[Congressional Record Volume 151, Number 14 (Thursday, February 10, 2005)]
[Senate]
[Pages S1225-S1252]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CLASS ACTION FAIRNESS ACT OF 2005
The PRESIDING OFFICER. Under the previous order, the Senate will
resume consideration of S. 5, which the clerk will report.
The legislative clerk read as follows:
A bill (S. 5) to amend the procedures that apply to the
consideration of interstate class actions to assure fairer
outcomes for class members and defendants, and for other
purposes.
Pending:
Durbin (Modified) Amendment No. 3, to preserve State court
procedures for handling mass actions.
Feingold Amendment No. 12, to establish time limits for
action by Federal district courts on motions to remand cases
that have been removed to Federal court.
Mr. SPECTER. Mr. President, I thank Senators on both sides of the
aisle for their cooperation in moving this class action bill. We
reported it out of committee a week ago today and started the opening
debate on it on Monday afternoon and then proceeded in a very timely
fashion. The prospects are good that we will conclude action on the
bill today. A unanimous consent agreement is currently in the process
of being worked out, and we will know in the next few minutes precisely
what will happen.
We are going to proceed in a few minutes to the amendment offered by
the Senator from Wisconsin, Mr. Feingold, which would impose some time
limits on the courts which, as I said at the committee hearing last
week, I think is a good idea. I advised Senator Feingold that I would
feel constrained to oppose it on this bill because of the procedural
status, where the House of Representatives has been reported to accept
the Senate bill provided it comes over as what we call a clean bill,
without amendments.
But as I said to Senator Feingold, and will repeat for the record, I
had heard many complaints about delays in our Federal judicial system.
I believe that is an appropriate subject for inquiry by the Judiciary
Committee on a broader range than the issue specifically proposed by
Senator Feingold. It is in the same family.
I want to be emphatic. We are not impinging in any way on the
independence of the Federal judiciary, their discretionary judgments.
But when it comes to time limits, how long they have these matters
under advisement, I think that is an appropriate matter for
congressional inquiry. It bears on how many judges we need and what
ought to be done with our judicial system generally. So that will be a
subject taken up by the Judiciary Committee at a later date.
I think the Senate bill--this may be a little parochial pride--is
more in keeping with an equitable handling of class action bills than
is the House bill. For example, the House bill would be retroactive and
apply to matters now pending in the State courts, which would be
extraordinarily disruptive of many State court proceedings. I think it
is fair and accurate to say that the House bill is more restrictive
than the Senate bill and our Senate bill, I think, is a better measure
to achieve the targeted objective of having class actions decided in
the Federal court with balance for plaintiffs and for defendants as
well.
So we are moving, I think, by this afternoon, to have a bill which
will be ready for concurrence by the House, and signature by the
President, and that I think will be a sign that we are moving forward
on the legislative calendar.
The Senator from Louisiana is going to seek recognition in a few
minutes. I thank my distinguished colleague, Senator Hatch, the former
chairman, who has agreed to come over and manage the bill during my
absence. We are, at the moment, having hearings on the bankruptcy bill
which we hope to have in executive session next Thursday, to move ahead
on our fast moving, ambitious judiciary calendar.
I now yield to my distinguished colleague from Louisiana.
The PRESIDING OFFICER. The Senator from Louisiana.
Mr. VITTER. Mr. President, I rise in strong support of S. 5, the
Class Action Fairness Act of 2005. In doing so, I wish to recognize and
thank them for their leadership, so many Senators who have moved the
bill thus far, certainly including the chairman of the Judiciary
Committee who just spoke, also the Senator from Iowa, the chief sponsor
of the bill, and also the Senator from Utah, the former chairman of the
Judiciary Committee.
I am also an original cosponsor of this bill, because it would
protect consumers from some of the most egregious abuses in our
judicial system.
Let me begin by saying that class actions are an important part of
our justice system. They serve an important purpose when properly
defined. No one would dispute they are a valuable feature of the legal
system. This bill doesn't do away with them.
As stated so eloquently by the bill's chief sponsor, my colleague
from Iowa, S. 5 is really court reform more than tort reform. What does
it reform? What is the problem?
The reason we need to pass this bill is that there are loopholes in
the class action system, and it allows bad actors to game the system.
As a result, in recent years class actions have been subject to abuses
that actually work to the detriment of individual consumers, plaintiffs
in such cases. That is exactly who the law is supposed to help.
Additionally, this gaming of the system clearly works to the
detriment of business and our economy, and the need for job creation in
forging a strong economy.
Such abuses happen mainly in State and local courts in cases that
really ought to be heard in Federal court.
We currently have a system, therefore, which some trial lawyers
seeking to game the system in an effort to maximize their fees seek out
some small jurisdiction to pursue nationwide cookie-cutter cases, and
they act against major players in a targeted industry. Often, these
suits have very little, if anything, to do with the place in which they
are brought. Rather, lawyers select the venues for strategic reasons,
or for political reasons, a practice known as forum shopping.
These trial lawyers seek out jurisdictions in which the judge will
not hesitate to approve settlements in which the lawyers walk away with
huge fees and the plaintiff class members often get next to nothing.
The judges in these jurisdictions will decide the claims of other State
citizens under their unique State law. They will use litigation models
that deny due process rights to consumers and defendants.
Often the decisions coming out of these hand-picked and carefully
selected venues are huge windfalls for trial lawyers and big law firms
and a punch line for consumers and the people the lawyers claim to
represent. There is now in our country a full blown effort aimed at
mining for jackpots in sympathetic courts known as ``magnet courts''
for the favorable way they treat these cases.
Let us look at a few examples of exactly what I am talking about.
Perhaps the best example nationwide, in terms of preferred venues for
trial lawyers, is Madison County, IL, where class action filings
between 1998 and 2000 increased nearly 2,000 percent. There is actually
an example of a South Carolina law firm filing a purported class action
on behalf of three named plaintiffs. None of them lived in Madison
County, IL, but the lawsuit was filed in that jurisdiction against 31
defendants throughout the United States. None of those defendants were
located in Madison County. These lawyers based the alleged jurisdiction
on the mere allegation that some as yet unknown class
[[Page S1226]]
member might happen to live in Madison County.
I have a law degree. That is stunning to me. You can imagine how
astounding and silly and ridiculous that seems to the American people,
small business owners, and consumers around the country. So Madison
County is a great example of one of these magnet jurisdictions. Once
their reputation as a magnet jurisdiction is established, they attract
major nationwide lawsuits that deal with interstate commerce--exactly
the types of lawsuits that should be decided in the Federal court.
As noted in one study:
Virtually every sector of the United States economy is on
trial in Madison County, Palm Beach County, FL, and Jefferson
County, TX--long distance carriers, gasoline purchasers,
insurance companies, computer manufacturers and
pharmaceutical developers.
Let us review some of the outrageous decisions that this gaming of a
broken system produces.
The Bank of Boston case, where class action members actually lost
money when their accounts were debited to pay their lawyers $8.5
million; the Blockbuster settlement, where the class action members
received coupons off their next rentals while their lawyers were paid
$9.25 million; and, the Cheerios case where the plaintiffs got coupons
for cereal, while the lawyers reaped $1.75 million--coupons that, quite
frankly, they could have gotten in the Sunday local newspaper.
Sad to say, this is hitting home in my home State of Louisiana as
well, because one of the jurisdictions that is appearing more and more
on the list of these magnet jurisdictions is in Louisiana, Orleans
Parish, the city of New Orleans.
I have mentioned how this gaming of the system is a huge disservice
so many times to the consumers that were allegedly harmed. They get
coupons or next to nothing. In one case, they had to pay even after the
award. It is also a huge cost to business and a huge drain on the
American economy.
Small businesses are already spending, on average, $150,000 annually
on legal fees. The tort system costs U.S. small business $88 billion
per year. This is all money that could be used to hire new employees or
to improve benefits. I have long been concerned that Louisiana is
increasingly becoming a part of this trend.
I mentioned a minute ago Orleans Parish, which is clearly showing up
more and more on the list of these magnet jurisdictions. This is bad
for our Louisiana efforts at job creation. It is a serious negative for
companies looking to locate in our State.
I will quote from an amicus brief filed at the Louisiana Supreme
Court in the case of Sutton Steel and Supply, Inc., Kate Davis, and
Mestayer and Mestayer, APLC v. Bellsouth Mobility, Inc. In that brief,
they said:
In a recent poll of more than 1,400 in-house general
counsel and other senior litigators at public corporations .
. . Louisiana was ranked 46th for its treatment of class
actions, out of the 48 States that permit class action suits
in their courts.
The study they cited is the Chamber of Commerce study done in March
2004, and the amicus brief continues:
Importantly, 80 percent of the respondents--these are
businesses now, job creators--indicated that they perceive
fairness of the litigation environment in a State ``could
affect important business decisions at their company, such as
where to locate or do business'' and with good reason.
Of course, many small businesses are dragged down by what are known
as Yellow Page lawsuits. In these cases, hundreds of defendants are
named in a lawsuit, and it is their responsibility to prove they are
not culpable. In many cases, plaintiffs named defendants using vendor
lists, or even lists literally from the Yellow Pages of certain types
of businesses, be they auto supply stores, drugstores, what have you,
in a particular jurisdiction.
Imagine what this means to your State's job creation efforts when
national attention is brought to your local jurisdiction because it is
a new magnet jurisdiction--a new Madison County, IL. The only jobs that
you will be creating are legal positions for the flyby lawsuit filed by
out-of-Staters hoping for a payoff from your local industries and
companies.
I have identified the problem, gaming a broken system. We have
identified the real and negative results of that problem, hurting the
actual consumers who are supposed to be helped, and costing business
and job creation in your State, including my home State of Louisiana,
enormous amounts, including in terms of jobs not created or lost jobs.
Why is S. 5 the solution?
I believe S. 5 is a careful, reasonable, and moderate response to the
problem with our class action system. We have a bipartisan compromise
that has been in the making for 6 years: 6 years of negotiation,
careful study, and careful compromise. It deserves our support.
The House of Representatives has already passed similar class action
reform legislation more than once. I have personally supported and
worked for that, and voted for that when I served in the House.
S. 5 provides for Federal district court jurisdiction for interstate
class action, specifically those in which the aggregate amount in
controversy exceeds $5 million and any member of a plaintiff class is a
citizen of a different State from any defendant. Under the bill,
certain class actions with more than 100 plaintiffs also would be
treated as class actions and subject to Federal jurisdiction.
The bill provides exceptions for cases in which Federal jurisdiction
is not warranted. Under the so-called home State exception and the
local controversy exception, class action cases will remain in State
courts if there is significant connection to a local issue or event or
a significant number of plaintiffs are from a single State.
The bill includes consumer protections so the real little guy, the
plaintiff, the consumer who is wronged, is truly made whole. The bill's
consumer bill of rights would require, among other things, that judges
review all coupon settlements and limit attorney's fees paid in such
settlements to the value actually received by class members. It would
also require judges to carefully scrutinize net law settlements in
which the class action members end up losing money in a class action
settlement, and would prohibit settlements in which parochial judges
allow some class action members to have a larger recovery because they
simply live closer to the courthouse.
I am pleased there is bipartisan, bicameral support for a carefully
crafted, well-thought-out measure. S. 5 is long overdue.
It is also important to say what we are not doing. This bill is not
an attempt to eliminate class action lawsuits. Time and again, it has
been said by parties on all sides that class actions have a proper
place in the legal system. This bill is a modest effort to swing the
pendulum back toward common sense, making the system work as it was
intended.
This bill will not move all class actions to Federal court, only the
ones most appropriately settled there. This bill will not overload
Federal courts with class actions. They are prepared to deal with these
cases far better than State courts, many of whom are overburdened now.
We are also not delaying justice for plaintiffs. Federal courts have as
good or better records of dealing with class actions in a timely
manner.
In closing, our class action system is rife with abuses. It is gamed.
It is broken. We need to fix it. First, we need to fix it for the
consumers who are hurt by alleged abuses which are the subject of this
class action litigation. Plaintiffs leave feeling cheated because they
receive a token settlement in many cases for their efforts while
lawyers reap all of the financial benefits.
Second, the system is broken and we need to fix it so we do not hurt
legitimate business, legitimate job-creation efforts in Louisiana and
elsewhere. Right now, businesses, fearing the mere threat of legal
action, settle cases--a form of judicial blackmail. The whole economy
is dragged down and fewer jobs are created as a result.
Third, our system of federalism is undermined today because one
State's legal system, rather than the legal system of the Federal
branch of the courts, is making decisions that affect many or even all
other States. So the system is not working for anyone but the lawyers
and law firms gaming that system.
A lot of good, hard work has been put into S. 5. I compliment again
the prime sponsor, Senator Grassley, as well as the Judiciary
Committee, led by the Senator from Pennsylvania. I compliment all of
their leadership and
[[Page S1227]]
their respective staff members for their efforts. I am proud to be a
cosponsor of S. 5. I urge my colleagues to support and vote for the
Class Action Fairness Act.
I yield the floor.
The PRESIDING OFFICER. The Senator from Utah.
Mr. HATCH. Mr. President, today is going to be an important day for
the American public because the Senate will adopt legislation that
takes a significant step forward in improving our Nation's civil
justice system. I commend my colleagues on both sides of the aisle for
coming together on this very important bipartisan bill. Our work in
this body bodes well for the Senate's ability to tackle important
issues in the 109th Congress.
Let me now take a couple of minutes to address the pending amendment,
Senator Feingold's amendment, that would add a provision to S. 5
requiring Federal courts to consider remand motions in class actions
within a specified period. This amendment is based on the questionable
premise that Federal courts move too slowly and consumer claims will
stall while plaintiffs are waiting for courts to rule on jurisdictional
issues.
In fact, in many cases, Federal courts move more quickly than the
State courts. Resolving remand motions is always their first course of
business, and we are moving these cases to Federal courts.
The amendment also fails to recognize the important considerations a
judge must make as part of a remand decision. Like other amendments
that have been offered, this proposal would result in a less workable
bill, not a better one. This amendment should be rejected.
The fact is, the Federal courts do not drag their feet in dealing
with remand motions. Federal courts always consider jurisdictional
issues first, as they must, before allowing discovery or other
substantive motions. The Supreme Court has repeatedly held that
jurisdiction is a threshold matter that must be decided prior to other
substantive issues in a case. Courts take up jurisdiction as the first
course of business already. The amendment is, therefore, unnecessary.
I also want to correct the misunderstanding that Federal courts drag
their feet in dealing with class actions generally. This is not the
case. In fact, Federal courts generally move more quickly than State
courts when it comes to class actions. A recent 2004 study by the
Federal Judicial Center found that State courts are far more likely
than Federal courts to let class actions linger without ruling on class
certification. Moreover, the median time for final disposition of a
civil claim filed in Federal court throughout this country is 9.3
months; the median time to trial in a civil matter in State court is
22.5 months. Let me repeat that: 9.3 months in Federal courts versus
22.5 months in State courts for civil claims to be disposed. The dates
showing the Federal courts act more than twice as fast as State courts
come from the nonpartisan Administrative Office of the United States
Courts. There is simply no evidence that States proceed more quickly.
Thus, the alleged problem that this amendment would fix is nonexistent.
It does not exist.
Take, for example, the case cited by Senator Feingold yesterday,
Lizana v. DuPont. It did take a year to rule on the motion to remand,
but it is my understanding that the court's docket reveals at the time
the court was considering the motion, there were numerous briefings and
motions on both sides and numerous hearings to determine whether to
remand. The court was hardly sitting on its hands. If anything, this
case shows that the courts may require more than 180 days to make a
correct decision. They were moving, and moving ahead, and moving ahead
with dispatch. But it was a complicated case and it took a little
longer. It may very well take more than 180 days, and in some cases, it
certainly will.
Another case cited in support of the amendment was Gipson v. Sprint.
But when you look at the facts, the facts do not show much support for
the amendment at all. Again, it is my understanding the docket reveals
that the court was very busy on the case before the ruling on the
motion to remand was even handed down. In fact, one of the motions the
court was contending with was a motion for continuance filed by, you
guessed it, plaintiffs' counsel. This means it was the plaintiffs who
wanted the court to delay its ruling. How can anyone complain about the
time it takes for a district court not to rule on a remand motion when
there are scores of docket entries in a single year and the plaintiffs
themselves were seeking delays?
Some opposed to this amendment suggested that defendants will use
removal as a delay tactic, but Federal law already penalizes defendants
who engage in such tactics. The Federal law governing removal gives
judges discretion to make a defendant pay the plaintiff's attorney's
fees if remand is granted. In addition, rule 11 of the Federal Rules of
Civil Procedure gives Federal judges the authority to levy sanctions
for frivolous filings. Thus, the law already addresses concerns about
improvident removals.
The bottom line is that this amendment will make it unnecessarily
difficult for judges to issue fair rulings in these more complicated
cases. And class actions generally are more complicated cases. By
forcing judges to decide remand motions by a certain date, as the
Feingold amendment would do, that amendment fails to recognize that in
some cases the jurisdictional issues will be complex, requiring
discovery, substantial briefing, and hearings before the judge.
At times, courts consider several remand motions jointly in order to
conserve judicial resources, such as in multidistrict litigation, or
MDL, as it is called, and this may, in a limited number of complex
cases, result in a slightly longer time period for resolution as well.
Forcing judges to rush these issues in all cases regardless of their
complexity could result in a denial of due process in these cases where
the judge cannot fully comprehend and resolve the issue, or issues, in
the time allotted by the Feingold amendment.
The reality is that most remand motions will be decided in less time
than the amendment requires, but in some cases they will require more
time. We should not create rules of law that force judges to decide
issues without full and fair consideration. And that is exactly what
the Feingold amendment would do.
Finally, there is a reason the time limits make sense for remand
appeals and not for initial rulings on remand motions. In contrast to
district courts, which often must develop a factual record to address
remand issues, an appeals court that is asked to review a remand order
will be provided with a full record from which to reach a decision.
Often, the appeals court's decision will be based simply on a reading
of the law, and it will, thus, be less time-consuming than the district
court's decision.
Even a 180-day time limit may be too stringent in some circumstances.
Extending it to district court judges will make it more difficult for
them, in some cases, to do their jobs in a fair and efficient fashion.
So I hope our colleagues will vote down the Feingold amendment.
Frankly, it is another poison pill amendment that would probably
scuttle this bill for another year. We have already been on this bill
for 6 solid years. We have a consensus in this body to pass it. We know
if we pass it in the form that it is in, the House will take it. We
know it will become law because the President will sign it into law.
Frankly, I hope this amendment will be voted down for all of those
reasons.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The senior assistant bill clerk proceeded to call the roll.
Mr. HATCH. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Graham). Without objection, it is so
ordered.
Mr. HATCH. Mr. President, I would like to talk more generally about
the Class Action Fairness Act because it responds to a serious abuse of
the class action system that is on the rise; namely, the filing of
copycat or duplicative lawsuits in State courts.
Over the past several years, we have seen a rise in the number of
class action lawsuits filed in a few State courts known for tilting the
playing field in favor of the plaintiffs' bar; in other words,
dishonestly, basically, getting the courts to not do justice. These
courts, referred to as ``magnet courts'' for their attractive qualities
to enterprising plaintiffs' lawyers, certify class
[[Page S1228]]
actions with little regard to defendants' due process rights. They
award substantial attorneys' fees as part of class settlements, and
they approve coupon settlements to the class members that are sometimes
worth little more than the paper on which they are printed.
It has not taken the plaintiffs' lawyers long to figure out which
courts are good for their bank accounts. There was an 82-percent
increase in the number of class actions filed in Jefferson County, TX,
between the years of 1998 and 2000. During the same time span, Palm
Beach County, FL, saw a 35-percent increase. The most dramatic
increase, however, has occurred in Madison County, IL. Madison County
has seen an astonishing 5,000-percent increase in the number of class
action filings since 1998.
Let me just refer to this bar chart. It shows that the number of
class actions filed in State courts has skyrocketed under current law:
Palm Beach County, 35 percent in just 2 years or 3 years; Jefferson
County, 82 percent in the same 2 or 3 years; and Madison County, over
5,000 percent. And then this chart shows the overall increase in State
courts: 1,315-percent growth.
Now, in their effort to gain a financial windfall in class action
cases, some aggressive plaintiffs' lawyers file copycat class action
lawsuits. This tactic helps explain the dramatic increase in filings in
these magnet courts. Here is how the copycat class action strategy
works: Competing groups of plaintiffs' lawyers, and sometimes even the
same lawyers, file nearly identical class action lawsuits asserting
similar claims on behalf of essentially the same class in State courts
around the country. Some lawyers file duplicative actions in an effort
to take a potentially lucrative role in an action. Other times, these
duplicative actions are the product of forum shopping by the original
lawyers who file similar actions in different State courts around the
country, perhaps with the sole purpose of finding a friendly judge
willing to certify the class.
Because these duplicative actions are filed in State courts of
different jurisdictions, there is no way to consolidate or coordinate
these cases. As a result of the separate, redundant litigation of
copycat lawsuits, our already overburdened State courts can become
clogged with complicated class actions that potentially affect the
rights and recoveries of class members throughout the entire country.
There is not a single magnet State court in this country that has not
encountered the copycat phenomenon. For example, it is my understanding
that in Shields v. Allstate County Mutual Insurance Company, filed in
Jefferson County, TX, in the year 2000, three named plaintiffs sought
certification of a nationwide class comprised of members who were
insured by three insurance companies. At the very same time this action
was brought in Jefferson County, no fewer than nine similar actions,
representing a similarly situated class and alleging the identical
claims, were pending in Madison County, IL, against the same insurance
companies.
Another example of copycat lawsuits is Flanagan v. Bridgestone/
Firestone, filed in Palm Beach County, FL. Now, this lawsuit was but
one of the approximately 100 identical class actions filed in State
courts throughout the country in the wake of the Ford/Firestone tire
recall in the year 2000.
One of the most obvious problems with copycat lawsuits is that they
place new burdens on an already stressed State court system. Class
actions are large, complex lawsuits with potential ramifications in
jurisdictions across the country. Our State courts are courts of
general jurisdiction that deal with issues ranging from domestic
disputes to routine traffic offenses. They are simply not the best
entity to handle the growing number of these complex lawsuits being
filed across the country where multiple parties and multiple issues are
involved.
S. 5 will mitigate the growing burden on our State courts by
providing a means through which truly national class actions will be
resolved in the most appropriate forum; that is, the Federal courts.
Over the past several months, I have heard some opponents of this
bill argue that the Class Action Fairness Act will somehow result in a
delay or even a denial of justice to consumers. They have argued that
State courts resolve claims more quickly, and that removing these
actions will result in the overburdening of our Federal courts. I have
yet to see or hear a single shred of persuasive evidence to support
these claims. In fact, according to the data, a strong case in the
opposite direction can be made. According to two separate examinations
of the State and Federal court systems conducted by the Court
Statistics Project and Administrative Office of the U.S. Courts, the
average State court judge is assigned nearly three times--nearly three
times--as many cases as a Federal court judge. The increase of State
court class actions further compounds this burden and interferes with
the ability of the State court judges to provide justice to their
citizens.
