[Congressional Record Volume 151, Number 18 (Thursday, February 17, 2005)]
[House]
[Pages H723-H755]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CLASS ACTION FAIRNESS ACT OF 2005
Mr. SENSENBRENNER. Madam Speaker, pursuant to House Resolution 96, I
call up the Senate bill (S. 5) to amend the procedures that apply to
consideration of interstate class actions to assure fairer outcomes for
class members and defendants, and for other purposes, and ask for its
immediate consideration.
The Clerk read the title of the Senate bill.
The SPEAKER pro tempore (Mrs. Capito). Pursuant to House Resolution
96, the bill is considered as read.
The text of S. 5 is 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.
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
[[Page H724]]
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 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
[[Page H725]]
``(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
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.
[[Page H726]]
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 SPEAKER pro tempore. After 90 minutes of debate on the bill, it
shall be in order to consider the amendment in the nature of a
substitute printed in House Report 109-7, if offered by the gentleman
from Michigan (Mr. Conyers) or his designee, which shall be considered
read and shall be debatable for 40 minutes equally divided and
controlled by the proponent and opponent.
The gentleman from Wisconsin (Mr. Sensenbrenner) and the gentleman
from Michigan (Mr. Conyers) each will control 45 minutes of debate on
the bill.
The Chair recognizes the gentleman from Wisconsin (Mr.
Sensenbrenner).
General Leave
Mr. SENSENBRENNER. Madam Speaker, I ask unanimous consent that all
Members may have 5 legislative days within which to revise and extend
their remarks and include extraneous material on S. 5.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Wisconsin?
There was no objection.
Mr. SENSENBRENNER. Madam Speaker, I yield myself such time as I may
consume.
Madam Speaker, I rise in strong support of S. 5, the Class Action
Fairness Act of 2005. Today marks the culmination of nearly a decade of
legislative efforts to end systematic abuse of our Nation's class
action system. We stand on the cusp of sending landmark legislation on
civil-justice reform to the President that has been approved by
increasing majorities each time it has been considered by the House in
each of the last three Congresses and which passed the other body last
week with an overwhelming majority of 72 votes.
Since these reforms were first proposed, the magnitude of the class
action crisis, the need to address it has become more and more urgent.
The crisis now threatens the integrity of our civil justice system and
undermines the economic vitality upon which job creation depends.
A major element of the worsening crisis is the exponential increase
in State class action cases in a handful of ``magnet'' or ``magic''
jurisdictions, many of which deal with national issues in classes. In
the last 10 years, State court class actions filings nationwide have
increased over 1,315 percent. The infamous handful of magnet courts
known for certifying even the most speculative class action suits, the
increase in filings now exceeds 5,000 percent. The only explanation for
this phenomenon is aggressive forum shopping by trial lawyers to find
courts and judges who will act as willing accomplices in a judicial
power grab, hearing nationwide cases and setting policy for the entire
country.
A second major feature of the present class action crisis is a system
producing outrageous settlements that benefit only lawyers and trample
the rights of class members. Class actions were originally created to
efficiently address a large number of similar claims by people
suffering small harms. Today they are too often used to efficiently
transfer the large fees to a small number of trial lawyers, with little
benefit to the plaintiffs.
The present rules encourage a race to any available State courthouse
in the hopes of a rubber-stamped nationwide settlement that produces
millions in attorney's fees for the winning plaintiff's attorney. The
race to settle produces outcomes that favor expediency and profits for
lawyers over justice and fairness for consumers. The losers in this
race are the victims who often gain little or nothing through the
settlement, yet are bound by it in perpetuity. And all Americans bear
the cost of these settlements through increased prices for goods and
services.
The bill before the House today offers commonsense procedural changes
that will end the most serious abuses by allowing more interstate class
actions to be heard in Federal courts while keeping truly local cases
in State courts. Its core provisions are similar to those passed by
this body in the last three Congresses. S. 5 also implements a consumer
bill of rights that will keep class members from being used by the
lawyers they never hired to engage in litigation they do not know about
or to extort money they will never see.
Madam Speaker, when the House considered this important reform in the
last Congress, I remarked that, ``The class action judicial system has
become a joke, and no one is laughing except the trial lawyers . . .
all the way to the bank.''
I imagine that laughter turned to nervous chuckles when S. 5 emerged
unscathed from the gauntlet in the other body with 72 votes last week.
Today, as the House prepares to pass this bill, I suspect you could
hear a pin drop in the halls of infamous courthouses located in Madison
County, Illinois and Jefferson County, Texas, where for so long the
good times have rolled for forum-shopping plaintiffs' attorneys and the
judges who enable them. And when this legislation is signed by the
President one day soon, those same halls may echo with sobs and curses
because this time justice and fairness and the American people will
have the last laugh.
Madam Speaker, after years of toil, the moment has arrived. The
opportunity to restore common sense, rationality, and dignity to our
class action system is now before us, and the need for reform has never
been more certain. I urge my colleagues to support the Class Action
Fairness Act of 2005.
Madam Speaker, I reserve the balance of my time.
(Mr. CONYERS asked and was given permission to revise and extend his
remarks.)
Mr. CONYERS. Madam Speaker, I yield myself such time as I may
consume.
Madam Speaker, with the consideration of this legislation, the
majority begins their assault on our Nation's civil justice system.
Today we will attempt to preempt State class actions. Next month we
will take up a bankruptcy bill that massively tilts the playing field
in favor of credit card companies and against ordinary consumers and
workers alike. On deck and pending are equally one-sided medical
malpractice bills and asbestos bills that both cap damages and
eliminate liability to protect some of the most egregious wrongdoers in
America.
The majority's assault on victims and consumers is unprecedented in
its scope and stunning in its breadth. Collectively, these measures
will close the courthouse doors on millions of Americans harmed by
intentional wrongdoing, negligence, and fraud. And so, long after the
109th Congress has forgotten, American consumers and workers will be
paying the price for these special interest bills through needless
injuries and uncompensated harm.
This legislation will remove class actions involving State law issues
from State courts, the forum most convenient for victims of wrongdoing
and with the judges most familiar with the substantive law, and this
legislation will move it to the Federal courts where the case will take
far longer to resolve and is far less likely to be certified.
Now, you do not need to take my word for it. Let us just ask big
business itself. The Nation's largest bank, Citicorp admits ``the
practical effect (of the bill will) be that many cases will never be
heard. Federal judges facing overburdened dockets and ambiguities about
applying State laws in a Federal court, often refuse to grant standing
to class action plaintiffs.''
Forbes Magazine writes, ``The legislation will . . . make it more
difficult for plaintiffs to prevail, since . . . federal courts are . .
. less open to considering . . . class action claims.''
Passage of this legislation would be particularly devastating for
civil rights cases and labor law cases. As the Lawyers Committee For
Civil Rights Under The Law explained, ``The consequences of the
legislation for civil rights class actions . . . will be astounding
and, in our view, disastrous. Redirecting State law class actions to
the Federal courts will choke Federal court dockets and delay or
foreclose the timely and effective determination of Federal (civil
rights) cases.''
Since the November election we have heard a lot of talk about values,
and that is fine; but will someone during this discourse today tell me
where the value is in denying senior citizens who suffered heart
attacks because they took Vioxx for their arthritis? Where is the
morality in preventing poor workers from joining together to obtain
compensation when unscrupulous employers pay them slave-labor wages?
[[Page H727]]
Where is the righteousness in telling victims of discrimination that
they will have to wait years for a Federal court to consider violations
of their own State laws?
If we have learned anything from the Enron, TYCO, Firestone, and
other legal debacles, it is that our citizens need more protection
against wrongdoers in our society, not less. And yet the class action
bill before us takes us in precisely the opposite direction.
The House should reject this one-sided, anti-consumer and anti-civil
rights legislation.
Madam Speaker, I reserve the balance of my time.
Mr. SENSENBRENNER. Madam Speaker, I yield 3 minutes to the gentleman
from Virginia (Mr. Boucher) to show the breadth of the bipartisan
support of this legislation.
(Mr. BOUCHER asked and was given permission to revise and extend his
remarks.)
Mr. BOUCHER. Madam Speaker, I thank the gentleman from Wisconsin (Mr.
Sensenbrenner) for yielding me time.
Madam Speaker, I am pleased to rise this morning in support of the
bill before us. In the two decades that I have been privileged to serve
in the House, the class action measure that is before us today is the
most modest litigation reform that has been debated, and it strikes in
a narrow and appropriate way at an egregious abuse of justice.
The bill before us makes procedural changes only. There are no
restrictions on the substantive rights of plaintiffs. There are no caps
on damages. There is no elimination on the rights of plaintiffs to
recover.
The bill simply permits the removal to Federal courts of class
actions that are truly national in scope, with plaintiffs living across
the Nation and the large corporate defendant, even if the current
diversity of citizenship rules are not strictly met.
This change is much needed. Cases that are truly national in scope
are being filed as State class actions before certain favored judges
who employ an almost ``anything goes'' approach that remedies virtually
any controversy subject to certification as a class action. Once
certification occurs, there is then a rush to settle the cases. The
lawyer who filed the case makes an offer that is hard for the corporate
defendant to refuse.
{time} 1030
He asks for large fees in the millions of dollars for himself and
coupons for the plaintiff class members that he represents. Rather than
go through years of expensive litigation, the defendant settles. The
judge who certified the class quickly approves the settlement. The
lawyer who filed the case gets rich. The plaintiff class members get
virtually nothing.
That is the problem that this bill is designed to address. It permits
the removal of these national cases to the Federal court in the State
in which the State class action has been filed.
In the Federal court, the rights of plaintiffs will be more carefully
observed. Any settlement involving non-cash compensation will be
carefully reviewed to assure that it is fair. Under the bill, cases
that are local in scope will remain in the State court where they are
initially filed.
I want to commend the gentleman from Virginia (Mr. Goodlatte) for the
thoughtful leadership that he has provided in steering this measure to
the point of passage today. The gentleman from Virginia (Mr. Goodlatte)
has exhibited both foresight and patience and as chief sponsor of the
bill through three Congresses deserves tremendous credit for the
success that we are now on the brink of achieving.
I also want to commend the gentleman from Wisconsin (Mr.
Sensenbrenner) for the wise course that he has followed as chairman of
the House Committee on the Judiciary in permitting the Senate to act in
advance of our action today.
I want to commend our former House colleague, Senator Tom Carper, for
the outstanding work he performed in negotiating changes to the measure
which resulted in 72 Members of the Senate voting to approve this
reform.
I hope the House will also lend its support to this reform.
Mr. CONYERS. Madam Speaker, I yield myself as much time as I may
consume.
The gentleman from Virginia (Mr. Boucher) is a dear friend of mine,
and I merely want to take one observation that he made, that this is
just a procedural process and that there is no substantive changes, but
I say to him, if the legal system is rigged and the rules are stacked
against you, you never have to get to the substance; you do not even
get your day in court.
That is the problem with this bill. It is a procedural process that
prevents people from bringing actions in State courts, and we are
sending it to the Federal courts when both the Federal judiciary has
spoken against this measure and the State judges have spoken against
this measure as well. I think that that should be a very instructive
criticism against this bill.
The proposal before us is opposed by both State and Federal
judiciaries. It is opposed by the National Council of State
Legislatures; consumers and public interest groups, including Public
Citizen, the Consumers Federation of America, the Consumers Union, the
United States PIRG; a coalition of environmental advocates; health
advocates, including the Campaign for Tobacco Free Kids; civil rights
groups such as the Alliance for Justice, the Leadership Conference on
Civil Rights, the National Association for the Advancement of Colored
People, and the Lawyers' Committee for Civil Rights and labor such as
the American Federation of Labor-Congress of Industrial Organizations,
AFL-CIO.
This legislation is also opposed by many of the Nation's editorial
boards in the newspaper business. A New York Times editorial board just
this weekend wrote this about the measure that is before the House
today: ``Instead of narrowly focusing on real abuses of the system, the
measure reconfigures the civil justice system to achieve a significant
rollback of corporate accountability and people's rights. The main
impact of the bill, which has the sort of propagandistic title normally
assigned to such laws, the Class Action Fairness Act, will be to funnel
nearly all major class action lawsuits out of State courts and into
already overburdened Federal courts. That will inevitably make it
harder for Americans to pursue legitimate claims successfully against
companies that violate State consumer, health, civil rights and
environmental protection laws.''
Madam Speaker, I reserve the balance of my time.
Mr. SENSENBRENNER. Madam Speaker, I yield myself such time as I may
consume.
(Mr. SENSENBRENNER asked and was given permission to revise and
extend his remarks.)
Mr. SENSENBRENNER. Madam Speaker, first, I have a lengthy additional
statement explaining how this bill is to work. We do not have the time
in general debate for me to give this statement on the floor, so I will
insert the statement relative to the intent of the managers of the bill
in the Record at this point.
Madam Speaker, I would like to provide a brief summary of the
provisions in Sections 4 and 5 of S. 5, the Class Action Fairness Act
of 2005. Section 4 gives Federal courts jurisdiction over class action
lawsuits in which the aggregate amount in controversy exceeds $5
million, and at least one plaintiff and one defendant are diverse.
Overall, new section 1332(d) is intended to expand substantially
Federal court jurisdiction over class actions. Its provisions should be
read broadly, with a strong preference that interstate class actions
should be heard in a Federal court if removed by any defendant. If a
purported class action is removed under these jurisdictional
provisions, the named plaintiff(s) should bear the burden of
demonstrating that the removal was improper. And if a Federal court is
uncertain about whether the $5 million threshold is satisfied, the
court should err in favor of exercising jurisdiction over the case.
The Sponsors intend that in a case seeking injunctive relief, a
matter be subject to Federal jurisdiction under this provision if the
value of the matter in litigation exceeds $5 million either from the
viewpoint of the plaintiff or the defendant, and regardless of the type
of relief sought (e.g., damages, injunctive relief, or declaratory
relief). Similarly, in assessing the jurisdictional amount in
declaratory relief cases, the Federal court should include in its
assessment the value of all relief and benefits that would logically
flow from granting the declaratory relief sought by the claimants. For
example, a declaration that a defendant's conduct is unlawful or
fraudulent will carry certain consequences, such as the need to cease
and desist from that conduct, that will often ``cost''
[[Page H728]]
the defendant in excess of $5 million. In addition, the law is clear
that, once a Federal court properly has jurisdiction over a case
removed to Federal court, subsequent events cannot ``oust'' the Federal
court of jurisdiction. While plaintiffs can seek to avoid Federal
jurisdiction by defining a proposed class in particular ways, they lose
that power once the case was properly removed.
New subsections 1332( d)(3) and (d)(4)(B) address the jurisdictional
principles that will apply to class actions filed against a defendant
in its home State, dividing such cases into three categories. First,
for cases in which two-thirds or more of the members of the plaintiff
class and the primary defendants are citizens of the State in which the
suit was filed, subsection 1332(d)(4)(B) states that such cases will
remain in State court. Second, cases in which more than two-thirds of
the members of the plaintiff class or one or more of the primary
defendants are not citizens of the forum State will be subject to
Federal jurisdiction since such cases are predominantly interstate in
nature. Finally, there is a middle category of class actions in which
more than one-third but fewer than two-thirds of the members of the
plaintiff class and the primary defendants are all citizens of the
State in which the action was filed. In such cases, the numbers alone
may not always confirm that the litigation is more fairly characterized
as predominantly interstate in character. New subsection 1332(d)(3)
therefore gives Federal courts discretion, in the ``interests of
justice,'' to decline to exercise jurisdiction over such cases based on
the consideration of five factors.
First, the court should consider whether the claims asserted are of
``significant national or interstate interest.'' Under this factor, if
a case presents issues of national or interstate significance, that
argues in favor of the matter being handled in Federal court. Second,
the court should consider whether the claims asserted will be governed
by laws other than those of the forum State. Under this factor, if the
Federal court determines that multiple State laws will apply to aspects
of the class action, that determination would favor having the matter
heard in the Federal court system, which has a record of being more
respectful of the laws of the various States in the class action
context. The third factor is whether the class action has been pleaded
in a manner that seeks to avoid Federal jurisdiction. The purpose of
this inquiry is to determine whether the plaintiffs have proposed a
``natural'' class that encompasses all of the people and claims that
one would expect to include in a class action, as opposed to proposing
a class that appears to be gerrymandered solely to avoid Federal
jurisdiction by leaving out certain potential class members or claims.
If the Federal court concludes evasive pleading is involved, that
factor would favor the exercise of Federal jurisdiction. The fourth
factor considers whether there is a ``distinct'' nexus between: (a) The
forum where the action was brought, and (b) the class members, the
alleged harm, or the defendants. This factor is intended to take
account of a major concern that led to this legislation--the filing of
lawsuits in out-of-the-way ``magnet'' State courts that have no real
relationship to the controversy at hand. Thus, for example, if the
majority of proposed class members and the defendant reside in the
county where the suit is brought, the court might find a distinct nexus
exists.
The fifth factor asks whether the number of citizens of the forum
State in the proposed plaintiff class(es) is substantially larger than
the number of citizens from any other State, and the citizenship of the
other members of the proposed class(es) is dispersed among a
substantial number of States. If all of the class members who do not
reside in the State where the action was filed are widely dispersed
among many other States, that point would suggest that the interests of
the forum State in litigating the controversy are preeminent. However,
if a court finds that the citizenship of the other class members is not
widely dispersed, the opposite balance would be indicated and a Federal
forum would be favored. Finally, the sixth factor is whether one or
more class actions asserting the same or similar claims on behalf of
the same or other persons have been filed in the last three years. The
purpose of this factor is efficiency and fairness: To determine whether
a matter should be subject to Federal jurisdiction so that it can be
coordinated with other overlapping or parallel class actions. If other
class actions on the same subject have been (or are likely to be) filed
elsewhere, the Sponsors intend that this consideration would strongly
favor the exercise of Federal jurisdiction. It is the Sponsors'
intention that this factor be interpreted liberally and that plaintiffs
not be able to plead around it with creative legal theories. If a
plaintiff brings a product liability suit alleging consumer fraud or
unjust enrichment, and another suit was previously brought against some
of the same defendants alleging negligence with regard to the same
product, this factor would favor the exercise of Federal jurisdiction
over the later-filed claim.
New subsection 1332(d)(4)(A) is the ``Local Controversy Exception.''
This subsection prohibits Federal courts from exercising diversity
jurisdiction over a class action under the foregoing provisions if the
plaintiffs clearly demonstrate that each and every one of the following
criteria are satisfied in the case at issue. First, more than two-
thirds of class members are citizens of the forum State. Second, there
is at least one in-State defendant from whom significant relief is
sought by members of the class and whose conduct forms a significant
basis of plaintiffs' claims. Third, the principal injuries resulting
from the alleged conduct, or related conduct, of each defendant were
incurred in the State where the action was originally filed. And
fourth, no other class action asserting the same or similar factual
allegations against any of the defendants on behalf of the same or
other persons has been filed during the preceding three years.
