[Congressional Record Volume 151, Number 13 (Wednesday, February 9, 2005)]
[Senate]
[Pages S1150-S1152]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   CLASS ACTION FAIRNESS ACT OF 2005

  Mr. REID. Mr. President, for the past 2 days the Senate has been 
debating the so-called Class Action Fairness Act of 2005. I want to 
spend a few minutes today talking about this bill.
  Despite its title, the bill is not about fairness at all, in my 
opinion. It is about depriving consumers of access to the courts and 
letting corporate wrongdoers off the hook.
  People ask, what are these cases all about? These cases are about 
things dealing with fairness. Class actions fall in a number of 
different categories: environmental pollution, insurance practices, 
wage-and-hour employment disputes, consumer fraud, dangerous drugs, 
products that kill, and consumer protection. In those categories we 
have had, in recent years, some very successful pieces of litigation 
that have made our society a better place. However if this bill had 
been law, those cases would have been removed to federal court where 
they would have likely been dismissed. It is important for states to 
continue to have the opportunity to protect their own citizens in their 
own courts.
  For example, there was a case in New Hampshire dealing with 
environmental pollution brought by the State of New Hampshire against 
22 oil and chemical companies responsible for polluting the State's 
waterways with methyl tertiary butyl ether. We refer to that as MTBE. 
These companies were accused of violating state consumer protection and 
state environmental laws. They were negligent. They produced a 
defective product and created a public nuisance. In this case, New 
Hampshire is seeking compensation for the cost of the cleanup as well 
as penalties, both monetary and punitive in nature. Under this bill, 
because the named defendant is a citizen of another state, the State of 
New Hampshire would have to have their case heard in federal court 
instead of their own state court.
  In Louisiana there was a pesticide there that had decimated the 
crawfish population. At one time, they were bringing in about 41 
million pounds of crawfish. After this chemical was put into the 
waterways, that dropped to about 16 million pounds. Crawfish farmers 
were going broke. The plaintiffs were all from Louisiana and the harm 
occurred there. They filed a class action in state court, and a 
Louisiana state court judge recently granted final approval on a 
settlement agreement. This case is a clear example of a state court 
having the opportunity to interpret its own state law, yet if S. 5 were 
already enacted, it would have had to be removed to federal court.
  There was a chemical plant leak that occurred in Richmond, California 
that caused a dangerous cloud to form over the town. Over 24,000 people 
sought medical treatment in the days immediately following the leak. 
The residents sued as a class, and the chemical company had to settle. 
While only California residents were harmed in California, under S. 5 
this case would have been removed to federal court because the 
defendant is based in New Jersey.
  Insurance practices: In one case, a Missouri state judge gave 
preliminary approval to a settlement agreement in a class action 
brought by Missouri plaintiffs, where a pharmacist diluted 
prescriptions for thousands of patients, including chemotherapy 
patients. Because the defendant is based in Iowa, although they sell 
policies in Missouri, the case could be removable to federal court 
under this bill.
  Equitable Life Insurance was accused of misleading and cheating 
customers. This was a situation of the so-called vanishing premium 
cases in the 1980s. They sold policies when interest rates were high. 
They told customers as soon as the interest rates went down their 
premiums would be lower. That was not true. Class action lawsuits were 
filed in Pennsylvania and Arizona state courts, and Equitable settled 
the suits for $20 million helping over 130,000 people. However, because 
the insurance company was based in another state, under this 
legislation, the case would have been removed to federal court and 
these people harmed between 1984-1996 would still be waiting for 
justice.

  Wage-and-hour employment disputes: In California, Wal-Mart employees 
have been denied pay for actual time worked. A California state judge 
certified a class action brought by California plaintiffs. The harm 
occurred in California, nonetheless, under the proposed legislation the 
case would be removed to federal court.
  Consumer fraud: Roto-Rooter overcharged approximately two million 
customers $10 each by adding charges to invoices violating state 
consumer protection laws. A class action was brought in Ohio where many 
of the class members live and where Roto-Rooter is based. Under S. 5, 
the case could be removed to federal court.
  AOL, a Virginia based company, charged the credit card of their 
customers for services even after those customers had canceled their 
AOL subscriptions. The lead plaintiff in a class action case was a 
California citizen. AOL wanted to litigate the case in federal court 
under Virginia law. The California Court of Appeals held that the 
proper venue was in state court because Virginia law did not allow 
consumer class actions and the available remedies were more limited 
than under California law. This would undermine

[[Page S1151]]