In fact, the Illinois Supreme Court has repeatedly criticized its own
Madison County, IL, State court for its horrible backlog. The backlog
is the result of the local court's willingness to take on cases that
have nothing to do with Madison County, the county in which they sit.
In fact, one Madison County State court judge expressed his willingness
to take on cases that have little or no connection to Madison County,
or even Illinois, for that matter, when he stated:
I am going to expand the concept that all courts in the
United States are for all citizens of the United States. . .
.
The fact is, when cases are accepted that have nothing to do with the
State in which they are filed, it is difficult to see how justice is
served. When the cases are forced to remain in State court because some
plaintiff's lawyers have exploited the system by engineering the
composition of the class and the defendants, both the class members and
the defendants can easily be deprived of justice. In some cases, it
appears that the interests disproportionately served are those of the
class counsel who stand to receive millions in attorney's fees upon the
swift approval of a proposed settlement while their clients receive
next to nothing.
Despite claims to the contrary, S. 5 will not flood or remove all
class actions to Federal court. Instead the bill acts to decrease the
number currently falling in State court dockets. Most of the cases that
would be removed to the Federal courts under the bill are precisely the
type of cases that should be heard by such courts in the first place;
namely, large national class actions affecting citizens in and around
the country, including the very copycat lawsuits I have discussed
today.
Class actions generally have three things in common. No. 1, they
involve the most people. No. 2, they involve the most money. And No. 3,
they involve the most interstate commerce issues. Taken as a whole, the
national implications of class actions are far greater than many of the
cases filed and heard by the Federal courts today. With this in mind,
one is left to wonder how anyone could argue that these actions are not
deserving of the attention of our Federal courts.
As Chief Justice Marshall noted:
However true the fact may be, that the tribunals of the
States will administer justice as impartially as to those of
the nation, to parties of every description, it is not less
true that the Constitution itself either entertains
apprehensions on this subject, or views with such indulgence
the possible fears and apprehensions of suitors, that it has
established national tribunals for the decision of
controversies between aliens and citizens, or between
citizens of different States.
When the Framers of the Constitution created the Federal courts in
article 3 of the Constitution, they gave them jurisdiction over cases
involving large interstate disputes, cases such as class actions.
Contrary to the claims of opponents of this bill, article 3 does not
require complete diversity amongst parties to a claim.
The Class Action Fairness Act will also help protect the interests of
consumer class members from copycat lawsuits. When duplicative lawsuits
are pending in different States, a settlement or judgment in any one
case has the potential to make every other pending case moot. This
winner-takes-all scenario acts as an incentive for plaintiffs' lawyers
with multiple class actions to seek a quick settlement in the case,
even if the settlement does no more than make the lawyers involved
rich. The bona fide claims of the plaintiffs to the other class actions
are wiped out by the settlement. That is not fair, but that is what is
happening.
[[Page S1229]]
Sometimes they file multiple suits so they can force a settlement with
a simple settlement demand. And what company wouldn't pay the defense
costs to get out of this type of abusive jurisdiction of the various
courts throughout the country.
What this means is that while one injured consumer in one court of
the country recovers for their injuries, an identically injured
consumer in another part of the country may get nothing. The quick
settlement of a copycat lawsuit may essentially steal the ability for
similarly situated plaintiffs to fully or fairly recover for their
injuries, especially if the forum-shopped court is going to pull this
kind of stuff and favor certain attorneys over others and certain
clients over others rather than do what is just under the law.
Under S. 5, many of these copycat lawsuits would be removed to
Federal court and consolidated to ensure that all similarly situated
plaintiffs received the same recovery under any settlement. Unlike
State courts, Federal courts are equipped with a mechanism for
consolidating similar claims. In the Federal court system, a judge may
consolidate multiple identical lawsuits found in various jurisdictions
into one proceeding before a single Federal court known as the
multidistrict litigation panel or MDL. The MDL panel has proven to be a
valuable tool for preventing abuse, judicial waste, and disparate
outcomes in Federal courts.
Under this system, much of the time-consuming pretrial activity in
the lawsuit is heard by a single court. This serves to help protect
against the plaintiffs' lawyer from making a separate deal for some
plaintiffs that is not in the best interests of all class members. And
by the way, for those who argue that consumers are being hurt by this
bill, guess how many consumers are hurt by a collusion between
plaintiffs' counsel and a particular corporation to settle in one State
that wipes out everybody else throughout the country.
That happens. It happens because we have not solved these problems.
This bill goes a long way toward solving some of these problems.
S. 5 solves this very problem by ensuring that a plaintiff's claim is
not extinguished by the settlement of the duplicative action in another
part of the country. This bill protects consumers in areas where they
are not protected under current law.
Before I close, I want to stress that this bill does not change
substantive law. The Class Action Fairness Act does not make it any
harder or easier to file or win a lawsuit unless, of course, winning is
unjustly based upon an uneven playing field. In other words, courts who
homer the cases because they want to help certain attorneys who have
supported them for their election to those State court positions.
This bill is one that is long overdue. As Chief Justice Rehnquist
stated:
We can no longer afford the luxury of State and Federal
courts that work at cross-purposes or irrationally duplicate
one another.
This bill is a procedural bill that applies common sense to
streamline the court system. The underlying substantive law is the same
for class actions whether they are in Federal or in State court. This
bill is a balanced, modest approach to solving some of the most abusive
problems in our current civil justice system. Members on both sides of
the aisle have worked long and hard to formulate a bipartisan bill, and
we are succeeding in this bipartisan effort on behalf of the American
people.
I steadfastly support the Class Action Fairness Act and urge my
colleagues to do so as well, because it is the right thing to do. It is
the right thing to do for the legal profession and for the plaintiffs
who deserve compensation.
I have been in some pretty tough cases in my day, but I have never
seen a case I could not win if the case was the right thing to bring. I
would not bring it if it were not the right thing to bring. I loved
being in Federal court, time I could get there. I also loved being in
State court. I never wanted a judge to lean my way or the other way. I
wanted the judge to be down the middle, and if that is the case, I
thought I stood a good chance of winning the case.
We are talking about unfair advantage here in these magnet courts,
these forum-shopped areas. Madison County has become the ``poster
child'' for magnet courts. It deserves its reputation.
This is an important bill. This is a bill that makes sense. This bill
does not deprive anybody of rights. This is a bill that will resolve a
lot of these conflicts and problems, and it is a bill that I think will
help all within the legal community to live within certain legal and
moral constraints.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. HATCH. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HATCH. Mr. President, I ask unanimous consent that at 12:30, the
Senate resume debate on the Feingold amendment, and that the time be
equally divided in the usual form; provided that at 12:40, 10 minutes
later, the Senate proceed to a vote in relation to the Feingold
amendment, with no intervening action or debate and no amendments in
order to the amendment prior to the vote. I further ask consent that
following that vote, debate be equally divided between the two leaders
or their designees until the hour of 3 p.m.; provided further that the
time between 2:20 and 2:40 be equally divided between Senator Specter
and Senator Leahy; and that at 2:40, the final 20 minutes be reserved,
with the Democratic leader in control of 10 minutes, to be followed by
the majority leader for the final 10 minutes; provided further that at
3 o'clock, the Senate proceed to a vote in relation to the Durbin
amendment, with no amendment in order to the amendment prior to the
vote. I further ask unanimous consent that following that vote the bill
be read the third time and the Senate proceed to a vote on passage of
the bill, with no intervening action or debate. Finally, I ask that no
other amendments be in order other than the two above-mentioned
amendments.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
Mr. HATCH. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. GRAHAM. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Hatch). Without objection, it is so
ordered.
Mr. GRAHAM. Mr. President, in light of the unanimous consent
agreement that will bring this bill to closure, there is something I
needed to get on the record. I appreciate getting a few minutes. I
intend to vote for the bill. Everything the Senator said about the bill
is very much true. The Senator from Utah has been working as chairman
for years. The legal abuse that the Senator described is real. This
bill really brings it to an end.
I found Federal court to be a fair place to try cases. The Senator is
also right about the scope of class action lawsuits. They involve many
people from different places throughout the country. We have a good
balance in the bill of when you can be removed. Every class action is
not going to go to Federal court. If the formula is right, and if it
has enough national impact, Federal court will be the place to go
because of the abuses described.
Those of us who practiced law for a living before we got here
understand that the legal system can be reformed. I admire what the
Senator from Utah and Senators Specter and Grassley have done to bring
about reform. But we find ourselves in a unique political dynamic with
this bill. Our friends in the House say they want it like we have it.
We all agree there are amendments that could make the bill better that
we would vote for, but the political moment will not allow that to
happen. I regret not offering in committee the amendment I am going to
speak about. I learned from my mistakes there.
One of the things we have done by federalizing certain class action
lawsuits is we have taken the abuse out of the system, and we have gone
to Federal court to have a more fair way of
[[Page S1230]]
doing business when the formula is right and when there is a national
impact to stop home cooking.
The reason the diversity clause exists to begin with is that when you
have two people from different States, you want to pick a neutral
sight. You do not want to do home cooking. Really, the whole goal of
this bill is to get it in a neutral site where people can have their
fair day in court. I certainly appreciate that.
But there is another component to class actions that is missing in
this bill. Class actions, by their very nature, as Senator Hatch
described, involve a lot of people from different places and usually a
lot is at stake. Sometimes it is money. Sometimes it is a business
practice that does not have a lot of economic effect on one person, but
when you add up the economic effect, it is bad for the country. People
are cheating. People are nickel and diming folks, getting rich at the
expense of the elderly or the infirm, by taking a few dollars here, and
it adds up to be a very bad situation for the country. Those type cases
lend themselves to class action.
There is another group of cases that could lend themselves to class
action, too. That is when products are not designed right. They are
consumer cases where consumers throughout the country are affected by
the particular behavior in question.
Most States have a procedure, when such cases exist affecting the
public at large, where the judge is able to determine what is fair in
terms of sealing documents relating to settlements. I had an amendment
that was modeled after a South Carolina statute--and over 20 States
have a similar statute--that says in cases where the public's interest
is present, where there is a consumer case that affects the health or
well-being of the community at large, settlements can be sealed,
documents can be made secret to protect business interests, but only if
the judge determines that the public interest is also being met.
The amendment I proposed would have received well over 50 votes in
this body, and I think Senator Hatch would have been friendly to it.
But I understand the effect it would have on the bill.
The current chairman, Senator Specter, and I will have a colloquy for
the record. This is the point of my seeking recognition.
This bill will leave the Senate and go to the House in a way to solve
abuse, but I think it is lacking in consumer protections. The reason I
am speaking today is this colloquy for the record with Senator Specter
recognizes the value of this amendment and a commitment on his part and
the committee's part to allow this amendment to move forward at another
date, another time, in another place.
The reason I am agreeing to that is enough of my colleagues who are
sympathetic to the amendment do not want to vote for anything that
would derail the bill. I very much appreciate that because that is the
way politics is, and there is nothing wrong with that as long as we do
not lose sight of the goal. And the goal is to have a balance, to take
care of abuses, but at the same time protect the public when the public
needs to be protected.
What I am trying to say is I will not put my colleagues in a bad spot
of having to vote down an amendment with which they agree because I do
not have 50 votes. I am mature enough to know when you can win and when
you cannot. Sometimes it is OK to lose. Losing is not bad as long as
you feel good about what you are doing.
I do not want to offer the amendment, have colleagues vote against
it, and create problems unnecessarily, but I do want my colleagues to
know--and this colloquy will express this--that this bill needs to be
amended and this problem needs to be addressed. We need to have a
provision that is married up with the bill that is about to leave the
Senate and go to the House that will allow a judge, upon motion of the
parties, to determine in a situation where there is a request to keep
the settlement secret and seal the documents from public review, to
have a judge to determine what documents should be sealed in secret and
what documents should be released to the public, balancing the needs of
business and the right of the public to know what they should know
about their health and their safety.
There were class action cases with the sunshine statute, about which
I am talking, in effect. Without that statute, deadly lighters,
exploding tires, defective drugs, toxic chemicals, and faulty
automobile designs would not have been known if it were not for a
procedure for the judge to release certain documents because the
request was: We will give you money, but you cannot tell anybody about
the underlying problem.
Sometimes that is very much unfair. I have case after case of
sunshine statutes allowing the judge to determine what was in the
public interest, to inform the public of deadly events, and peoples
lives were saved and their health was protected.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. GRAHAM. I ask unanimous consent for 2 more minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
protective orders
Mr. GRAHAM. Mr. President, I appreciate Chairman Specter taking the
time to join me in discussing a concern I have regarding S. 5, the
class action bill. I am still prepared to seek a vote on my amendment,
but based on my conversations with a number of senators this week,
including Chairman Specter, and in a desire to see this bill pass as
soon as possible, I have decided not to offer my amendment.
I agreed to support this bill some time ago because I believe we are
long overdue for reform in the class action area. Over the last few
years, I have worked to support this bill in both the Judiciary
Committee and on the senate floor.
While I have fully supported this reform, I have also noticed some
areas where the bill could be improved. I had hoped to offer an
amendment on the floor regarding protective orders during discovery. I
am confident that the amendment that I had hoped to introduce with
Senator Prior of Arkansas would have made a significant improvement in
the area of class action discovery.
Our amendment is very simple. It is based on the local rule in South
Carolina Federal Courts for obtaining protective orders for documents.
All it says is, if you want a protective order, you must make a motion
at the beginning of trial, explain why it is necessary for the court to
seal your documents, and provide public notice of the motion and a
description of the documents. that's it.
At least 20 states have taken action to limit secrecy agreements.
This type of scrutiny should be extended throughout the nation,
especially where we are removing parties from the protections afforded
them by their States.
And let me be clear. This is not an onerous burden to place on those
seeking protective orders. It is not that far a departure from the
current discovery rules. We could have gone a lot further; with higher
standards, a presumption against sealing, and other controversial
discovery reforms. However, we are not seeking to tilt the playing
field to one side or the other, just make sure some reasonable, well-
thought out ground rules are applied to everyone.
My amendment creates a presumption of openness--it would require the
parties in class action lawsuits to justify their requests for secrecy,
followed by a medical review of the information they want the court to
keep under seal.
They would have to identify the documents or information they want
sealed--and most importantly the reasons why it's necessary to keep
them secret.
They also would have to explain why a protective order approach is
necessary and justify the request based on controlling case law.
The public would be notified of the information that was being put
under seal--and a descriptive non-confidential index of the secret
documents would be provided.
In the end, however, it is still up to the judge's discretion, albeit
with a slightly higher standard than currently exist under the Federal
rules of civil procedure.
I am doing this because I am convinced Federal Judges will come down
on the side of consumer protection where it's in the public interest
and come down on the side of secrecy where merited. In short, while the
burden here is on any party that wants to keep
[[Page S1231]]
something secret, it is not an onerous task, nor impossible.
Valid trade secrets and proprietary information--sensitive
information that goes to the heart of a company being able to compete
in the market place should and will be protected. There must be
safeguards for businesses--they have a right to protect valid trade
secrets--patents and other proprietary information. But this isn't
something that can just go on automatic pilot--there has to be some
judicial review and I am confident the procedures protect all the
parties in a class action lawsuit.
So again, we have merely tried to find a way to balance the
legitimate interests of companies, who we want to remain strong
competitors in the marketplace, with the public's interest in
disclosing potentially harmful products or practices.
Our amendment strikes the right balance because it raises the bar
only slightly for companies to justify why they need to impose secrecy,
using our courts to do so, but does not force them to open up their
companies to every passerby simply because they are defending a
lawsuit.
Now there are critics who warn that an amendment like this is going
to create a number of problems in the judicial system, making discovery
more difficult and deterring settlements.
I do not agree. Take a look at Florida, which has one of the most
stringent sunshine laws. I don't think anyone can tell you Florida is a
magnet for class actions. In fact, the most recent studies in the 20
States that have sunshine laws show that limiting court secrecy has not
led to more litigation or curtailed the number of case that are
settled.
In fact I do not believe there is any evidence that supports the
proposition that more cases will go to trial and fewer settlements will
be reached if some procedural safeguards are put in place.
Also, you have to remember that our amendment only applied to court-
ordered secrecy. Parties would still have been free to privately agree
upon secrecy between them.
In closing Mr. President, I must say I have been a bit taken aback by
all the turmoil this amendment has caused. I am pretty sure we can all
agree that ours was a fairly benign procedural amendment, one that
serves both the public and those before our courts.
Toward that end, I very much appreciate the understanding I and
Senator Pryor have been able to reach with Chairman Specter regarding
the substance of our amendment. The chairman has graciously agreed to
assist us with this amendment in the Judiciary Committee. I thank the
chairman and look forward to working with him to address this issue in
the near future.
Mr. SPECTER. I appreciate Senator Graham's willingness to help us
move forward on this bill. He and I have agreed that, due to the
procedural posture of this particular bill, we should address the
substance of his amendment in committee in the future.
Mr. GRAHAM. I thank my chairman for his future assistance.
Mr. President, I say to my colleagues that they will have done a good
thing by passing this bill. They will do a very good thing if we can
take up this amendment at another time to make this bill more balanced
because the abuses as described by Senator Hatch are real. My
colleagues have worked a long time to bring about this date. They
should be proud of it.
There is a way to make this bill better, and if we do not address
this problem, I predict something is going to happen out there without
a sunshine amendment. There is going to be a class action case
involving consumer interests, and if there is no procedure for the
judge to balance the public interests against business interests, we
are going to shield the public from something they should know. There
is no reason we cannot do both: Stop the legal abuse and help
consumers. It is my pledge and my promise to work with everybody in
this body to make that happen.
I yield the floor and thank the Senate for its indulgence.
The PRESIDING OFFICER. The Senator from Iowa. Without objection, the
Senator is recognized on the minority time.
amendment no. 12
Mr. GRASSLEY. Mr. President, I rise in opposition to Senator
Feingold's amendment which would add a provision to the bill requiring
the Federal courts to consider remand motions in class actions within a
set timetable. This amendment needs to be rejected because it is
unnecessary.
There is not any evidence that the Federal courts are particularly
slow in dealing with class actions, or specifically that they are slow
relative to remand motions. In fact, there is evidence that the Federal
courts move more quickly than State courts in considering these motions
because they always consider jurisdictional issues first. Senator
Feingold cites three examples of delay to support his amendment, but I
do not think that is enough to start placing strict time limits on
court procedure. I think that Senator Feingold is in search of a
problem that does not really exist.
Also, the amendment could make it hard for judges to issue fair
rulings in complicated class action cases because judges would be
forced to make rushed decisions. This deadline may be too stringent and
inflexible to deal with complex cases, where sometimes several remand
motions are considered jointly in order to conserve judicial resources.
These motions may require hearings, and the timeframe provided in
Senator Feingold's amendment may not be enough time for a court to
schedule a hearing and consider all the evidence.
I also understand that Federal judges who have learned of this
possible time limitation on deciding these kinds of motions are
concerned that it would place an unreasonable restriction on their
ability to fairly decide cases. The Judicial Conference sent a letter
opposing a previous iteration of Senator Feingold's amendment that was
more stringent that the current language. However, this amendment still
puts significant time constraints on Federal judges that could prove to
be too stringent.
So there just is not any evidence that there is a problem with remand
motions in class action cases that requires this time limitation that
Senator Feingold is proposing. This is just an attempt to weaken the
bill. So I urge my colleagues to reject this amendment.
The PRESIDING OFFICER (Mr. Graham of South Carolina). The Senator
from Wisconsin.
Mr. FEINGOLD. Mr. President, I ask unanimous consent that I have
restored the full 5 minutes I was originally given.
The PRESIDING OFFICER. The Senator has 3 seconds remaining.
Mr. FEINGOLD. I ask unanimous consent to have the 5 minutes restored.
I would appreciate that, because the chairman who is handling this bill
on the floor asked me to stay in committee and finish the bankruptcy
hearing. I feel justified in asking for my time to be restored.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. FEINGOLD. Mr. President, everyone understands that this bill will
allow many more class actions to be removed from State to Federal
court, but as the supporters have been proclaiming all week long, there
are still class actions that belong in State court, even under this
bill. Unfortunately, that may not stop defendants from removing cases
that should still be in State court.
When a notice of removal is filed, the case is removed to Federal
court. There is no proceeding in the State court to make sure the
removal is proper. It is up to the Federal court to decide that
question, but only if the plaintiffs file a motion to remand to return
the case back to the State court.
The amendment I have offered is designed simply to make sure that
this process of removal and remand does not become a tool for delaying
cases that actually belong in State court. It requires a district court
to take a look at a motion to remand within 60 days of filing and then
do one of two things: Decide it, which I hope will be possible in
almost all cases, or issue an order stating why a decision is not yet
possible. If the court issues that order, it must then reach a decision
within 180 days of filing. The parties can agree on an extension of any
length.
I want to make this clear because I heard Senator Grassley responding
to my original argument when I came on the floor. The amendment before
us actually gives the court a great deal of flexibility. It will also
assure that a
[[Page S1232]]
motion to remand does not languish for months, or even years, before a
court reviews it and says, oops, this case really should be back in
State court.
As I noted last night, we have many examples of remand motions
sitting unresolved for a year and then the case goes back to State
court.
As the Senator from Iowa pointed out, the Judicial Conference did
oppose my amendment in committee that had a strict limit of 60 days,
but what I have done to try to accommodate this concern, which I
believe moves in their direction, is tripled that limit in the pending
amendment. I think that is eminently reasonable, as the Senator from
Delaware, a strong supporter of this bill, acknowledged last night on
this floor.
The bill itself provides that appeals of remand motions must be
decided within 60 days. So why would there be any substantive argument
against having a similar limitation at the district court level?
I heard the Senator from Utah suggesting that somehow my amendment
denies due process, but I suggest that 180 days is enough time to
handle any remand motion. That is time for discovery and for an
evidentiary hearing. The problem is that without a deadline, the motion
can sit there for a year or longer without any action.
What I am hearing from some of my colleagues who support the bill and
recognize that what I am trying to do is reasonable is that they cannot
upset the delicate agreement that has been reached with the House. On
this one, I cannot accept that. It makes no sense to me that Senators
would give up their independent judgment because of a fear of the
leadership of the other body. Does anyone think, after everything this
bill has been through, that the House leadership is going to refuse to
pass this bill if my very reasonable amendment, simply making sure that
motions to remand are decided on time, is included? Are they going to
further delay this bill for this? I do not think so.
This amendment does not blow the bill up. It is not a poison pill.
Everyone I have talked to says this amendment basically makes sense. So
I implore my colleagues to exercise their own good judgment, accept
this amendment, and persuade their colleagues on the House side and the
business community, which several of my colleagues have told me
privately, that this amendment makes sense.
It does not harm the bill. In fact, it makes the bill better because
it means all the cases we agree on should remain in State court will
actually proceed in State court without delay.
I thank the Chair for according me this additional time. I yield the
floor, and I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The question is on agreeing to amendment No. 12.