This provision is intended to respond to concerns that class actions
with a truly local focus should not be moved to Federal court under
this legislation because State courts have a strong interest in
adjudicating such disputes. At the same time, this is a narrow
exception that was carefully drafted to ensure that it does not become
a jurisdictional loophole. Thus, in assessing whether each of these
criteria is satisfied by a particular case, a Federal court should bear
in mind that the purpose of each of these criteria is to identify a
truly local controversy--a controversy that uniquely affects a
particular locality to the exclusion of all others. For example, under
the second criterion, there must be at least one real local defendant.
By that, the Sponsors intend that the local defendant must be a primary
focus of the plaintiffs' claims--not just a peripheral defendant. The
local defendant must be a target from whom significant relief is sought
by the class (as opposed to just a subset of the class membership), as
well as being a defendant whose alleged conduct forms a significant
basis for the claims asserted by the class. Similarly, the third
criterion is that the principal injuries resulting from the actions of
all the defendants must have occurred in the State where the suit was
filed. By this criterion, the Sponsors mean that all or almost all of
the damage caused by defendants' alleged conduct occurred in the State
where the suit was brought. The purpose of this criterion is to ensure
that this exception is used only where the impact of the misconduct
alleged by the purported class is localized. For example, a class
action in which local residents seek compensation for property damage
resulting from a chemical leak at a manufacturing plant in that
community would fit this criterion, provided that the property damage
was limited to residents in the vicinity of the plant. However, if the
defendants engaged in conduct that could be alleged to have injured
consumers throughout the country or broadly throughout several States
(such as an insurance or product case), the case would not qualify for
this exception, even if it were brought only as a single-State class
action.
The fourth and final criterion is that no other class action
involving similar allegations has been filed against any of the
defendants over the last three years on behalf of the same or other
persons. Once again, the Sponsors wish to stress that the inquiry under
this criterion should not be whether identical (or nearly identical)
class actions have been filed. Rather, the inquiry is whether similar
factual allegations have been made against the defendant in multiple
class actions, regardless of whether the same causes of actions were
asserted or whether the purported plaintiff classes were the same (or
even overlapped in significant respects).
New subsections 1332(d)(5)(A) and (B) specify that S. 5 does not
extend Federal diversity jurisdiction to class actions 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 fewer than 100 class members. The purpose
of the ``State action'' cases provision is to prevent States, State
officials, or other governmental entities from dodging legitimate
claims by removing class actions to Federal court and then arguing that
the Federal courts are constitutionally prohibited from granting the
requested relief. However, Federal courts should proceed cautiously
before declining Federal jurisdiction under the ``State action'' case
exception, and do so only when it is clear that the primary defendants
are indeed States, State officials, or other governmental
entities against whom the ``court may be foreclosed from ordering
relief.'' The Sponsors wish to stress that this provision should not
become a subterfuge for avoiding Federal jurisdiction. In particular,
plaintiffs should not be permitted to name State entities as defendants
as a mechanism to avoid Federal jurisdiction over class actions that
largely target non-governmental defendants. The Sponsors intend that
``primary defendants'' be interpreted
[[Page H729]]
to reach those defendants who are the real ``targets'' of the lawsuit--
i.e., the defendants that would be expected to incur most of the loss
if liability is found. It is the Sponsors' intention with regard to
each of these exceptions that the party opposing Federal jurisdiction
shall have the burden of demonstrating the applicability of an
exemption.
The Sponsors understand that in assessing the various criteria
established in all of these new jurisdictional provisions, a Federal
court may have to engage in some fact-finding, not unlike what is
necessitated by the existing jurisdictional statutes. The Sponsors
further understand that in some instances, limited discovery may be
necessary to make these determinations. However, the Sponsors caution
that these jurisdictional determinations should be made largely on the
basis of readily available information. Allowing substantial,
burdensome discovery on jurisdictional issues would be contrary to the
intent of these provisions to encourage the exercise of Federal
jurisdiction over class actions.
Under new subsection 1332(d)(9), the Act excludes from its
jurisdictional provisions class actions that solely involve claims that
relate to matters of corporate governance arising out of State law. The
purpose of this provision is to avoid disturbing in any way the Federal
vs. State court jurisdictional lines already drawn in the securities
litigation class action context by the enactment of the Securities
Litigation Uniform Standards Act of 1998. The Sponsors intend that this
exemption be narrowly construed. By corporate governance litigation,
the Sponsors mean only litigation based solely on (a) State statutory
law regulating the organization and governance of business enterprises
such as corporations, partnerships, limited partnerships, limited
liability companies, limited liability partnerships, and business
trusts; (b) State common law regarding the duties owed between and
among owners and managers of business enterprises; and (c) the rights
arising out of the terms of the securities issued by business
enterprises.
New subsection 1332(d)(11) expands Federal jurisdiction over mass
actions--suits that are brought on behalf of numerous named plaintiffs
who claim that their suits present common questions of law or fact that
should be tried together even though they do not seek class
certification status. Mass action cases function very much like class
actions and are subject to many of the same abuses. Under subsection
1332(d)(11), any civil action in which 100 or more named parties seek
to try their claims for monetary relief together will be treated as a
class action for jurisdictional purposes. The Sponsors wish to stress
that a complaint in which 100 or more plaintiffs are named fits the
criteria of seeking to try their claims together, because there would
be no other apparent reason to include all of those claimants in a
single action unless the intent was to secure a joint trial of the
claims asserted in the action. The Sponsors also wish to stress that
this provision is intended to mean a situation in which it is proposed
or ordered that claims be tried jointly in any respect--that is, if
only certain issues are to be tried jointly and the case otherwise
meets the criteria set forth in this provision, the matter will be
subject to Federal jurisdiction. However, it also should be noted that
a mass action would not be eligible for Federal jurisdiction under this
provision if any of several criteria are satisfied by the action,
including (1) when all the claims asserted in the action arise out of
an event or occurrence in the State where, the suit is filed and the
injuries were incurred in that State and contiguous States (e.g., a
toxic spill case) and (2) when the claims 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 an action.
The first exception would apply only to a truly local single event
with no substantial interstate effects. The purpose of this exception
is to allow cases involving environmental torts such as a chemical
spill to remain in State court if both the event and the injuries were
truly local, even though there are some out-of-State defendants. By
contrast, this exception would not apply to a product liability or
insurance case. The second exception also addresses a very narrow
situation, specifically a law like the California Unfair Competition
Law, which allows individuals to bring a suit on behalf of the general
public.
Subsection 1332(d)(11)(B)(i) includes a statement indicating that
jurisdiction exists only over those plaintiffs whose claims in a mass
action satisfy the jurisdictional amount requirements under section
1332(a). It is the Sponsors' intent that although remands of individual
claims not meeting the section 1332 jurisdictional amount requirement
may take the action below the 100-plaintiff jurisdictional threshold or
the $5 million jurisdictional amount requirement, those subsequent
remands should not extinguish Federal diversity jurisdiction over the
action as long as the mass action met the various jurisdictional
requirements at the time of removal.
Under subsection 1332(d)(11)(C), a mass action removed to a Federal
court under this provision may not be transferred to another Federal
court under the MDL statute (28 U.S.C. Sec. 1407) unless a majority of
the plaintiffs request such a transfer. The Sponsors wish to make clear
that this restriction on MDL transfers applies only to mass actions as
defined in subsection 1332(d)(11); the legislation does not more
broadly restrict the authority of the Judicial Panel on Multidistrict
Litigation to transfer class actions removed to Federal court under
this legislation. Under subsection 1332(d)(11)(D), the statute of
limitations for any claims that are part of a mass action will be
tolled while the mass action is pending in Federal court.
The removal provisions in Section 5 of the legislation are self-
explanatory and attempt to put an end to the type of gaming engaged in
by plaintiffs' lawyers to keep cases in State court. They should thus
be interpreted with this intent in mind. In addition, new subsection
1453(c) provides that an order remanding a class action to State court
is reviewable by appeal at the discretion of the reviewing court. The
Sponsors note that the current prohibition on remand order review was
added to section 1447 after the Federal diversity jurisdictional
statutes and the related removal statutes had been subject to appellate
review for many years and were the subject of considerable appellate
level interpretive law. The Sponsors believe it is important to create
a similar body of clear and consistent guidance for district courts
that will be interpreting this legislation and would particularly
encourage appellate courts to review cases that raise jurisdictional
issues likely to arise in future cases.
Thank you, Madam Speaker, for allowing me to provide an explanation
of these jurisdictional provisions.
Madam Speaker, for purposes of engaging in a colloquy with the two
gentlemen from Virginia (Mr. Goodlatte) and (Mr. Boucher), I yield to
the gentleman from Virginia (Mr. Goodlatte).
Mr. GOODLATTE. Madam Speaker, I thank the chairman very much for
yielding.
Madam Speaker, the general principles behind S. 5 and many of the
provisions in the legislation are similar to those in H.R. 1115, which
the House passed in 2003, and S. 274, which was voted out of committee
in the Senate in 2003 but did not ultimately pass.
To the extent these provisions are the same, the House Committee on
the Judiciary's report on H.R. 1115 and the Senate Committee on the
Judiciary's report on S. 274 reflect the intent and understanding of
the committee and the sponsors as to the import of these provisions.
However, there are several new provisions in S. 5 regarding Federal
jurisdiction over class actions that were not included in prior
versions of the legislation.
I would like to ask my colleague, the chairman of the Committee on
the Judiciary, to provide an overview of the jurisdictional provisions
in the legislation, and I would like to discuss the various exceptions
included in the legislation and the intent of the sponsors with regard
to these exceptions.
Mr. SENSENBRENNER. Madam Speaker, reclaiming my time, I appreciate
the gentleman's question.
Section 4 of the bill gives Federal courts jurisdiction over class
action lawsuits in which the matter in controversy exceeds the sum or
value of $5 million, excluding interests and costs and at least one
proposed class member and one defendant are citizens of different
States or countries.
For purposes of the citizenship element of this analysis, S. 5 does
not alter current law. Thus, a corporation will continue to be deemed a
citizen of any State by which it has been incorporated and of the State
where it has its principal place of business. However, the bill
provides that for purposes of this new section, and section 1453 of
title 28, 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 organized. This provision is added to ensure that
unincorporated associations receive the same treatment as corporations
for purposes of diversity jurisdiction. New subsection 1332(d)(10)
corrects this anomaly.
Mr. BOUCHER. Madam Speaker, will the gentleman yield?
Mr. SENSENBRENNER. I yield to the gentleman from Virginia.
Mr. BOUCHER. Madam Speaker, I thank the gentleman for yielding.
What about the amount-in-controversy component, the $5 million? Under
current law, some Federal courts have determined the value for
[[Page H730]]
requests for injunctive relief by considering the value to each
individual plaintiff. Since that value is usually less than $75,000,
these courts have kept such cases in State court. This is sometimes
known as the plaintiff's viewpoint, defendant's viewpoint problem.
Would the Chairman explain how the bill resolves this challenge?
Mr. SENSENBRENNER. Madam Speaker, reclaiming my time, under new
subsection 1332(d)(6), the claims of the individual class members in
any class action shall be aggregated to determine whether the amount in
controversy exceeds the sum or value of $5 million. The sponsors intend
this subsection to be interpreted broadly, and if a purported class
action is removed under this provision, the plaintiff shall bear the
burden of demonstrating that the $5 million threshold is not satisfied.
By the same token, if a Federal court is uncertain about whether a case
puts $5 million or more in controversy, the court should favor
exercising jurisdiction over the case.
This principle applies to class actions seeking injunctive relief as
well. The sponsors intend that a matter be subject to Federal
jurisdiction under this provision if the value of the matter in
litigation exceeds the $5 million, either from the viewpoint of the
plaintiff or the viewpoint of the defendant, regardless of the type of
relief sought, such as damages, injunctive relief or declaratory
relief.
The sponsors are aware that some courts, especially in the class
action context, have declined to exercise Federal jurisdiction over
cases on the grounds that the amount in controversy in those cases
exceeded the jurisdictional threshold only when assessed from the
viewpoint of the defendant.
For example, a class action seeking injunctive relief that would
require a defendant to restructure its business in some fundamental way
might cost a defendant well in excess of $75,000 under current law, but
might have substantially less value to each plaintiff or even to the
class of plaintiffs as a whole. Because S. 5 explicitly allows
aggregation for the purposes of determining the amount of controversy
in class actions, that concern is no longer relevant.
To the extent plaintiffs seek to avoid this rule by framing their
cases as individual actions for injunctive relief, most Federal courts
have properly held that in an individual case the cost of injunctive
relief is viewed from the defendant's perspective. This legislation
extends that principle to class actions as well.
The same approach would apply in a case involving declaratory relief.
In determining how much money a declaratory relief case puts in
controversy, the Federal court should include in its assessment the
value of all relief and benefits that would logically flow from the
granting of the declaratory relief sought by the plaintiffs.
For example, a declaration that a defendant's conduct is unlawful or
fraudulent will carry certain consequences, such as the need to cease
and desist from that conduct that will often cost the defendant in
excess of $5 million; or a declaration that a standardized product sold
throughout the Nation is defective might well put a case over the $5
million threshold, even if the class complaint did not affirmatively
seek a determination that each class member was injured by the product.
The bottom line is that new section 1332(d) is intended to
substantially expand Federal court jurisdiction over class actions, not
to create loopholes. This provision should be read broadly, with a
strong preference that interstate class actions should be heard in a
Federal court if properly removed by a defendant.
Mr. GOODLATTE. Madam Speaker, will the gentleman yield?
Mr. SENSENBRENNER. I yield to the gentleman from Virginia.
Mr. GOODLATTE. Madam Speaker, I would also like to discuss the home
State exception in the legislation.
New subsections 1332(d)(3) and (d)(4)(B) address the jurisdictional
principles that will apply to class actions filed against the defendant
in its home State, dividing such cases into three categories.
First, for cases in which two-thirds or more of the members of the
plaintiff class and the primary defendants are citizens of the State in
which the suit was filed, section 1332(d)(4)(B) states that Federal
jurisdiction will not be extended by S. 5. Such cases will remain in
State courts.
Second, cases in which more than two-thirds of the members of the
plaintiff class are not citizens of the State in which the action was
filed will be subject to Federal jurisdiction. Federal courts should be
able to hear such lawsuits because they have a predominantly interstate
component. They affect people in many jurisdictions, and the laws of
many States will be at issue.
Finally, there is a middle category of class actions in which more
than one-third, but fewer than two-thirds, of the members of the
plaintiff class and the primary defendants are all citizens of the
State in which the action was filed. In such cases, the numbers alone
may not always confirm that the litigation is more fairly characterized
as predominantly interstate in character. New subsection 1332(d)(3),
therefore, gives Federal courts discretion in the interests of justice
to decline to exercise jurisdiction over such cases based on the
consideration of five factors.
{time} 1045
Madam Speaker, I would ask the chairman to explain these factors.
Mr. SENSENBRENNER. Reclaiming my time, Madam Speaker, I am pleased to
answer the gentleman.
The first factor is whether the claims asserted are of significant
national or interstate interest. Under this factor, if a case presents
issues of national or interstate significance that argues in favor of
the matter being handled in Federal Court, for example, if a class
action alleges a nationally distributed pharmaceutical product caused
side effects, those cases presumably should be heard in Federal court
because of the nationwide ramifications of the dispute and the
potential interface with Federal drug laws.
Under this factor, the Federal court should inquire whether the case
does present issues of national or interstate significance of this
sort. If such issues are identified, that point favors the exercise of
the Federal jurisdiction.
The second factor is whether the claims asserted will be governed by
laws other than those of the forum State. The sponsors believe that one
of the significant problems posed by multistate class actions in State
court is the tendency of some State courts to be less than respectful
of the laws of other jurisdictions, applying the law of one State to an
entire nationwide controversy and thereby ignoring the distinct and
varying State laws that should apply to various claims included in the
class, depending upon where they arose.
Under this factor, if the Federal court determines that multiple
State laws will apply to aspects of the class action, the determination
would favor having the matter handled in the Federal court system,
which has a record of being more respectful of the laws of various
States in the class action controversy. Conversely, if the court
concludes that the laws of the State to which the action was filed will
apply to the entire controversy, that factor will favor keeping the
case in State court.
The third factor is whether the class action has been pleaded in a
manner that seeks to avoid Federal jurisdiction. The purpose of this
inquiry is to determine whether the plaintiffs have proposed a natural
class, a class that encompasses all the people and claims that one
would expect to include in a class action, as opposed to proposing a
class that appears to be gerrymandered solely to avoid Federal
jurisdiction by leaving out certain potential class members or claims.
If the Federal court concludes that evasive pleading is involved,
that factor would favor the exercise of Federal jurisdiction. On the
other hand, if the class definition and claims appear to follow a
natural pattern, that consideration would favor allowing the matter to
be handled by a State court.
The fourth factor is whether there is a distinct nexus between, A,
the forum where the action was brought, and, B, the class members, the
alleged harm or the defendants. This factor is intended to take account
of a major concern that led to this legislation, the filing of lawsuits
in the out-of-the-way magnet State courts that have no real
relationship to the controversy at hand.
[[Page H731]]
Thus, if a majority of the proposed class action members and the
defendants reside in the county where the suit is brought, the court
might find a distinct nexus exists. The key to this factor is the
notion of there being a distinct nexus. If the allegedly injured
parties live in many other localities, the nexus is not distinct, and
this factor would weigh heavily in favor of the exercise of Federal
jurisdiction over the matter.
The fifth factor is whether the number of citizens in the forum State
in the proposed plaintiff class is substantially larger than the number
of citizens from any other State, and the citizens of the other members
of the proposed class is dispersed among a substantial number of
States.
This factor is intended to look at the geographic distribution of
class members in an effort to determine the forum State's interest in
handling the litigation. If all of the out-of-State class members are
widely dispersed among many other States, that point would suggest that
the interest of the forum State in litigating the controversy are
preeminent.
The sponsors intend that such a conclusion would favor allowing the
State court in which the action was originally filed to handle the
litigation. However, if a court finds that the citizenship of the other
class members is not widely dispersed, then a Federal forum would be
more appropriate because several States other than the forum State
would have a strong interest in the controversy.
The final factor is whether one or more class actions asserting the
same or similar claims on behalf of the same or other persons have been
filed in the last 3 years. The purpose of this factor is to determine
whether a matter should be subject to Federal jurisdiction so that it
can be coordinated with other overlapping or parallel class actions.
If the other class actions on the same subject have been or are
likely to be filed elsewhere, the sponsors intend that this
consideration would strongly favor the exercise of Federal
jurisdiction. It is the sponsors' intention that this factor be broadly
interpreted and that plaintiffs not be able to plead around it with
creative legal theories.
If a plaintiff brings a product liability suit alleging consumer
fraud or unjust enrichment, and another suit was previously brought
against some of the same defendants alleging negligence with regard to
the same product, this factor would favor the exercise of Federal
jurisdiction over the later-filed claim.
