[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.
                                 ______