The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. McCONNELL. The following Senators were necessarily absent: The
Senator from New Hampshire (Mr. Sununu) and the Senator from Indiana
(Mr. Lugar).
The PRESIDING OFFICER (Mr. Martinez). Are there any other Senators in
the Chamber desiring to vote?
The result was announced--yeas 37, nays 61, as follows:
[Rollcall Vote No. 8 Leg.]
YEAS--37
Akaka
Baucus
Biden
Bingaman
Boxer
Byrd
Carper
Clinton
Conrad
Corzine
Dayton
Dorgan
Durbin
Feingold
Feinstein
Harkin
Inouye
Jeffords
Johnson
Kennedy
Kerry
Lautenberg
Leahy
Levin
Lincoln
Mikulski
Murray
Nelson (FL)
Obama
Pryor
Reed
Reid
Rockefeller
Salazar
Sarbanes
Stabenow
Wyden
NAYS--61
Alexander
Allard
Allen
Bayh
Bennett
Bond
Brownback
Bunning
Burns
Burr
Cantwell
Chafee
Chambliss
Coburn
Cochran
Coleman
Collins
Cornyn
Craig
Crapo
DeMint
DeWine
Dodd
Dole
Domenici
Ensign
Enzi
Frist
Graham
Grassley
Gregg
Hagel
Hatch
Hutchison
Inhofe
Isakson
Kohl
Kyl
Landrieu
Lieberman
Lott
Martinez
McCain
McConnell
Murkowski
Nelson (NE)
Roberts
Santorum
Schumer
Sessions
Shelby
Smith
Snowe
Specter
Stevens
Talent
Thomas
Thune
Vitter
Voinovich
Warner
NOT VOTING--2
Lugar
Sununu
The amendment (No. 12) was rejected.
Mr. GRASSLEY. I move to reconsider the vote, and I move to lay that
motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. Under the previous order, the time until 2:20
p.m. is equally divided between the leaders or their designees. Who
yields time?
The Senator from Delaware.
Mr. CARPER. Mr. President, in an hour or two or three, we will have
the opportunity to vote final passage on class action reform
legislation.
The goals of this legislation are fourfold: One is to make sure when
people--I say ``little'' people--are harmed by companies, big or small
companies, that the little people have the opportunity to band together
and be made whole and compensated for harm. The second goal is to make
sure the companies know that if they shortchange their customers or
others in our country, there will be a price to pay if they get caught.
The third goal is to make sure when companies are called on the carpet
and are involved in class action litigation, they are in a court, in a
courthouse, with a judge, where the companies have a fair shake and the
deck is not stacked against them. Finally, our goal is to make sure
that, in shifting some class action litigation of a national scope with
hundreds of or thousands of plaintiffs across the Nation, multimillions
of dollars involved and defendants scattered across the country in
different States than the plaintiffs, to make sure we move some class
action litigation to Federal courts, we do not overburden the already
busy Federal judiciary.
I take a moment or two today to go through and cite examples--not all
of them; this is not an exhaustive list--but some of the examples we
have sought to make sure in many instances that the majority of class
action litigation remains in State court where it belongs.
Let me cite a couple of examples where this bill has been modified
over the years to enable a majority of class action litigation cases to
stay in State courts. For example, these are cases where the litigation
will remain in State courts: No. 1, cases against State and State
officials will remain in state court. Smaller cases will remain in
State court. Cases where there are fewer than 100 plaintiffs or in
which less than $5 million is at stake, those cases are not eligible
for removal from State to Federal court. Cases in which two-thirds or
more of the plaintiffs are from the same State as the defendant will
remain in State court. Cases in which between one-third and two-thirds
of the plaintiffs are from the same State as the defendant may well
remain in State court. It is left to the discretion of the Federal
judge to decide whether it is Federal or State based on the criteria
laid out in the bill.
Similarly, cases involving a local incident or controversy, where the
people involved are local, where at least one of the significant
defendants involved in the litigation is within the same State, in
those instances as well, the cases can and probably should remain in
State courts.
That is a handful of the examples where we make sure a lot of the
class action litigation remains in State courts where it belongs.
If you go back, the first bill introduced on class action litigation
goes back about 7 years, I think, to 1997. That initial bill, along
with a number of bills that were introduced in subsequent Congresses,
was opposed by the Federal bench. There is an arm of the Federal
judiciary called the Judicial Conference of the United States. They
have a couple different committees, and from time to time they are
asked, and they respond with their opinion, about whether certain
legislation is needed, is appropriate, as it pertains to them and the
work they are doing.
The initial legislation proposed, I think, in 1997, 1998, was opposed
by the Federal judiciary through their Judicial Conference of the
United States. In the next Congress, again, the Federal
[[Page S1233]]
judiciary opposed that legislation. As the legislation has evolved, we
have gone back to ask the Federal judiciary: What do you think? We know
you were opposed to original versions of this bill in the late 1990s.
How about this latest revision? They continued to oppose subsequent
versions of the class action reform until the last Congress.
The Federal judiciary has the same concerns a lot of us have, the
wholesale shifting of class action cases from the State courts to the
Federal courts. Federal judges are busy, and they do not want to see an
avalanche of litigation coming to them. With the adoption of a number
of provisions in this legislation that comes to us today, the Judicial
Conference wrote to the Senate in 2003 that, particularly given the
changes Senator Feinstein proposed, their concerns about the wholesale
shifting of State class action litigation to the Federal courts, for
the most part, had been met and been satisfied.
They are not taking a position, saying the Senate should vote for
this legislation. That is not what they are about. But the concerns
they had expressed earlier, year after year after year, have been
addressed.
Mr. President, I ask unanimous consent to have printed in the Record
a letter from the Judicial Conference of the United States, dated April
25, 2003.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Judicial Conference
of the United States,
Washington, DC, April 25, 2003.
Hon. Patrick J. Leahy,
Ranking Member, Committee on the Judiciary,
U.S. Senate, Washington, DC.
Dear Senator Leahy: Thank you for your letters of April 9,
2003, and April 11, 2003. In those letters, you requested
that the Judicial Conference provide the Senate Judiciary
Committee with legislative language implementing the Judicial
Conference's March 2003 recommendations on class-action
litigation and the views of the Conference on S. 274, the
``Class Action Fairness Act of 2003,'' as reported by the
Senate Judiciary Committee on April 11, 2003.
As you know, at its March 18, 2003, session, the Judicial
Conference adopted the following resolution:
That the Judicial Conference recognize that the use of
minimal diversity of citizenship may be appropriate to the
maintenance of significant multi-state class action
litigation in the federal courts, while continuing to oppose
class action legislation that contains jurisdictional
provisions that are similar to those in the bills introduced
in the 106th and 107th Congresses. If Congress determines
that certain class actions should be brought within the
original and removal jurisdiction of the federal courts on
the basis of minimal diversity of citizenship and an
aggregation of claims, Congress should be encouraged to
include sufficient limitations and threshold requirements so
that the federal courts are not unduly burdened and states'
jurisdiction over in-state class actions is left undisturbed,
such as by employing provisions to raise the jurisdictional
threshold and to fashion exceptions to such jurisdiction that
would preserve a role for the state courts in the handling of
in-state class actions. Such exceptions for in-state class
actions may appropriately include such factors as whether
substantially all members of the class are citizens of a
single state, the relationship of the defendants to the forum
state, or whether the claims arise from death, personal
injury, or physical property damage within the state.
Further, the Conference should continue to explore additional
approaches to the consolidation and coordination of
overlapping or duplicative class actions that do not unduly
intrude or state courts or burden federal courts.
S. 274, as reported by the Senate Judiciary Committee,
generally provides for federal jurisdiction of a class action
based on minimal diversity of citizenship if the matter in
controversy exceeds the sum of $5 million, exclusive of
interest and costs. (S. 274 as introduced established a $2
million minimum amount in controversy.) The bill also now
permits a federal district court, in the interests of
justice, to decline to exercise jurisdiction over a class
action in which greater than one-third but less than two-
thirds of the members of all proposed plaintiff classes in
the aggregate and the primary defendants are citizens of the
state in which the action was originally filed. The court
would be required to consider five specified factors when
exercising this discretion. (This discretionary provision was
not included in the bill as introduced.)
In addition, S. 274 as reported provides that the federal
district courts shall not have original jurisdiction over any
class action in which: (A) two-thirds or more of the members
of all proposed plaintiff classes in the aggregate and the
primary defendants are citizens of the state in which the
action was originally filed; (B) the primary defendants are
states, state officials, or other governmental entities
against whom the district court may be foreclosed from
ordering relief; or (C) the number of members of all proposed
plaintiff classes in the aggregate is less than one hundred.
As introduced, the second and third exceptions were the same,
but the first one originally precluded federal jurisdiction
where ``the substantial majority of the members of the
proposed plaintiff class and the primary defendants are
citizens of the State in which the action was originally
filed'' and ``the claims asserted therein will be governed
primarily by the laws of that state. The replacement language
in essence substitutes a numerical ratio for ``substantial
majority'' and eliminates the choice-of-law requirement.
We are grateful that Congress is working to resolve the
serious problems generated by overlapping and competing class
actions. The Judicial Conference ``recognizes that the use of
minimal diversity of citizenship may be appropriate to the
maintenance of significant multi-state class action
litigation in the federal courts.'' At the same time, the
Judicial Conference does not support the removal of all state
law class actions into federal court. Appropriate legislation
should ``include sufficient limitations and threshold
requirements so that federal courts are not unduly burdened
and states' jurisdiction over in-state class actions is left
undisturbed.'' Finding the right balance between these
objectives and articulating that balance in legislative
language implicate important policy choices.
Any minimal-diversity bill will result in certain cases
being litigated in federal court that would not previously
have been subject to federal jurisdiction. The effects of
this transfer should be assessed in determining the
appropriateness of various limitations on the availability of
minimal diversity jurisdiction.
Certain kinds of cases would seem to be inherently ``state-
court'' cases--cases in which a particular state's interest
in the litigation is so substantial that federal court
jurisdiction ought not be available. At the same time,
significant multi-state class actions would seem to be
appropriate candidates for removal to federal court.
The Judicial Conference's resolution deliberately avoided
specific legislative language, out of deference to Congress's
judgment and the political process. These issues implicate
fundamental interests and relationships that are political in
nature and are peculiarly within Congress's province.
Notwithstanding this general view, we can, however, confirm
that the Conference has no objection to proposals: (1) to
increase the threshold jurisdictional amount in controversy
for federal minimal diversity jurisdiction; (2) to increase
the number of all proposed plaintiff class members required
for maintenance of a federal minimal-diversity class action;
and (3) to confer upon the assigned district judge the
discretion to decline to exercise jurisdiction over a
minimal-diversity federal class action if whatever criteria
imposed by the statute are satisfied. Finally, the Conference
continues to encourage Congress to ensure that any
legislation that is crafted does not ``unduly intrude on
state courts or burden federal courts.''
We thank you for your efforts in this most complex area of
jurisdiction and public policy.
Sincerely,
Leonidas Ralph Mercham,
Secretary.
Mr. CARPER. We are going to vote on final passage in an hour or two.
I think Senator Durbin is going to come to the floor. He may ask for a
vote on his amendment. I am not sure he will. He cares deeply,
passionately about these issues and has sought to try to make sure that
we end up not making bad, unwise public policy decisions. My guess is,
he is not going to come to the floor and urge us to vote for the bill
or say he is going to vote for it. I know he has serious misgivings
about this legislation. But he has worked constructively, as have
people on our side and the Republican side, to get us to this point in
time.
Senator Reid of Nevada is our new leader on the Democratic side. He
is not on the floor, but I express to him and my colleagues, if he is
listening, my heartfelt thanks for working with the Republican
leadership and those on our side who support this legislation, to
enable us to have this opportunity to debate it fairly and openly,
allowing people who like it, people who do not like it, those who
wanted to offer amendments, those who did not want to offer amendments,
to have a chance for the regular order to take place, to debate the
issues and vote, and then to move on.
I do not know if this legislation, the way we have taken it up and
debated it, can serve as a template or example to use in addressing
other difficult issues--energy policy, asbestos litigation, a variety
of other issues--but it might. Because in this case, Democratic and
Republican leaders have worked together, have urged us, the rank and
file in the Senate, to work together.
Each of the folks in the private sector--people who have an interest
in this bill, not only the business side, but the plaintiffs' lawyers
side, and other
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interested parties, labor, and so forth, consumer groups--I think
everybody has acted in good faith to get us to this point in time.
Whether you like the bill, I urge my Democratic colleagues, if you
are on the edge and not sure which way to go--you may have voted for
all these amendments, and you are not sure how to vote on final passage
of the bill--I urge you to vote for this bill.
I do not know if it is possible to have a big margin. I would love to
have 70 votes, 75 votes for this bill. I hope we can do that.
Let me close, if I can, by saying, whether you are for the bill or
against it, for the amendments or against them, I hope there is one
thing we can all agree upon. I will bring to mind the words of one of
our colleagues, a legendary trial lawyer from Illinois, who has gone on
to be elected and serves with us in the Senate. I will close my
comments with his admonition. That admonition is the old Latin phrase:
semper ubi sub ubi. Whether you like the bill, I think we can all agree
on that admonition today.
With that having been said, I yield back my time and suggest the
absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. CARPER. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. CARPER. Mr. President, I ask unanimous consent that again we go
into a quorum call, but that the time be equally divided.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. CARPER. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. SESSIONS. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Alexander). Without objection, it is so
ordered.
Mr. SESSIONS. Mr. President, this week's debate is the culmination of
more than 6 years of work in the Senate on a very important piece of
legislation, reform that is needed in the U.S. legal system--class
action reform.
I practiced law for most of my adult life and have litigated in a
number of different forums. I believe in our legal system. It is
critical for America's economic vitality and our liberty to have a good
legal system. There is no doubt in my mind that the strength of this
American democracy, the power of our economy, and our ability to
maintain freedom and progress are directly dependent on our commitment
to the rule of law and a superb legal system, and we can make it
better.
To keep our system strong, we in this Congress have to meet our
responsibility to pass laws that improve litigation in America. Our
court system must produce effective results that further our national
policy, correct wrongs, punish wrongdoers, and generate compensation
for those who suffer losses in a fair and objective way. We, therefore,
as a Congress must periodically review what is happening in our courts
and make adjustments if they are needed. That is what we are here for.
This class action fairness bill, S. 5, seeks to make the adjustments
we currently need, in my opinion. It will guarantee that the plaintiffs
in a class action, the people who have been actually harmed and have a
right to be compensated, are the actual beneficiaries of the class
action and not just their attorneys and not sometimes the defendants
who benefit by being able to get rid of a bunch of potential litigation
by settleing the case and paying less to the plaintiffs than the case
is really worth.
The Class Action Fairness Act will not move ``all class actions'' to
Federal Court or ``shut the doors to the courthouse'' as some have
claimed--rather it will provide fairness for the class action parties
by allowing a class action to be removed from a State court where it
has been filed to a Federal court when the aggregate amount in question
exceeds $5 million and the home State plaintiffs make up two-thirds or
less of the plaintiff class.
The Act contains a bill of rights for class action plaintiffs to
ensure that coupon settlements or net loss awards receive special
scrutiny. We have had some real problems with those. The stories are
painful to recite by those of us who believe in a good legal system.
Furthermore, the Class Action Fairness Act will provide notice to
public officials of proposed settlements--I was an attorney general,
and I know that notice is given to the proper official in a State so
that public officials can react if the settlement appears to be unfair
to some or all of the class members.
The Class Action Fairness Act has been through the proper charnels in
the Senate. The Act has been through the Judiciary Committee not just
once but twice. The bill originally passed out of the Judiciary
Committee by a 12 to 7 vote over a year ago in June of 2003. It was a
bipartisan vote. Since then, it has gone through two substantive
negotiations, each bringing on more Senators to support the bill. Just
last week, we again passed a bill out of the Judiciary Committee, this
time with an even stronger vote of 13 to 5. Today, we expect that more
than 70 Senators will support it. The bill is a responsible, restrained
bill that will curb class action abuses and further productive class
action litigation.
The concept of class actions is a good one. Class actions can be
extraordinarily effective tools in helping us deal with legal problems
confronting America. Sometimes error or negligence is committed by more
than one defendant which harms multiple litigants. In such cases, the
number of cases filed can quickly become unmanageable if separate
individual lawsuits are required by each person who suffered the harm.
One hundred thousand individual lawsuits would not be appropriate when
one case could settle the issue for all involved.
Anyone looking closely at our legal system today knows that we have a
number of problems to address. One of the main problems is how much the
system costs the average American. Americans pay these costs primarily
through increased insurance premiums. They also pay it in increased
costs for our judiciary.
The 2004 Tillinghast study on the cost of U.S. tort systems found
that the U.S. tort system--a tort is a lawsuit or an act that has
wronged or injured someone--cost $246 billion in 2003. That is $845 per
person. That is a significant number. It is worthy of repeating. The
tort system cost $246 billion at an average cost per American citizen
of $845. That is an average of $70 a month out of somebody's
livelihood. Now, $246 billion is equivalent to 2 percent of GDP, gross
domestic product. That is a stunning number. By 2006, the study
estimates that the U.S. tort system will cost over $1,000 per person.
Most Americans would be surprised to know that the 2003 version of
the Tillinghast study found that the U.S. tort system returned less
than 50 cents on the dollar to the people it is designed to help--the
plaintiffs--and only 22 cents on the dollar to compensate for actual
economic loss. Who, then, would appear to be making the money out of
our current tort system? An earlier Tillinghast study reported that the
income of litigation attorneys, trial lawyers, in 2001 was $39 billion.
That same year Microsoft made only $26 billion, and Coca-Cola, $17
billion.
As a Washington Post editorial has noted: No portion of the American
civil justice system is more of a mess than the world of class action.
There are a number of problems with the class action system currently
making up the mess The Washington Post referred to.
The number of class actions pending in State courts, many of them
nationwide, increased 1,042 percent from 1988 to 1998, while the number
pending in Federal courts increased only 338 percent during that same
period.
State courts are being overwhelmed by class actions. A number of
State courts lack the necessary resources to supervise the class or the
proposed settlements affected. Many State judges do not have even one
law clerk, and most of the class actions involve citizens from a number
of different States, requiring the application of multiple State laws.
Some times a state court dockets becomes jammed while the judge
researches out-of-State law to get up to speed.
[[Page S1235]]
Some say it is a burden on the Federal courts, but Federal judges
have on their docket a fraction of the cases of most State court judges
in America. Some cases are complex, but that is the nature of Federal
court cases for the most part. They have at least two law clerks. The
occupant of the chair, Senator Alexander, clerked for Federal judges.
District court judges all have at least two clerks, and appellate
Federal judges have three or more. Some of them have their clerical
support become on staff lawyers and then they really end up with three
clerks. At any rate, they have a greater ability to give the time and
attention to a major interstate class action involving over $5 million
and maybe thousands of plaintiffs than an average circuit judge in a
State court system in America. I do not think that can be disputed.
The class action settlement process is problematic because many of
the class members have no part in shaping the settlement agreement. In
fact, many of the members of the class have no knowledge they have even
been involved in a lawsuit or one has been filed on their behalf,
leading to an abuse of the settlement process. In this scenario,
plaintiffs' attorneys can find themselves in a position where their
loyalty is not to these class members. It creates an unhealthy
situation. For example, a plaintiffs' lawyer does not know the 1,000 or
10,000 members of his class. He is talking regularly with the
defendant's company, and they say: Let us settle this case.
The plaintiffs' lawyer says: We would like to settle this case.
They say: What will it take?
He says: The plaintiffs want $50 million to settle it.
They say: Well, that is too much. Look, why do we not give you
$10,000 in coupons for all of your victims and we will give you $10
million or $20 million in legal fees?
Now, most lawyers handle themselves well, but that plaintiffs lawyer
now finds themselves in an ethical dilemma. His oath as a lawyer says
that he or she should defend the interests of the client, get the most
money for their client, but the defendant is dangling out a personally
large fee in exchange for a settlement to end the litigation. We have
had that happen, frankly, and we have seen that too often. Too often,
the attorneys are the ones who received the big fees, and the named
plaintiffs, the victims, have gotten very little. It is appropriate,
then, that we in this Congress examine this difficulty in our legal
system and tighten it up so we have less of that occur.
Many class actions appear to be filed solely for the purpose of
forcing a settlement, not the protection of an interest of a class, and
that has been referred to in debate frequently as ``judicial
blackmail.'' Rather than losing a public relations battle, going
through court for several years, the defendants often feel they have to
settle these cases even if they are frivolous so they do not risk the
cost of litigation and the embarrassment and difficulty of explaining
some complex transaction.
There are several other problems. One is forum shopping, and another
is settlements detrimental for class members.
Forum shopping occurs when the attorney sets out to try to find the
best place to file the class action lawsuit. You could have a case
involving an attorney from New York with California plaintiffs filing a
class action lawsuit in Mobile, AL. Where can national class action
lawsuits be filed today? Amazingly, the answer is in almost any venue,
any court, county, circuit court in America. A plaintiff can search
this country all over and select the single most favorable venue in
America for filing their lawsuit--that is, if it is a broad-based class
action that covers victims in every state and county in America, and
some of them do. Some may just cover a region or half the counties in
America or involve 10 percent of the States. At any rate, they are able
to search within that area for the most favorable venue.
I believe that is not healthy. A report issued this year by the
American Tort Reform Association about the abuse of this choice named
the various counties around the country as ``judicial hellholes.'' The
study pointed to the large number of frivolous class actions found in
counties it named, citing judicial cultures that ignore basic due
process and legal protections and efforts by the county's judges to
intimidate proponents of tort reform.
By bringing their suits in one of these areas, plaintiffs' attorneys
can defeat diversity by naming a single defendant and a single
plaintiff who have citizenship in the same State, thus preventing a
Federal court from hearing the case and allowing a State court in a
single county to bind people all over the country under that one State
or county's laws.
Let me read what the Constitution says about diversity:
The judicial Power of the United States shall extend to all
Cases, in law and equity, arising under this Constitution,
the Laws of the United States . . . to Controversies which
the United States shall be a party;--Controversies between
two or more States, between a State and a Citizen of another
State;--between Citizens of different States. . . .
Our Founding Fathers thought about this issue, and they concluded
that, if a person from Alabama wanted to sue a person from Illinois,
the person in Illinois might not be comfortable being sued in an
Alabama state court. They might think that might not be a favorable
forum. There might be ``home cooking'' for the Alabama citizen there.
So they said those cases ought to be in Federal court.
As history developed, pretty early in our process it was concluded
that diversity required complete diversity; that is, if one plaintiff
and one of a host of potential defendants was a local defendant, then
that could be kept in State court.
I am not disputing that. All I am saying is I believe the Founding
Fathers would have believed that a lawsuit that is predominantly
intrastate in nature, involving the real defendant, should be in
Federal court.