California's strong consumer protection laws. Under this bill we are 
considering, California would be powerless to protect their own public 
policy. What's fair about that?
  In Florida a person sold funeral plots that didn't exist and 
desecrated some of the graves that were there. The issues raised in 
this case are state issues and the coffins desecrated were only those 
in Florida, yet under S. 5 the case would be removed to federal court 
because the parent company of the funeral home is based in another 
state.
  Products that kill: Lead paint has poisoned thousands of children 
since 1993. Ford sold police cruisers that are prone to fire. This bill 
would seek to remove these cases to our already overburdened federal 
courts where they would experience extreme delays and possible 
dismissal.
  Consumer protection: Cases against Monsanto, Jack-in-the-Box, and 
Nestle would all be removed to federal court possibly denying the 
members in the class the protection of their own state laws.
  I believe it has been good for our country to have these lawsuits 
because if you didn't have these lawsuits and you had the law that is 
now sought in this legislation, these cases, most of them, wouldn't 
have been brought.
  I am not saying there is no room to improve the rules governing class 
action lawsuits. There is. There are abuses. Coupon settlement cases, I 
believe, are not good. Consumers get no meaningful relief, and the 
lawyers get everything. That isn't fair. If this bill simply addressed 
the coupon problem, all 100 Senators would vote for it. But this 
pending proposal goes much further. It effectively closes the 
courthouse doors to a wide range of injured plaintiffs. I have 
mentioned some of them. At the same time, the bill turns federalism on 
its head. It denies State courts the opportunity to hear State law 
claims brought by residents of that State.
  My friends on the majority side, the Republicans, say they favor 
States rights. They should be embarrassed to support this bill, which 
is one of the most profound assaults on States rights to come before 
Congress in many years. Most disturbingly, this bill limits corporate 
accountability at a time when corporate scandals have proliferated.
  As we began debate on this bill, the majority leader and I received a 
letter signed by attorneys general of New York, Oklahoma, California, 
Illinois, Iowa, Kentucky, Maine, Massachusetts, Maryland, Minnesota, 
New Mexico, Oregon, Vermont, and West Virginia. These attorneys general 
whose sworn duty is to protect the public and enforce State laws oppose 
the bill now before the Senate. They say that despite improvements 
since the bill was first introduced a number of years ago, that:

       S. 5 still unduly limits the rights 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.

  They warn us further:

       S. 5 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.

  This bill would ``reorder'' our justice system, as the attorneys 
general have warned us.
  Several amendments we are going to offer are important.
  First, S. 5 will allow corporate defendants to remove many multi-
state class actions from State court to Federal court. But under 
current law and practice, the Federal courts can refuse to certify 
these cases as class actions on the ground that there are too many 
State laws involved. Prior to the passage of S. 5, the Federal courts' 
failure to certify would allow consumers to re-file their cases in 
State court, but this bill would preclude plaintiffs turned away in 
Federal court from going back to State court. If this problem isn't 
corrected, consumers will have lost their only means of redress when 
they have been cheated by a corporation in a matter too small to file 
an individual case. Plaintiffs in cases like the Roto-Rooter example 
would have no remedy, and the corporation could continue to take 
advantage of them.
  Senator Bingaman will offer an amendment. It is my understanding that 
he and Senator Feinstein are working on a compromise. Senator Feinstein 
has been an early supporter of S. 5. She understands that this is a 
problem. I am confident she will work with Senator Bingaman to come up 
with some way to resolve this important issue.
  Second, the bill will literally make a Federal case out of what has 
always been State personal injury cases. Sometimes such cases are 
consolidated by State courts for efficiency. They are not ``class 
actions'' at all. But the pending bill would include them under a newly 
invented term, ``mass actions,'' and allow them to be removed to 
Federal court.
  For example, when a large number of people are injured by the same 
dangerous pharmaceutical drug, their claims may be consolidated by 
State court rules. Now those consolidated individual claims would be 
removed to Federal court where they will be subject to extensive delays 
or even dismissal if the laws of more than one State are involved. 
These mass torts often involve hundreds of plaintiffs who have been 
physically injured by drugs, medical devices, tobacco, lead paint, or 
ground water contamination.