Madam Speaker, I now yield to my colleague, the gentleman from
Virginia (Mr. Boucher), to provide some examples that illustrate how
these six factors would work in litigation.
Mr. BOUCHER. Madam Speaker, I thank the gentleman for yielding to me,
and I will be pleased to provide two examples.
Suppose that a California State court class action were filed against
a California pharmaceutical drug company on behalf of a proposed class
of 60 percent California residents and 40 percent Nevada residents
alleging harmful side effects attributed to a drug sold nationwide.
In such a case, it would make sense to leave the matter in Federal
court. After all, the State laws that would apply in all of these cases
would vary, depending on where the drug was prescribed and purchased.
As a result, allowing a single Federal court to sort out such issues
and handle the balance of the litigation would make sense both from
added efficiency and a federalism standpoint.
Now, suppose, in a second example, a checking account fee disclosure
class action were filed in a Nevada State court against a Nevada bank
located in a border city, and the class consisted of 65 percent Nevada
residents and 35 percent California residents who crossed the border in
order to conduct transactions in the Nevada bank.
In this hypothetical, it might make sense to allow that matter to
proceed in State court. It is likely that Nevada banking law would
apply to all of these claims, even those of the California residents,
since all of the transactions occurred in the State of Nevada. There is
also less likelihood that multiple actions will be filed around the
country on the same subject so as to give rise to a coordinating
Federal multidistrict litigation proceeding.
Mr. GOODLATTE. Madam Speaker, if the chairman would continue to
yield.
Mr. SENSENBRENNER. I yield to the other gentleman from Virginia (Mr.
Goodlatte).
Mr. GOODLATTE. I thank the chairman for yielding to me. I think those
examples really reflect the intent of the legislation.
Madam Speaker, the legislation also includes a local controversy
exception which is intended to ensure that truly local class actions
can remain in State court under the legislation. Under this provision,
Federal courts are instructed not to exercise jurisdiction over cases
that meet all of the following four criteria:
First, more than two-thirds of the class members must be the citizens
of the State where the suit is brought; second, there must be at least
one in-State defendant from whom significant relief is sought by
members of the class and whose conduct forms a significant basis of
plaintiffs' claims; third, the principal injuries resulting from the
alleged conduct or related conduct of each defendant must have occurred
in the State where the action was originally filed; and, fourth, no
other class action has been filed during the preceding 3 years
asserting the same or similar factual allegations against any of the
defendants.
Madam Speaker, I would ask that the chairman elaborate on these
criteria.
Mr. SENSENBRENNER. Madam Speaker, reclaiming my time, yes, this
provision is intended to respond to concerns that class actions with a
truly local focus should not be moved to Federal court under this
legislation because State courts have a strong interest in adjudicating
such disputes. At the same time, this is a narrow exception that was
carefully drafted to ensure that it does not become a jurisdictional
loophole. Thus, each of the criteria is intended to identify a truly
local class action.
First, there must be a primarily local class. Secondly, there must be
at least one real local defendant. And by that the drafters meant that
the local defendant must be a primary focus of the plaintiffs' claims,
not just a retailer or other peripheral defendant. The defendant must
be a target from whom significant relief is sought by the class, as
opposed to just a subset of the class membership, as well as being a
defendant whose alleged conduct forms a significant basis for the
claims asserted by the class.
For example, in a consumer fraud case, alleging that an insurance
company incorporated and based in another State misrepresented its
policies, the local agent of the company named as a defendant
presumably would not fit this criteria. He or she probably would have
had contact with only some of the purported class members and, thus,
would not be a person from whom significant relief would be sought by
the plaintiff class viewed as a whole. And, from a relief standpoint,
the real demand of the full class in terms of seeking significant
relief would be on the insurance company itself.
Third, the principal injuries resulting from the actions of all the
defendants must have occurred in the State where the suit was filed.
This criterion means that all or almost all of the damage caused by the
defendants' conduct occurred in the State where the suit was brought.
If defendants engaged in conduct that allegedly injured consumers
throughout the country, the case would not qualify for the local
controversy exception, even if it was only brought as a single State
class action.
And, fourth, no other class action involving similar allegations has
been filed against any of the defendants over the last 3 years. In
other words, if we are talking about a situation that results in
multiple class actions, those are not the types of cases that this
exception is intended to address. I would like to stress that the
inquiry under this criterion should not be whether identical or nearly
identical class actions have been filed. Rather, the inquiry is whether
similar factual allegations have been made against the defendant in
multiple class actions, regardless of whether the same causes of action
were asserted or whether the proposed plaintiff classes in the prior
case was the same.
Madam Speaker, I yield to the gentleman from Virginia (Mr.
Goodlatte).
Mr. GOODLATTE. I thank the chairman for yielding once again.
[[Page H732]]
Madam Speaker, in this regard I think it is important to note that
the exceptions in this legislation are just that, exceptions, and they
should not be interpreted in ways that turn them into loopholes. For
example, the legislation excludes actions against States. Obviously,
this does not mean that plaintiffs can simply name a State in every
consumer class action and stay out of Federal court. To the contrary,
Federal courts should proceed cautiously before declining Federal
jurisdiction under the subsection 1332(d)(5)(a) ``state action'' case
exception, and do so only when it is clear that the primary defendants
are indeed States, State officials, or other governmental entities
against whom the court may be foreclosed from ordering relief.
The sponsors intend that primary defendants be intended to reach
those defendants who are the real targets of the lawsuit, i.e. the
defendants who would be expected to incur most of the loss if liability
is found. Thus, the term ``primary defendant'' should include any
person who has substantial exposure to significant portions of the
proposed class in the action, particularly any defendant that is
allegedly liable to the vast majority of the members of the proposed
classes, as opposed to simply a few individual class members.
It is the sponsors' intention with regard to each of these exceptions
that the party opposing Federal jurisdiction shall have the burden of
demonstrating the applicability of an exemption. Thus, if a plaintiff
seeks to have a class action remanded on the ground that the primary
defendants and two-thirds or more of the class members are citizens of
the home State, that plaintiff has the burden of demonstrating that
these criteria are met.
Similarly, if a plaintiff seeks to have a purported class action
remanded because a primary defendant is a State, that plaintiff should
have the burden of demonstrating that the exception should apply.
Mr. BOUCHER. Madam Speaker, if the gentleman from Wisconsin will
yield once again.
Mr. SENSENBRENNER. I yield to the gentleman from Virginia (Mr.
Boucher).
Mr. BOUCHER. Madam Speaker, I thank the gentleman for yielding.
The principles that have just been enumerated apply to another
provision that I would like to discuss, the mass action provision.
Under this provision, defendants will be able to remove mass actions to
Federal court under the same circumstances in which they will be able
to remove class actions.
{time} 1100
However, a Federal court would only exercise jurisdiction over these
claims that meet the $75,000 minimum. In addition, a mass action cannot
be removed to Federal court if it falls under one of the following four
categories: number one, if all of the claims arise out of an event or
occurrence that happened in the State where the action was filed and
that resulted in injuries only in that State or in contiguous States;
number two, if it is the defendants who seek to have the claims
joined for trial;
number three, if the claims are asserted on behalf of the general
public pursuant to a State statute authorizing such an action;
and, number four, if the claims have been consolidated or coordinated
for pretrial purposes only.
I would appreciate the gentleman from Wisconsin clarifying how the
$75,000 amount in controversy minimum would apply to assessing whether
Federal jurisdiction exists over a mass action, and, most importantly,
explaining the intent of the sponsors with regard to the first and
third exceptions.
Mr. SENSENBRENNER. Mr. Speaker, reclaiming my time, I will be happy
to explain.
The mass action provision was included in the bill because mass
actions are really class actions in disguise. They involve an element
of people who want their claims adjudicated together, and they often
result in the same abuses as class actions. In fact, sometimes the
abuses are even worse because the lawyers seek to join claims that have
little to do with each other and confuse a jury into awarding millions
of dollars to individuals who have suffered no real injury.
Here is how the mass action provision and the current amount-in-
controversy provision would work in tandem: suppose 200 people file a
mass action in Mississippi against a New Jersey drug manufacturer and
also name a local drug store. Three of them assert claims for a million
dollars apiece, and the rest assert claims of $20,000.
The Federal Court would have jurisdiction over the mass action
because there are more than 100 plaintiffs, there is minimal diversity,
and the total amount of controversy exceeds $5 million, and a product
liability case does not qualify for the local occurrence exception in
the provision.
Then the question becomes, which claims would, in the mass action,
the Federal judge keep in Federal Court, and which would be remanded?
At this point the judge would have to look at each of the claims very
carefully and determine whether or not they meet the $75,000 minimum.
In this regard, I would note that the plaintiffs often seek to
minimize what they are seeking in the complaint so that they can stay
in State court. For example, sometimes plaintiffs leave their claim for
punitive damages off the original complaint to make it seem like their
claims are smaller than they really are.
It is our expectation that a Federal judge would read a complaint
very carefully and only remand claims that clearly do not meet the
$75,000 threshold. If it is likely that a plaintiff is going to turn
around in a month and add an additional claim for punitive damages, the
Federal court should obviously assert jurisdiction over that
individual's claims.
Finally, I would like to stress that this provision in no way is
intended to abrogate 8 United States Code 3867 to narrow current
jurisdictional rules. Thus, if a Federal court believed it to be
appropriate, the court could apply supplemental jurisdiction in the
mass action context as well.
With regard to the exceptions, it is our intent that they be
interpreted strictly by a court so that they do not become loopholes
for an important jurisdictional provision. Thus, the first exception
would apply only in a situation where we are talking about a truly
local single event with no substantial interstate effects.
The purpose of this exception is to allow cases involving
environmental torts, such as a chemical spill, to remain in State court
if both the event and the injuries were truly local, even though there
are some out-of-state defendants.
By contrast, this exception would not apply to a product liability or
insurance case. The sale of a product to different people does not
qualify as an event, and the alleged injuries in such a case would be
spread out over more than one State or contiguous States even if all of
the plaintiffs in a particular case came from one single State.
The third exception addresses a very narrow situation, specifically a
law like the California Unfair Competition Law, which allows
individuals to bring a suit on behalf of the general public. Such a
suit would not qualify as a mass action. However, the vast majority of
cases brought under other States' consumer fraud laws which do not have
a parallel provision could qualify as removable class actions.
I yield to the gentleman from Virginia.
Mr. GOODLATTE. I thank the gentleman for yielding.
Finally, Mr. Speaker, some critics have complained that the
legislation removal provisions will result in delay. Can the gentleman
explain why that is simply not the case?
Mr. SENSENBRENNER. Mr. Speaker, reclaiming my time, once again,
critics of the legislation have it backwards. This legislation will
streamline jurisdictional inquiries by putting an end to all of the
gaming that takes place under the current system, and the so-called
delay refers to procedural rules that already exist under the current
system.
Under existing law, diversity of citizenship between the parties must
exist, both at the time a complaint is filed and at the time a
complaint is removed to Federal court. However, if the plaintiff files
an amended complaint in State court that creates jurisdiction,
[[Page H733]]
or if subsequent events create jurisdiction, the defendant can then
remove the case to Federal court.
Current law is also clear that once a complaint is properly removed
to Federal court, the Federal court's jurisdiction cannot be ousted by
later events. Thus, for example, changes in the amount of controversy
after the complaint has been removed would not subject a lawsuit to be
remanded to State court.
Mr. GOODLATTE. Mr. Speaker, I thank the gentleman for his leadership
in moving this legislation forward and in working with the Senate to
accomplish that as well.
I hope this colloquy will provide guidance on the very important
jurisdictional provisions in S. 5 and the sponsor's intent.
Mr. SENSENBRENNER. Mr. Speaker, I reserve the balance of my time.
Mr. CONYERS. Mr. Speaker, I am pleased to yield 4 minutes to my good
friend, the gentleman from Massachusetts (Mr. Markey) from the
Committee on Energy and Commerce. He has worked with us on many of
these issues.
Mr. MARKEY. Mr. Speaker, I thank the gentleman from Michigan for
yielding, and I thank him for his leadership on this most critical of
all consumer issues before Congress this year.
So you have all heard now the technical arguments made by the Bush
administration proponents here on the House floor. So you have heard
the Bush administration argument on why this is good.
Now, you want to hear what the bill is really about? Do you want to
hear what the Bush administration is really interested in? Well, here
it is, ladies and gentlemen. Citigroup's Smith Barney subdivision:
``Tobacco. Flash--Senate Just Passed Class Action Bill--Positive For
Tobacco.'' Let me read it to you:
``The Senate just passed a bill, 72-26.'' This has gone out from
Smith Barney to all their investors. ``This bill is designated to
funnel class action suits with plaintiffs in different States out of
State courts and into the Federal court system, which is typically much
less sympathetic to such litigation.
``The practical effect of the change could be that many cases will
never be heard given how overburdened Federal judges are, which might
help limit the number of cases.''
Smith Barney advised its clients that this bill will be positive in
general for the tobacco industry and that tobacco stocks have rallied
on this favorable news given that this bill could have a positive
impact on tobacco litigation.
That is what it is all about, ladies and gentlemen. You heard the
technical defense of it for the last half hour. The impact is they are
trying to protect the tobacco industry from being sued. So if you are
out there, one of your family members has just found that they have a
spot on their lung, they have smoked for the last 20 or 30 years, what
this bill will do is it will make it more difficult for you and the
other people in your States who also have found that they have spots on
their lungs to get together to sue the tobacco companies.
If your children are beginning to smoke, they are 13, 14, 15, this
bill is intended to make it more difficult for the people in the State
of New Hampshire, or Kansas, or Oklahoma to bring a suit to stop it.
That is what it is all about. Smith Barney gives the good news to the
tobacco industry investors, not to smokers.
And so what they have done is this. It is brilliant in the Bush
administration and that is what this side of the aisle is all about.
The FDA, is it going to move in to regulate tobacco? No, they made sure
they appoint people who will not do it. The EPA, are they going to move
in to make sure that the oil industry does not pollute your groundwater
so that the children in your neighborhood do not contract leukemia;
that breast cancers do not rise? No. Are they going to have a
Department of Labor which protects you against asbestos in the
workplace? No.
You are not going to see those suits, ladies and gentlemen. So it
comes to you and your families to go to court. And what this bill is
intended to do is to not let you go to court. So it is perfect. If you
are an asbestos company, your stocks are going up. If you are a tobacco
company, your stocks are going up. If you are an oil company, a
chemical company, your stocks are going up. Smith Barney gives you the
good news, Mr. and Mrs. Investor of America.
But if you are afraid for the health of your family, if you know that
the groundwater in New Hampshire has been poisoned by Amerada Hess and
22 other oil companies that are not in New Hampshire, you know what the
Republicans say? You know what the Bush administration says? The case
should not be held in New Hampshire. If Amerada Hess, the big oil
company, is a defendant, the case should be outside of New Hampshire,
not protecting the person whose family's health has been injured.
And so that is what it is all about. It is the final payback to the
tobacco industry, to the asbestos industry, to the oil industry, to the
chemical industry at the expense of ordinary families who need to be
able to go to court to protect their loved ones when their health has
been compromised. And these people are saying, your State is not smart
enough, your jurors are not smart enough to understand how the MTBE
ruined the groundwater in their State and poisoned thousands of people,
that it has to go to a State where Amerada Hess or some large oil
company feels comfortable, because they are not headquartered in New
Hampshire, they do not have a large plant in New Hampshire. All they
did was sell the material which poisoned your neighborhood.
That is what it is all about, ladies and gentlemen. You just watch
across the board every single interest that harms the health and well-
being of America skyrocket as soon as we take the vote on final passage
of this bill today because President Bush is going to sign this bill
with great joy because the oil, the chemical and polluting industries
are going to be happy.
Industry Note: Tobacco--Senate Just Passed Class Action Bill--Positive
for Tobacco
(By Bonnie Herzog)
Summary
The Senate just passed a bill 72-26 which is designed to
funnel class-action suits with plaintiffs in different states
out of state courts and into the federal court system, which
is typically much less sympathetic to such litigation.
The practical effect of the change could be that many cases
will never be heard given how overburdened federal judges
are, which might help limit the number of cases.
Although this news is positive in general for the tobacco
industry, we do not necessarily believe that class actions
pose a big threat to the industry. Furthermore, this type of
legislation would have been a bigger help to the industry if
it was passed 10 years ago.
The bill now moves to the House floor and the chances are
high that it passes since the House Republican leadership
said last week that it would pass the Senate's version of
this legislation as long as there were no amendments.
OPINION
The Senate just passed a bill that is designed to funnel
class-action lawsuits with plaintiffs in different states out
of state courts and into the federal court system, which is
historically much less sympathetic to such litigation.
The practical effect of the change could be that many cases
will never be heard, which might also be positive for tobacco
companies. Federal judges, facing overburdened dockets and
ambiguities about applying state laws in a federal court,
often refuse to grant standing to class-action plaintiffs.
Therefore, tobacco stocks have rallied on this favorable
news given that this bill could have a positive impact on
potential future tobacco litigation.
Now the bill should move to the House floor and apparently
the House Republican leadership announced last week that the
GOP majority in that chamber will pass the Senate's version
of class-action litigation provided it arrives without
amendments and from what we hear, this is in fact what has
happened in the Senate. Obviously President Bush has been a
big proponent of this type of legislation so we would assume
that he would sign it as part of a broader fight that he
hopes will lead to limits on awards in asbestos cases and to
caps on pain-and-suffering awards in medical malpractice
cases.
Although positive in general terms for the tobacco
companies, clearly this type of legislation would have been
much more useful if it were passed 10 years ago.
analyst certification
I, Bonnie Herzog, hereby certify that all of the views
expressed in this research report accurately reflect my
personal views about any and all of the subject issuer(s} or
securities. I also certify that no part of my compensation
was, is, or will be directly or indirectly related to the
specific recommendation(s) or view(s) in this report.
IMPORTANT DISCLOSURES
Analysts' compensation is determined based upon activities
and services intended
[[Page H734]]
to benefit the investor clients of Citigroup Global Markets
Inc. and its affiliates (``the Firm''). Like all Firm
employees, analysts receive compensation that is impacted by
overall firm profitability, which includes revenues from,
among other business units, the Private Client Division,
Institutional Equities, and Investment Banking.
SMITH BARNEY EQUITY RESEARCH RATINGS DISTRIBUTION
[Data current as of 31 December 2004]
------------------------------------------------------------------------
Buy Hold Sell
------------------------------------------------------------------------
Smith Barney Global Fundamental Equity Research 39% 42% 18%
Coverage (2598)................................
% of companies in each rating category that are 56% 55% 44%
investment banking clients.....................
------------------------------------------------------------------------
Guide to Fundamental Research Investment Ratings: Smith
Barney's stock recommendations include a risk rating and an
investment rating.
Risk ratings, which take into account both price volatility
and fundamental criteria, are: Low [L], Medium [M], High [H],
and Speculative [S].