So what happens is if you sue a drug company and you want to keep it
in State court, you sue the lady in small town Mississippi who sells
the prescription at her store--she is a local defendant, whereas the
person who is going to be paying the judgment is out of State. If the
drug company had been sued directly, it would have been in Federal
court, but by suing one local State defendant along with the big-money
deep-pocket in New York, that is not the case.
The PRESIDING OFFICER. The time controlled by the majority has
expired.
Mr. SESSIONS. Mr. President, I thank the Chair. I will conclude by
saying there are a lot of reasons we ought to support this bill. It has
been thought out very carefully. A lot of work has gone into it over a
number of years. We are in a position to pass good legislation at this
time.
I yield the floor.
The PRESIDING OFFICER. The Senator from Illinois.
Mr. DURBIN. Mr. President, I would like to spend a few minutes to
discuss my amendment No. 3, which is pending at this time, and then ask
that it be withdrawn. This is the amendment I had offered on Tuesday to
clarify the scope of the ``mass action'' provision in Section 4(a) of
the bill.
As I had explained earlier this week, this provision requires that
mass actions be treated the same as class actions under this bill, and
therefore taken out of State courts and removed to Federal courts. But
it was still unclear to me--and to many of the injured people who will
be affected by this bill--what precisely the drafters had in mind in
coming up with this ``mass action'' language in the bill.
When I last took the floor, I had raised some questions about the
differences between ``mass actions'' and ``mass torts,'' and whether
mass torts would be ,I affected by the language in S. 5. I heard from
proponents of this bill that these are two very different types of
cases, and that the bill is designed to affect only mass actions and
not mass torts.
In fact, Senator Lott of Mississippi the other day explained on the
floor that:
Mass torts and mass actions are not the same. The phrase
``mass torts'' refers to a situation in which many persons
are injured by the same underlying cause, such as a single
explosion, a series of event, or exposure to a particular
product. In contrast, the phrase ``mass action'' refers to a
specific type of lawsuit in which a large number of
plaintiffs seek to have all their claims adjudicated in one
combined trial. Mass actions are basically disguised class
actions.
I am glad that the proponents of this bill agree with me that there
is a very
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significant difference between these two types of cases. Mass torts
are large scale personal injury cases that result from accidents,
environmental disasters, or dangerous drugs that are widely sold.
Cases like Vioxx that I described earlier, and cases arising from
asbestos exposure, are examples of mass torts. These personal injury
claims are usually based on State laws, and almost every State has well
established rules of procedure to allow their State courts to customize
the needs of their litigants in these complex cases.
Senator Lott also explained on the floor that:
There are a few States, like my State--I think, and West
Virginia is another one and there may be some others--which
do not provide a class action device. In those States,
plaintiffs' lawyers often bring together hundreds, sometimes
thousands of plaintiffs, to try their claims jointly without
having to meet the class action requirements. And often the
claims of the multiple plaintiffs have little to do with each
other.
So, it seems to me that the authors of this bill are trying to
include only these so-called mass actions and not mass torts.
And I understand from the statements made by Senator Lott, the U.S.
Chamber of Commerce, and many other proponents of the bill, that these
so-called mass actions are currently filed only in Mississippi and West
Virginia. In other words, this provision of S. 5 will have no impact on
mass torts cases filed in the other 48 States.
That is good news because I would hate to see this bill--which
already turns the idea of federalism on its head--preempt any more
State rules and procedures than it already does with the diversity
provisions.
I agree with the proponents that the scope of this language is
limited.
It is my understanding from conversations with my colleagues who
support this bill that a mass action, as used in this section of the
bill, is simply a procedural device designed to aggregate for trial
numerous claims. If that is the case, I believe my amendment would not
be necessary.
I had offered my amendment as a good faith effort to keep mass tort
cases from being impacted negatively by this provision. But if the
language affects only a narrow set of procedural devices in a limited
number of States, then I believe that is consistent with what I had
attempted to achieve with my amendment.
Accordingly, I ask unanimous consent that my amendment, Amendment No.
3, be withdrawn.
The PRESIDING OFFICER. Is there objection to the request of the
Senator to withdraw the amendment? Without objection, it is so ordered.
Mr. DURBIN. Mr. President, I would also like to talk about the bill
generally.
Why are we even debating a question about whether a lawsuit can be
filed in a State court or a Federal court? If you can file a lawsuit,
you are supposed to have your day in court. But it is not that simple.
The reason why the business lobbies have spent millions of dollars in
Washington pushing for this bill, the reason why this bill is the
highest priority of the Bush administration and the Republican
leadership in Congress, is because of one simple fact: Class action
cases removed from State courts to Federal courts are less likely to go
forward to be tried, they are less likely to reach a verdict where
someone wins or loses, and if there is a decision on behalf of the
plaintiffs, they are less likely to pay a reasonable amount of money in
Federal court than in State court.
What I say to you is not idle speculation; it is based on Federal
court decisions. That is why the business community has worked so long
and so hard to remove the rights of consumers and citizens to sue in
their own State courts. Rather, they want them removed to Federal
courts where they have a better chance to win. The businesses know they
can win more class action cases in Federal courts than they could ever
win in State courts. That is what this whole debate is about. So you
hear all of this talk about whether class action suits are filed here,
whether they are filed there--frankly, many of these discussions
overlook what these class action lawsuits are all about.
I had my staff compile some information on some of these lawsuits
because people tell me: I don't understand what is a class action. I
can understand if I am in an automobile accident, I get hurt, and I sue
the person who ran into me. Is this what we are talking about? That
probably wouldn't be a class action.
Let me give you some examples of real class action lawsuits. These
cases will be more difficult to file and more difficult to be
successful because the business interests are going to pass this bill.
U.S. postal workers given Cipro after the anthrax attacks in 2001
found out there were many damages that came from the drug, and the
postal workers came together as a group to sue the company that made
Cipro. This is a class action lawsuit.
Then we had a group of people in Rhode Island who were harmed because
they were exposed to lead in paint. They sued, as a class, the
manufacturers of lead paint that caused the damage to them physically.
But because the manufacturers are not based in Rhode Island, this class
action might be removed to a Federal court under this bill.
Then there was a court in Illinois in a class action lawsuit in one
of the counties the proponents of this bill like to rail about. It was
against Ford Motor Company because they were selling Ford Crown
Victoria vehicles to police departments alleging they were better cars
for police use. It turned out they had a defective fuel tank that made
them dangerous for policemen. So, all of the police departments that
bought these cars sued Ford Motor Company as a class because of a
defective product. But because Ford Motors is based in Michigan, the
Illinois police officers might have to litigate this case in a Federal
court.
Here is another one against Foodmaker, which ran Jack-in-the-Box
restaurants. It turned out thousands of their patrons were subjected to
food contamination and serious illness. The patrons sued as a class.
Why? Because any individual might say: I took my child to Jack-in-the-
Box, my child became sick and went to the hospital, and was there for
two days. The medical bills came to $1,500. But I can't file a lawsuit
against the restaurant for $1,500.
Then, the parent finds out that the same thing happened to hundreds
of other kids, so all the parents come together and say: Jack-in-the-
Box, you should have done a better job. And this class of plaintiffs
went forward in a State court. But they would have less of a chance for
success under this bill. That is what it is about.
A suit was brought by mothers and fathers when they discovered that
Beech-Nut was selling apple juice for infants that turned out to be
nothing but sugar water.
What is the damage to an individual infant, or a single family? How
do you measure it? If a company sold millions of bottles of this
defective product, shouldn't that company be held accountable?
That is what this debate is all about. It is about accountability for
those who cause harm to the public. The businesses that are responsible
for environmental contamination, for producing dangerous products that
cause injuries, for manufacturing items that shouldn't be sold, or for
overcharging customers, should be held liable.
But these business interests come to Congress for help, and they are
going to win today. As a result of this victory, fewer consumers and
fewer families are going to have a chance to succeed in court.
The Government closes down the agencies to protect you, Congress will
not pass the laws to protect you, and now this Senate will pass a law
to close the courthouse doors in your States when you want to come
together as a group and ask for justice. This is the highest priority
of the Bush administration: closing that courthouse door, making sure
these families and these individuals don't have a fighting chance.
I think there are a lot of other priorities we should consider, such
as the cost of health care in America. We will not even talk about that
issue on the Senate floor, let alone discuss bipartisan options for
addressing that pressing problem.
This so-called Class Action Fairness Act may pass today, but the
ultimate losers are going to be families across
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America who are hoping that Congress will at least consider their best
interests in the very first piece of legislation that we consider.
I yield the floor.
Mr. LEVIN. Mr. President, I will vote against the Class Action
Fairness Act of 2005 because, although this bill is an improvement over
previous versions, it still has significant deficiencies that would
have been corrected by a number of common sense amendments that were
not adopted.
For example, forty seven attorneys general, including the attorney
general of Michigan, expressed concern that this legislation could
limit their powers to investigate and bring actions in their State
courts against defendants who have caused harm to their citizens. The
attorneys general supported an amendment offered by Senator Pryor that
would have exempted all actions brought by State Attorneys General from
the provisions of S. 5 stating, ``It is important to all of our
constituents, but especially to the poor, elderly and disabled, that
the provisions of the act not be misconstrued and that we maintain the
enforcement authority needed to protect them from illegal practices.''
The Pryor amendment was defeated.
Federal courts generally do not certify class actions if laws of many
states are involved. However, this legislation would force nationwide
class actions into Federal courts where they would likely be dismissed
for involving too many state laws. This would deprive the plaintiffs
from the opportunity to have their case heard. An amendment sponsored
by Senator Feinstein, a cosponsor of this legislation, and Senator
Bingaman would have fixed this problem by prohibiting the district
court from denying class certification in whole or in part on the
ground that the law of more than one State will be applied. However,
that amendment failed.
Senator Feingold offered an amendment that would have set a time
limit for a district court to assume jurisdiction or rule on a remand
motion to State court. The amendment, which failed, would have provided
protection for plaintiffs against attempts to remove cases to Federal
court merely to delay the outcome.
We do need class action reform, however this bill fails to adequately
protect the rights of our citizens and therefore I cannot support it.
Mr. SCHUMER. Mr. President, I rise today to express my support for S.
5, the Class Action Fairness Act, and to explain why I supported the
amendment proposed by my friend from California, Senator Feinstein, for
herself and on behalf of my friend from New Mexico, Senator Bingaman.
I support the class action legislation before us today. Certain
lawsuits have become a concern to many Americans. Many lawsuits have
been filed in local State courts that have no connection to the
plaintiff, the defendant, or the conduct at issue. This allows forum
shopping, which undercuts the basic fairness of our justice system.
Having said that, I am not one of those who think access to the
courts should be unduly blocked. Our citizens' use of the courts has
led to many reforms in the protection of civil rights and the
environment, and has held corporate malefactors accountable for
improper conduct that has cost victims billions of dollars. Often for
those without power, a lawsuit is the only avenue for redress. We need
lawsuits, but the rules governing them should be fair.
As we have heard yesterday and today, courts in some places have
become magnets for all kinds of lawsuits. Some of these lawsuits are
meritorious; some are not. In either scenario, if the case affects the
Nation as a whole, it should be heard in Federal court. Judges in small
counties should not make law for all of America. Although those judges
might make good law, there is a real risk that parochial concerns would
dominate in that type of decision. That is not to say that there are
not judges in the Federal courts who do not have extreme views on both
sides of the issues, much as we try not to confirm judges who fall out
of the mainstream.
Consequently, we need to rein in forum shopping. When consumers
allege that a product sold nationwide to consumers in all 50 States is
defective, a Federal court should decide that case.
It is for these reasons that I joined with my colleagues, the Senator
from Connecticut, Mr. Dodd, and the Senator from Louisiana, Ms.
Landrieu, to help craft the compromise that led to the bill before us.
The spirit of the compromise we reached would not create a new
mechanism to dismiss class actions, but instead would remove the large
and national class actions to the Federal courts.
But when Senators Dodd, Landrieu, Carper, Kohl, and I, all of whom
have worked so long and hard on this bill, met with the majority leader
and others 2 years ago, we made perfectly clear the right of the
minority to offer amendments. That right remains an essential part of
my participation in the compromIse.
Although we worked hard to improve the bill, we wanted to make sure
that our colleagues had the opportunity to offer amendments because no
bill is perfect.
One area where the bill could be improved stems from a real concern
that many of the consumer class actions removed to Federal court might
not be certified on the grounds that there would be too many non-common
issues due to differences among State laws that would apply to
different members of the national class. To date, at least 26 Federal
district courts have refused to certify class actions on those grounds.
Some of us believed that not certifying could have resulted in a
problem because it would effectively mean the weakening, if not the
disappearance, of the class members' ability to get remedies,
particularly with the changes made to current law by this bill. Not
certifying could also create a practical problem for lawyers, who have
the opportunity to try their class action before one court, and post-
decertification might have to re-plead and try several class actions in
several courts, thereby destroying the sought-after efficiency of class
actions and creating the risk that the results would not be uniform.
This was not the desired outcome of our compromise: We intended to
send national class actions to Federal court, not to their graves.
The amendment that my friend from California, Senator Feinstein, and
my friend from New Mexico, Senator Bingaman, introduced would not only
have improved the bill, but would have also furthered the spirit of the
compromise by clarifying our intention that the bill remove, but
preserve class actions, even when Federal judges face choice of law
issues.
Importantly, this amendment would not have aided forum-shopping
plaintiffs' lawyers. Instead, it would have clarified options for a
Federal judge facing a choice of law question. That clarification would
have helped to grind to a halt the class action merry-go-round between
the State and Federal courts. I hope that Federal judges view this
bill, even without the amendment, as a vehicle that was intended to
bring national class actions to the Nation's courts and not as a
vehicle to balk at certification. The use of subclasses to protect
people's rights under their State laws is now in the hands of Federal
judges. They have the tools to protect those rights. This bill was not
intended to destroy them.
That view will protect an important instrument of deterrence against
future wrongdoing and an important adjunct to regulators in the
enforcement of laws protecting our citizens.
Mr. ENZI. Mr. President, today I rise in support of S. 5, the Class
Action Fairness Act of 2005. The class action system in our country is
broken. Over the past decade, class action lawsuits have grown by over
1,000 percent nationwide. This extraordinary increase has created a
system that produces hasty claims that are often unjust. Lawsuits that
have plaintiffs and defendants from multiple States are tried in small
State courts with known biases. This leads to irrationally large
verdicts that make little sense legally or practically.
The U.S. Constitution gives jurisdiction to the Federal Government
when cases involve citizens of differing states. It makes sense, that,
in a case involving plaintiffs from Wyoming and Alabama and defendants
from New York and Idaho, that no party be given the inevitable ``home-
court'' advantage that comes when a case is tried in your backyard.
Regrettably, for years, Congress has required all plaintiffs to be
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diverse from all defendants. In large class action lawsuits, with
plaintiffs or defendants from states throughout the Nation, it is
increasingly difficult for this requirement of complete diversity to be
met.
In the system we have created, we see lawyers seeking out victims
instead of victims seeking out lawyers. We see lawsuits being
adjudicated in a select few courts with proven track records for
delivering large verdicts instead of lawsuits being tried in courts
with the most appropriate jurisdiction.
S. 5 is a step in the right direction. It eliminates the lottery-like
aspect of civil liability that individuals now face by moving
interstate cases to the federal level. If passed, S. 5 makes it so that
class action cases involving citizens from Wyoming, Utah, Kansas and
Texas will not be adjudicated at a courthouse in Madison County,
Illinois. In the same vein, it ensures that cases involving folks from
Illinois, Arkansas, and Mississippi are not decided in a State court in
Wyoming. These are interstate cases and should decided without a home
state bias that can exist in some State courts.
When the Founding Fathers drafted the Constitution and its provisions
regarding the filing of interstate cases, they could never have
imagined that our court system would be used someday to engage almost
every sector of the U.S. economy in just three counties. That statistic
should be a wake up call that something is dreadfully wrong and that
the system is not working as the designers intended. By placing cases
in Federal court, we avoid the forum shopping that has become so
commonplace over the past few decades. S. 5 gives the defendants in a
lawsuit a chance to have their day in an impartial court.
While State courts undoubtedly have their place, and in many
instances operate more effectively than Federal courts, a select few
have become notorious for delivering outrageous verdicts. Consequently,
many of our most costly class action lawsuits end up in these courts.
This should not be the case.
S. 5 will not only benefit the defendants, it will also make the
system more fair for the plaintiffs. Weak oversight of class action
lawsuits has created a system that returns less than 50 cents on the
dollar to plaintiffs in a case. Compensation, when compared to actual
economic loss, is approximately 22 cents per dollar. Settlement
notifications are often times so confusing that plaintiffs do not
understand what they are receiving. Plaintiffs are signing off on
agreements they do not even understand, with even less understanding
about how to challenge the settlement. They are getting a raw deal.
I am pleased that the Class Action Fairness Act addresses this
problem by including a ``Consumer Class Action Bill of Rights.'' The
``Bill of Rights'' includes a provision requiring the Federal court to
hold a hearing and find that a settlement is fair before it can be
approved. It includes provisions that make more fair what have become
known as ``coupon settlements,'' in which the attorneys receive real
money and the victims receive the equivalent of a Sunday newspaper
clipping.
S. 5 works to reign in the only people who covertly benefit from the
way the class action system works today, a select group of defense
attorneys who seem more interested in profits than process. These
lawyers are more concerned with reaching a settlement than helping
their victims. They push for quick class certification, and once they
have crossed that hurdle, they push for a quick settlement by
threatening the defendants with large monetary verdicts that have come
about in past cases.
In the face of these ridiculous verdicts, defendants settle quickly.
They know the stars are lined up against them if the case goes all the
way to trial and often times, by agreeing to coupon settlements, the
defendants pay only a fraction of the stated damages. The Class Action
Fairness Act takes steps to change this practice. It takes steps to
ensure that when a settlement is reached, the lawyers and the
defendants do not come out ahead when the victims come out behind.
Is S. 5 perfect? Absolutely not. It does not require that individuals
opt-in to class action lawsuits. It does not require sanctions be
brought against attorneys who file frivolous lawsuits over and over
again. There are a number of provisions that I believe should be
included in the bill that did not make the cut.
But S. 5 is the true example of a bipartisan compromise. S. 5 takes
into account the wants of the various parties. It took a lot of give
and take to get to this point, and now, we have a bill that does some
good. We have a bill that takes a first step toward reforming our court
system to make it more fair for both the plaintiffs and the defendants.
I look forward to voting in favor of the Class Action Fairness Act
later today, and I will encourage all my colleagues to do the same.
Mr. KOHL. Mr. President, I rise today on the final day of debate on
the class action reform bill to say a final word in support of the
legislation. We have worked for many years on this bill through
numerous hearings, committee markups and repeated floor consideration.
We can proudly say that we are about to succeed in passing modest, yet
important changes to the class action process. Consumers and businesses
across the country will benefit and not a single case with merit will
go unheard.
Today is the culmination of many years of our bipartisan efforts on
this issue as we have attempted to make the class action system fairer
for both consumers and businesses alike. Our success once again
demonstrates that the Congress works best when we work together. I am
most proud that we were able to construct a bipartisan core of
supporters to pass this bill.
While this bill does not solve all of the problems in the system,
consumers will never again need to worry about being injured and
receiving worthless coupons as damages. Businesses will never again
need to fear being sued in a small county court where the rules are
stacked against them. Most importantly, under our bill every claim with
merit will still go forward and the court house doors will always be
open.
It is a well-known saying that success has many fathers, so many will
deserve thanks for their work leading to the passage of this bill
today. I would like to mention a few people specifically who have been
indispensable to the passage of this legislation. Senator Grassley and
I have worked on this bill for 7 years now. He has been a good partner
and leader. He deserves tremendous credit for his willingness to accept
bipartisan compromises in an effort to get this bill done.
Senators Carper and Hatch also deserve praise for the tremendous
energy that they have brought to this bill over the past two
Congresses. Without them, class action reform certainly would not have
made it to the verge of passage today.
In addition, Senators Dodd, Feinstein, Schumer and Landrieu
contributed significantly in this process by making important changes
to the bill. They were successful in identifying ways to ensure that
primarily State cases stayed in state court and only truly national
cases could be removed to the Federal courts. This has been our goal
all along. With their assistance we have accomplished it.
I would be remiss if I did not thank the many very fine staffers
whose work often goes unheralded. This bill addresses a very technical
and difficult area of the law, so their contribution to this bill was
truly indispensable. All of the following were essential to the final
passage of this bill: Rita Lari with Senator Grassley; Jonathon Jones,
Sheila Murphy and John Kilvington with Senator Carper; David Hantman
with Senator Feinstein; Jeff Berman with Senator Schumer; Shawn Maher
with Senator Dodd; and Harold Kim with Senator Hatch.
Finally, Paul Bock and Jeff Miller, my chief of staff and chief
counsel respectively, deserve significant credit for the passage of
this bill. They have worked tirelessly on this legislation for several
years and have provided wise counsel during the long and difficult
negotiations on this legislation. With their assistance, we succeeded
in crafting a moderate bill that will help business and consumers
alike. For that, we should all be proud.
Mr. ALLEN. Mr. President, I rise today in support of the Class Action
Fairness Act.
This legislation we are considering today is crucial to ensuring that
there
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is fairness in our courtrooms, that claimants receive the judicial
consideration they deserve, and that the American economy and small
businesses are able to stay competitive.
This class action reform legislation is primarily designed to allow
defendants to move a class action lawsuit from State court to Federal
court when there is diversity or citizens from different States
involved in the litigation. This concept is as old as our Republic. No
one will be denied access to the courts. It is simply allowing most
litigants to find the most appropriate court to decide the case. In
significant cases with diversity, the Federal courts are the proper
choice.
We have heard about cases where lawyers shop around to find courts in
particular counties that have a proven track record of being
sympathetic to class action lawsuits with absurdly large judgments.
When justice arbitrarily hinges on what county in which a case is
tried, that is not fair.
A recent study found that 89 percent of Americans believe the legal
system is in need of reform. The statistics are indeed alarming: Over
the past decade, the number of class action lawsuits has increased by
over 1,000 percent nationwide. And the cost of the U.S. tort system has
increased one hundred fold over the last 50 years. Lloyd's of London
estimates that the tort system cost $205 billion in 2001, or $721 per
U.S. citizen. Most importantly, Lloyd's estimates this number to rise
to $298 billion by this year. At current levels, U.S. tort costs are
equivalent to a five percent tax on wages.
The implications of an abused tort system on the American economy are
of legitimate concern. While there is no doubt that many class action
lawsuits are legitimate, the inadequacies of the system have resulted
in frequent abuses. And the increased cost to businesses has an
enormous impact--tying the hands of businesses and restricting their
ability to expand, provide additional jobs, or contribute to the
economy. Even the threat of class action lawsuits forces businesses to
spend millions of dollars. Defendants face the risk of a single
judgment in the tens of millions or even billions of dollars, simply
because a State court judge has rushed to certify a class without
proper review. The risk of a single, bankrupting award often forces
defendants to settle the case with sizable payments even when the
defendant has meritorious defenses.
