee on Homeland Security and Governmental Affairs
will act promptly to mark-up and report this important measure to
establish a streamlined, efficient, and fair method for homeland
security funds to get into the hands of first responders.
______