Investment ratings are a function of Smith Barney's
expectation of total return (forecast price appreciation and
dividend yield within the next 12 months) and risk rating.
For securities in developed markets (US, UK, Europe, Japan,
and Australia/New Zealand), investment ratings are: Buy [1]
(expected total return of 10% or more for Low-Risk stocks,
15% or more for Medium-Risk stocks, 20% or more for High-Risk
stocks, and 35% or more for Speculative stocks); Hold [2]
(0%-10% for Low-Risk stocks, 0%-15% for Medium-Risk stocks,
0%-20% for High-Risk stocks, and 0%-35% for Speculative
stocks); and Sell [3] (negative total return).
For securities in emerging markets (Asia Pacific, Emerging
Europe/Middle East/Africa, and Latin America), investment
ratings are: Buy [1] (expected total return of 15% or more
for Low-Risk stocks, 20% or more for Medium-Risk stocks, 30%
or more for High-Risk stocks, and 40% or more for Speculative
stocks); Hold [2] (5%-15% for Low-Risk stocks, 10%-20% for
Medium-Risk stocks, 15%-30% for High-Risk stocks, and 20%-40%
for Speculative stocks); and Sell [3] (5% or less for Low-
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Mr. SENSENBRENNER. Mr. Speaker, I always thought that Federal judges
protected the rights of everybody.
Mr. Speaker, I yield 3 minutes to the gentleman from Utah (Mr.
Cannon).
Mr. CANNON. Mr. Speaker, to understand the need for S. 5, we need to
understand the game the class action lawyers play here and how they go
about abusing the court systems. I call it Class Action Monopoly. Here
is how it works. They start at Go. The first thing they do is come up
with an idea for a lawsuit. And then they find a named plaintiff. It
does not have to be someone who is actually injured in the process. All
the lawyer really needs is an idea for a lawsuit and potential
defendants who have deep pockets.
[[Page H735]]
Next they find a person who is the named plaintiff. That named
plaintiff is a citizen of the same State as one of the defendants and
that puts them in the State court, which is where they want to be.
Sometimes they have to promise to pay off that named plaintiff at this
point, but that is all part of the game.
Next the lawyers level their allegations, both in court and in the
media. Remember, they do not have to have proof for their allegations.
They just need a forum in which to make the allegations. Now the real
fun begins after you have made the allegations. They are in State court
with the named plaintiffs and their allegations, and it is time to get
out of rule 23 free.
Rule 23 is the rule that would apply in Federal courts that defines
when a class action can be certified consistent with fundamental
fairness and due process considerations. But in this game, there is no
fairness. There is no due process. So they easily convince their magnet
State to certify that they have a class and at the same time they file
copycat lawsuits in State courts all over the country. These are the
same class actions asserting the same claims on behalf of the same
people. These copycat lawsuits clog the State courts.
{time} 1115
At this point in the game, the lawyers start making the money. Let us
see where the money goes.
In the Columbia House record case, the lawyers took home $5 million
and the plaintiffs got a coupon for discounts on future purchases of
records.
In the Blockbuster case, the lawyers walked away with $9.25 million,
and the plaintiffs again got a coupon for $1 off their next video
rental, coupons that the defendant probably would have issued anyway.
In the Bank of Boston case, the lawyers settled the case and took
home $8.5 million. And the customers had money deducted from their
mortgage accounts to pay off the lawyers. So in the end, a State court
approved these cases, and all of the consumers in the lawsuit lost
money.
People may be wondering what happens to them in this game. We already
know that if one is a consumer, in the consumer class, they will be
lucky if they get a dollar-off coupon. If the business one works for
gets sued in one of the class actions, their employer is going to take
a major hit and maybe even lay them off. It is that clear in some of
these cases, the basic result is that the lawyers will get lots of
money, but consumers will pay because health care and car insurance
premiums will go through the roof. And when the game comes to an end,
they are left with no money and the lawyers are at ``go'' and they get
to start the process all over again.
It is fundamentally important that we resolve this problem and help
America move forward. I urge support of S. 5.
Mr. CONYERS. Mr. Speaker, I yield 2\1/2\ minutes to the gentlewoman
from California (Ms. Linda T. Sanchez).
(Ms. LINDA T. SANCHEZ and was given permission to revise and extend
her remarks.)
Ms. LINDA T. SANCHEZ of California. Mr. Speaker, I rise in opposition
to S. 5.
The sponsors of this bill call it the Class Action Fairness Act, but
nothing about this bill is fair, especially for the victims of
corporate wrongdoing. This bill erects a nearly insurmountable barrier
for everyday Americans, who have been hurt or wronged, to have their
day in court. Thanks to the so-called Class Action Fairness Act, people
who have had their civil rights trampled on will no longer be able to
bring their claims to State court. It does not matter if the laws of
their home State provide better civil rights protections or that it may
be more convenient for the victims of discrimination to seek justice in
a court where they live. With S. 5 they must go to Federal court.
The same burden is put on the backs of hourly wage workers who sue
for back pay that they are owed. These folks are struggling to put food
on their family's table, and they almost certainly cannot afford the
high cost of multistate litigation. With S. 5 they, too, must bring
their claims to a Federal court that may not even be in their State
just so that they can get the back pay that they do.
I ask all the proponents of this bill, is that their idea of
fairness?
Let us be real. S. 5 is not about reducing venue shopping. It is not
about the mythical scourge of predatory plaintiffs' lawyers, and it is
not about the fabricated economic drain of excessive jury awards. What
this bill really is about is doing a favor for unscrupulous, negligent
corporations by making it harder for their victims to sue them. It is
protecting big businesses who are guilty of wrongdoing from liability.
I am a lawyer and I acknowledge that there are some members of my
profession who file frivolous suits. But if the lawyers are the ones
that they claim are ruining this legal system, why are the sponsors of
this bill making it harder for the victims?
This bill makes about as much sense as locking the door of a hospital
in order to lower health care costs. Kicking people out of the system
does not solve the problem, and that is exactly what S. 5 does. It
penalizes the victims of wrongdoing without doing anything to improve
our legal system, and it shields bad actors from having to face the
consequences of their action. Where is the personal responsibility?
That is why I oppose this bill.
I urge all of my colleagues to vote ``no'' on the final passage and
to vote ``yes'' on the Conyers substitute.
Mr. SENSENBRENNER. Mr. Speaker, I yield 2 minutes to the gentleman
from Florida (Mr. Keller).
Mr. KELLER. Mr. Speaker, I thank the gentleman for yielding me this
time.
Mr. Speaker, the bottom line is that class action reform is badly
needed. Currently, crafty lawyers are able to game the system by filing
large, nationwide class action suits in certain preferred State courts
such as Madison County, Illinois, where judges are quick to certify
classes and quick to approve settlements that give the lawyers millions
of dollars in fees and give the clients worthless coupons.
Let us take a look at Madison County, Illinois with this chart.
Madison County, Illinois has been called the number one judicial
hellhole in the United States. In 2002 we can see there were 77 class
action filings, and in 2003 there were 106 class action lawsuits filed.
The movie ``Bridges of Madison County'' was a love story. The ``Judges
of Madison County'' would be a horror flick.
Unfortunately, all too often it is the lawyer who drives these cases
and not the individuals who are supposedly hurt. For example, in a suit
against Blockbuster over late fees, the attorneys received for
themselves $9.25 million, while their clients got a $1-off discount
coupon. Similarly, in a lawsuit against the company who makes Cheerios,
the lawyers received $2 million for themselves; predictably their
clients received a coupon for a box of Cheerios.
In a nutshell, these out-of-control class action lawsuits are killing
jobs, they are hurting small business people who cannot afford to
defend themselves, they are hurting consumers who end up paying higher
prices for goods and services.
This legislation provides much-needed reform in two key areas. First,
it eliminates much of the forum shopping by requiring most of these
nationwide class action suits to be filed in federal court. And,
second, it cracks down on these coupon-based class action settlements
by requiring fee awards to be based on the number of coupons actually
redeemed or the number of hours actually billed.
Mr. Speaker, I urge my colleagues to vote ``yes'' on this class
action reform legislation. It is about common sense, it is about
justice, and it is about time.
Mr. CONYERS. Mr. Speaker, I yield 3 minutes to the distinguished
gentleman from Virginia (Mr. Scott).
Mr. SCOTT of Virginia. Mr. Speaker, I thank the gentleman for
yielding me this time.
Mr. Speaker, we hear all this hoopla about these coupon settlements,
but we do not hear any suggestion as to what to do about them. There
are a lot of situations where corporations are ripping people off for
small amounts of money.
For example, if a person at a checkout counter calibrates the machine
to just cheat one out of a few cents, what is one's recovery in that
case? Just a few cents. And the only way one can stop that is with a
class action. But they would suggest there is no point in bringing the
class action; as long as they did not rip them off for too much, they
ought to get away with it.
[[Page H736]]
Furthermore, a lot of these coupon settlements are in Federal courts
anyway, so there is not going to be much change. But some of these
coupon cases are the only way that we can rein in corporate abuse.
But this bill just increases complications in a gratuitous way. It
took a half an hour for the proponents to explain when it is a class
action and when it is not a class action. In normal cases they file it
in State court. Either they certify it or not, and then one goes
forward. There is not much complication. But this invites mischief.
Whether it is really a class action or not, remove it anyway, and let
the Federal courts mess around with it and mess around with it and mess
around with it. They may never get their day in court. And if they do
not certify it, what happens to one's case? They may not be able to get
back to State court. So the fact that they did not certify a class
action will deny one the right to even have their day in court.
This complicates venue. They do not know where the case is going to
be heard. It could be that an injury happens in one State, they have
corporations in that State involved, they have State plaintiffs, and
here one has to go chasing around, trying to figure out where they are
going to be.
The Attorneys General across the States, 47 Attorneys General in
States and territories, have come out against the bill because it puts
the Attorneys General in the same crack. They do not know where the
case is going to be heard. If they bring a State action in State court,
they may get removed. Some of the States have better wage laws, civil
rights laws, sometimes consumer protections, and if the Attorneys
General want to come in to protect their own citizens in their own
States, they ought to have that right and not get jerked around to
Federal court.
Finally, Mr. Speaker, some Federal courts are more clogged up than
State courts. Some in the same area, the State courts are more clogged
up than the Federal courts. Why do we have to always go into Federal
court on these cases rather than have some kind of choice? Every time
we have a criminal case, it will take preference over the civil cases.
And in some cases where we have some terrorist cases or a backlog of
Federal cases, one may never get to hear their case in Federal court.
If we want consumers to get timely justice, we need to defeat this
bill, and I hope that is what we do.
Mr. CONYERS. Mr. Speaker, I yield 4 minutes to the distinguished
gentleman from North Carolina (Mr. Watt).
Mr. WATT. Mr. Speaker, I rise in opposition to S. 5, the Class Action
Fairness Act. Despite its name, this bill is anything but fair to the
class action device that has provided redress to large numbers of
American citizens who have been harmed by the same defendant or a group
of defendants.
Class action procedures have made it possible for injured Americans
to aggregate small claims that might not otherwise warrant the expense
of individual litigation. This bill before us will effectively
undermine the utility, practicality, and choice the class action
mechanism has offered to injured persons with legitimate claims against
powerful entities.
There appear to be improvements in this bill from the bill we
considered last Congress; yet there could and should be more
improvements. But the trend thus far this session is to dispense with
regular order, deny committee consideration, and to leave Members with
1 to 2 minutes to hurriedly voice our concerns. I can guarantee my
colleagues, having practiced law for over 20 years, that the core
provisions of this bill will invite prolonged satellite litigation into
ill-defined or undefined terms in this bill, clogging the Federal
courts and denying prompt justice to worthy claimants.
For example, where ``significant relief'' is sought against a home
State defendant, the court has no jurisdiction. What is significant and
what is not significant? Also, and worse in my judgment, no longer will
a coherent description of the class be sufficient before the trial on
the merit proceeds. Under the bill the judge must first know with
certainty the absolute number of the plaintiff class, because whether
he may or must decline to hear the case depends on whether a ``magic''
number of plaintiffs are citizens of the State where the lawsuit was
filed. There are other examples too complicated to address here in the
time that we have available.
But let me just say that juxtaposed against the smattering of cases
paraded by the supporters of this bill as justification for this
upheaval in our justice system are countless class action lawsuits by
principled attorneys and courageous plaintiffs that have exposed
deliberate wrongdoing, obtained justice for American citizens, and
vindicated the values of fair play and equal justice that define our
society.
America is distinguished from other countries because of its legal
system both criminal and civil. Is it perfect? No. But the majority
wages countless legislative assaults on the entire system rather than
confined, deliberative, surgical repairs. Under this bill, one bad
judge, we condemn all of the judges in the system. One excessive jury
award, let us overhaul the entire jury system. One irresponsible
lawyer, let us punish all lawyers. And here let us take these actions
without any committee hearings, markup, or debate. What could be more
irresponsible to our constituents?
Whatever happened to the notion that we were making our court systems
convenient to people? In some of our States, the Federal courts are far
removed from the places where individual litigants live. And what is it
with the notion all of a sudden that my States rights friends believe
that the Federal courts and the Federal Government can solve every
problem in our society? That is just simply absurd, inconsistent with
any kind of consistent philosophy about federalism.
I think we should defeat this flawed bill, and I thank the gentleman
for yielding me this time.
{time} 1130
Mr. CONYERS. Mr. Speaker, I yield 3 minutes to the gentleman from
Virginia (Mr. Moran).
Mr. MORAN of Virginia. Mr. Speaker, I thank the gentleman for
yielding me time, even though I am in opposition to his position and
favor this bill. This is not a radical bill, nor is it regressive. In
fact, it is a reasonable compromise designed to address what is an
abuse of the judicial system. That is why The Washington Post endorses
this bill. It is why the Democratic Senators from New York, California,
and Illinois all voted for the bill. In fact, Democratic Senators
representing 19 States voted for this bill in the other body. Why did
they do this? Because they believe on balance that consumers are going
to be better represented in Federal courts.
And this notion that somehow State courts are going to be more
inclined to represent consumer interests rather than Federal courts on
issues like tobacco and civil rights and so on, I do not think history
proves that to be the case.
I am particularly sensitive to these charges that this bill is going
to inhibit civil rights actions. Clearly if we look at history, it is
the Federal courts that have been far more insistent upon enforcement
of civil rights than State courts. Even recently in the Home Depot
case, a gender-discrimination case, it was settled with a $65 million
settlement, filed in Federal court. The Coca-Cola racial-discrimination
settlement, which guaranteed each class member recovery of at least
$38,000, was achieved in Federal court.
Contrast that to the Bank of Boston case, where the depositors in
Boston were not even aware they were members of a plaintiff class,
where a lawyer filed suit down in Alabama supposedly representing their
interest, and they found out when they had their bank account reduced
by $90; $90 was taken out of the mortgage escrow account from these
depositors to pay the lawyers when they were not even aware they were a
member of the plaintiff's suit, and the lawyer walks off with $8.25
million. That is judicial abuse, and that is what this bill corrects.
This is a reasonable bill. The fact is that in so many State and
local courts, they do not have the resources to go through the
mountains of evidence that have to be presented in class action suits.
In Federal courts they are far more likely to have those resources.
They have court clerks and they can hire magistrates that can go
through all of the evidence.
[[Page H737]]
There has been far too much abuse where judges have certified these
settlements at the tort lawyer's request and then, the defendant has to
settle for large sums of money. That is not the way it is supposed to
work.
On balance, I think the judicial system will be far more fair,
responsible, and reasonable under this compromise bill; so I would urge
my colleagues, particularly on the Democratic side, to support this
bill.
Mr. CONYERS. Mr. Speaker, I yield myself 1 minute. I would like to
respond to my good friend, the gentleman from Virginia (Mr. Moran).
First of all, I think the NAACP and the civil rights groups will be
eager to find out that his wisdom is superior to their experience in
the civil rights movement. What the gentleman was suggesting may have
been correct a number of years ago, but I would point out to the
gentleman that the Federal courts more recently have not been as
desirable a forum for civil rights activities.
The Bank of Boston case, that was 10 years ago and an anomaly. There
are not other examples of class actions where class members lost money.
No other court has made the same mistake. I would urge that neither the
gentleman nor any of us rewrite class action rules because of one
mistake.
Mr. Speaker, I yield 3 minutes to the gentleman from Washington (Mr.
Inslee).
(Mr. INSLEE asked and was given permission to revise and extend his
remarks.)
Mr. INSLEE. Mr. Speaker, I heard an earlier speaker refer to class
actions as a game. Try telling that to the 9-year-old son of Janet
Huggins, a 39-year-old healthy Tennessee mother who took Vioxx and died
in September 2004. Tell her family that the effort to protect her
family is a game. This is not a game. This is flesh and blood, the
ability to protect your family when something happens to you that you
did not have anything to do with.
This bill is the Vioxx Protection Bill. It is the Wal-Mart Protection
Bill. It is the Tyco Protection Bill. It is the Enron Protection Bill.
Anyone in the State of Washington who saw what Enron did to us,
stealing $1 billion, should not be voting for this bill, because this
bill in many ways is the Just Say No Bill to People Who Are Injured By
Rapacious Wrongdoers.
In three ways it says ``just say no'' to consumers who were hurt by
Enron, because in the Federal courts, if you happen to be in a
plaintiff's group of multiple States and the laws are a little
different in the States, do you know what the Federal courts do? They
throw out the class action.
Do you want to know why the Chamber of Commerce is spending $1
billion to lobby on what seems to be a procedural issue? Because they
throw out class actions where there is any difference in States,
meaning you will not be able to have a class action anywhere, anywhere,
Federal or State.
Why is this so important? I liken this to right now you have two arms
to protect Americans, the State judicial system and the Federal
judicial system. This reduces by half the resources that are available
to Americans to get redress when Enron steals from them or when Vioxx
kills them.
On 9/11, did we respond to September 11 by taking out city police
officers and only having the FBI? On 9/11, did we respond by not having
local fire departments and only having the Coast Guard or Army fire
department? No. We recognized that in our system of federalism,
Americans deserve the full protection, not just half the protection.
This cuts the available judicial resources in half. Why is that
important? The second reason it just says no to injured Americans is
the Federal courts cannot handle these class actions. They do not have
enough courts and judges. You go down and ask how long you will wait
today to get into a Federal court. Then add about 4 or 5 years after
this bill if this bill were to come into effect. You just say no
because it takes the keys away from the courthouse.
The third reason it just says no to good American citizens is it
takes from the State attorneys general their ability to protect people.
That is why the States attorneys general, Republican and Democrat
alike, are adamantly opposed to this bill, because this bill takes cops
off the beat; attorneys generals whose job it is to protect us from
what Roosevelt called the ``malefactors of great wealth'' are off the
beat.
Mr. Speaker, we should reject this bill.
Mr. CONYERS. Mr. Speaker, I am pleased to yield 5 minutes to the
distinguished gentlewoman from Texas (Ms. Jackson-Lee), a member of the
Committee on the Judiciary and a ranking subcommittee member.