Believe it or not, some opponents of the Class Action Fairness Act
are still urging that the current class action system works well and
that class action reform is unnecessary. Apparently, they do not think
it is a problem when consumers take home 50-cent coupons to compensate
them for their injuries, while their lawyers pocket millions in cash.
Take for example a case against Blockbuster, Inc., where customers
alleged they were charged excessive late fees for video rentals. These
customers received $1 coupons while their attorneys received over $9
million. Or when one State court prevents citizens from litigating
their claims under the law of their home State. Or when attorneys file
the same lawsuit in dozens of State courts across the country and file
the same lawsuit in a race to see which judge will certify the fastest
and broadest class.
In fact, numerous studies have documented class action abuses taking
place in a small number of ``magnet'' State courts, and by now, it is
beyond legitimate debate that our class action system is in shambles.
As the Washington Post editorial page has noted, ``[n]o portion of the
American civil justice system is more of a mess than the world of class
action.''
A RAND Institute for Civil Justice, ICJ, Study on U.S. class actions
released at the end of 1999 empirically confirms what has long been
widely believed--State court consumer class actions primarily benefit
lawyers, not the consumers on whose behalf the actions ostensibly are
brought. Case studies in the ICJ piece confirm that in State court
consumer class actions--that is, cases not involving personal injury
claims--the fees received by attorneys are typically larger than the
total amount of monetary benefits paid to all of the class members
combined. In short, the lawyers are the primary beneficiaries. The ICJ
Study contains no data indicating that this problem exists in Federal
court class actions.
If we do not pass this vital legislation, the class action process
will remain a system ripe for exploitation, and the harm to the
fundamental fairness of the civil justice system will continue to grow.
Excessive and frivolous class action lawsuits stifle innovation,
discourage risk-taking, and harm the entrepreneurship that drives our
Nation's economic growth and job creation.
This commonsense, bipartisan legislation will help alleviate the
dramatic effects that have resulted from an abuse of the class action
system. This legislation ensures that legitimate class action cases are
given full consideration and that prevailing plaintiffs receive the
compensation they deserve. Americans deserve to have a judicial system
that is effective and efficient, and, most importantly, fair--this
legislation goes a long way toward accomplishing these objectives. I
urge my colleagues to support this legislation. In the 108th Congress,
this legislation came up one vote short. We now have four more Senators
on our side of the aisle, so I am confident in its success in the 109th
Congress. This is a success that people in States desire, and it will
be a promise kept.
Mrs. CLINTON. Mr. President, I oppose this legislation called the
Class Action Fairness Act of 2005, because I do not believe it is fair
to litigants who have legitimate claims that are most appropriately
addressed by our state courts.
Yes, there are some problems in the use of class actions, and in some
cases there are excessive fees or inappropriate coupon settlements. I
am pleased that after many years of seeking to move class action
``reform'' legislation, the bill proponents finally agreed to include
language that addresses some of the abuses concerning ``coupon''
settlements, in which plaintiffs who have proven their case in court
receive in turn coupons for products or services that have little
value. This language has long been advocated by the distinguished
ranking member of the Senate Judiciary Committee, Senator Leahy, and it
is a good provision because in contrast to most of the bill, it is
narrowly crafted to address an actual problem that the legal system and
litigants confront.
But the vast majority of the provisions in this legislation are not
narrowly crafted to address discrete problems. Instead, this
legislation is an extremely blunt instrument that I believe will result
in justice delayed and justice denied for many Americans.
There have been many claims about ``judicial hellholes'' and ``magnet
jurisdictions'' but the evidence shows that these claims are, at best,
overstated, and are certainly not so widespread so as to justify
passage of this legislation that turns 200 years of federalism on its
head. Indeed, a recent report by Public Citizen found that there were,
at most, two jurisdictions--Madison County and St. Clair County, IL--of
the 3,141 court systems in the United States for which bill proponents
have provided limited data that they are ``magnet jurisdictions.'' As
to Madison County in particular, the facts also do not support the
rhetoric. In 2002, only 3 of 77 class actions were actually certified
to proceed to trial, and in 2003, only 2 of 106 class actions filed
were certified.
Moreover, the Public Citizen report notes that, in recent years, at
least 11 states have made major changes to the class action process
used in their States to aid in the administering of justice, and in
fact Illinois is in the process of doing the same.
The legislation purports to help Americans but I believe it will hurt
them. The legislation itself states its purpose is to: ``(1) assure
fair and prompt recoveries for class members with legitimate claims;
(2) restore the intent of the framers of the United States Constitution
by providing for Federal court consideration of interstate cases of
national importance under diversity jurisdiction; and (3) benefit
society by encouraging innovation and lowering consumer prices.''
As to assuring ``fair and prompt recoveries,'' hundreds of consumer
rights, labor, civil rights, senior, and environmental organizations,
esteemed legal experts, and many State Attorneys General believe, as I
do, that this legislation will do just the opposite.
There is also no reasonable basis for the assertion that this
legislation ``will
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restore the intent of the framers'' with respect to the role of our
federal courts. As Arthur Miller, the distinguished Harvard Law School
professor, author, and expert in the fields of civil procedure, complex
litigation, and class actions noted with respect to similar legislation
considered last year: it is a ``radical departure from one of the most
basic, longstanding principles of federalism [and] is a particular
affront to state judges when we consider the unquestioned vitality and
competence of state courts to which we have historically and frequently
entrusted the enforcement of state-created rights and remedies.''
As a Senator representing the great State of New York, I have worked
closely with many businesses in my state to help them with their
efforts to grow and create jobs, and I am a firm believer in
encouraging innovation and lowering consumer prices. But even if we
assume there is a strong connection between this legislation and those
goals, there are many more appropriate means to achieve those ends
without doing the harm to the administration of justice that I believe
this legislation will impose.
In addition to being unfair to the American people, I do not believe
this legislation is fair to our State or Federal judiciaries. This bill
will effectively preclude state courts in many instances from employing
their expertise and experience in class action cases based on state law
that they have historically considered. I believe that state courts
should determine matters of state law whenever possible. It is not fair
to our Federal judiciary, which simply does not have the resources or
experience to handle a mass influx of class action cases to our federal
courts.
Indeed, the Judicial Conference of the United States has expressed
its opposition to similar legislation introduced in prior Congresses
because it ``would add substantially to the workload of the federal
courts and [is] inconsistent with principles of federalism.''
Similarly, the Board of Directors of the Conference of Chief Justices
representing the Chief Justices of our state courts has said that
legislation of this kind is simply unwarranted ``absent hard evidence
of the inability of the state judicial systems to hear and decide
fairly class actions brought in state courts.'' That evidence simply
does not exist.
As the National Conference of State Legislatures, NCSL, has noted in
its strong opposition to this legislation, the legislation ``sends a
disturbing message to the American people that state court systems are
somehow inferior or untrustworthy.'' The NCSL went on to say that the
effect of the legislation ``on state legislatures is that state laws in
the areas of consumer protection and antitrust, which were passed to
protect the citizens of a particular state against fraudulent or
illegal activities, will almost never be heard in state courts.
Ironically, state courts, whose sole purpose is to interpret state
laws, will be bypassed and the federal judiciary will be asked to
render judgment in those cases.''
Although bill proponents have sometimes suggested the contrary, make
no mistake: if enacted, this legislation will not only result in the
majority of class action lawsuits being transferred from our state to
Federal courts, but it will also serve to terminate some class action
lawsuits that seek to provide justice to everyday Americans.
Proponents of this legislation refer to an alleged abuse by lawyers
in bringing class actions and assert that too many cases are instituted
that are without merit. As I have already noted, I believe some
proponents of this legislation have mischaracterized the extent of the
problems concerning class actions. But, even if these assertions were
true, the proponents have failed to justify the rejection of the very
reasonable amendments offered by my colleagues that sought to address
major concerns with the legislation without undermining its spirit or
intent.
One such amendment was offered by my colleague Senator Pryor of
Arkansas, a former Arkansas State Attorney General. It would have
clarified the role that State Attorneys General would continue to play
in State class action cases. That amendment had the express written
support of 47 of the 50 State Attorneys General in our Nation. As the
highest law enforcement officers in their respective States, I cannot
imagine that anyone in this body would believe that such public
servants would bring ``frivolous lawsuits'' or would seek to abuse the
class action process. And yet, that amendment failed, primarily along
party lines.
The remaining amendments met a similar fate, including one offered by
Senators Bingaman and Feinstein. There is no general Federal consumer
protection statute, which is why consumer fraud, deceptive sales
practices, and defective product cases are almost always commenced in
state courts.
Yet, the legislation before us would effectively move many of these
cases to Federal courts, courts that are already overburdened and have
neither the experience nor the expertise to handle these cases. If such
cases are forced into Federal courts through consolidation of many
state court cases, a Federal court hearing such a case must then decide
which state laws should be applied. Because these kinds of
circumstances have presented enormous challenges to our Federal courts,
many Federal judges have simply, and understandably, denied
certification of nationwide consumer fraud cases. Yet, the bill
language would preclude the consideration of many of these cases in
state courts, creating what many have described as the bill's ``Catch-
22.'' At that point, such cases would literally be in justice ``limbo''
because a federal court would have dismissed the case but under the
provisions of the legislation, the case could not withstand a
defendant's challenge to maintain the case in a State court.
The amendment offered by Senator Feinstein, an original cosponsor of
the underlying legislation, and Senator Bingaman, would have provided a
process to handle such cases to increase the likelihood that such cases
would be certified by a Federal court and the appropriate State laws
would be applied. This was a more than reasonable effort to address a
significant concern with this legislation without undermining the
legislation's intent to transfer many class actions to Federal courts.
But, once again, a majority of the Members of this body chose to reject
it.
The Leadership Conference on Civil Rights has stated, and no one has
refuted, that ``there is no evidence that lawsuits brought by workers
seeking justice in state courts on issues ranging from overtime pay to
working off the clock are abusing the system. To the contrary, failure
to exempt such lawsuits in this legislation is an abusive act against
every hard-working American seeking fair pay and a better life.'' Yet,
the amendment offered by Senator Kennedy that would have carved out
such cases from this legislation was rejected as well.
In short, this bill currently stands now in the same shape as when it
was introduced. Though valiant efforts were made to improve it, none
were successful. Eliot Spitzer, the distinguished New York State
Attorney General, and a number of other State Attorneys General,
expressed their overall concern with the bill, including the fact that
the legislation still ``unduly limits the right of individuals to seek
redress for corporate wrongdoing in their state courts.'' I could not
agree more.
In speaking in opposition to this legislation on the Senate floor
earlier this week, Senator Leahy, the Ranking Member of the Senate
Judiciary Committee, reminded all of my colleagues that sometimes
individual claims are so small that even though a harm was done for
which a plaintiff should receive relief, it is not worth it for him or
her to spend significant financial resources to obtain that relief
through the judicial process. Unfortunately, as he said, ``[s]ometimes
that is what cheaters count on, and it is how they get away with their
schemes. [Yet,] cheating thousands of people is still cheating. Class
actions allow the little guys to band together, allow them to afford a
competent lawyer, and allow them to redress wrongdoing.'' With the
expected passage of this legislation today, I believe the ``little
guy'' loses, and I believe that is neither fair nor just. That is why I
cannot support this legislation.
I appreciate the concerns raised by businesses in New York and around
the country about the cost of litigation. I too believe that litigation
costs have increased significantly. Any legislation that seeks to
address discrete problems with class action litigation should address
this and other concerns without
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unnecessarily and negatively affecting the ability of Americans to seek
and obtain justice through our courts. A proper balance must be struck.
The so-called Class Action Fairness Act simply does not strike that
balance.
Mrs. DOLE. Mr. President, I rise today in support of the Class Action
Fairness Act of 2005, legislation that is greatly needed to restore
public confidence in our Nation's judicial system and protect jobs in
my own State and throughout the country.
Frivolous litigation has helped drive the total cost of our tort
system to more than $230 billion a year. Tort costs in America are now
far higher than those of any other major industrialized nation, and in
our global economy, this has become a tremendous disadvantage for
American manufacturers and entrepreneurs, who have long sought reform.
But this affects not just certain businesses; this affects our overall
economy and all Americans.
The Class Action Fairness Act will provide that some class action
suits be litigated in the Federal courts rather than allowing venue
shopping for a sympathetic State court. The measure will also ensure
that cases of national importance are not overlooked. Most importantly,
this legislation will ensure that class members with legitimate claims
are fairly compensated.
Class action suits are an important part of our legal system. They
originated to make our courts more efficient by joining together
parties with a common claim. However, growing abuses by opportunistic
plaintiffs' attorneys--coupled with the skyrocketing costs of runaway
litigation and excessive awards--have had a dramatic impact on
America's interstate commerce.
Over the past decade, the number of class action lawsuits has grown
by over 1,000 percent nationwide. And the jury awards are sharply
increasing over time as well. In 1999, the top 10 awards totaled $9
billion; by 2002, that number had jumped to $32.7 billion.
Businesses, like those in my home State of North Carolina, are losing
out because the rules in place today allow lawyers to ``shop'' for the
``friendliest'' court to hear their case. And it is not just large
companies being sacked with enormous payouts in class action lawsuits.
Small businesses are bearing the majority of tort liability costs.
According to a study conducted for the U.S. Chamber of Commerce, small
businesses bear 68 percent of tort liability costs but take in just 25
percent of business revenue.
We all know that small businesses are the job creators and the
engines of our economy. They create 70 percent of all new jobs in
America. Yet the rules in place today allow for a judicial system that
is truly hurting them and causing them to spend money--on average
$150,000 a year--on litigation expenses rather than on business
development and equipment and expansion--the very things that can lead
to more jobs.
Our goal in reforming class action lawsuits is to provide justice to
the truly injured parties, not to deny victims their day in court and
their just compensation. Lawsuit costs have risen substantially over
the past several decades, and a significant part of these costs is
going towards paying exorbitant lawyers' fees and transaction costs.
And some injured plaintiffs are suffering because of weak State court
oversight of class action cases. In fact, under the current U.S. tort
system, less than 50 cents on the dollar finds its way to claimants,
and only 22 cents compensate for actual economic loss.
And sometimes class members don't receive cash at all. For example,
in a settlement with Crayola, approved by a State court in Illinois,
crayon purchasers in North Carolina and around the country received 75-
cent coupons for the purchase of more crayons; their lawyers, however,
received $600,000 in cash.
And in the Cheerios class action settlement, also approved by State
court in Illinois, consumers in North Carolina and around the country
received coupons for buying a single box of cereal, while lawyers got
$1.75 million.
I hardly think it's in the best interest of the class member to
actually have to purchase more of a product to receive any benefit. And
it isn't fair that class members are losing out while their attorneys
are cashing in.
This legislation establishes a ``Consumer Class Action Bill of
Rights'' that will ensure that class actions do not harm the intended
beneficiaries--people who were actually harmed by the actions of a
defendant. And it does nothing to prevent class members from having
their cases heard--it just establishes that some of these cases may be
heard in Federal courts.
It is time we do what is right and repair this broken system--for
claimants in class action cases, for our Nation's economy, businesses
large and small, and for all Americans.
Mr. VOINOVICH. Mr. President, I rise today to speak on behalf of the
Class Action Fairness Act, a bill to stop unfair and abusive class
action lawsuits that ignore the best interests of injured plaintiffs.
This legislation is sorely needed to help people understand their
rights in class action lawsuits and protect them from unfair
settlements.
It is also needed to reform the class action process, which has been
so manipulated in recent years that U.S. companies are being driven
into bankruptcy to escape the rising tide of frivolous lawsuits and has
resulted in the loss of thousands of jobs, especially in the
manufacturing sector.
Unfortunately, not enough Americans realize that we are in a global
marketplace and businesses now have choices as to where they
manufacture their products. Many of our businesses are leaving our
country because of the litigation tornado that is destroying their
competitiveness. The Senate must start taking into consideration the
impact of its decisions on this Nation's competitive position in the
global marketplace.
I believe that for the system to work, we must strike a delicate
balance between the rights of aggrieved parties to bring lawsuits and
the rights of society to be protected against frivolous lawsuits and
outrageous judgments that are disproportionate to compensating the
injured and made at the expense of society as a whole. This is what the
Class Action Fairness Act, does, and I am proud to cosponsor it.
Since my days as Governor of Ohio, I have been very concerned with
what I call the ``litigation tornado'' that has been sweeping through
the economy of Ohio, as well as the Nation.
Ohio's civil justice system is in a state of crisis. Ohio doctors are
leaving the State and too many have stopped delivering babies because
they can't afford the liability insurance.
From 2001-02, Ohio physicians faced medical liability insurance
increases ranging from 28 to 60 percent. Ohio ranked among the top five
States for premium increases in 2002. General surgeons pay as much as
$74,554, and OB-GYNs pay as much as $152,496. Comparatively, Indiana
general surgeons pay between $14,000-$30,000; and OB-GYNs pay between
$20,000-$40,000.
Further, Ohio businesses are going bankrupt as a result of runaway
asbestos litigation. And today, one of my fellow Ohioans can be a
plaintiff in a class action lawsuit that she doesn't know about and
taking place in a State she has never even visited.
In 1996, as Governor of Ohio, I was proud to sign H.B. 350, strong
tort reform legislation that became law in Ohio for a while. It might
have helped today's liability crisis, but it never got a chance.
In 1999, the Supreme Court of Ohio, in a politically motivated 4-3
decision, struck down Ohio's civil justice reform law, even though the
only plaintiff in the case was the Ohio Academy of Trial Lawyers--the
personal injury bar's trade group.
Their reason for challenging the law? They claimed their association
would lose members and lose money due to the civil justice reform laws
we enacted.
The bias of the case was so great that one of the dissenters, Justice
Stratton, had this to say:
This case should have never been accepted for review on the
merits. The majority's acceptance of this case means that we
have created a whole new arena of jurisdiction--advisory
opinions on the constitutionality of a statute challenged by
a special interest group.
From this, it is obvious to me that the way we currently administer
class actions is not working.
While we were frustrated at the State level, I'm proud to have
continued my fight for a fair, strong civil justice system in the
United States Senate.
[[Page S1242]]
To this end, a few years ago I worked with the American Tort Reform
Association to produce a study entitled ``Lawsuit Abuse and Ohio'' that
captured the impact of this rampant litigation on Ohio's economy, with
the goal of educating the public on this issue and sparking change.
Can you imagine what this study found? In 2002 in Ohio, the
litigation crisis costs every Ohioan $636 per year, and every Ohio
family of four $2,544 per year. These are alarming numbers. And this
study was released on August 8, 2002--imagine how high these numbers
have risen in 2\1/2\ years.
In tough economic times, families can not afford to pay over $2,500
to cover other people's litigation costs. Something needs to be done,
and passage of this bill will help!
Mr. President, this legislation is intended to amend the federal
judicial code to streamline and curb abuse of class action lawsuits, a
procedural device through which people with identical claims are
permitted to merge them and be heard at one time in court.
In particular, this legislation contains safeguards that provide for
judicial scrutiny of the terms of class action settlements in order to
eliminate unfair and discriminatory distribution of awards for damages
and prevent class members from suffering a net loss as a result of a
court victory.
This bill would establish a concept of diversity jurisdiction that
would allow the largest interstate class actions into Federal court,
while preserving exclusive State court control over smaller, primarily
intrastate disputes. As several major newspaper editorial boards--
ranging from the Post to the Wall Street Journal--have recognized,
enactment of such legislation would go a long way toward curbing
unfairness in certain state court class actions and restoring faith in
the fairness and integrity of the judicial process.
This bill is designed to improve the handling of massive U.S. class
action lawsuits while preserving the rights of citizens to bring such
actions.
Class action lawsuits have spiraled out of control, with the threat
of large, overreaching verdicts holding corporations hostage for years
and years.
In total, America's civil justice system had a direct cost to tax
payers in 2002 of $233.4 billion, or 2.23 percent of GDP. That is $809
per citizen and equivalent to a 5 percent wage tax. That's a 13.3
percent jump from the year before--a year when we experienced a 14.4
percent increase which was the largest percentage increase since 1986.
Now, some of my colleagues have argued that this bill sends most
state class actions into Federal court and deprives state courts of the
power to adjudicate cases involving their own laws. They argue that the
bill therefore infringes upon States' sovereignty.
However, in one empirical study done by two attorneys from O'Melveny
& Myers, their data indicated that this bill would not sweep all class
actions into Federal court. Rather, the bill is a targeted solution
that could result in moving to Federal court a substantial percentage
of the nationwide or multi-State class actions filed in class action
``mill'' jurisdictions (like Madison County, IL), while allowing State
courts everywhere to litigate truly local class actions (the kinds of
class actions typically filed in State courts that do not endeavor to
become ``magnet'' courts for class actions with little or no
relationship to the forum).
There is just no evidence for the assertion that this bill deprives
State courts of their power to hear cases involving their own laws. In
fact, it is the present system that infringes upon state sovereignty
rights by promoting a ``false federalism'' whereby some state courts
are able to impose their decisions on citizens of other States
regardless of their own laws.
Another argument against this bill is that it will unduly expand
Federal diversity jurisdiction at a time when courts are overcrowded.
However, State courts have experienced a much more dramatic increase in
class action filings and have not proven to be any more efficient in
processing complex cases.
In addition, Federal courts have greater resources to handle the most
complex, interstate class action litigation, and are insulated from the
local prejudice problems so prevalent under current rules.
Mr. President, I emphasize to my colleagues that this isn't a bill to
end all class action lawsuits. It's a bill to identify those lawsuits
with merit and to ensure that the plaintiffs in legitimate lawsuits are
treated fairly throughout the litigation process.
It's a bill to protect class members from settlements that give their
lawyers millions, while they only see pennies. It's a bill to rectify
the fact that over the past decade, State court class action filings
increased over 1,000 percent. It's a bill to fix a broken judicial
system.
I am a strong supporter of this bill, and I urge my colleagues to do
the same.
Mr. JEFFORDS. Mr. President, I am pleased to support S. 5, the Class
Action Fairness Act of 2005.
I believe there are problems with our current class action system
that should be addressed through Congressional action. These problems
include:
Cases and controversies that are national in scope and are currently
being decided in State courts;
Decisions or settlements that are determined in one State's court
system, are being applied nationwide, and conflict with laws in other
States; and
Plaintiffs receiving little compensation, or in the most extreme
example, actually owing money from the settlement of a class action
lawsuit.
Class action lawsuits serve a useful purpose in our judicial system.
Class actions allow individuals to merge a number of similar claims
into one lawsuit, which can be an efficient use of judicial resources.
Class action lawsuits enable individuals with small claims the ability
to seek justice.
The legislation we are considering today will fairly determine
whether a class action should be considered in a State court or a
Federal court. Thus, the legislation will help ensure that issues that
are national in scope are heard in federal court, while issues that are
local in nature are heard in State courts.
The Class Action Fairness Act also provides some common sense reforms
and oversight of the class action settlement process. These changes
will help ensure that individuals who should be compensated receive
fair compensation for their injuries, rather than worthless coupons, or
actually owing money.