  S. 5 should be required to have a big label on it: ``Warning: This 
legislation may be dangerous to the health of all Americans''--
especially healthy American consumers.
  Senator Durbin has already offered an amendment to deal with this 
``mass torts'' issue. I hope that the chairman of the committee, 
Senator Specter, will work with him to see if this matter can be 
resolved.
  These two things I have mentioned--the Bingaman amendment and the 
Durbin amendment--are issues of basic fairness.
  Third, the bill would apply to civil rights and wage-and-hour cases 
that have nothing to do with the coupon settlements the bill sponsors 
say they want to address. These cases would now be subject to the same 
delay and potential dismissal as the personal injury cases I just 
discussed.
  Class actions are particularly important for low wage workers. There 
are now dozens of class action suits in State courts representing tens 
of thousands of low wage workers who have been forced to work extra 
hours without pay or who have been denied their wages for other 
reasons. Also, many States provide greater civil rights protections 
than are available under Federal law. Senator Kennedy will offer an 
amendment to carve out these cases from this bill. That is fair.
  Fourth, as drafted, this bill even applies to cases brought by State 
attorneys general enforcing State laws on behalf of State consumers. 
Federalism has certainly taken a tumble around here when State courts 
are not permitted to hear cases brought by their own attorneys general 
to enforce State consumer fraud laws, environmental protection laws, 
and other vital State interests.
  Separate from the letter I described earlier from Attorney General 
Spitzer and others, we have received a letter from the National 
Association of State Attorneys, the organization representing all 50 
statewide prosecutors, Republicans and Democrats. Forty-six of them 
have signed it. They uniformly urge that the bill be clarified to 
include consumer class actions brought by State attorneys general. That 
is fair. Senator Pryor, one of several former attorneys general we have 
serving in this body, will offer an amendment to achieve this goal.
  This bill is imbalanced in that it establishes a 60-day deadline for 
Federal appellate courts to decide appeals of a district court's 
decision to remand a class action lawsuit, but it lacks a parallel 
mechanism to ensure speedy consideration of the motion to remand in the 
district court. Senator Feingold will offer an amendment to correct 
this imbalance. If 60 days is not a good deadline, they can come up 
with another one. But unless the Feingold amendment is agreed to, these 
people can bring a case to court which will lay there forever.
  None of these amendments we offer are killer amendments. All are 
modest improvements that would strengthen corporate accountability and 
ensure that vulnerable citizens get their day in court. I urge my 
colleagues to accept these amendments.
  These amendments I have talked about to the underlying bill will be

[[Page S1152]]

helpful. However, even with these amendments, the underlying bill will 
still be a bad bill, but it would be better. They would certainly 
improve the bill.
  There was a tremendously powerful article in Business Week last week 
entitled, ``A Phony Cure: Shifting class actions to federal courts is 
no reform.'' No one can say it is some liberal rag of the Democratic 
Party. In this article, even Chief Justice Rehnquist criticizes this 
legislation. The article emphasizes that Federal judges hate this 
legislation and it is more of a step towards chaos than reform. 
Justice Rehnquist says: Don't do this to us. Federal judges are too 
busy. Federal courts are already overburdened and it will make the case 
backlogs even longer. In addition to that, instead of helping Federal 
courts, the article states that it will cut back on those resources to 
our Federal court system, and it is going to leave these Federal judges 
in a real bind.

  This month is Black History month, and this legislation brings to 
mind for many of us Brown vs. Board of Education. The distinguished 
majority leader, Senator Frist, talked today about the first sit-ins by 
these courageous young men and women in the South which brought about a 
number of things. But one reason that the Brown vs. Board of Education 
case was able to move forward was because it was a class action. It was 
a culmination of appeals from four class action cases--three from the 
Federal court decisions in Kansas, South Carolina, and Virginia, and 
one by the decision of the Supreme Court of Delaware. Only the state 
court, the Supreme Court of Delaware, made the correct decision by 
ruling in favor of the African-American plaintiffs. The State court 
held that the segregated schools in Delaware violated the 14th 
amendment, Delaware rejected separate and unequal schools.
  Another example is a case brought last June. The U.S. Supreme Court 
decided to allow a state class action lawsuit against Daimler Chrysler 
to continue in Oklahoma. That was an important case because it affects 
up to 1 million owners of minivans that have front passenger seat air 
bags that deploy in low speed accidents, very low speeds, with 
tremendous force, potentially killing children and hurting small adult 
passengers. Oklahoma's Supreme Court ruled that the case could go 
forward in state court for this defect. A federal court, relying on the 
Federal Rules of Civil Procedure, would probably find the case 
unmanageable.
  These cases I have mentioned should be allowed to proceed. This 
legislation would not allow that. That is too bad.
  This legislation, especially if we don't get these amendments passed, 
is disrespectful to States rights and will result in many instances of 
injustice. I am going to vote against this bill. I hope my colleagues 
will do the same. But I certainly hope my colleagues will do something 
to improve this bad bill. We need to be alarmed at what it is doing to 
States rights. I am going to vote against this bill, but I hope people 
will work with us.
  I apologize to my colleague for taking away from his morning business 
time. I ask unanimous consent that when the Chair announces morning 
business the full hour be extended with one-half hour on each side.
  The PRESIDENT pro tempore. The Chair states that was previously the 
understanding. It would not take a unanimous consent request.
  The Senator from Oregon.

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