(Ms. JACKSON-LEE of Texas asked and was given permission to revise
and extend her remarks, and include extraneous material.)
Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the gentleman for the
time that he has spent on this legislation. I think we have seen this
come across our desks for a number of sessions, and we have tried to
work in a bipartisan manner in order to find a way to respond to some
of the larger class actions that are now proceeding before us in the
courts.
Mr. Speaker, let me start out by trying to address some of the large
dilemmas that have seemingly been the underpinnings of this overhaul of
a system that is not broken.
I know some two or three sessions ago we were in the midst of
conversations about the asbestos lawsuits. Frankly, I believe that with
a reasonable dialogue and exchange, we were nearing some sort of
resolution that would have allowed that heinous series of events over
the years, the asbestos poisoning for many, many workers, to be brought
to a conclusion.
For some reason, those favoring class action reform want to paint
with a broad brush the victims, those who have been victimized by
asbestos poisoning. Even today as we are looking to reconstruct some of
the older buildings in my community, we are finding an asbestos
problem. But because of the notice that was given through these class
action lawsuits, we now have companies who are protecting workers who
are going in trying to clean out asbestos. We would not have had that
had we had not had this asbestos crisis.
It is the same thing with tobacco. Although there has been some humor
about ``don't you know when to stop smoking,'' we know that for years
and years, years and years, there was no labeling of cigarettes to
suggest that they in fact caused cancer. So the tobacco lawsuits are
not in fact frivolous. They may be high in return, but they are not
frivolous.
This class action lawsuit legislation, I believe, is excessive and
overreaching. What it simply wants to do is burden Federal courts
without giving them any resources. There is nothing in this legislation
that increases the funding of our Federal courts.
Take the southern district, for example. We are so overburdened with
criminal cases, immigration cases, smuggling cases, drug cases, there
is absolutely no room to orderly now prosecute or allow to proceed
class action lawsuits from people who have been damaged enormously.
This legislation wants to federalize mass torts, that is thousands
and thousands of people, when they realize that the compromise, for
example, that was offered in the Senate, the Feinstein compromise, does
not do anything, because what it says is you can go into State court if
you can find one of the defendants of a large corporation in your
State. If you happen to be a small State or maybe some State that is
not the headquarters of corporate entities, like on the east coast, for
example, you will find no defendant, so you will be languishing year
after year after year trying to get into Federal court.
What it also does is minimizes the opportunity of those who can
secure their local lawyer to get them into a State court and burdens
them with the responsibility of finding some high-priced counsel that
they cannot afford to try to understand Federal procedure law to get
into the Federal court. It closes the door to the least empowered: the
poor, the working class and the middle class.
What we find as well is that this legislation is much broader than is
needed. Why close the door to those who are injured by the failings of
products? Why close the doors to those who are injured by the mass and
unfortunate activities of a company like Enron in my congressional
district, penalizing thousands of workers all over America unfairly and
giving them no relief, giving no relief to the pensioners who lost all
of their dollars?
[[Page H738]]
Mr. Speaker, what we have here is a response to no crisis, a response
to no problem. Frankly, I believe that if we reasonably look at this
legislation, we will find that all it does is it zippers the courthouse
door.
To my good friend who mentioned that civil rights can take place
wherever is necessary, let me just share with you that civil rights is
not a popular cause; and, therefore, to then add it to get in line now
with thousands of other cases, you can be assured that there will be a
crisis.
Mr. Speaker, let me simply say I rise to support the substitute that
has the civil rights carve-out, the wage-and-hour carve-out. It
excludes non-action cases involving physical injuries, an attorney
general carve-out, the anti-secrecy language; and in particular it does
not allow companies to go offshore to avoid class action lawsuits.
Mr. Speaker, let me simply say this is a bill on the floor with no
problem. But I can tell you, America, you are going to have a big
problem once this bill is passed, and I am saddened by the fact that
time after time we come to this floor and we close out the working
people, we close out the middle-class, and we close out those who need
relief.
Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, we have listened carefully to the discussion here, and
it is very clear that one thing is for sure: this is not a simple
procedural fix to class actions in our courts.
{time} 1145
Another thing, it is clear that all of the totally unsatisfactory
provisions have not been removed.
First, the bill, as the gentlewoman from Texas has said, harms
working Americans and victims of discrimination who are in no position
to bring individual actions of wage-and-hour cases or civil rights
discrimination claims. Moving the cases to Federal court will result in
many never being ever heard at all.
Many State laws provide better protection than Federal statutes. For
example, 20 States provide protection for marital status and Federal
law does not. Twenty-one States extend Federal definitions of national
origin discrimination by including ancestry, place of birth, and
citizenship status; and 31 States prohibit genetic discrimination in
the workplace, not provided under Federal law.
Secondly, this bill closes the door on victims of large-scale
personal injury cases resulting from accidents, environmental
disasters, or dangerous drugs that are widely sold. Although these
cases are filed in State courts under State law, the bill will treat
them as class actions and throw them willy-nilly into the Federal
court.
While harming victims of personal injury, this provision greatly
helps the companies, like Merck, the company that manufactured the
deadly drug Vioxx. Since the discovery of the dangers of Vioxx,
hundreds of cases from all over the country have been filed against
Merck, and we can anticipate likely thousands more. However, under this
proposal before us today, those who suffered harm from the drug will be
denied their day in court and their ability to seek justice.
Finally, this bill makes it difficult for consumers to pursue claims
against defendants who violated consumer protection laws. The bill will
force many of these cases filed in State courts into the Federal
system. But some Federal courts will not certify class actions
involving the laws of multiple States because they deem the case too
complex and unmanageable. Result: harmed consumers will never have
their cases adjudicated in the courts.
It also makes it impossible for States to pursue actions against
defendants who have caused harm to the State's citizens. State
attorneys general often pursue these claims under State consumer
protection statutes, antitrust laws, often with the attorney general
acting as the class representative for the consumers of the State.
Under this bill, would we want these cases to be thrown into Federal
court and severely impede the State's ability to enforce its own laws
for its own citizens? That is what will happen. That is what will take
place.
So I am very pleased to put in the Record the letter from the States
attorneys general opposing this legislation, those attorneys general
from California, Illinois, Iowa, Kentucky, Maine, Maryland,
Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oklahoma,
Oregon, Vermont, and West Virginia.
I would also like to add the letter from the environmental
organizations which have made their case as to why this would be a very
harmful measure. The signatories of this letter include the United
States Public Interest Research Group, PIRG; the Wilderness Society;
the Sierra Club; the National Environment Trust; Greenpeace; Friends of
the Earth; and the National Audubon Society, and many others.
Finally, Mr. Speaker, I include in this debate from the Leadership
Conference and the AFL-CIO, and the Alliance For Justice, all writing
on one letter, and they plead with us in the House of Representatives
to protect working men and women and civil rights litigants by opposing
the measure that is before us.
Washington, DC, February 15, 2005.
Dear Representative: On behalf of the undersigned civil
rights and labor organizations, we write to urge you to vote
against the Class Action Fairness Act (S. 5), which passed
the Senate last week. While the bill was pending before the
Senate, we pushed for an amendment offered by Senator Kennedy
that would have exempted civil rights and wage and hour state
law cases. Because the amendment was not adopted, we ask you
to reject S. 5 in order to ensure that the Class Action
Fairness Act does not adversely impact the workplace and
civil rights of ordinary Americans by making it extremely
difficult to enforce civil rights and labor rights.
During Congress' extensive examination into the merits of
class action lawsuits, nowhere has a case been made that
abuses exist in anti-discrimination and wage and hour class-
action litigation. By allowing dozens of employees to bring
one lawsuit together, the class-action device is frequently
the only means for low wage workers who have been denied mere
dollars a day to recover their lost wages. Moreover, class
actions also are often the only means to effectively change a
policy of discrimination. These suits level the playing field
between individuals and those with more power and resources,
and permit courts to decide cases more efficiently.
Wage and hour class actions are most often brought in state
courts under the law of the state in which the claims arise.
The reason is that state wage and hour laws typically provide
more complete remedies for victims of wage and hour
violations than the federal wage and hour statute. For
instance, the federal Fair Labor Standards Act (FLSA) offers
no protection for a worker who works 30 hours and is paid for
20, so long as the worker's total pay for the 30 hours worked
exceeds the federal minimum wage. However, many states have
``payment of wage'' laws that would require that the worker
be fully paid for those additional 10 hours of work. Also,
federal law provides no remedy for part-time workers who
often work 10-16 hour days, yet earn no overtime because they
work less than 40 hours per week. At least six states and
territories, however, including California and Alaska,
require payment of overtime after a prescribed number of
hours are worked in a single day.
Likewise, state laws increasingly provide greater civil
rights protection than federal law. For example, every state
has passed a law prohibiting discrimination on the basis of
disability. Some of these state statutes provide a broader
definition of disability and a greater range of protection in
comparison to the federal Americans with Disabilities Act
including California, Minnesota, New Jersey, New York, Rhode
Island, Washington, and West Virginia. In addition, every
state has enacted a law prohibiting age discrimination in
employment, and some of these state laws--including those of
California, Michigan, Ohio and the District of Columbia--
contain provisions affording greater protection to older
workers than comparable provisions of the federal Age
Discrimination in Employment Act (ADEA).
In addition, many state laws provide protections to
classifications not covered by federal law. For example, the
following states provide protection for marital status:
Alaska, California, Connecticut, Delaware, Florida, Hawaii,
Illinois, Maryland, Michigan, Minnesota, Montana, Nebraska,
New Hampshire, New Jersey, New York, North Dakota, Oregon,
Virginia, Washington, and Wisconsin. Moreover, several states
have expanded Title VII's ban on national origin
discrimination to prohibit discrimination on the basis of
ancestry, or place of birth, or citizenship status. These
states include Arkansas, California, Colorado, Connecticut,
Hawaii, Illinois, Indiana, Kansas, Maine, Massachusetts,
Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, South
Dakota, Vermont, West Virginia, Wisconsin, Wyoming, and the
Virgin Islands.
Finally, 31 states have enacted legislation prohibiting
genetic discrimination in the workplace--an important
protection given the rapid increase in the ability to gather
this type of information. The 31 states are Arizona,
Arkansas, California, Connecticut, Delaware, Hawaii, Iowa,
Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan,
Minnesota, Missouri, Nebraska, Nevada, New Hampshire, New
Jersey, New York, North
[[Page H739]]
Carolina, Oklahoma, Oregon, Rhode Island, South Dakota,
Texas, Utah, Vermont, Virginia, Washington, and Wisconsin. In
addition, Florida and Illinois have enacted more limited
protections against genetic discrimination.
Under S. 5, citizens are denied the right to use their own
state courts to bring class actions against corporations that
violate these state wage and hour and state civil rights
laws, even where that corporation has hundreds of employees
in that state. Moving these state law cases into federal
court will delay and likely deny justice for working men and
women and victims of discrimination. The federal courts are
already overburdened. Additionally, federal courts are less
likely to certify classes or provide relief for violations of
state law.
In light of the lack of any compelling need to sweep state
wage and hour and civil rights claims into the scope of the
bill, which is done in the current bill, we urge you to vote
against S. 5. In the event that amendments are offered, we
support any amendment that, like the Kennedy amendment and
others offered in the Senate, preserves the right of
individuals to bring class actions in an effective, efficient
manner.
If you have any questions, or need further information,
please call Nancy Zirkin, Deputy Director of the Leadership
Conference on Civil Rights (202-263-2880); Sandy Brantley,
Legislative Counsel, Alliance for Justice (202-822-6070); or
Bill Samuel, Legislative Director, AFL-CIO (202-637-5320).
Sincerely,
AARP; AFL-CIO; Alliance for Justice; American-Arab Anti-
Discrimination Committee; American Association of People with
Disabilities; American Association of University Women;
American Civil Liberties Union; American Federation for the
Blind; American Federation of Government Employees; American
Federation of School Administrators; American Federation of
State, County & Municipal Employees; American Federation of
Teachers; American Jewish Committee; Americans for Democratic
Action.
The Arc of the United States; Association of Flight
Attendants; Bazelon Center for Mental Health Law; Center for
Justice and Democracy; Coalition of Black Trade Unionists;
Communications Workers of America; Consortium for Citizens
with Disabilities Civil Rights Task Force; Department for
Professional Employees, AFL-CIO; Disability Rights Education
and Defense Fund; Epilepsy Foundation; Federally Employed
Women; Federally Employed Women's Legal & Education Fund,
Inc.; Food & Allied Service Trades Department, AFL-CIO; Human
Rights Campaign.
International Association of Machinists and Aerospace
Workers; International Brotherhood of Boilermakers, Iron Ship
Builders, Blacksmiths, Forgers and Helpers; International
Brotherhood of Electrlcal Workers; International Brotherhood
of Teamsters; International Federation of Professional &
Technical Engineers; International Union of Bricklayers and
Allied Craftworkers; International Union of Painters and
Allied Trades of the United States and Canada; International
Union, United Automobile, Aerospace & Agricultural Workers of
America; Jewish Labor Committee; Lawyers' Committee for Civil
Rights Under Law; Lawyers' Committee for Civil Rights of the
San Francisco Bay Area; Leadership Conference on Civil
Rights; Legal Momentum; Mexican American Legal Defense and
Educational Fund.
NAACP; NAACP Legal Defense & Educational Fund, Inc.;
National Alliance of Postal and Federal Employees; National
Asian Pacific American Legal Consortium; National Association
for Equal Opportunity in Higher Education; National
Association of Protection and Advocacy Systems; National
Association of Social Workers; National Employment Lawyers
Association; National Fair Housing Alliance; National
Organization for Women; National Partnership for Women and
Families; National Women's Law Center; Paper, Allied-
Industrial, Chemical and Energy Workers International Union;
Paralyzed Veterans of America.
People For the American Way; Pride At Work, AFL-CIO;
Service Employees International Union; Transport Workers
Union of America; Transportation Communications International
Union; UAW; Unitarian Universalist Association of
Congregations; UNITE!; United Cerebral Palsy; United Food and
Commercial Workers International Union; United Steelworkers
of America; Utility Worker Union of America; and Women
Employed.
____
February 7, 2005.
Dear Senator: Our organizations are opposed to the
sweepingly-drawn and misleadingly named ``Class Action
Fairness Act of 2005.'' This bill is patently unfair to
citizens harmed by toxic spills, contaminated drinking water,
polluted air and other environmental hazards involved in
class action cases based on state environmental or public
health laws. S. 5 would allow corporate defendants in many
pollution class actions and ``mass tort'' environmental cases
to remove these kinds of state environmental matters from
state court to federal court, placing the cases in a forum
that could be more costly, more time-consuming, and
disadvantageous to your constituents harmed by toxic
pollution. State law environmental harm cases do not belong
in this legislation and we urge you to exclude such pollution
cases from the class action bill.
Class actions protect the public's health and the
environment by allowing people with similar injuries to join
together for more efficient and cost-effective adjudication
of their cases. All too often, hazardous spills, water
pollution, or other toxic contamination from a single source
affects large numbers of people, not all of whom may be
citizens or residents of the same state as that of the
defendants who caused the harm. In such cases, a class action
lawsuit in state court based on state common law doctrines of
negligence, nuisance or trespass, or upon rights and duties
created by state statutes in the state where the injuries
occur, is often the best way of fairly resolving these
claims.
For example, thousands of families around the country are
now suffering because of widespread groundwater contamination
caused by the gasoline additive MTBE, which the U.S.
government considers a potential human carcinogen. According
to a May, 2002 GAO report, 35 states reported that they find
MTBE in groundwater at least 20 percent of the time they
sample for it, and 24 states said that they find it at least
60 percent of the time. Some communities and individuals have
brought or soon will bring suits to recover damages for MTBE
contamination and hold the polluters accountable, but under
this bill, MTBE class actions or ``mass actions'' based on
state law could be removed to federal court by the oil and
gas companies in many of these cases.
This could not only make these cases more expensive, more
time-consuming and more difficult for injured parties, but
could also result in the dismissal of legitimate cases by
federal judges who are unfamiliar with, or less respectful
of, state-law claims. For example, in at least one MTBE class
action, a federal court dismissed the case based on oil
companies' claims that the action was barred by the federal
Clean Air Act (even though that law contains no tort
liability waiver for MTBE). Yet a California state court
rejected a similar federal preemption argument and let the
case go to. a jury, which found oil refineries, fuel
distributors, and others liable for damages. These cases
highlight how a state court may be more willing to uphold
legitimate state law claims. Other examples of state-law
cases that would be weakened by this bill include lead
contamination cases, mercury contamination, perchlorate
pollution and other ``toxic tort'' cases.
In a letter to the Senate last year, the U.S. Judicial
Conference expressed their continued opposition to such
broadly written class action removal legislation. Notably,
their letter states that, even if Congress determines that
some ``significant multi-state class actions'' should be
brought within the removal jurisdiction of the federal
courts, Congress should include certain limitations and
exceptions, including for class actions ``in which plaintiff
class members suffered personal injury or personal property
damage within the state, as in the case of a serious
environmental disaster.'' The Judicial Conference's letter
explains that this ``environmental harm'' exception should
apply ``to all individuals who suffered personal injuries or
losses to physical property, whether or not they were
citizens of the state in question.''
We agree with the Judicial Conference that cases involving
environmental harm are not even close to the type of cases
that proponents of S. 5 cite when they call for reforms to
the class action system. Including such cases in the bill
penalizes injured parties in those cases for no reason other
than to benefit the polluters. No rationale has been offered
by the bill's supporters for including environmental cases in
S. 5's provisions. We are unaware of any examples offered by
bill supporters of environmental harm cases that represent
alleged abuses of the state class actions.
More proof of the overreaching of this bill is that the so-
called ``Class Action Fairness Act'' is not even limited to
class action cases. The bill contains a provision that would
allow defendants to remove to federal court all environmental
``mass action'' cases involving more than 100 people--even
though these cases are not even filed as class actions. For
example, the bill would apply to cases similar to the
recently concluded state-court trial in Anniston, Alabama,
where a jury awarded damages to be paid by Monsanto and
Solutia for injuring more than 3,500 people that the jury--
found had been exposed over many years--with the companies'
knowledge--to cancer-causing PCBs.
There is little doubt in the Anniston case that, had S. 5
been law, the defendants would have tried to remove the case
from the state court that serves the community that suffered
this devastating harm. Even in the best-case scenario, S. 5
would put plaintiffs like those in Anniston in the position
of having to fight costly and time-consuming court battles in
order to preserve their chosen forum for litigating their
claims. In any case, it would reward the kind of reckless
corporate misbehavior demonstrated by Monsanto and Solutia by
giving defendants in such cases the right to remove state-law
cases to federal court over the objections of those they have
injured.
The so-called ``Class Action Fairness Act'' would allow
corporate polluters who harm the public's health and welfare
to exploit the availability of a federal forum whenever they
perceive an advantage to doing so. It is nothing more than an
attempt to take legitimate state-court claims by injured
parties out of state court at the whim of those who have
committed the injury.