I cannot, and would not, support legislation that denies individuals
their ability to pursue compensation in the legal system for damages
they have suffered. The legislation before this body is a bipartisan
compromise worked out over many years. It does not deny individuals
their right to pursue justice through the legal system. Because I
believe the Class Action Fairness Act of 2005 fairly addresses the
problems in our class action system, I will support its passage today.
Mr. REED. Mr. President, I rise to speak about S. 5, the Class Action
Fairness Act.
First and foremost, I want to commend both the Republican and
Democratic Leaders for all the work they did to bring this bill before
the Senate. In particular, I am pleased that the consent agreement
allowed all relevant amendments to be offered and debated.
I believe many of these amendments would have improved the underlying
legislation without threatening its reforms. In particular, I think we
should have adopted the Feinstein-Bingaman amendment, which would have
given federal judges clear guidance about how to apply state consumer
laws in multi-state class action lawsuits. This would have permitted
more multi-state consumer class actions to be certified in federal
court and resolved on their merits.
After S. 5 is enacted into law, I believe we should rapidly revisit
this issue and make sure that consumers are actually getting their day
in court and not having their class action cases thrown out because
Federal courts are deeming them too complex or unmanageable to certify.
That being said, I think this legislation benefited greatly from the
negotiations entered into by Senators Dodd, Landrieu and Schumer with
the bill's major sponsors, Senators Grassley, Kohl, Hatch and Carper.
Although S. 5 is not the bill I would have written, I do think it will
address some of the well-documented problems created by overlapping
class actions in State and Federal courts.
[[Page S1243]]
In particular, the Dodd-Landrieu-Schumer language included in S. 5
addressed some of my biggest concerns about moving class actions to
Federal court. Many class actions involve only State law issues, are
brought by plaintiffs from the same geographical area and have a
defendant who is based within that same community. Moving these cases
to Federal court is inappropriate, especially if they do not involve
issues of national importance. In many cases, it is our State judges
who are in the best position to make determinations about State law.
The Dodd-Landrieu-Schumer compromise created a new exception for
keeping cases like this in State court. Under the bill, if two-thirds
of the plaintiffs are from a given State, the injury happened in that
State and at least one significant defendant is from that same State,
then the class action can remain in State court. As a result, I believe
S. 5 ensures that ``nationwide'' class actions are separated from those
that should continue to be heard in State courts.
I also believe that any attempt to stop forum shopping by plaintiffs
should minimize forum shopping by defendants. The Dodd-Landrieu-Schumer
compromise in S. 5 addressed this issue by making it clear that there
is a firm 30-day deadline for the removal of nationwide class actions
to Federal court once the plaintiffs have filed papers that create
conditions for removal.
I also am pleased that the Dodd-Landrieu-Schumer compromise dealt
with one of the most serious abuses in class action cases, certain
types of collusive coupon settlements. S. 5 clarified that if a
settlement provides coupons as a remedy, attorneys' fees will only be
paid in proportion to the redemption of the coupons. A provision like
this does not prohibit coupon settlements, but practically speaking,
attorneys will not agree to such settlements unless the coupons are
actually valuable. S. 5 also requires that a judge may not approve a
coupon settlement until a hearing is conducted to determine if the
settlement terms are fair, reasonable, and adequate for class members.
Finally, I believed that is important to preserve the ability of the
Advisory Committee on the Federal Rules, the U.S. Judicial Conference,
and the Supreme Court to amend the class action rules or procedures to
the extent necessary to accomplish their purposes more effectively or
to cure any unanticipated problems. S. 5 also included a provision
saying that the Federal courts could make such changes as appropriate.
As a result of all of these improvements, I believe S. 5 is
legislation that addresses serious problems in our nation's class
action system and will make the system fairer for both plaintiffs and
defendants.
The PRESIDING OFFICER. Twenty minutes is to be equally divided
between the chairman and ranking member of the Judiciary Committee.
The Senator from Vermont.
Mr. LEAHY. Mr. President, I commend the distinguished senior Senator
from Illinois. He is absolutely right. You have the corporate
interests, and this administration is closing courthouse doors--one of
the few places where people can go that are not aligned with either the
Republican or the Democratic Party; a place where they don't need any
political clout; a place where somebody can't say they are going to
contribute heavily to a political party so their interests will be
heard, or something like that. There is one place they could go--
whether they are a mechanic, a bus driver, a person raising a family,
somebody who had been damaged by a product sold when the manufacturer
knew of the flaw--the one place they could go would be the courthouse.
They are not the rich, powerful, or well-connected. They could win. Or
at least seek justice. We are going to close that door, too.
Over the few days that the Senate has been considering this bill,
there have been a few modest amendments that might actually keep the
door open a tiny crack for the people who need it. There have been
serious concerns raised by the National Conference of State
Legislatures of our 50 States, the National Association of State
Attorneys General, prominent legal scholars, consumers, environmental
groups, and civil rights organizations. They asked us to at least
consider a few improvements but the courthouse door was slammed shut.
The Senate's door was slammed shut.
For anybody watching this debate, they have figured out that by now
the fix was in, despite these legitimate concerns.
After 31 years here I am disappointed that the Senate is now taking
its marching orders for major legislation from corporate special
interests and the White House.
We could have actually acted as an independent body and made some
changes in this bill. Instead, we are saying--the 100 of us--to all 50
of the State legislatures that we know better than they do, that they
are irrelevant, that we could close them off.
It is going to make it harder for American citizens to protect
themselves against violation of State civil rights, consumer, health,
environmental protection laws, to take these cases to State court.
Aside from being convenient, plaintiffs actually know where the local
state courthouse is. These courthouses have experience with the legal
and factual issues within their States. We are simply going to sweep
these cases into Federal court, after we have already swept so much
criminal jurisdiction there, and you can't get a civil case heard
anyway. We are erecting barriers to lawsuits, and we are placing new
burdens on plaintiffs. They will languish.
The bill contains language that would reduce the delay that parties
can experience when a case is removed to Federal court by setting a
limit for appeals of remand orders. But we don't say anything about how
long the court can sit on the remand motion. They could sit on it for
10 years if they want to before they do a thing. Plaintiffs can die,
witnesses can move away, memories could grow dim, and nothing happens.
Senator Feingold offered a modest amendment to set a reasonable time
for action on remand motions. The solution received praise from one of
the sponsors of this legislation, but the corporate masters and the
White House said no. So it was rejected by the Senate.
The biggest concern raised by legal scholars and agreed to by several
Senate sponsors of the bill would address the recent trend in Federal
courts not to certify class actions if multiple state laws are
involved.
The way this is set up in the bill--a lot of the business groups are
behind this--one could easily get a case dismissed by a Federal court.
Senator Feinstein and Senator Bingaman worked together to alleviate
what was a legal Catch-22. The Federal court says if a case has
complicated State laws in it, it can't hear it. But you can't bring it
in State court either. The Federal court says the State laws are
complicated and it should have been heard in the State court. But under
this bill, it goes to the Federal court so, of course, the corporate
interests win. We tried to change that.
Cynics might even speculate that is what the business groups behind
this purported ``procedural'' change are really seeking, the dismissal
of meritorious cases on procedural grounds by the federal courts.
Naturally, the orders came down from the corporate masters and the
White House: Don't do it. We love the way this is going to allow us to
keep things out of court. There it goes.
Anyone who reads this bill will notice that despite its title, it
affects more than just class actions. Individual actions, consolidated
by state courts for efficiency purposes, are not class actions. Despite
the fact that a similar provision was unanimously struck from the bill
during the last Congress, mass actions reappeared in this bill this
Congress. Federalizing these individual cases will no doubt delay, and
possibly deny, justice for victims suffering real injuries. Senator
Durbin's amendment sought to clarify the bill's effect on these cases.
I'm glad the debate this week served to clarify the narrow scope of
this provision.
It is interesting because a similar provision to was unanimously
struck from the bill during the last Congress--unanimously but that
wasn't good enough for the corporate masters. It was slipped back into
the bill this Congress.
[[Page S1244]]
Class action legislation had been criticized by nearly all of the
State attorneys general in this country, Republicans and Democrats
alike. The distinguished former attorney general, Senator Pryor of
Arkansas, had a concern that S. 5 would limit their official powers to
investigate and bring actions in State courts against defendants. He
wanted to put in minor clarifications to show they could do that.
Although these attorneys general contacted their Senators--Republicans
and Democrats alike--they were tossed out.
Senator Kennedy's amendment to exempt civil rights, and wage and hour
cases in the bill, was a sensible solution. Prominent civil rights
organizations and labor advocates requested that the bill be modified
to acknowledge the fact that many of our states have their own
protective civil rights and employment laws. I was proud to cosponsor
it and regret that with the fix being in, this amendment was rejected
by the Senate. But the fix was in, and that is out.
What we have done here? I will give you an example of one class
action suit that would have been impacted under this legislation--Brown
v. Board of Education, finally ending segregation in our schools, a
blight on the American conscience. And how did Brown v. Board of
Education get to the Supreme Court? Not from the three Federal courts
in that class action suit; not the three Federal courts that said
``separate but equal'' is the law of the land. It had been good enough
for all of us. Send those African-American children to one school. Send
the White kids to a much better school--because that is what it was.
The view was that is good enough for us, always been that way.
Only one State court in the State of Delaware said: That might be
what the U.S. Supreme Court said, but they are wrong. They are wrong.
We don't believe in Plessy v. Ferguson. We don't believe in the
separate but equal. We say sending Black children to one school and
White kids to the other is not equal. We are making second-class
citizens of these African Americans.
And because a State court heard and ruled on that class action, it
went up to the U.S. Supreme Court, and the U.S. Supreme Court
unanimously came down with Brown v. Board of Education.
We pray there is not some class of people in this country being
damaged the way African-American children were being damaged at that
time because if they go into the courts in the wake of this
legislation, the fix is in, this Senate has closed the court doors to
them, this White House has closed the court doors to them, these
corporate interests have closed the court doors to them. It is a shame.
It is wrong. It is one heck of a message to send to this country.
It is disappointing to me that the Senate has refused to listen to
wise counsel of our state legislatures, our state law enforcement
officers, our state judges and even the views expressed by our federal
judiciary since they are the institutions that we are affecting by
enacting this legislation.
I predict this legislation will be manipulated by well-paid corporate
defense lawyers to create complex, expensive and lengthy litigation
over the criteria and factors in the bill and whether they apply to a
particular case. Unfortunately, one of the great boons of this
legislation, to the extent it does not simply deter class actions
brought by consumers, is that it will make them more costly, burdensome
and complicated.
The so-called Class Action Fairness Act falls short of the
expectation set by its title. It will leave many injured parties who
have valid claims with no avenue for relief, and that is anything but
fair to the ordinary Americans who look to us to represent them in the
United States Senate.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. SPECTER. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SPECTER. Mr. President, I thank my colleagues for moving this
bill through to final conclusion where we are now scheduled to vote on
final passage at 3 o'clock this afternoon.
We took this bill up in the Judiciary Committee a week ago today.
Although there was some conjecture we could not pass the bill out of
committee, in the morning we did so. We started the floor debate Monday
afternoon. I led off in my capacity as chairman of the Judiciary
Committee. We had a number of amendments and we have worked the will of
the Senate. A number of amendments have been withdrawn, a number of
amendments have been defeated.
The Senator from Wisconsin, Senator Feingold, offered an amendment
which would have imposed time limitations on the courts on their
handling of class action cases. I told him I thought it was a good
idea, but I was constrained to vote against it because we have an
understanding--implicit or explicit, I am not quite sure which because
I was not party to it--with the House of Representatives that if we
sent them a so-called clean bill without amendments, they would accept
the Senate version. I told Senator Feingold as to his issue, I have had
a number of complaints about delays in the administration of the
courts. That is something the Judiciary Committee will take up.
I make it plain we will not deal with judicial independence or the
court's discretionary functions, but when it comes to delays, that is a
matter of congressional oversight on our fundamental responsibility to
decide how many judges there will be at all levels. That is an issue we
will take up.
The Senator from South Carolina, Senator Lindsey Graham, had proposed
an amendment on disclosure, on transparency, sunshine. There again,
that is a good idea. We have worked through a colloquy. I have not seen
the final form, but I was discussing it with Senator Graham again this
morning and the staffs are working that out. I anticipate we will have
that finished.
The Senator from Illinois, Senator Durbin, had a proposed amendment
on mass actions. We had worked through to see if we could formulate a
colloquy. That has not reached fruition. Senator Durbin has decided to
withdraw. That is a complex matter which we took up in committee 2
years ago. We made some modifications in the bill, but it is very
important as this bill moves forward to become law that it be dealt
with as a procedural change, that there not be substantive changes in
the rights of the parties.
We have sought to move into the Federal courts in order to avoid
forum shopping on judges or courts where there is some indication of a
prejudicial predisposition. It is my hope as this class action bill is
interpreted that it will not effect substantive rights.
There is a tender issue on selection of State law where there are a
number of States involved. There is a lot of commonality in our law
injected through the uniform commercial code and interjected through
the restatement of varieties of substantive matters such as torts,
where class actions can be certified, so it is my hope this bill, this
act, will not be interpreted to curtail a substantive right.
There is a great deal of wisdom in the Senate on this bipartisan bill
which has received considerable support on the Democratic side of the
aisle as well as very strong support on the Republican side of the
aisle to move through without a conference where we might have had a
bill which was a great deal more restrictive of plaintiffs' rights,
where we might have had a bill where the House provision calls for
retroactive application. That would upset a great many existing
lawsuits. All factors considered, we have come to a wise conclusion.
Mr CORNYN. Mr. President, I have spoken previously on this floor
about my concerns that this legislation does not go far enough to
address the scandal of litigation abuse that plagues our civil justice
system. I stand by those concerns today. We can and should do more to
reduce the burden of frivolous, expensive litigation. Our Nation's
economic competitiveness in the 21st century depends on it.
We should consider additional measures that better level the playing
field, that produce a good flow of information and transparency, and
that provide a clear relationship between plaintiffs and their
attorneys.
But while this modest legislation could do more, I believe that S. 5
is an important first step to reform--a step in the right direction.
[[Page S1245]]
By providing for removal of a greater number of class action lawsuits
from State court to Federal court and by requiring that judges
carefully review all coupon settlements and limit attorneys' fees paid
to these settlements to the value actually received by class members,
it sets the groundwork for a much needed reform.
In the spirit of bipartisan cooperation that drove this bill forward,
I set aside my concerns for now and am proud to co-sponsor.
I thank my friend from Iowa, Senator Grassley, for his leadership and
persistence on this issue. For five consecutive Congresses, dating back
to 1997, Senator Grassley has taken up the mantel of class action
reform and he deserves a great deal of credit for it.
Finally, I want to thank Chairman Specter and Senator Hatch for their
continued stewardship. Without them, this bill would not be where it is
today.
Mr. SPECTER. Mr. President, I have a few minutes remaining on my 10
minutes. I notice the distinguished Democratic leader is here, but I
said I would yield to the Senator from Connecticut, Senator Dodd. He
has a very unique spot in my evaluation of Senators because he was
elected in the class of 1980. He reminds me there were 18 of us
elected, and the Democrats, through their tenacity and wisdom, have
maintained 50 percent of their class and the Republicans, on the other
hand, have only retained 12\1/2\ percent. Of course, we started with 16
to 2, so let the record show that the Republicans from the class of
1980 still outnumber the Democrats 2 to 1.
I yield to Senator Dodd.
Mr. DODD. Mr. President, I thank my colleague from Pennsylvania. One
of the great pleasures over the past 24 years has been to serve with
Arlen Specter in this body.
We are nearing the end of consideration of this bill.
I would like to spend just a few minutes to offer some thoughts on
it.
First, a brief word about the process by which this bill has been
considered by the Senate. I don't think it is an overstatement to say
that--aside from the details of the legislation itself--the most
important factor in its expected passage is the unanimous consent
agreement that was put into place at the onset of the Senate's
deliberations on the bill.
In that respect, the two leaders--Senator Frist and Senator Reid--are
to be greatly commended. Either one could have refused to enter into
such an agreement--which would have made the prospects for passage of
this legislation far less certain.
As I said yesterday, a determined minority of even one Senator can
impede or block consideration of legislation in this body. Either
Leader, by declining to enter into a consent agreement, could have
paved the way for others to employ dilatory, delaying, and distracting
tactics.
However, both Senators Reid and Frist agreed that only relevant
amendments to the bill would be in order. No doubt, that agreement
displeased some members in both caucuses. However, it helped ensure
that the debate we have had on this bill has been substantive, orderly,
and deliberate. And it minimized the risk that this bill would be
derailed by contentious issues wholly unrelated to the substance of the
bill itself.
So the cooperation shown by the two leaders on this legislation
cannot be overemphasized. Senator Reid is to be particularly commended
in this regard, given that a majority of the members of his caucus do
not appear to support the bill.
The consent agreement that he entered into with the majority leader
demonstrates his commitment to working in as cooperative a manner as
possible for the good of the Senate.
Allow me to spend a few moments talking about the substance of this
legislation. We have heard a lot of characterizations over the past few
days to describe the bill and the problems it seeks to correct. I am
among those who believe that our class action system is in need of
reform. There are clear abuses and shortcomings that have not served
the interests of the parties or the interests of justice. And this bill
takes a number of significant steps to remedy those abuses and
shortcomings.
To those who say that this legislation will have dire consequences on
the quality of justice in our Nation, I must respectfully disagree. And
I do so for a number of reasons.
First, it is important to view this legislation in a larger
perspective. According to one estimate, .92 percent of all cases filed
in Federal courts over the past three decades have been class actions.
This point deserves special emphasis: from 1972 to 2002, less than one
percent of all cases filed in the Federal courts of our Nation have
been class actions.
Not all states compile similar data, so there are no comparable
statistics for class actions as a percentage of all cases filed in
State courts. However, there is every reason to believe that the
percentage of class actions filed in state courts is at least as
minuscule as the percentage filed in state courts. My point is simply
this: that this legislation will affect only a very small percentage of
all cases filed in our courts--less than 1 percent.
Some would argue that if even one just case in America were denied by
this bill, that would be an unit result, and merit the defeat of this
bill. I am not unsympathetic to that argument. Indeed, I agree
wholeheartedly with it. Our system of justice is premised on the belief
that equal justice under law is the right of each and every citizen.
Even one just cause unjustly denied offends our Nation's commitment
to justice and fair play. Any legislation that would deny to even one
citizen the right to equal justice deserves opposition, at least in
this Senator's opinion.
But this bill does not deny such a right. It does not even come
close. It will not close the courthouse door on a single citizen.
Moreover--unlike other legislation that has been considered by this
body--it will not cap damages in a single case.
It will not cap attorney's fees for a single class action lawyer.
It will not extinguish or alter in any way a single pending class
action.
Nor does it impose more rigorous pleading requirements or evidentiary
standards of proof in a single class action.
In short, no citizen will in any way lose his or her right to go to
court and seek the redress of grievances.
My colleagues might ask: if this bill will not do any of these
things, then what will it do?
First and foremost, it will put an end to the kind of abusive forum-
shopping that has grown in frequency and notoriety over the past few
years.
Opponents of this bill claim that, by in any way altering the
procedural rules governing class actions, substantive rights will be
denied.
However, this argument is trumped by a little document called the
U.S. Constitution.
Article III of that document extends Federal jurisdiction to suits
between ``citizens of different States.'' The purpose of extending this
``diversity jurisdiction'' to citizens is to prevent the citizens of
one State from being discriminated against by the courts of another
State.
However, over the years, this purpose has been increasingly thwarted
by clever pleading practices of enterprising class action attorneys.
By adding a plaintiff or a defendant to a lawsuit solely based on
their citizenship, they have been able to defeat efforts to move cases
to Federal court--even cases involving multiple parties from multiple
States. Likewise, by alleging an amount in controversy that does not
trigger the $75,000 threshold, they have thwarted Federal
jurisdiction--even in cases alleging millions if not billions of
dollars in damages.
In short, current pleading practice by the class action plaintiffs
bar has very effectively denied Federal jurisdiction over cases that
are predominantly interstate in nature. These are precisely the kinds
of cases the Framers thought deserve to be heard in Federal courts.
All that this legislation does in this respect is bring pleading
practice more into line with constitutional requirements. Cases that
are primarily intra- rather than interstate in nature may continue to
be heard in State courts.
But those that are clearly interstate in nature will now be more
likely to be heard in Federal court, where they belong.
The notion that cases will be ``dismissed'' as a result of this and
other changes created by this legislation is, in my view, patently
absurd. No provision of this legislation requires a single case to be
dismissed. Plaintiffs' attorneys may end up spending more time in
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Federal court than State court. They may not be able to pick a class of
plaintiffs that is as large as they can now, or that encompasses as
many States. They may end up bringing cases in two or more courts that
they might have preferred to bring in a single court. But they will not
find their cases dismissed.
As my friend and colleague from Utah, Senator Hatch, said earlier,
good lawyers will find a way to do well under this bill. Good lawyers
will do well in Federal courts, as they have done well in State courts.
In that sense, then, this bill is exceedingly modest.
We write our laws on paper. We do not etch them in stone. I am
confident that the bill we have written here is a good one. I believe
that, if and when it becomes law, it will withstand the test of time.
Likewise, I am confident that if in the future any shortcomings emerge,
we will have the good sense to fix them.
By way of analogy, I remind our colleagues of another reform bill
that was considered several years ago. The Senator from New Mexico,
Senator Domenici, and I wrote a bill to address frivolous securities
lawsuits directed primarily at high-tech companies. The bill was on the
floor of the Senate for about 2 weeks, if I recall correctly. A number
of amendments were offered. It ultimately became law, despite a
Presidential veto.
There were those who predicted dire consequences as a result of that
bill's enactment. We were told that securities lawsuits would dry up,
that harmed investors would have no recourse.
Well, here we are, about 9 years after enactment of that law, and
there has been no appreciable drop-off in investor lawsuits and
recoveries. In fact, some of the most vehement opponents of that law in
the trial bar continue to be some of the most successful under the law.
In sum, we have written a good bill here. It deserves to become law.
I hope that it will. I want to acknowledge those of our colleagues who
are most responsible for bringing us to this point: Senators Frist and
Reid, as I have already mentioned; as well as Senators Grassley, Kohl,
Hatch, Feinstein, Carper, and others. I also want to acknowledge the
hard work of their staff, who in some cases have worked on this
legislation for a number of years.
So, to briefly reiterate, I thank my leader, Senator Reid, and the
majority leader, as well. We would not be in the position we are in, I
have said on several occasions over the last 3 or 4 days, had the
Democratic leader--particularly because the minority always has unique
rights in this Senate to delay or stop legislation moving at all.
Even though my colleague from Nevada has strong reservations, which I
am sure he will express shortly, about the substance of this bill, as a
result of his willingness to let a product move forward, we are here
today about to adopt a piece of legislation. When I hear some of the
comments being made about whether Democrats are willing to work on
issues, even ones they disagree with, that is belied by the fact that
the minority leader made it possible for us to be here to deal with all
relevant, germane amendments on this bill. I thank the Senator from
Nevada for his efforts in allowing that to go forward.