Cases involving environmental harm and injury to the public
from toxic exposure
[[Page H740]]
should not be subject to the bill's provisions; if these
environmental harm cases are not excluded, we strongly urge
you to vote against S. 5.
Sincerely,
S. Elizabeth Birnbaum, Vice President for Government
Affairs, American Rivers.
Doug Kendall, Executive Director, Community Rights Counsel.
Mary Beth Beetham, Director of Legislative Affairs,
Defenders of Wildlife.
Sara Zdeb, Legislative Director, Friends of the Earth.
Anne Georges, Acting Director of Public Policy, National
Audubon Society.
Karen Wayland, Legislative Director, Natural Resources
Defense Council.
Tom Z. Collina, Executive Director, 20/20 Vision.
Linda Lance, Vice President for Public Policy, The
Wilderness Society.
Paul Schwartz, National Campaigns Director, Clean Water
Action.
James Cox, Legislative Counsel, Earthjustice.
Ken Cook, Executive Director, Environmental Working Group.
Rick Hind, Legislative Director, Toxics Campaign,
Greenpeace US.
Kevin S. Curtis, Vice President, National Environmental
Trust.
Ed Hopkins, Director, Environmental Quality Programs,
Sierra Club.
Julia Hathaway, Legislative Director, The Ocean
Conservancy.
Anna Aurilio, Legislative Director, U.S. Public Interest
Research Group.
____
National Association
of Attorneys General,
Washington, DC, February 7, 2005.
Hon. Bill Frist,
Senate Majority Leader, U.S. Senate,
Dirksen Building, Washington, DC.
Hon. Harry Reid,
Senate Minority Leader, U.S. Senate,
Hart Building, Washington, DC.
Dear Senate Majority Leader Frist and Senate Minority
Leader Reid: We, the undersigned State Attorneys General,
write to express our concern regarding one limited aspect of
pending Senate Bill 5, the ``Class Action Fairness Act,'' or
any similar legislation. We take no position on the Act as a
general matter and, indeed, there are differing views among
us on the policy judgments reflected in the Act. We join
together, however, in a bipartisan request for support of
Senator Mark Pryor's potential amendment to S. 5, or any
similar legislation, clarifying that the Act does not apply
to, and would have no effect on, actions brought by any State
Attorney General on behalf of his or her respective state or
its citizens.
As Attorneys General, we frequently investigate and bring
actions against defendants who have caused harm to our
citizens. These cases are usually brought pursuant to the
Attorney General's parens patriae authority under our
respective consumer protection and antitrust statutes. In
some instances, such actions have been brought with the
Attorney General acting as the class representative for the
consumers of the state. It is our concern that certain
provisions of S. 5 might be misinterpreted to hamper the
ability of the Attorneys General to bring such actions,
thereby impeding one means of protecting our citizens from
unlawful activity and its resulting harm.
The Attorneys General have been very successful in
litigation initiated to protect the rights of our consumers.
For example, in the pharmaceutical industry, the States have
recently brought enforcement actions on behalf of consumers
against large, often foreign-owned, drug companies for
overcharges and market manipulations that illegally raised
the costs of certain prescription drugs. Such cases have
resulted in recoveries of approximately 235 million dollars,
the majority of which is earmarked for consumer restitution.
In several instances, the States' recoveries provided one
hundred percent reimbursement directly to individual
consumers of the overcharges they suffered as a result of the
illegal activities of the defendants. This often meant
several hundred dollars going back into the pockets of those
consumers who can least afford to be victimized by illegal
trade practices, senior citizens living on fixed incomes and
the working poor who cannot afford insurance.
We encourage you to support the aforementioned amendment
exempting all actions brought by State Attorneys General from
the provisions of S. 5, or any similar legislation. 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. We
respectfully submit that the overall purposes of the
legislation would not be impaired by such an amendment that
merely clarifies the existing authority of our respective
States.
Thank you for your consideration of this very important
matter. Please contact any of us if you have questions or
comments.
Sincerely,
Mike Beebee, Attorney General, Arkansas.
Gregg Renkes, Attorney General, Alaska.
Mark Shurtleff, Attorney General, Utah.
Fiti Sunia, Attorney General, American Samoa.
Terry Goddard, Attorney General, Arizona.
John Suthers, Attorney General, Colorado.
Jane Brady, Attorney General, Delaware.
Charlie Crist, Attorney General, Florida.
Mark Bennett, Attorney General, Hawaii.
Stephen Carter, Attorney General, Indiana.
Bill Lockyer, Attorney General, California.
Richard Blumenthal, Attorney General, Connecticut.
Robert Spagnoletti, Attorney General, District of Columbia.
Thurbert Baker, Attorney General, Georgia.
Lawrence Wasden, Attorney General, Idaho.
Tom Miller, Attorney General, Iowa.
Greg Stumbo, Attorney General, Kentucky.
Steven Rowe, Attorney General, Maine.
Tom Reilly, Attorney General, Massachusetts.
Mike Hatch, Attorney General, Minnesota.
Jay Nixon, Attorney General, Missouri.
Jon Bruning, Attorney General, Nebraska.
Kelly Ayotte, Attorney General, New Hampshire.
Charles Foti, Attorney General, Louisiana.
Joseph Curran, Attorney General, Maryland.
Mike Cox, Attorney General, Michigan.
Jim Hood, Attorney General, Mississippi.
Mike McGrath, Attorney General, Montana.
Brian Sandoval, Attorney General, Nevada.
Peter Harvey, Attorney General, New Jersey.
Eliot Spitzer, Attorney General, New York.
Wayne Stenehjem, Attorney General, North Dakota.
Jim Petro, Attorney General, Ohio.
Hardy Myers, Attorney General, Oregon.
Roberto Sanchez Ramos, Attorney General, Puerto Rico.
Henry McMaster, Attorney General, South Carolina.
Roy Cooper, Attorney General, North Carolina.
Pamela Brown, Attorney General, N. Mariana Islands.
W.A. Drew Edmondson, Attorney General, Oklahoma.
Tom Corbett, Attorney General, Pennsylvania.
Patrick Lynch, Attorney General, Rhode Island.
Lawrence Long, Attorney General, South Dakota.
Paul Summers, Attorney General, Tennesse.
Darrell McGraw, Attorney General, West Virginia.
Patrick Crank, Attorney General, Wyoming.
Rob McKenna, Attorney General, Washington.
Peg Lautenschlager, Attorney General, Wisconsin.
Mr. Speaker, I urge my colleagues to seriously consider the excellent
presentations made on our side of the aisle and vote against the
measure that is before us today.
Mr. Speaker, I yield back the balance of my time.
Mr. SENSENBRENNER. Mr. Speaker, I yield myself the balance of the
time.
Mr. Speaker, notwithstanding what we have heard from opponents of
this legislation, its passage would not extinguish the legal right of
any injured party, whether it be a class action, a mass action, or an
individual lawsuit from proceeding in a court of competent jurisdiction
in the United States. What the bill does do is it puts some sense into
the class action system so that the members of the plaintiff's class
will be fairly and adequately compensated rather than seeing all of
their gains go to attorneys and them just getting coupon settlements
from the people who have allegedly done them wrong.
I was particularly perturbed listening to the gentleman from
Massachusetts (Mr. Markey), who said that the kids who start smoking at
13 and 14 years old are going to be denied their day in court, and that
the tobacco companies are going to end up cashing in on a big bonanza.
Well, I had my staff, while this was going on, look at what has
happened to Altria, the parent company of Philip Morris. Since the
other body passed this bill, Altria stock has gone down by at least
$1.50, or 2 percent. And today, the Reuters story that came out less
than an hour ago says that the Dow has been dragged down by Altria.
Now, if this was the bonanza to investors in Altria, the stock would
not be going down. It is not. That is a fallacious argument. Reject the
substitute and pass the bill.
Mr. HASTERT. Mr. Speaker, I'm pleased join my colleagues here today
who support taking a historic first step to breaking one of the main
shackles holding back our economy and America's workforce--lawsuit
abuse.
For the last decade, the Republican Congress has worked to end out of
control lawsuits. Today is the day we will pass common-sense
legislation and put an end to Class Action Lawsuit abuse.
I particularly want to praise the efforts of House Judiciary Chairman
Jim Sensenbrenner for his relentless work. Without his
[[Page H741]]
stewardship, I don't think th achievement would have become a reality.
I come from Illinois--the Land of Lincoln--where downstate Madison
County has the dubious distinction as a personal injury lawyer's
paradise. No, there are not palm trees or sandy beaches there. Instead,
Madison County, Illinois, is home to very warm courtrooms where
frivolous lawsuits are filed virtually everyday.
Why's Madison County? The answer: ``venue shopping.''
Cagey trial lawyers have figured out there's a pretty good likelihood
their case--no matter what its merit--will literally get its day in
court because of favorable judges.
To use a sports analogy, thanks to willing judges, personal injury
lawyers get to play on their ``home court'' each and every time they
file a frivolous lawsuit there.
For instance, a legendary class action case from Madison County
illustrates what's wrong with the current legal system.
In 2000, Cable TV customers who filed suit over their cable
operator's late fee policy won their case, but received nothing . . .
not a dime, not a nickel, not a Lincoln penny. Instead, their $5.6
million settlement went directly into the pockets of their attorneys.
How is that justice? How does that help victims?
The American people deserve better. Our working families demand
better.
Today's action takes a step in the right direction to end the so-
called Tort Tax.
The Tort Tax makes consumers pay more for the goods and services they
use.
The Tort Tax adds to the cost of everything we buy because businesses
and manufacturers have to cover themselves and their employees--just in
case they get sued by a greedy personal injury lawyer.
At last estimate, this outrageous Tort Tax cost the nation's economy
$246 billion a year, and by 2006, it will cost the average American
nearly $1,000 more each year on their purchases because of defensive
business practices.
In closing, as a matter of principle, damage awards should go to the
victim, not the lawyers. Lawsuits should not be ``strike it rich''
schemes for lawyers.
There has to be some limit to what lawyers can take from their
clients. Otherwise, cagey attorneys end up with the lion's share of the
settlement and the victims end up with little more than scraps.
Mr. UDALL of Colorado. Mr. Speaker, the House has considered similar
legislation in 1999, 2002, and 2003. On each of those occasions, I
voted ``no''--not because I was unalterably opposed to Congress acting
on this subject, but because in my judgment the defects of those bills
outweighed their potential benefits.
When it was announced that this bill would be considered, I hoped
that the pattern would be broken and that this time I would be able to
support the legislation. And if the Conyers substitute had been
adopted, that would have been the case.
Adoption of the substitute would have greatly improved the
legislation. It would have reaffirmed the authority and ability of each
State's Attorney General to carry out his or her duties under State
law. It would have made sure that the bill would not prejudice people
with complaints about violations of their civil rights. It would have
properly focused the legislation on class actions unrelated to personal
injuries. It would have added important protections for the public's
right to know about the proceedings in our courts. And it would have
made other changes that would have improved the bill.
Unfortunately, the substitute was not adopted--and I have come to the
reluctant conclusion that I must vote against the bill.
That conclusion is reluctant because in several ways this bill is
better--or, more accurately, less bad--than its predecessors.
Unlike earlier versions, S. 5 would not have a retroactive effect, so
it would not affect pending cases. It also does not include a provision
for immediate interlocutory appeals of denials of class action
certification, or for a stay of all discovery while the appeal was
pending. And in several other ways, it differs for the better from
previous versions.
However, while the bill is less bad, in my opinion it still is not
good enough. I remain unconvinced that the problem the bill purports to
address is so great as to require such a sweeping remedy, and I am
still concerned that in too many cases the side-effects of this
treatment will be more severe than the disease.
Mr. Speaker, one of the most important rights we have as Americans is
the ability to seek redress from the courts when we believe our rights
have been abridged or we have been improperly treated. And, when a
complaint arises under a State law, it is both appropriate and
desirable that it be heard in State court because those are the most
convenient and with the best understanding of State laws and local
conditions.
Of course, it is appropriate to provide for removing some State cases
to Federal courts. But I think that should be more the exception than
the rule, and I think this bill tends to reverse that. I think it
excessively tilts the balance between the States and the Federal
government so as to throw too many cases into already-overburdened
Federal courts--with the predictable result that too many will be
dismissed without adequate consideration of their merits.
So, while I respect those who have urged the House to pass this bill,
I cannot vote for it.
Mr. BLUMENAUER. Mr. Speaker, I agree with this bill's intent to
prevent the legal system from being ``gamed'' by attorneys who lump
thousands of speculative claims into a single class action lawsuit and
then seek out a sympathetic State court. Any abusive or frivolous class
action is a drain on the system and forces innocent defendants to
settle cases rather than play judicial roulette with the risk of a huge
unjustified settlement.
Unfortunately, instead of narrowly focusing on such abuses, Senate
bill 5 completely reconfigures the judicial system, resulting in
diminished corporate accountability and fundamental legal rights of
individuals. While this bill makes some improvements to limit frivolous
lawsuits, it does so at a price that will make it harder for average
Americans to successfully pursue real claims against interests that
violate their States' consumer health, civil rights, and environmental
protection laws. This is an unnecessary tradeoff. I voted for a
Democratic substitute motion which would have minimized some of these
abuses. Sadly, it was defeated and, as a result, I voted against final
passage.
I will continue to be open to changes that make our judicial system
work better, but not at the expense of the people I represent. It is
essential that we hold accountable the forces that have so much impact
on the lives of every American.
Mr. WEXLER. Mr. Speaker, I rise today in strong opposition to the so-
called ``Class Action Fairness Act.'' I have strong objections to not
only to the text of the bill itself but also to the very process by
which it was strong-armed by the Republican leadership past the
Judiciary Committee. This process did not allow any opportunity for
committee members to raise our objections or to work constructively to
fix the major problems in this legislation. This circumvention of
regular order is being sold to us with a myriad of excuses, one of them
is that the bill is a simple procedural fix for a judicial crisis with
nothing controversial in it.
Nothing could be further from the truth. This bill is a federal
mandate to undermine and all but kill the ability to raise class
actions cases in State courts. Under this so-called ``procedural
bill,'' almost every class action lawsuit would be removed from State
jurisdiction and forced onto an already overburdened Federal judiciary.
Moving these cases to Federal court will make litigation more costly,
more time-consuming and less likely that victims can get their rightful
day in court at all. This bill is so preposterously far-reaching it
would prevent State courts from considering class action cases that
only involve State laws. We have already added so many State cases to
Federal jurisdiction that if this bill passes victims will be added to
the substantial backlog of Federal cases and will likely find it
difficult to ever have their cases heard.
It should be obvious to even the most casual observer that the intent
of this bill is to prevent class action lawsuits from ever being heard.
Members should make no mistake about it--if we pass this misguided
legislation, we will have effectively shut the door on civil rights, on
workers rights and on anyone injured through corporate negligence.
Mr. Speaker, I urge my colleagues to join me in opposing one of the
most destructive and far reaching civil justice measures ever
considered by this body.
Mr. SHAYS. Mr. Speaker, I rise in support of S. 5, the Class Action
Fairness Act.
This legislation will work to balance class actions. Currently,
plaintiffs' lawyers take advantage of the system by bringing large,
national lawsuits in specific jurisdictions with relaxed certification
criteria.
Attorneys are increasingly filing interstate class actions in State
courts, mostly in what are known as ``magnet'' jurisdictions. Courts in
these jurisdictions are attractive to lawyers because they routinely
approve settlements in which attorneys receive large fees and the class
members receive virtually nothing, and they also decide the claims of
other state's citizens under the court's state law.
This results in more and more class actions being losing propositions
for everyone involved--except for the lawyers who brought them.
The Class Action Fairness Act works to improve our legal system by
allowing larger interstate class action cases to be heard in Federal
courts, closing the magnet jurisdiction loophole.
This bill will also make it easier for local businesses to avoid
harassment. Currently,
[[Page H742]]
plaintiffs' lawyers can name a local business in a nationwide liability
suit to stay out of Federal court. This legislation will put an end to
this unfair practice.
Finally, S. 5 protects consumers with a consumer class action bill of
rights. The bill of rights includes several provisions designed to
ensure class members--not their attorneys--are the primary
beneficiaries of the class action process, and are not simply awarded a
coupon at the end of a trial.
Allowing judges to limit attorney's fees when the value of the
settlement received by the class member is small in comparison and
banning settlements that award some class members more simply because
they live closer to the court will make class action suits more fair
and help compensate the people who were wronged, not the attorney's
handling their case.
I strongly support S. 5 and encourage my colleagues to do so as well.
Mr. DELAHUNT. Once again, Mr. Speaker, we have before us a bill that
would sweep aside generations of State laws that protect consumers.
Citizens will be denied their basic right to use their own State courts
to file class action lawsuits against companies--even if there are
clear violations of State labor laws or State civil rights laws. This
bill comes after a lobbying campaign costing business interests tens of
millions of dollars. Well, that was money well spent. With this
sweeping legislation, corporations will have free reign to avoid
responsibility for the wrongs they commit.
It is just shameful that the victims of corporate misconduct do not
have the same level of influence here in the halls of Congress. Let's
not forget the people who died as a result of defective tires
manufactured by Firestone. What about countless individuals who died as
a result of the tobacco industry's failure to disclose the risks of
cigarettes?
Well, if it is any indication of this bill's intent--tobacco is
already celebrating this week. Stocks are up and the industry is
glowing. Let me quote their take on this bill, ``The practical effect
of the change could be that many cases will never be heard given how
overburdened Federal judges are.''
Plainly that is the goal of the bill. The goal is to ensure that
legitimate plaintiffs are denied any recovery at all. And that whatever
recovery they do receive is delayed as long as possible. I have spent
decades in courtrooms and I can tell my colleagues--from my own
experience--that justice delayed is justice denied. The doors to the
courthouse will be locked shut. And this Republican leadership is
handing the key to corporate America.
With complete disregard for precedent-setting individual and class
action litigation, the Republican leadership is determined to destroy
America's civil justice system, eliminating protections for the poor
and powerless. This bill is a disgrace to the historic victories in
courts across the country--to expand consumer rights, protect our
environment, and strengthen workers' rights.
And there has been complete disregard for the legislative process in
the House. While we have had hearings and markups on class action
legislation in the past, this bill is quite complex and very different
than previous versions. The fact that the other Chamber has already
approved this matter in no way justifies a ``rush to judgment'' in the
House, when so many important rights are at stake.
Class actions have addressed the looting of company after company by
corporate insiders, whose brazen misconduct and self-dealing defrauded
creditors and investors of billions of dollars, and stripped employees
and retirees of their livelihood and life savings.
Yet if this bill becomes law, the victims of those practices will
face new obstacles in their efforts to call those executives to task.
This bill is not about protecting plaintiffs. It's not about
protecting the public. It's about protecting large corporations whose
conduct has been egregious. It's about protecting the powerful at the
expense of the powerless. And to prevent people from banding together
as a class to challenge that power in the only way they can.