There has been a lot of talk over the last several days. Classically,
with a matter like this the opponents and proponents have a tendency to
engage in, if I may say with all due respect, a little bit of
hyperbole. But it's important to stick to the facts. And one important
fact that should shape how we view this legislation is that less than 1
percent of all cases filed in the Federal courts since 1972 have been
class action cases. I searched very tirelessly to find out the
percentages in State courts. I could not come up with an exact number.
I am told by those knowledgeable the number of class actions filed in
State courts as a percentage of all State actions is not substantially
different than the Federal courts, and is likely to be even smaller
given the large number of State cases filed generally. What is beyond
dispute is that a very small percentage of the cases filed in our court
systems are class actions.
Obviously, if anyone is denied access to the courts in this country
because of things we do here, then, obviously, justice is denied to
someone who cannot make that case.
We have not done that. This system of class action is in need of
reform.
This is about money. Unfortunately, it is not about the money that
legitimate plaintiffs get; it is about the money that is either saved
by a defendant or made by the plaintiffs' bar. That is what this is
about, and forum shopping around the country, finding the venue that
gets you the best possible result for your particular point of view--
not exactly what the Founders had in mind when they drafted the
diversity provisions of article III of the Federal Constitution. If you
want to change the Constitution and say that no longer should diversity
apply, then you may try to do that. If that is what opponents of this
legislation believe, then they can try to amend the Constitution to in
effect keep all these cases in State courts. But since the founding of
this Republic, the diversity clause of article III of the Constitution
has been very clear.
Mr. REID. Mr. President, I ask unanimous consent that the Senator
from Connecticut be allowed 5 more minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DODD. Mr. President, I thank my colleague. I will go quickly.
The point is, this is about court reform more than tort reform. About
fifteen months ago, as many of my colleagues recall, we worked out this
bill. We struck an agreement, a good one. Unfortunately, the majority
here, last year, decided not to bring this bill up. I believe they made
a mistake in doing that. We could have wrapped this bill up in January
of 2004 but did not do it. This agreement has been ready for the
Senate's consideration for over a year. We have had good debate on some
of these amendments, and we have drafted a pretty good bill. It is not
written in marble; it is not written in granite; it is written on
paper. And we think it is going to provide equal access to the courts.
It is going to provide a fairness to plaintiffs and defendants, to see
that they get a just decision regarding the matters that are brought
before the courts.
So to my colleagues who are strong opponents of all of this, believe
me, this bill is a simple matter of court reform. It will help ensure
that victims of wrongdoing get fair compensation and relief, rather
than a raw deal that lines the pockets of those who either allegedly
represent them or those who are on the defendant side who want to avoid
some of the payments they would otherwise have to make.
There are no caps in this bill. It does not impose any rigorous
procedural requirements or evidentiary requirements of proof at all. In
short, no citizen will in any way lose his or her right to go to court
to seek redress for their grievances.
You get anecdotal stories, hearing of one case or another. This bill
is about court reform, getting a system right. It is long overdue. It
does not mean that every tort reform measure that comes before us ought
to be supported, but on this one, those of us who worked on this
believe we have done a good job. We were asked to make four
improvements in this bill. We made 12 of them over a year ago.
I thank the Senator from Delaware, Mr. Carper, Senator Feinstein,
Senator Schumer, Senator Landrieu, and other Members on the Democratic
side who have worked on this issue to make this possible.
Again, my thanks--and it should be noted--to the distinguished
Senator from Nevada, Mr. Reid, and Senator Frist, who struck a
procedural agreement so the Senate could consider this bill.
The PRESIDING OFFICER. The Democratic leader.
Mr. REID. Mr. President, yesterday on the Senate floor I expressed
serious concerns about this legislation that is pending before the
Senate. I explained at that time that this legislation, in my opinion,
is one of the most unfair, anti-consumer pieces of legislation to come
before the Senate in a long time. It slams the courthouse doors on a
wide range of injury plaintiffs, it turns federalism upside down by
preventing State courts from hearing State law claims, and it limits
corporate accountability at a time of rampant corporate scandals.
Instead of turning up
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the heat on corporate fraud, this bill lets corporate wrongdoers off
the hook.
At the beginning of the debate yesterday, I said this is a bad piece
of legislation, but there are going to be some amendments offered,
amendments that will improve this bad legislation. They would have made
significant improvements. But my hope of these amendments passing was
very short lived. It did not happen. Over the last 2 days, the Senate
has turned away each and every effort to make this bill less offensive.
Every single amendment--each a message of fairness--was debated and
turned down. That is a shame. Proponents of this bill explained their
opposition to the common sense amendments by describing the current
bill as a ``delicate compromise.'' I have heard that so many times. I
spoke to Congressman Sensenbrenner, the chairman of the Judiciary
Committee in the House, who is supposedly the gatekeeper on this
legislation. He said: We are going to accept legislation that is in
keeping with what you did last time. Well, when he said, What you did
last time, he was talking about the bill that came out of the Senate
Judiciary committee and was here on the floor. These changes would not
have dramatically altered that.
If you went downtown to see what K Street wanted with these
amendments, of course they were against all of them because, in my
opinion, this legislation slams the door on most everyone who wants to
bring a case and use class action as the tool for coming to court.
The debate yesterday was characterized by two significant
misunderstandings about the bill. First, proponents claimed that under
this bill, class action lawsuits could stay in State courts as long as
two-thirds of the plaintiffs are from a single State. Well, in fact,
the bill reverses longstanding Federal court diversity rules by saying
that no matter how many plaintiffs are from a single State, the case
can still be removed to Federal court if the defendant corporation is
incorporated in a different State. Keep in mind, of the Fortune 500
companies, 58 percent of them are incorporated in Delaware, so the
majority of class action lawsuits would be removable just on that
figure alone.
For example, in the State of Nevada, at the famous Yucca Mountain,
the contractors were in such a rush, the Department of Energy was in
such a rush to drill a hole in this mountain, they had a huge auger.
The size of this auger was halfway to the top of the second story of
this Chamber. It was a huge machine. It dug a hole almost as big as
this Chamber--a big tool going right through that mountain. They knew
they were coming to a formation there and that the toxic mineral dust
from drilling the formation would cause people to get really sick with
silicosis. They knew that, but they were in such a rush that they would
not even wet down this big tool to prevent the dust. They drilled dry,
so to speak, and this toxic dust flew all over and the workers inhaled
it. And today, as we speak, people are dying as a result of that.
Well, there has been a request for the case to be considered a class
action--under the old law in existence before this passes--that would
allow all those workers to join together in a class action and have it
certified. Even though well over two-thirds of the plaintiffs are
residents of Nevada, the harm was caused in Nevada, and the defendants
were obviously doing business in Nevada, a defendant incorporated in a
State other than Nevada could remove the case from Nevada State court.
That is how this bill works. It is just unfair.
The second mischaracterization of this legislation is that supporters
make it sound as though all we are talking about is venue: These cases
will simply move from State court to Federal court and proceed just the
same. That is simply not true. Under Supreme Court precedents that this
bill does nothing to change, Federal judges routinely dismiss class
action lawsuits based on State law. Those cases that are not dismissed
go to the back of a very long line in the overburdened Federal court
system.
One of the foremost experts on class actions is a man who is also an
expert in antitrust law. He is a professor at Harvard Law School. His
name is Arthur Miller. Here is what he said:
Federal courts have consistently denied class certification
in multi-state lawsuits based on consumer as well as other
state laws. . . . not a single Federal Circuit Court has
granted class certification for such a lawsuit, and six
Circuit Courts have expressly denied certification.
The rejection of the Feinstein-Bingaman amendment shows this bill's
true colors. And I admire greatly Senator Feinstein for having the
courage to do the right thing and say: I have been one of the original
pushers of this legislation, but what we are trying to do is unfair,
and the Bingaman amendment should be adopted. She joined with him for
the Feinstein-Bingaman amendment.
So, if the sponsors merely wanted federal court review of lawsuits
with national implications, they would not object to an amendment
making clear that federal judges may not dismiss these cases.
But without that change, the truth is plain to see: This bill is
designed to bury class action lawsuits, to cut off the one means by
which individual Americans ripped off by fraudulent or deceptive
practices can band together to demand justice from corporate America.
What does this change mean in the real world? It means, for example,
that cases like the one brought by Shaneen Wahl will not be able to go
forward. Shaneen is a 55 year old woman, and she was diagnosed with
breast cancer. Her health insurance company raised the rates on her
insurance premiums from $194 a month to $1,800 a month--a little jump
in price. She found out that her insurance company was improperly doing
this for tens of thousands of other chronically ill patients. She got a
lawyer, they banded together in a class action lawsuit, and they
prevailed in state court. Under this legislation, the case would be
dismissed.
Another breast cancer survivor also a Florida woman, is 40-year-old
Susan Friedman. Susan's insurance company removed her case to federal
court, where it was dismissed. She is an unlucky example of what will
happen to more people under this legislation. This is the fate of many
other class action lawsuits under the bill the Senate will soon pass.
Unfortunately, insurance companies are ripping people off all the
time, and this legislation will give the biggest, best businesses in
the world, the insurance companies, more money.
In the real world, this legislation means that when a phone company
systematically bills customers for services they had cancelled or a
plumbing company routinely overcharges customers by $10, those
practices will not be brought to light. The dollar amounts would be too
small. Why should the plumbing company get an extra $10 from everyone?
I guess what this legislation means is if you cheat a lot, you can take
them to court, but if you cheat just a little bit, lots and lots of
times, have at it, because no one can do anything about it. This is the
``cheat a little bit'' legislation.
This legislation is not good. It will help the tobacco industry avoid
accountability. It virtually guarantees that tobacco-related cases will
end up in federal court where they won't be able to proceed. I had a
person, Fritz Hahn, who lived on my property in Nevada to keep an eye
on things. He was there for many years. He started smoking when he was
a teenager. He is now dead as a result of tobacco. He smoked too much.
He got throat cancer. He died a slow, terrible death. But for class
action lawyers, tobacco companies would have a free rein, and they
would be able to kill a lot more people like Fritz Hahn.
That is what class action is all about, joining together and going
after those companies who do bad things to people. However, this
legislation will make it so much more difficult. That is why numerous
consumer groups, including the Campaign for Tobacco-Free Kids, the
Leadership Conference on Civil Rights, the Consumers Union, the AFL-
CIO, Public Citizen, and many others have urged the Senate to reject
the bill.
I ask unanimous consent to print in the Record scores and scores of
companies that support my statement against this legislation.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[[Page S1248]]
National Organizations Opposed to Federal Class Action Legislation as
of May 21, 2004
AARP, ADA Watch/National Coalition for Disability Rights,
AFL-CIO, Alliance for Healthy Homes, Alliance for Justice,
Alliance for Retired Americans, American Association of
People with Disabilities, American Association of University
Women, American Cancer Society, American Heart Association,
American Federation of Government Employees, American
Federation of State, County and Municipal Employees, American
Lung Association, American-Arab Anti-Discrimination
Committee, Americans for Democratic Action, Bazelon Center
for Mental Health Law, Brady Campaign to Prevent Gun
Violence, United with the Million Mom March, and Campaign for
Tobacco Free Kids.
Center for Disability and Health, Center for Justice and
Democracy, Center for Responsible Lending, Center for Women
Policy Studies, Civil Justice, Inc., Clean Water Action,
Coalition to Stop Gun Violence, Commission on Social Action
of Reform Judaism, Communication Workers of America, Consumer
Federation of America, Consumers for Auto Reliability and
Safety, Disability Rights Education and Defense Fund,
Earthjustice, Education Law Center, Environmental Working
Group, Epilepsy Foundation, Families USA, Federally Employed
Women, Friends of the Earth, and Gray Panthers.
Greenpeace, Homeowners Against Deficient Dwellings, Jewish
Labor Committee, Lawyers' Committee for Civil Rights Under
Law, Leadership Conference on Civil Rights, Mexican American
Legal Defense and Educational Fund, Mineral Policy Center,
NAACP Legal Defense and Education Fund, National Alliance of
Postal and Federal Employees, National Asian Pacific Legal
Consortium, National Association for the Advancement of
Colored People, National Association for Equal Opportunity in
Higher Ed, National Association of Consumer Advocates,
National Association of Consumer Agency Administrators,
National Association of the Deaf, National Association of
Protection and Advocacy Systems, National Bar Association,
National Campaign for Hearing Health, National Center on
Poverty Law, and National Coalition on Black Civic
Participation.
National Committee on Pay Equity, National Consumer Law
Center, National Consumer's Coalition, National Council of La
Raza, National Employment Lawyers Association, National Fair
Housing Alliance, National Gay and Lesbian Task Force,
National Law Center on Homeless & Poverty, National Legal Aid
and Defender Association, National Organization for Women,
National Partnership for Women & Families, Natural Resources
Defense Council, National Workrights Institute, National
Women's Health Network, National Women's Law Center, North
Carolina Justice Center, NOW Legal Defense and Education
Fund, People for the American Way, Public Citizen, and Pride
at Work.
Project Equality, Religious Coalition for Reproductive
Choice, Sargent Shriver National Center on Poverty Law,
Service Employees International Union, Sierra Club, Tobacco
Control Resource Center, Tobacco Products Liability Project,
UNITE!, United Food and Commercial Workers International
Union, United Steelworkers of America, USAction, U.S. Public
Interest Research Group, Violence Policy Center, and Women
Employed.
Government Organizations Opposed to Class-Action Legislation
Conference of Chief Justices (State Supreme Court
Justices), Judicial Conference of the United States (Federal
Judges Association), Attorney General of California, Bill
Lockyer, Attorney General of Illinois, Lisa Madigan, Attorney
General of Maryland, J. Joseph Curran, Jr., and Attorney
General of Minnesota, Mike Hatch.
Attorney General of Missouri, Jeremiah W. Nixon, Attorney
General of Montana, Mike McGrath, Attorney General of New
Mexico, Patricia A. Madrid, Attorney General of New York,
Eliot Spitzer, Attorney General of Oklahoma, W.A. Drew
Edmondson, Attorney General of Vermont, William H. Sorrell,
and Attorney General of West Virginia, Darrell Vivian McGraw,
Jr.
Mr. REID. Organizations are against it. State court judges, Federal
judges, many state Attorneys General, and the National Conference of
State Legislators are against it. Officials in our home States are
telling us not to do this. The only groups that want us to pass this
bill are those representing defendants in these lawsuits. Sure, they
want to be relieved of the burden of accountability. We shouldn't let
them. This is not just a battle between big business and lawyers. It is
more. It is certainly more anti-lawyer than I would like to think. But
that is what we hear coming from the White House.
At a meeting in Las Vegas, the President said: The most hurtful thing
in the American economy today is lawyers. I don't believe that, as
indicated by the instances I gave about tobacco. Sure there are bad
lawyers who bring meritless cases, and there should be something we do
to crack down on them. But this bill is not about punishing bad
lawyers. More fundamentally this bill is about limiting access to civil
courts and hurting consumers.
One of the grievances that inspired our Founding Fathers to revolt
against King George was they couldn't bring their grievances to a body.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. REID. What time is that? I will use leader time.
The PRESIDING OFFICER. The Senator had 10 minutes.
Mr. REID. I thank the Chair.
As I was saying, one of the grievances that inspired our Founding
Fathers to revolt against King George was limited access to the civil
courts. That was based on the rights secured in the year 1215, when
King John signed the Magna Carta. King John couldn't sign his name, so
he put an X. From that day forward, one of the things that was brought
over the ocean and is now in our common law, when the Founding Fathers
developed our country, is that you bring to court your grievances. They
had a jury that could sit down and talk about what was good and bad
about your case. Access to the courts is a basic right in our
democracy, and after today it will be a diminished right.
These rights are being denigrated, taken away from us with this
legislation. It is too bad. A basic right that has been in existence
since we have been a country, they are chipping away at.
I am going to vote against this ill-considered bill. I recognize it
is going to pass. I think that is too bad. I can say this without any
question: Downtown beat us. There is no question about that.
The PRESIDING OFFICER. The majority leader is recognized.
Mr. FRIST. Mr. President, in a few minutes we will be voting on the
Class Action Fairness Act. We have before us truly a bipartisan bill
that was introduced with 32 cosponsors, 24 Republicans and 8 Democrats.
It was voted out of the Judiciary Committee on a strong bipartisan
vote. Every vote on every amendment that has been offered has been
bipartisan, if we look at the vote tallies. I do anticipate that in a
few minutes our vote on final passage will be strongly bipartisan as
well.
There are a few misconceptions about the bill that I would like to
definitively dispel in these final moments. This bill does not close
the courthouse doors to injured or aggrieved plaintiffs. It does not.
This is court reform. It is designed to rein in lawsuit abuses, and it
does just that. The plaintiff may end up in Federal court, yes, rather
than State court, but no citizen will lose his or her right to bring a
case--no citizen. In fact, the Class Action Fairness Act will protect
plaintiffs in large interstate class action cases. No longer will
predatory lawyers be able to negotiate deals that leave their clients
with coupons while they take home millions. Plaintiffs will now be
covered by a consumer bill of rights for the first time, a consumer
bill of rights that will require lawyer's fees for coupon settlements
to be based either on the value of the coupons that are actually
redeemed or on the hours actually billed.
Take the case such as the one in my home State of Tennessee involving
a Memphis car dealer. It was discovered that a dealership was
instructing its employees to cheat car purchasers by as much as $2,000.
Numerous residents were affected so a class action suit was filed. The
suit was eventually settled, and the plaintiffs received a coupon for
$1,200, but that coupon could only be used if they went back to the
same dealer who had cheated them in the first place and bought another
car. Meanwhile, the trial attorneys who settled the suit received $1.3
million in legal fees. A number of customers were understandably upset
that in order to receive any financial benefit, they would have to take
that coupon and go back to the very same dealer, while at the same time
the lawyers were able to take their money and put it right into their
pockets. The legislation before us today will put a stop to such unfair
practices.
Second, the class action bill will help end the phenomenon that we
all recognize known as forum shopping. Aggressive trial lawyers have
found that a few counties are lawsuit friendly, and in these select
State courts, judges are quick to certify a class action and juries are
known to grant extravagant damage awards. Meanwhile, this same
defendant can face copycat cases all
[[Page S1249]]
across the country, each jury granting a different result. These
counties may have little or no geographic relationship to either the
plaintiff or to the defendant, but the trial lawyers know that simply
the threat of suing in these particular counties can lead to huge,
extravagant cash settlements. One study estimates that virtually every
sector of the U.S. economy is on trial in only three State courts.
The Class Action Fairness Act moves those large nationwide cases that
genuinely impact interstate commerce to the Federal courts where they
belong. The Class Action Fairness Act is a good bill. It is a fair
bill. It is a significant first step in putting an end to the lawsuit
abuses that undermine our legal system.
I commend my colleagues for their hard work. I thank, in particular,
Senator Grassley, the bill's lead sponsor, who has been working on this
issue for a decade; Senator Specter, for leading the bill expeditiously
through the Judiciary Committee and on to the floor; Senator Hatch, who
has been a tireless advocate for legal reform and class action reform
and has helped to manage this bill on the floor; Senator Cornyn, who
has been tireless in his presence and participation on this class
action bill over the last several days; the bill's Democratic
supporters, especially Senator Kohl, Senator Dodd, Senator Carper,
Senator Ben Nelson; all have worked and reached across the aisle
despite great pressure from the bill's opponents, and for that I thank
them.
Finally, I thank the Democratic leader, Harry Reid, for working on a
process. We just heard him speaking on the floor against the bill. In
spite of that personal feeling toward this bill, he has worked in a
real leadership manner--working with us to deal with the bill in a
timely and expeditious manner on the floor.
The American people expect and deserve a government that works and
leaders who work together. I think they have seen it play out very well
on this bill. They did elect us to govern toward meaningful solutions.
The bill, I believe, demonstrates we are accomplishing just that. We
are meeting the challenge and we are moving America forward. I look
forward to quick passage of the bill in the House and being able to
send it to the President's desk.
Mr. President, we will vote very shortly. So that Members can plan on
their schedules, this upcoming vote on final passage of the class
action fairness bill will be the last vote of the evening.
Following this vote, we will have a few Members making statements. We
will remain in session for a short period today. The Senate will not be
in session tomorrow and we will reconvene on Monday.
On Monday, the plans are to begin debate on the nomination of Michael
Chertoff to be Secretary of Homeland Security. At closing today, we
will reach an agreement that will provide for debate on the Chertoff
nomination during Monday's session, with a vote to occur on that
nomination on Tuesday.
Therefore, I am prepared to announce we will not have any votes on
Monday. I will have more to say about the precise timing of the debate
and vote later today when we wrap up our business. Once again, I thank
all Members for their cooperation and assistance throughout the debate
on the class action bill. I believe we are ready for final passage.
Mr. President, I ask for the yeas and nays on the bill.
The PRESIDING OFFICER (Mr. Coleman). Is there a sufficient second?
There is a sufficient second.
The question is on the engrossment and third reading of the bill.
The bill was ordered to be engrossed for a third reading and was read
the third time.
The PRESIDING OFFICER. The bill having been read the third time, the
question is, Shall the bill pass?
The yeas and nays have been ordered. The clerk will call the roll.
The legislative clerk called the roll.
Mr. McCONNELL. The following Senators were necessarily absent: the
Senator from Pennsylvania (Mr. Santorum) and the Senator from New
Hampshire (Mr. Sununu).
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 72, nays 26, as follows:
[Rollcall Vote No. 9 Leg.]
YEAS--72
Alexander
Allard
Allen
Bayh
Bennett
Bingaman
Bond
Brownback
Bunning
Burns
Burr
Cantwell
Carper
Chafee
Chambliss
Coburn
Cochran
Coleman
Collins
Conrad
Cornyn
Craig
Crapo
DeMint
DeWine
Dodd
Dole
Domenici
Ensign
Enzi
Feinstein
Frist
Graham
Grassley
Gregg
Hagel
Hatch
Hutchison
Inhofe
Isakson
Jeffords
Johnson
Kohl
Kyl
Landrieu
Lieberman
Lincoln
Lott
Lugar
Martinez
McCain
McConnell
Murkowski
Nelson (NE)
Obama
Reed
Roberts
Rockefeller
Salazar
Schumer
Sessions
Shelby
Smith
Snowe
Specter
Stevens
Talent
Thomas
Thune
Vitter
Voinovich
Warner
NAYS--26
Akaka
Baucus
Biden
Boxer
Byrd
Clinton
Corzine
Dayton
Dorgan
Durbin
Feingold
Harkin
Inouye
Kennedy
Kerry
Lautenberg
Leahy
Levin
Mikulski
Murray
Nelson (FL)
Pryor
Reid
Sarbanes
Stabenow
Wyden
NOT VOTING--2
Santorum
Sununu
The bill (S. 5) was passed, as follows:
S. 5
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Class
Action Fairness Act of 2005''.