We must also see this bill in its proper context. It is part of an
ambitious and multi-pronged campaign by major corporations to evade
their obligations to society.
Under the guise of ``deregulation'' we're watching the wholesale
dismantling of health and safety standards, environmental protections,
and longstanding limits on concentration of ownership within the media
and other key industries.
Today's bill completes this picture. It takes aim at the civil
justice system that exists to correct the wrongs that the government
cannot or will not address. I urge my colleagues to oppose this blatant
effort to muzzle the courts. This bill is but the latest in a series of
assaults by those on the other side attacking the ability of
individuals to seek relief from the courts. And it is also but the
latest in a series of assaults on States' rights to provide legal
remedies for harm suffered by their citizens.
We cannot allow them to do it, Mr. Speaker. I urge my colleagues to
vote ``no.''
Mr. BACA. Mr. Speaker, I ask unanimous consent to revise and extend
my remarks.
Mr. Speaker, I rise in strong opposition of S. 5, the so-called
``Class Action Fairness Act.''
This bill will send the majority of class action suits from State to
Federal courts, making it more difficult for people who have been
unfairly hurt to collect compensation for their injuries.
Federal courts are already overwhelmed by a large number of drug and
immigration cases, and they don't have the time or the resources to
deal with complex issues of State law.
This bill has it all wrong. Instead of punishing individuals who
pursue frivolous lawsuits, this bill will punish innocent people who
have been wrongfully hurt.
This bill is a payoff to large companies and special interests. It
takes rights away from consumers in order to protect drug
manufacturers, insurance companies, HMOs and negligent doctors. There
is no accountability on their part.
It is not ``frivolous'' for an innocent person who has been harmed
through no fault of their own to seek compensation for their injuries.
When a child is disabled or maimed by a preventable error, it is not
frivolous to seek damages from the company responsible for the injury.
This is a bill that's going to significantly harm small consumers who
want to hold large companies accountable for defrauding them.
I urge my colleagues to vote ``no'' on S. 5.
Mr. MEEHAN. Mr. Speaker, I rise in opposition to S. 5, the so-called
Class Action Fairness Act.
Few of us would stand here and argue that there is too much
accountability in corporate America today. In recent years, millions of
our constituents have been swindled out of their retirement savings by
corporate crooks at Enron, WorldCom, and other companies. For years,
many unscrupulous mutual fund managers were skimming off the top of
their clients' investment funds. Drug companies put new products on the
market like Vioxx that they knew to be unsafe.
This bill is a windfall for companies that have profited while
causing harm to others. And no industry is in a better position to
benefit than the tobacco industry. It's little wonder that tobacco
stocks rallied at the news that the Senate had passed this bill.
I'd like to read from a Wall Street analyst's view of how this bill
would impact the tobacco industry. ``Flash--Senate Just Passed Class
Action Bill--Positive for Tobacco,'' the analyst writes.
``The Senate just passed a bill 72-26 which is designed to funnel
class-action suits with plaintiffs in different States out of State
courts and into the Federal court system, which is typically much less
sympathetic to such litigation. The practical effect of the change
could be that many cases will never be heard given how overburdened
Federal judges are, which might help limit the number of cases.''
I only wish that the proponents of this bill would use such candid
language to describe its true intent--to make sure that legitimate
cases are never heard, and to shield corporations from accountability
for their actions.
The class action system is a major reason why we have safer consumer
products, more honest advertising, cleaner air and drinking water, and
better workplace protections than many other countries.
All of us are empowered by the right to band together and seek
justice. Class actions are one of the most effective and powerful ways
we have to hold people accountable for their actions.
I oppose this attempt to shut the courthouse door to people who have
been wronged.
Mr. STARK. Mr. Speaker, I rise today to oppose this misguided
legislation to limit the ability of average Americans to seek redress
for injury and harm caused by corporate malfeasance.
Don't be fooled by the title of this bill. Congress is not standing
up for the average American under this bill. It's not fixing inequities
in our judicial system. It's making those inequities worse by giving
the upper hand to big corporations.
I won't vote for this Republican-sponsored hoax. It unfairly
threatens the very people we are all elected to protect. When the so-
called party of local control makes it a top priority to move class
action cases from State to Federal court, there's an ulterior motive.
Don't believe the myth my Republican colleagues want to sell you.
Class action suits aren't frivolous. They allow average Americans
financially unable to launch a judicial battle on their own the means
to seek redress for injury or death of a loved one. They empower
consumers to challenge wrongdoings by wealthy corporations who would
otherwise ignore their appeal.
I don't think that the American public would be satisfied knowing
that if this bill passes, the accountability of companies like Eron
would be held less accountable. And the makers of
[[Page H743]]
Vioxx and other dangerous drugs would be held less accountable.
It is truthful, law-abiding citizens who will lose if this bill
becomes law, Apparently, in America today, we have government for, by,
and of corporate interests and not the people.
I ask my colleagues to stand up for real people and vote against this
shameful bill.
The SPEAKER pro tempore (Mr. Boozman). All time for general debate
has expired.
Amendment in the Nature of a Substitute Offered by Mr. Conyers
Mr. CONYERS. Mr. Speaker, I offer an amendment in the nature of a
substitute.
The SPEAKER pro tempore. The Clerk will designate the amendment in
the nature of a substitute.
The text of the amendment in the nature of a substitute is as
follows:
Amendment in the nature of a substitute offered by Mr.
Conyers:
Strike all after the enacting clause and insert the
following:
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.
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.
``1716. Sunshine in court records.
``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. The
term `class action' does not include any civil action brought
by, or on behalf of, any State attorney general or the chief
prosecuting or civil attorney of any county or city within a
State.
``(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.
``(7) State.--The term `State' means each of the several
States of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth of the Northern
Mariana Islands, and any territory or possessions of the
United States.
``(8) State attorney general.--The term `State attorney
general' means the chief legal officer of a State.
``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
[[Page H744]]
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 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.
``Sec. 1716. Sunshine in court records
``No order, opinion, or record of the court in the
adjudication of a class action, including a record obtained
through discovery, whether or not formally filed with the
court, may be sealed or subjected to a protective order
unless the court makes a finding of fact--
``(1) that the sealing or protective order is narrowly
tailored, consistent with the protection of public health and
safety, and is in the public interest; and
``(2) if the action by the court would prevent the
disclosure of information, that disclosing the information is
clearly outweighed by a specific and substantial interest in
maintaining the confidentiality of such information.''.
(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
amending the subsection to read as follows:
``(e) As used in this section--
``(1) the term `State' means each of the several States of
the United States, the District of Columbia, the Commonwealth
of Puerto Rico, the Commonwealth of the Northern Mariana
Islands, and any territory or possessions of the United
States; and
``(2) the term `State attorney general' means the chief
legal officer of a State.''; 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'--
``(i) 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; and
``(ii) does not include--
``(I) any civil action brought by, or on behalf of, any
State attorney general or the chief prosecuting or civil
attorney of any county or city within a State;
``(II) any class action brought under a State or local law
prohibiting discrimination on the basis of race, color
religion, sex, national origin, age, disability, or other
classification specified in that law; or
``(III) any class action or collective action brought to
obtain relief under a State or local law for failure to pay
the minimum wage, overtime pay, or wages for all time worked,
failure to provide rest or meal breaks, or unlawful use of
child labor;
``(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
[[Page H745]]
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
of this title, a foreign corporation which acquires a
domestic corporation in a corporate repatriation transaction
shall be treated as being incorporated in the State under
whose laws the acquired domestic corporation was organized.
``(B) In this paragraph, the term `corporate repatriation
transaction' means any transaction in which--
``(i) a foreign corporation acquires substantially all of
the properties held by a domestic corporation;
``(ii) shareholders of the domestic corporation, upon such
acquisition, are the beneficial owners of securities in the
foreign corporation that are entitled to 50 percent or more
of the votes on any issue requiring shareholder approval; and
``(iii) the foreign corporation does not have substantial
business activities (when compared to the total business
activities of the corporate affiliated group) in the foreign
country in which the foreign corporation is organized.''.
(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
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.''.
(c) Choice of State Law in Interstate Class.--
Notwithstanding any other choice of law rule, in any class
action over which the United States district courts have
jurisdiction and that asserts claims arising under State law
concerning products or services marketed, sold, or provided
in more than 1 State on behalf of a proposed class which
includes citizens of more than 1 such State, as to each such
claim and any defense to such claim, the district court shall
not deny class certification, in whole or in part, on the
ground that the law of more than 1 State will be applied.
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.
[[Page H746]]
(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.
Mr. SENSENBRENNER. Mr. Speaker, pursuant to the rule, I claim the
time in opposition.
The SPEAKER pro tempore. Pursuant to House Resolution 96, the
gentleman from Michigan (Mr. Conyers) and the gentleman from Wisconsin
(Mr. Sensenbrenner) each will control 20 minutes.
The Chair recognizes the gentleman from Michigan (Mr. Conyers).
Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I would like to briefly describe why this substitute is
the superior piece of legislation before us today. The substitute is
much better for the following reasons: civil rights carve-out. The
substitute would carve out State civil rights claims in order to make
sure that civil rights plaintiffs, especially those seeking immediate
injunctive relief, can have their grievances addressed in a timely
manner.
Believe me, this is an issue of great moment to those of us who are
still prosecuting for a fair day in our Nation and have civil rights
laws to back us up, but we now are pleading to keep the proper forums.
For example, every State in the Union has passed a law prohibiting
discrimination on the basis of disability. The language does not affect
the Federal jurisdiction over Federal claims.
The second consideration for this is the wage-and-hour carve-out.
Wage-and-hour class actions are often brought in State courts because
State wage-and-hour remedies are often, I am sorry to say, more
complete than the Federal wage-and-hour statute; and we have examples
of that.
The third reason: we exclude non-class action cases involving
physical injuries. The measure before us applies not only to class
actions, but also to mass torts. The Democratic substitute removes the
mass tort language. And then, of course, the attorney general carve-out
which clarifies cases brought by State attorneys general are excluded
from the provisions of the class action bill and would not be forced
into Federal court.
These are the major reasons why we encourage a supportive vote for
the substitute to the measure that is being debated today.
Mr. Speaker, I reserve the balance of my time.
Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in opposition to the Democratic substitute
amendment and urge my colleagues to reject it. The new math behind the
substitute amendment rests on the following arithmetic: if you add a
number of amendments rejected by large bipartisan majorities in the
other body last week and combine them with the amendment ideas
overwhelmingly rejected on the House floor by a bipartisan vote last
year, the sum will somehow equal a credible solution. Funny math.
Mr. Speaker, this formula simply does not add up. The American
consumers and businesses will be left with change in their pockets if
the amendment passes. The Democratic substitute is less than the sum of
its parts and represents a quotient that renders Senate Bill 5's core
reform elements meaningless.
The individual elements of this proposal deserve some comment and
explanation. First, I note with some amusement that the substitute
totally recycles the findings of S. 5. The pages of findings discuss
abusive class action windfall settlements for trial attorneys, forum
shopping, and the need for more of these large interstate class action
cases to be in Federal court.
While the minority substitute reargues the compelling case for reform
of the class action system, it is followed by text that will only
perpetuate the crisis the findings identify. Their admitting you have a
problem is the first step to recovery, and we appreciate that
admission; but the minority sponsors clearly are not ready for step
two.
One element of the substitute amendment is the State attorney general
provision allowing any class action to be brought by or on behalf of
the State attorney general to be in State court. This provision is
unnecessary because when State attorneys general sue on behalf of their
citizens, those actions are almost always ``parens patriae'' actions,
and not class actions; and the former will be in no way affected by
this bill.
Also, the provision could produce troubling associations between
attorneys general and plaintiffs' lawyers. For these reasons, the Pryor
amendment in the other body that this provision copies verbatim failed
to garner even 40 votes on the Senate floor last week.
A second element of the substitute is the ``choice of law''
provision. This provision would not only eviscerate the bill, but also
would overturn 70 years of established Supreme Court precedent and
would export to Federal courts a primary expedient of class action
abuse we seek to remedy: the reckless application by local courts of
the law of one State to the entire Nation in large interstate cases.
{time} 1200
This provision is reprinted from a Senate amendment by Senator
Feinstein and Senator Bingaman. It was also soundly defeated.
The third element of the substitute is the so-called labor and
civility rights carveout. This provision seeks to keep all class
actions involving alleged civil rights and labor law violations in
State court, despite the fact that the most generous racial
discrimination and employment class action settlements in recent years
have been in the Federal courts. The language was also offered in the
other body and rejected.
Other major elements of the substitute include one our colleagues
might remember as the Jackson-Lee House floor amendment to the bill in
the last Congress. That amendment makes companies that incorporate
abroad for tax purposes a citizen of a State and punishes them by
keeping them out of Federal court. This is at least an admission that
going into certain State courts as a defendant is indeed punishment,
and that amendment was defeated in this House by the last Congress by a
vote of 183 to 238. There is also a loophole creating a provision on
mass actions and a completely unnecessary public disclosure provision,
both based on Senate amendments in the other body that were offered and
withdrawn.
What the minority has chosen as a substitute package certainly belies
any grumblings about the lack of regular order this year. Since there
is not a single original idea among the provisions that has not already
been debated and defeated either in this House or the other body, it is
hard to give credence to such complaints. This is a package of oldies
but not goodies; oldies that have been rejected and should not be
resurrected.
Finally, Mr. Speaker, a vote on this substitute is clearly just a
vote to further deny or delay meaningful class action reform, and a
vote on the substitute could not in any way be construed as reform of
any kind but, rather, support for the trial-lawyer-dominated status
quo.
I urge my colleagues to reject this recycled package of recycled
amendments. The time for reform of a class action system which is out
of control is now.
I urge my colleague to vote ``no'' on the substitute, and ``yes'' on
S. 5.
Mr. Speaker, I reserve the balance of my time.
Mr. CONYERS. Mr. Speaker, I yield 3 minutes to the gentleman from
Virginia (Mr. Scott).
Mr. SCOTT of Virginia. Mr. Speaker, I rise in support of the
substitute. One of the problems with the substitute is you have to
debate all of the different
[[Page H747]]
issues all at once. If we had the opportunity to introduce individual
amendments, we could have discussed them one at a time and had a much
more coherent discussion.
As it has been said, the underlying bill does not extinguish the
right to get to court but it does gratuitously complicate the
litigation. It does not fix coupons, it just moves them from State
court to Federal courts. It adds procedural hurdles, and this
substitute removes many of those hurdles.
The main thing it does is it carves out many of the different cases
that belong in State court or at least ought to have the opportunity in
the State court. It also fixes the yo-yo effect where you start off in
State court, get removed to Federal court, Federal court does not
certify the class, and then what happens? I guess you come back to
State court or, I do not know, you might not be able to get back to
State court. You may end up in a procedural trap where you have lost
your case just in the time it takes to get over there and try to get
back.
This amendment fixes that quagmire. It also carves out, as has been
said, the State civil rights cases where some States have civil rights
laws that are stronger and cover different people, different classes
than the Federal laws. Wage and hour laws, some States have better laws
than the Federal court. Mass torts where you have not class actions per
se, but a lot of different litigants all in the same State. It fixes
the problem with Attorneys General in bringing a case in State court on
behalf of not only members of their State, but if the injury has
occurred to a lot of other people, the Attorney General might want to
bring that case.
I have a letter, Mr. Speaker, signed on this specific issue by 47
Attorneys General.
It also denies benefits under the bill for tax traitors, those who
move their corporate headquarters off shore to avoid corporate taxes;
and it also provides a limitation on sealed settlements that the
gentleman from New York (Mr. Nadler) has been very active in making
sure that cases that are settled cannot be sealed beyond public view,
unless if such a sealing would violate public health or other important
considerations.
This is a well-reasoned substitute. It eliminates many but not all of
the problems in the underlying bill, and I would hope that the House
would adopt the substitute.
National Association
of Attorneys General,
Washington, DC, February 7, 2005.
Hon. Bill Frist,
Senate Majority Leader, U.S. Senate,
Dirksen Building, Washington, DC.
Hon. Harry Reid,
Senate Minority Leader, U.S. Senate,
Hart Building, Washington, DC.
Dear Senate Majority Leader Frist and Senate Minority
Leader Reid: We, the undersigned State Attorneys General,
write to express our concern regarding one limited aspect of
pending Senate Bill 5, the ``Class Action Fairness Act,'' or
any similar legislation. We take no position on the Act as a
general matter and, indeed, there are differing views among
us on the policy judgments reflected in the Act. We join
together, however, in a bipartisan request for support of
Senator Mark Pryor's potential amendment to S. 5, or any
similar legislation, clarifying that the Act does not apply
to, and would have no effect on, actions brought by any State
Attorney General on behalf of his or her respective state or
its citizens.
As Attorneys General, we frequently investigate and bring
actions against defendants who have caused harm to our
citizens. These cases are usually brought pursuant to the
Attorney General's parens patriae authority under our
respective consumer protection and antitrust statutes. In
some instances, such actions have been brought with the
Attorney General acting as the class representative for the
consumers of the state. It is our concern that certain
provisions of S. 5 might be misinterpreted to hamper the
ability of the Attorneys General to bring such actions,
thereby impeding one means of protecting our citizens from
unlawful activity and its resulting harm.
The Attorneys General have been very successful in
litigation initiated to protect the rights of our consumers.
For example, in the pharmaceutical industry, the States have
recently brought enforcement actions on behalf of consumers
against large, often foreign-owned, drug companies for
overcharges and market manipulations that illegally raised
the costs of certain prescription drugs. Such cases have
resulted in recoveries of approximately 235 million dollars,
the majority of which is earmarked for consumer restitution.
In several instances, the States' recoveries provided one
hundred percent reimbursement directly to individual
consumers of the overcharges they suffered as a result of the
illegal activities of the defendants. This often meant
several hundred dollars going back into the pockets of those
consumers who can least afford to be victimized by illegal
trade practices, senior citizens living on fixed incomes and
the working poor who cannot afford insurance.
We encourage you to support the aforementioned amendment
exempting all actions brought by State Attorneys General from
the provisions of S. 5, or any similar legislation. 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. We
respectfully submit that the overall purposes of the
legislation would not be impaired by such an amendment that
merely clarifies the existing authority of our respective
States.
Thank you for your consideration of this very important
matter. Please contact any of us if you have questions or
comments.
Sincerely,
Mike Beebee, Attorney General, Arkansas.
Gregg Renkes, Attorney General, Alaska.
Mark Shurtleff, Attorney General, Utah.
Fiti Sunia, Attorney General, American Samoa.
Terry Goddard, Attorney General, Arizona.
John Suthers, Attorney General, Colorado.
Jane Brady, Attorney General, Delaware.
Charlie Crist, Attorney General, Florida.
Mark Bennett, Attorney General, Hawaii.
Stephen Carter, Attorney General, Indiana.
Bill Lockyer, Attorney General, California.