(b) Reference.--Whenever in this Act reference is made to
an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or
other provision of title 28, United States Code.
(c) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; reference; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Consumer class action bill of rights and improved procedures
for interstate class actions.
Sec. 4. Federal district court jurisdiction for interstate class
actions.
Sec. 5. Removal of interstate class actions to Federal district court.
Sec. 6. Report on class action settlements.
Sec. 7. Enactment of Judicial Conference recommendations.
Sec. 8. Rulemaking authority of Supreme Court and Judicial Conference.
Sec. 9. Effective date.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--Congress finds the following:
(1) Class action lawsuits are an important and valuable
part of the legal system when they permit the fair and
efficient resolution of legitimate claims of numerous parties
by allowing the claims to be aggregated into a single action
against a defendant that has allegedly caused harm.
(2) Over the past decade, there have been abuses of the
class action device that have--
(A) harmed class members with legitimate claims and
defendants that have acted responsibly;
(B) adversely affected interstate commerce; and
(C) undermined public respect for our judicial system.
(3) Class members often receive little or no benefit from
class actions, and are sometimes harmed, such as where--
(A) counsel are awarded large fees, while leaving class
members with coupons or other awards of little or no value;
(B) unjustified awards are made to certain plaintiffs at
the expense of other class members; and
(C) confusing notices are published that prevent class
members from being able to fully understand and effectively
exercise their rights.
(4) Abuses in class actions undermine the national judicial
system, the free flow of interstate commerce, and the concept
of diversity jurisdiction as intended by the framers of the
United States Constitution, in that State and local courts
are--
(A) keeping cases of national importance out of Federal
court;
(B) sometimes acting in ways that demonstrate bias against
out-of-State defendants; and
(C) making judgments that impose their view of the law on
other States and bind the rights of the residents of those
States.
(b) Purposes.--The purposes of this Act are to--
(1) assure fair and prompt recoveries for class members
with legitimate claims;
(2) restore the intent of the framers of the United States
Constitution by providing for Federal court consideration of
interstate cases of national importance under diversity
jurisdiction; and
(3) benefit society by encouraging innovation and lowering
consumer prices.
[[Page S1250]]
SEC. 3. CONSUMER CLASS ACTION BILL OF RIGHTS AND IMPROVED
PROCEDURES FOR INTERSTATE CLASS ACTIONS.
(a) In General.--Part V is amended by inserting after
chapter 113 the following:
``CHAPTER 114--CLASS ACTIONS
``Sec.
``1711. Definitions.
``1712. Coupon settlements.
``1713. Protection against loss by class members.
``1714. Protection against discrimination based on geographic location.
``1715. Notifications to appropriate Federal and State officials.
``Sec. 1711. Definitions
``In this chapter:
``(1) Class.--The term `class' means all of the class
members in a class action.
``(2) Class action.--The term `class action' means any
civil action filed in a district court of the United States
under rule 23 of the Federal Rules of Civil Procedure or any
civil action that is removed to a district court of the
United States that was originally filed under a State statute
or rule of judicial procedure authorizing an action to be
brought by 1 or more representatives as a class action.
``(3) Class counsel.--The term `class counsel' means the
persons who serve as the attorneys for the class members in a
proposed or certified class action.
``(4) Class members.--The term `class members' means the
persons (named or unnamed) who fall within the definition of
the proposed or certified class in a class action.
``(5) Plaintiff class action.--The term `plaintiff class
action' means a class action in which class members are
plaintiffs.
``(6) Proposed settlement.--The term `proposed settlement'
means an agreement regarding a class action that is subject
to court approval and that, if approved, would be binding on
some or all class members.
``Sec. 1712. Coupon settlements
``(a) Contingent Fees in Coupon Settlements.--If a proposed
settlement in a class action provides for a recovery of
coupons to a class member, the portion of any attorney's fee
award to class counsel that is attributable to the award of
the coupons shall be based on the value to class members of
the coupons that are redeemed.
``(b) Other Attorney's Fee Awards in Coupon Settlements.--
``(1) In general.--If a proposed settlement in a class
action provides for a recovery of coupons to class members,
and a portion of the recovery of the coupons is not used to
determine the attorney's fee to be paid to class counsel, any
attorney's fee award shall be based upon the amount of time
class counsel reasonably expended working on the action.
``(2) Court approval.--Any attorney's fee under this
subsection shall be subject to approval by the court and
shall include an appropriate attorney's fee, if any, for
obtaining equitable relief, including an injunction, if
applicable. Nothing in this subsection shall be construed to
prohibit application of a lodestar with a multiplier method
of determining attorney's fees.
``(c) Attorney's Fee Awards Calculated on a Mixed Basis in
Coupon Settlements.--If a proposed settlement in a class
action provides for an award of coupons to class members and
also provides for equitable relief, including injunctive
relief--
``(1) that portion of the attorney's fee to be paid to
class counsel that is based upon a portion of the recovery of
the coupons shall be calculated in accordance with subsection
(a); and
``(2) that portion of the attorney's fee to be paid to
class counsel that is not based upon a portion of the
recovery of the coupons shall be calculated in accordance
with subsection (b).
``(d) Settlement Valuation Expertise.--In a class action
involving the awarding of coupons, the court may, in its
discretion upon the motion of a party, receive expert
testimony from a witness qualified to provide information on
the actual value to the class members of the coupons that are
redeemed.
``(e) Judicial Scrutiny of Coupon Settlements.--In a
proposed settlement under which class members would be
awarded coupons, the court may approve the proposed
settlement only after a hearing to determine whether, and
making a written finding that, the settlement is fair,
reasonable, and adequate for class members. The court, in its
discretion, may also require that a proposed settlement
agreement provide for the distribution of a portion of the
value of unclaimed coupons to 1 or more charitable or
governmental organizations, as agreed to by the parties. The
distribution and redemption of any proceeds under this
subsection shall not be used to calculate attorneys' fees
under this section.
``Sec. 1713. Protection against loss by class members
``The court may approve a proposed settlement under which
any class member is obligated to pay sums to class counsel
that would result in a net loss to the class member only if
the court makes a written finding that nonmonetary benefits
to the class member substantially outweigh the monetary loss.
``Sec. 1714. Protection against discrimination based on
geographic location
``The court may not approve a proposed settlement that
provides for the payment of greater sums to some class
members than to others solely on the basis that the class
members to whom the greater sums are to be paid are located
in closer geographic proximity to the court.
``Sec. 1715. Notifications to appropriate Federal and State
officials
``(a) Definitions.--
``(1) Appropriate federal official.--In this section, the
term `appropriate Federal official' means--
``(A) the Attorney General of the United States; or
``(B) in any case in which the defendant is a Federal
depository institution, a State depository institution, a
depository institution holding company, a foreign bank, or a
nondepository institution subsidiary of the foregoing (as
such terms are defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813)), the person who has the
primary Federal regulatory or supervisory responsibility with
respect to the defendant, if some or all of the matters
alleged in the class action are subject to regulation or
supervision by that person.
``(2) Appropriate state official.--In this section, the
term `appropriate State official' means the person in the
State who has the primary regulatory or supervisory
responsibility with respect to the defendant, or who licenses
or otherwise authorizes the defendant to conduct business in
the State, if some or all of the matters alleged in the class
action are subject to regulation by that person. If there is
no primary regulator, supervisor, or licensing authority, or
the matters alleged in the class action are not subject to
regulation or supervision by that person, then the
appropriate State official shall be the State attorney
general.
``(b) In General.--Not later than 10 days after a proposed
settlement of a class action is filed in court, each
defendant that is participating in the proposed settlement
shall serve upon the appropriate State official of each State
in which a class member resides and the appropriate Federal
official, a notice of the proposed settlement consisting of--
``(1) a copy of the complaint and any materials filed with
the complaint and any amended complaints (except such
materials shall not be required to be served if such
materials are made electronically available through the
Internet and such service includes notice of how to
electronically access such material);
``(2) notice of any scheduled judicial hearing in the class
action;
``(3) any proposed or final notification to class members
of--
``(A)(i) the members' rights to request exclusion from the
class action; or
``(ii) if no right to request exclusion exists, a statement
that no such right exists; and
``(B) a proposed settlement of a class action;
``(4) any proposed or final class action settlement;
``(5) any settlement or other agreement contemporaneously
made between class counsel and counsel for the defendants;
``(6) any final judgment or notice of dismissal;
``(7)(A) if feasible, the names of class members who reside
in each State and the estimated proportionate share of the
claims of such members to the entire settlement to that
State's appropriate State official; or
``(B) if the provision of information under subparagraph
(A) is not feasible, a reasonable estimate of the number of
class members residing in each State and the estimated
proportionate share of the claims of such members to the
entire settlement; and
``(8) any written judicial opinion relating to the
materials described under subparagraphs (3) through (6).
``(c) Depository Institutions Notification.--
``(1) Federal and other depository institutions.--In any
case in which the defendant is a Federal depository
institution, a depository institution holding company, a
foreign bank, or a non-depository institution subsidiary of
the foregoing, the notice requirements of this section are
satisfied by serving the notice required under subsection (b)
upon the person who has the primary Federal regulatory or
supervisory responsibility with respect to the defendant, if
some or all of the matters alleged in the class action are
subject to regulation or supervision by that person.
``(2) State depository institutions.--In any case in which
the defendant is a State depository institution (as that term
is defined in section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813)), the notice requirements of this section
are satisfied by serving the notice required under subsection
(b) upon the State bank supervisor (as that term is defined
in section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813)) of the State in which the defendant is incorporated or
chartered, if some or all of the matters alleged in the class
action are subject to regulation or supervision by that
person, and upon the appropriate Federal official.
``(d) Final Approval.--An order giving final approval of a
proposed settlement may not be issued earlier than 90 days
after the later of the dates on which the appropriate Federal
official and the appropriate State official are served with
the notice required under subsection (b).
``(e) Noncompliance if Notice Not Provided.--
``(1) In general.--A class member may refuse to comply with
and may choose not to be bound by a settlement agreement or
consent decree in a class action if the class
[[Page S1251]]
member demonstrates that the notice required under subsection
(b) has not been provided.
``(2) Limitation.--A class member may not refuse to comply
with or to be bound by a settlement agreement or consent
decree under paragraph (1) if the notice required under
subsection (b) was directed to the appropriate Federal
official and to either the State attorney general or the
person that has primary regulatory, supervisory, or licensing
authority over the defendant.
``(3) Application of rights.--The rights created by this
subsection shall apply only to class members or any person
acting on a class member's behalf, and shall not be construed
to limit any other rights affecting a class member's
participation in the settlement.
``(f) Rule of Construction.--Nothing in this section shall
be construed to expand the authority of, or impose any
obligations, duties, or responsibilities upon, Federal or
State officials.''.
(b) Technical and Conforming Amendment.--The table of
chapters for part V is amended by inserting after the item
relating to chapter 113 the following:
``114. Class Actions........................................1711''.....
SEC. 4. FEDERAL DISTRICT COURT JURISDICTION FOR INTERSTATE
CLASS ACTIONS.
(a) Application of Federal Diversity Jurisdiction.--Section
1332 is amended--
(1) by redesignating subsection (d) as subsection (e); and
(2) by inserting after subsection (c) the following:
``(d)(1) In this subsection--
``(A) the term `class' means all of the class members in a
class action;
``(B) the term `class action' means any civil action filed
under rule 23 of the Federal Rules of Civil Procedure or
similar State statute or rule of judicial procedure
authorizing an action to be brought by 1 or more
representative persons as a class action;
``(C) the term `class certification order' means an order
issued by a court approving the treatment of some or all
aspects of a civil action as a class action; and
``(D) the term `class members' means the persons (named or
unnamed) who fall within the definition of the proposed or
certified class in a class action.
``(2) The district courts shall have original jurisdiction
of any civil action in which the matter in controversy
exceeds the sum or value of $5,000,000, exclusive of interest
and costs, and is a class action in which--
``(A) any member of a class of plaintiffs is a citizen of a
State different from any defendant;
``(B) any member of a class of plaintiffs is a foreign
state or a citizen or subject of a foreign state and any
defendant is a citizen of a State; or
``(C) any member of a class of plaintiffs is a citizen of a
State and any defendant is a foreign state or a citizen or
subject of a foreign state.
``(3) A district court may, in the interests of justice and
looking at the totality of the circumstances, decline to
exercise jurisdiction under paragraph (2) over a class action
in which greater than one-third but less than two-thirds of
the members of all proposed plaintiff classes in the
aggregate and the primary defendants are citizens of the
State in which the action was originally filed based on
consideration of--
``(A) whether the claims asserted involve matters of
national or interstate interest;
``(B) whether the claims asserted will be governed by laws
of the State in which the action was originally filed or by
the laws of other States;
``(C) whether the class action has been pleaded in a manner
that seeks to avoid Federal jurisdiction;
``(D) whether the action was brought in a forum with a
distinct nexus with the class members, the alleged harm, or
the defendants;
``(E) whether the number of citizens of the State in which
the action was originally filed in all proposed plaintiff
classes in the aggregate is substantially larger than the
number of citizens from any other State, and the citizenship
of the other members of the proposed class is dispersed among
a substantial number of States; and
``(F) whether, during the 3-year period preceding the
filing of that class action, 1 or more other class actions
asserting the same or similar claims on behalf of the same or
other persons have been filed.
``(4) A district court shall decline to exercise
jurisdiction under paragraph (2)--
``(A)(i) over a class action in which--
``(I) greater than two-thirds of the members of all
proposed plaintiff classes in the aggregate are citizens of
the State in which the action was originally filed;
``(II) at least 1 defendant is a defendant--
``(aa) from whom significant relief is sought by members of
the plaintiff class;
``(bb) whose alleged conduct forms a significant basis for
the claims asserted by the proposed plaintiff class; and
``(cc) who is a citizen of the State in which the action
was originally filed; and
``(III) principal injuries resulting from the alleged
conduct or any related conduct of each defendant were
incurred in the State in which the action was originally
filed; and
``(ii) during the 3-year period preceding the filing of
that class action, no other class action has been filed
asserting the same or similar factual allegations against any
of the defendants on behalf of the same or other persons; or
``(B) two-thirds or more of the members of all proposed
plaintiff classes in the aggregate, and the primary
defendants, are citizens of the State in which the action was
originally filed.
``(5) Paragraphs (2) through (4) shall not apply to any
class action in which--
``(A) the primary defendants are States, State officials,
or other governmental entities against whom the district
court may be foreclosed from ordering relief; or
``(B) the number of members of all proposed plaintiff
classes in the aggregate is less than 100.
``(6) In any class action, the claims of the individual
class members shall be aggregated to determine whether the
matter in controversy exceeds the sum or value of $5,000,000,
exclusive of interest and costs.
``(7) Citizenship of the members of the proposed plaintiff
classes shall be determined for purposes of paragraphs (2)
through (6) as of the date of filing of the complaint or
amended complaint, or, if the case stated by the initial
pleading is not subject to Federal jurisdiction, as of the
date of service by plaintiffs of an amended pleading, motion,
or other paper, indicating the existence of Federal
jurisdiction.
``(8) This subsection shall apply to any class action
before or after the entry of a class certification order by
the court with respect to that action.
``(9) Paragraph (2) shall not apply to any class action
that solely involves a claim--
``(A) concerning a covered security as defined under
16(f)(3) of the Securities Act of 1933 (15 U.S.C. 78p(f)(3))
and section 28(f)(5)(E) of the Securities Exchange Act of
1934 (15 U.S.C. 78bb(f)(5)(E));
``(B) that relates to the internal affairs or governance of
a corporation or other form of business enterprise and that
arises under or by virtue of the laws of the State in which
such corporation or business enterprise is incorporated or
organized; or
``(C) that relates to the rights, duties (including
fiduciary duties), and obligations relating to or created by
or pursuant to any security (as defined under section 2(a)(1)
of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)) and the
regulations issued thereunder).
``(10) For purposes of this subsection and section 1453, an
unincorporated association shall be deemed to be a citizen of
the State where it has its principal place of business and
the State under whose laws it is organized.
``(11)(A) For purposes of this subsection and section 1453,
a mass action shall be deemed to be a class action removable
under paragraphs (2) through (10) if it otherwise meets the
provisions of those paragraphs.
``(B)(i) As used in subparagraph (A), the term `mass
action' means any civil action (except a civil action within
the scope of section 1711(2)) in which monetary relief claims
of 100 or more persons are proposed to be tried jointly on
the ground that the plaintiffs' claims involve common
questions of law or fact, except that jurisdiction shall
exist only over those plaintiffs whose claims in a mass
action satisfy the jurisdictional amount requirements under
subsection (a).
``(ii) As used in subparagraph (A), the term `mass action'
shall not include any civil action in which--
``(I) all of the claims in the action arise from an event
or occurrence in the State in which the action was filed, and
that allegedly resulted in injuries in that State or in
States contiguous to that State;
``(II) the claims are joined upon motion of a defendant;
``(III) all of the claims in the action are asserted on
behalf of the general public (and not on behalf of individual
claimants or members of a purported class) pursuant to a
State statute specifically authorizing such action; or
``(IV) the claims have been consolidated or coordinated
solely for pretrial proceedings.
``(C)(i) Any action(s) removed to Federal court pursuant to
this subsection shall not thereafter be transferred to any
other court pursuant to section 1407, or the rules
promulgated thereunder, unless a majority of the plaintiffs
in the action request transfer pursuant to section 1407.
``(ii) This subparagraph will not apply--
``(I) to cases certified pursuant to rule 23 of the Federal
Rules of Civil Procedure; or
``(II) if plaintiffs propose that the action proceed as a
class action pursuant to rule 23 of the Federal Rules of
Civil Procedure.
``(D) The limitations periods on any claims asserted in a
mass action that is removed to Federal court pursuant to this
subsection shall be deemed tolled during the period that the
action is pending in Federal court.''.
(b) Conforming Amendments.--
(1) Section 1335(a)(1) is amended by inserting ``subsection
(a) or (d) of'' before ``section 1332''.
(2) Section 1603(b)(3) is amended by striking ``(d)'' and
inserting ``(e)''.
SEC. 5. REMOVAL OF INTERSTATE CLASS ACTIONS TO FEDERAL
DISTRICT COURT.
(a) In General.--Chapter 89 is amended by adding after
section 1452 the following:
``Sec. 1453. Removal of class actions
``(a) Definitions.--In this section, the terms `class',
`class action', `class certification order', and `class
member' shall have the meanings given such terms under
section 1332(d)(1).
``(b) In General.--A class action may be removed to a
district court of the United States in accordance with
section 1446 (except that the 1-year limitation under section
[[Page S1252]]
1446(b) shall not apply), without regard to whether any
defendant is a citizen of the State in which the action is
brought, except that such action may be removed by any
defendant without the consent of all defendants.
``(c) Review of Remand Orders.--
``(1) In general.--Section 1447 shall apply to any removal
of a case under this section, except that notwithstanding
section 1447(d), a court of appeals may accept an appeal from
an order of a district court granting or denying a motion to
remand a class action to the State court from which it was
removed if application is made to the court of appeals not
less than 7 days after entry of the order.
``(2) Time period for judgment.--If the court of appeals
accepts an appeal under paragraph (1), the court shall
complete all action on such appeal, including rendering
judgment, not later than 60 days after the date on which such
appeal was filed, unless an extension is granted under
paragraph (3).
``(3) Extension of time period.--The court of appeals may
grant an extension of the 60-day period described in
paragraph (2) if--
``(A) all parties to the proceeding agree to such
extension, for any period of time; or
``(B) such extension is for good cause shown and in the
interests of justice, for a period not to exceed 10 days.
``(4) Denial of appeal.--If a final judgment on the appeal
under paragraph (1) is not issued before the end of the
period described in paragraph (2), including any extension
under paragraph (3), the appeal shall be denied.
``(d) Exception.--This section shall not apply to any class
action that solely involves--
``(1) a claim concerning a covered security as defined
under section 16(f)(3) of the Securities Act of 1933 (15
U.S.C. 78p(f)(3)) and section 28(f)(5)(E) of the Securities
Exchange Act of 1934 (15 U.S.C. 78bb(f)(5)(E));
``(2) a claim that relates to the internal affairs or
governance of a corporation or other form of business
enterprise and arises under or by virtue of the laws of the
State in which such corporation or business enterprise is
incorporated or organized; or
``(3) a claim that relates to the rights, duties (including
fiduciary duties), and obligations relating to or created by
or pursuant to any security (as defined under section 2(a)(1)
of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)) and the
regulations issued thereunder).''.
(b) Technical and Conforming Amendments.--The table of
sections for chapter 89 is amended by adding after the item
relating to section 1452 the following:
``1453. Removal of class actions.''.
SEC. 6. REPORT ON CLASS ACTION SETTLEMENTS.
(a) In General.--Not later than 12 months after the date of
enactment of this Act, the Judicial Conference of the United
States, with the assistance of the Director of the Federal
Judicial Center and the Director of the Administrative Office
of the United States Courts, shall prepare and transmit to
the Committees on the Judiciary of the Senate and the House
of Representatives a report on class action settlements.
(b) Content.--The report under subsection (a) shall
contain--
(1) recommendations on the best practices that courts can
use to ensure that proposed class action settlements are fair
to the class members that the settlements are supposed to
benefit;
(2) recommendations on the best practices that courts can
use to ensure that--
(A) the fees and expenses awarded to counsel in connection
with a class action settlement appropriately reflect the
extent to which counsel succeeded in obtaining full redress
for the injuries alleged and the time, expense, and risk that
counsel devoted to the litigation; and
(B) the class members on whose behalf the settlement is
proposed are the primary beneficiaries of the settlement; and
(3) the actions that the Judicial Conference of the United
States has taken and intends to take toward having the
Federal judiciary implement any or all of the recommendations
contained in the report.
(c) Authority of Federal Courts.--Nothing in this section
shall be construed to alter the authority of the Federal
courts to supervise attorneys' fees.
SEC. 7. ENACTMENT OF JUDICIAL CONFERENCE RECOMMENDATIONS.
Notwithstanding any other provision of law, the amendments
to rule 23 of the Federal Rules of Civil Procedure, which are
set forth in the order entered by the Supreme Court of the
United States on March 27, 2003, shall take effect on the
date of enactment of this Act or on December 1, 2003 (as
specified in that order), whichever occurs first.
SEC. 8. RULEMAKING AUTHORITY OF SUPREME COURT AND JUDICIAL
CONFERENCE.
Nothing in this Act shall restrict in any way the authority
of the Judicial Conference and the Supreme Court to propose
and prescribe general rules of practice and procedure under
chapter 131 of title 28, United States Code.
SEC. 9. EFFECTIVE DATE.
The amendments made by this Act shall apply to any civil
action commenced on or after the date of enactment of this
Act.
The PRESIDING OFFICER. The Senator from Mississippi.
Mr. LOTT. Mr. President, I move to reconsider the vote and I move to
lay that motion on the table.
The motion to lay on the table was agreed to.
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