Richard Blumenthal, Attorney General, Connecticut.
Robert Spagnoletti, Attorney General, District of Columbia.
Thurbert Baker, Attorney General, Georgia.
Lawrence Wasden, Attorney General, Idaho.
Tom Miller, Attorney General, Iowa.
Greg Stumbo, Attorney General, Kentucky.
Steven Rowe, Attorney General, Maine.
Tom Reilly, Attorney General, Massachusetts.
Mike Hatch, Attorney General, Minnesota.
Jay Nixon, Attorney General, Missouri.
Jon Bruning, Attorney General, Nebraska.
Kelly Ayotte, Attorney General, New Hampshire.
Charles Foti, Attorney General, Louisiana.
Joseph Curran, Attorney General, Maryland.
Mike Cox, Attorney General, Michigan.
Jim Hood, Attorney General, Mississippi.
Mike McGrath, Attorney General, Montana.
Brian Sandoval, Attorney General, Nevada.
Peter Harvey, Attorney General, New Jersey.
Eliot Spitzer, Attorney General, New York.
Wayne Stenehjem, Attorney General, North Dakota.
Jim Petro, Attorney General, Ohio.
Hardy Myers, Attorney General, Oregon.
Roberto Sanchez Ramos, Attorney General, Puerto Rico.
Henry McMaster, Attorney General, South Carolina.
Roy Cooper, Attorney General, North Carolina.
Pamela Brown, Attorney General, N. Mariana Islands.
W.A. Drew Edmondson, Attorney General, Oklahoma.
Tom Corbett, Attorney General, Pennsylvania.
Patrick Lynch, Attorney General, Rhode Island.
Lawrence Long, Attorney General, South Dakota.
Paul Summers, Attorney General, Tennessee.
Darrell McGraw, Attorney General, West Virginia.
Patrick Crank, Attorney General, Wyoming.
Rob McKenna, Attorney General, Washington.
Peg Lautenschlager, Attorney General, Wisconsin.
Mr. SENSENBRENNER. Mr. Speaker, I yield 4 minutes to the gentleman
from Missouri (Mr. Blunt), the distinguished majority Whip.
Mr. BLUNT. Mr. Speaker, the vote in this House we will take within
the hour will leave only one more step, the President's signature, in
this first major attack on lawsuit abuse.
I oppose the substitute and support the bill. I want to express my
appreciation to the gentleman from Wisconsin (Mr. Sensenbrenner) and
his committee and all the Members, in fact, who have been willing to
take on this tough fight, but particularly to the chairman for working
hard to find a way to get this bill on the floor and to the President
this early in this Congress.
Frivolous lawsuits are clogging America's judicial system,
endangering America's small businesses, jeopardizing jobs, and driving
up prices for consumers. The bill we are debating today will reduce
these junk lawsuits through tougher sanctions and increased commonsense
protections.
The past few years have witnessed an explosion of interstate class
actions being filed in State courts, particularly
[[Page H748]]
in certain magnet jurisdictions. These magnet courts are filled with
class action abuses. They routinely approve settlements in which the
lawyers receive large fees and the class members receive virtually
nothing.
The Class Action Fairness Act is a commonsense bipartisan plan that
addresses this serious problem by allowing larger interstate class
action cases, cases that truly do involve multiple States, to be filed
in Federal court. In addition to unclogging certain overused courts,
this bill ends the harassment of local businesses through forum
shopping. Lawyers who now manipulate this system often do anything to
stay out of Federal court. They sometimes name a local pharmacy or a
local convenience store in a nationwide product liability suit simply
because they believe that court, and that court often has created a
reputation as the place to go to get unjust settlements.
Sometimes they wait and amend their complaint and add millions of
dollars of claims after the deadline for removal to Federal court. This
bill stops this unfair practice as well.
This bill also establishes a much-needed class action rights bill.
Several provisions are specifically designed to ensure that class
members, not their attorneys, are the primary beneficiaries of the
class action process.
Six years ago on this floor we really began the process of attacking
this system. The stories go on and on and on, to the point that by the
time we passed legislation like this in the last Congress for the third
Congress straight, Members were eager to just simply get a couple of
minutes to talk about one of the classes where the people in the class
get a dollar-off coupon, the people in the class get the smallest
possible box of Cheerios, the people in the class get a 31-cent check,
or the people in the class even wind up having to pay the lawyers of
the class additional money because there really was no money for the
people in the class that was being determined.
This bill requires that judges carefully review settlements and
limits attorneys fees when the value of the settlement received by the
class members is minor in comparison or when there is a net loss
settlement where the class members actually end up losing money.
This bill bans settlements that award some class members a large
recovery simply because they live closer to the court that the lawyers
shopped for to get that case in that judge's court.
It allows Federal courts to maximize the benefit of class action
settlements by requiring that unclaimed settlement funds be donated to
charitable organizations.
The Class Action Fairness Act is good for small business and good for
consumers. I urge a ``no'' vote on the substitute. I urge my colleagues
to support this important legislation.
Mr. Speaker, I thank the chairman and his committee for their hard
work on this effort.
Mr. CONYERS. Mr. Speaker, I yield 1 minute to the gentlewoman from
California (Ms. Pelosi), the minority leader of our caucus.
Ms. PELOSI. Mr. Speaker, I rise in strong opposition to this
legislation.
Today Republicans are bringing to the floor as their first major
legislative action a payback to big business at the expense of
consumers. The Republican agenda is to ensure that some Americans do
not get their day in court.
Make no mistake that this class action bill before us today is an
extreme bill. It is not a compromise bill as some have claimed. It is
an extreme bill that is an injustice to consumers and a windfall for
irresponsible corporations. Consumers will be hit hard by this bill,
Mr. Speaker. It lumps together individual personal injury cases such as
those involving Vioxx, which are not class action under current
procedures, and forces them into the Federal courts. Doing so will
greatly increase the likelihood that such cases will never be heard.
When Americans are injured or even killed by Vioxx or Celebrex or
discriminated against by WalMart, they may never get their day in
court. Those cases that do go forward will take significantly longer
because the Federal courts are overburdened and unequipped for this
caseload. That is why the bill is opposed by Federal judges, including
The Judicial Conference of the United States. Special interests have
even admitted that the real intent of this bill is to clog the Federal
courts and, therefore, stop the cases.
To irresponsible corporations, however, the class action bill is a
belated Valentine. It is exactly what they have asked for. Powerful
corporations will largely be immune from the accountability that
currently comes from meritorious State class action cases. For example,
this bill would help shield large corporations from any accountability
for Enron-style shareholder fraud, for activities that violate employee
rights under State law, and for telemarketing fraud targeted at the
elderly.
It should come as no surprise, however, that Republicans are seeking
yet another way to protect irresponsible corporations.
The Washington Post reported that last year's Republican medical
malpractice bill contained special liability protections that would
have precluded consumers from suing to recover punitive damages arising
for the types of injuries caused by Vioxx and Celebrex. Protecting big
drug companies is always at the top of the Republican agenda. We saw
that in the prescription drug bill under Medicare. This is yet again
another example of Republicans being the handmaidens of the
pharmaceutical industry.
This bill also runs counter to the principles of federalism that my
colleagues on the other side of the aisle claim to support. It throws
thousands of State cases into Federal courts that are not equipped to
adjudicate State laws. For instance, lawsuits involving the enforcement
of the State hourly wage laws, which often have greater protections
than Federal wage laws, would be forced into Federal courts. In fact,
46 State Attorneys General on a bipartisan basis have requested an
exemption so that they can continue to protect their citizens under the
State consumer protection laws in State courts. The Republicans have
rejected that request while Democrats have incorporated it into our
substitute.
Democrats in our substitute support sensible approaches that weed out
frivolous lawsuits but not meritorious claims. Our Democratic
substitute says that certain kinds of cases must always have their day
in court. Physical injury cases, civil rights cases, wage and hour
cases, State Attorneys General cases, and others must be heard if we
are to remain a Nation that strives for justice for all.
President Harry Truman said it so well. ``The Democratic party stands
for the people. The Republican party stands, and has always stood, for
special interest.''
I urge my colleagues to stand up to the special interests, to support
the Democratic substitute, to listen, to listen to the recommendation
of the Federal judges and the Judicial Conference of the United States
and oppose this extreme legislation.
{time} 1215
Mr. SENSENBRENNER. Mr. Speaker, I yield 2\1/2\ minutes to the
gentleman from Texas (Mr. Smith).
Mr. SMITH of Texas. Mr. Speaker, I thank the chairman of the
Committee on the Judiciary for yielding me time.
Mr. Speaker, all Americans should thank the gentleman from Virginia
(Mr. Goodlatte) and the gentleman from Wisconsin (Chairman
Sensenbrenner) for their leadership on this most important issue.
The Class Action Fairness Act is a bipartisan, sensible bill that
clarifies the rights of consumers and restores confidence in America's
judicial system. It reforms the class action system and addresses the
abuses that harm so many Americans.
We have all heard of the lawsuits in which plaintiffs walk away with
pennies, sometimes literally, while the attorneys walk away with
millions of dollars in fees. This problem will be addressed by
providing greater scrutiny over settlements that involve coupons or
very small cash amounts.
This legislation also ensures that deserving plaintiffs are able to
make full use of the class action system. It allows easier removal of
class action cases to Federal courts. This is important because class
actions tend to affect numerous Americans and often involve millions of
dollars. Federal court is the right place for such large lawsuits.
Moving more class actions to Federal courts also prevents one of the
worst
[[Page H749]]
problems in class actions today, forum shopping.
Mr. Speaker, while many concessions were made on both sides, this is
still a very worthwhile bill that contains many good reforms, and I
fully support it and look forward to its enactment into law and also
encourage my colleagues to support it as well.
Mr. CONYERS. Mr. Speaker, I am pleased to yield 3 minutes to the
gentleman from New York (Mr. Nadler), a distinguished member of the
Committee on the Judiciary.
Mr. NADLER. Mr. Speaker, I thank the gentleman for yielding me the
time.
I rise in strong opposition to this egregious legislation and in
support of the Conyers/Nadler/Jackson-Lee substitute amendment.
This substitute amendment amends this bill in several ways to ensure
that consumers, workers and victims in personal injury cases are not
precluded from having a fair opportunity to present their cases in
court. I know the distinguished minority leader and others have
mentioned some of these instances.
My good friend Eliot Spitzer, the distinguished attorney general of
New York State, has joined 46 State attorneys general in expressing
their concern that this legislation could limit their power to
investigate and bring actions in their State courts against defendants
who have caused harm to their citizen. Our amendment clarifies that
cases brought by States attorneys general will not be subject to the
provision of this bill and would not be forced into Federal court.
The substitute also includes a provision which I have advocated for
many years, which actually was supported by the distinguished chairman
and passed the Committee on the Judiciary a couple of times, to limit
the ability of corporations settling lawsuits to demand that records
that may indicate threats to public health and safety be sealed, unless
it is necessary to protect trade confidentiality.
The substitute provides that when such a gag order is requested, and
it is normally requested by both the plaintiff and the defendant
because in the settlement the defendant insists on this as a condition
of the settlement, the court then rubber stamps it. This substitute
provides that if such a gag order is requested, the court must make a
finding as to whether the defendant's interest in confidentiality
outweighs the public interest in knowing of the threat to its health or
safety.
If the court finds that the privacy interest outweighs the public
interest, the court will issue the gag order. If the court finds the
public interest in health and safety outweighs the privacy interest
claimed in the specific case, the court must prohibit the sealing of
the information.
Too often, critical information is sealed from the public and people
are harmed as a result. How many people were killed or injured because
the court sealed records relating to exploding Firestone tires, for one
example. This provision will allow the public to learn of threats to
this health and safety so as to take proper action to protect the
public, while protecting legitimate confidential information.
The Conyers/Nadler/Jackson-Lee substitute amendment also deals with a
major catch-22 created by the bill for victims of large and complex
multistate court torts. On the one hand, the bill provides State courts
cannot hear such cases; but when these cases are removed to Federal
court, plaintiffs will find that the Federal courts routinely refuse to
hear them. Federal courts are very reluctant to certify a multistate
consumer class action suit, and six circuit courts and 26 district
courts have expressly refused to consider certifying cases where
several State laws apply.
Our substitute protects victims from facing this catch-22 and having
the courtroom door completely closed to them by providing that if these
cases are removed to Federal court by this bill, the Federal courts
cannot refuse to certify a class action simply because more than one
State law applies.
I urge my colleagues not to allow this bill to completely deny
victims their day in court, either in State court or in Federal court.
That would render this bill completely hypocritical. I urge my
colleagues to vote ``yes'' on the Conyers/Nadler/Jackson-Lee substitute
and ``no'' on the main bill.
Mr. SENSENBRENNER. Mr. Speaker, I yield 5 minutes to the gentleman
from Virginia (Mr. Goodlatte), the author of the bill.
Mr. GOODLATTE. Mr. Speaker, I thank the chairman for yielding me time
and for his leadership in bringing this legislation to the floor and
for working with the Senate to achieve the compromise that we need.
The gentlewoman from California (Ms. Pelosi), the minority leader,
called this an extreme Republican measure. Apparently, she has not
spoken to her own fellow San Franciscan and senior Senator from her
State, Dianne Feinstein, who negotiated the compromise that has brought
this legislation to the floor of the House, or to Senator Chuck
Schumer, also a member of the Committee on the Judiciary on the
Democratic side in the Senate, or 16 other Democratic Senators who
voted for this legislation.
She also apparently has not spoken to members of her own Democratic
Caucus, many of whom have voted for this legislation in each of the
last three Congresses that have passed the House of Representatives and
many more of whom will vote for the legislation today.
A number of the folks who have spoken on the other side of the aisle
criticizing the legislation have cited total inaccuracies about what
the legislation will do.
The gentleman from Massachusetts (Mr. Markey) would not yield to me,
but he said that the Amerada Hess case in New Hampshire, with gasoline
leaking into groundwater, would not be heard in the State court; but if
you live in New Hampshire and you have gasoline leaking in your
groundwater and virtually all of the plaintiffs are New Hampshire
residents, the case, under this bill, would be heard in the State
courts.
Some have mentioned the Vioxx case against Merck would be affected by
this, and they have argued that Senate 5 should be rejected because it
will hurt consumers bringing Vioxx cases against Merck. The truth,
however, is that this legislation will have absolutely no effect on
Vioxx suits. Here is why: the majority of personal injury cases brought
against Merck are individual cases that would not be affected by the
bill in any manner whatsoever. These include more than 400 personal
injury cases that are part of a coordinated proceeding in New Jersey
State court. None of these cases will be affected by the bill because
they are neither class actions nor mass actions.
Now, what kind of cases would be affected by this legislation? Well,
let me show my colleagues how a select number of class action trial
lawyers play the class action wheel of fortune.
How about the Kay Bee Toys case where the lawyers got $1 million in
attorneys fees and the consumers got 30 percent off selected products
of an advertised sale at Kay Bee Toys for one week.
Or the Poland Spring Water case where the lawyers got $1.35 million
in the wheel of fortune and the consumers got coupons to buy more of
the water that the lawyers were alleging was defective.
How about the Ameritech case. The price goes up, $16 million for
those lawyers; the consumers, $5 phone cards.
How about the Premier Cruise line case. The lawyers got nearly
$900,000. The consumers got $30 to $40 off of their next thousand
dollar cruise, with a coupon to buy more of the product the lawyers
were alleging was defective.
Or the computer monitor litigation, $6 million in attorneys fees in a
case alleging that the size of the computer screen was slightly off,
and therefore, they were entitled to something. What did the consumers
get? A $13 rebate to purchase their next purchase.
How about the register.com case, $642,500 to the lawyers. The
consumers, $5-off coupons.
My favorite case, the case against Chase Manhattan Bank, the lawyers
got $4 million in attorneys fees, but the plaintiffs that allegedly the
opponents of this bill are protecting, they got 33 cents. Here is one
of the actual checks. The catch was that at the time, to accept this
33-cent magnanimous check, they had to use a 34-cent postage stamp to
send in the acceptance to get their 33-cent fee.
[[Page H750]]
How about the case that President Bush cited last week when he
highlighted problems with this of the woman who had a defective
television set against Thompson Electronics, found she had been made a
member of a class action seeking redress of her grievances and many
others against Thompson Electronics. What did the lawyers get? $22
million in attorneys fees. What did she get? A coupon for $25 to $50
off her next purchase of exactly what she did not want, another
Thompson Electronics television set.
Now, the gentlewoman from California, the minority leader, also cited
the Washington Post. Let me tell my colleagues, the Washington Post has
repeatedly endorsed this legislation, along with over a hundred other
major newspapers, the Washington Post, the Wall Street Journal, the
Financial Times, Christian Science Monitor, on and on the list goes.
And here is what the Washington Post said, and that is why we need to
pass this legislation today. The clients get token payments while the
lawyers get enormous fees. This is not justice. It is an extortion
racket that only Congress can fix.
I urge my colleagues to pass the bill.
Mr. CONYERS. Mr. Speaker, I am pleased to yield 4 minutes to the
gentleman from New York (Mr. Weiner), a distinguished member of the
Committee on the Judiciary.
Mr. WEINER. Mr. Speaker, I thank the gentleman from Michigan for the
time.
Sometimes during these debates I like to step in to take a
perspective of someone on the committee who is not a lawyer; but I have
to tell my colleagues, the previous speaker, the gentleman from
Virginia, went to great lengths to talk about the lawyers fees. There
is nothing in this bill that limits lawyers fees, and there is not
anything in the bill actually that argues for his point, which is
apparently that there should be a minimum amount that wrongdoers pay to
each individual aggrieved person, which is a novel argument, I have not
heard it made by my colleague before, saying that the plaintiffs are
receiving too little now.
Let me explain very briefly why it is that we have situations like
that. Those of us who are individuals of modest means, if we have been
aggrieved by a major company, if they have done something that has
harmed our health or our community or our family, we as individuals
frankly do not have the ability to take on a major company to stop them
from doing the wrongful things, to make sure they understand that there
is a cost of doing it. So we join together as a community and we bring
these actions as a group. We cannot, frankly, pay the lawyer up front
so they are paid on contingencies, and that is the way these actions
get taken.
One thing the gentleman from Virginia did not say even once through
that whole wheel of rhetoric was that any of those that were held
accountable by juries of their peers were not guilty of those things.
In those cases, those parties, each and every one of them, on the wheel
of rhetoric actually was found by a judge or a jury to have done
substantial bad things to the community. The system actually worked in
those cases.
We can quibble about the person, the individual that wound up getting
a payment. There were so many of them, millions of people who had been
harmed by those companies, that when they were done divvying up what
seemed like a very large judgment, tens of millions of dollars, there
was only left a 35, 40-cent coupon and the like.
I stand perfectly ready to vote in favor of an amendment by the
gentleman from Virginia to have minimum payments to people who have
been harmed. If the gentleman thinks it is not enough that they get 35
cents, I am with him. Some of those companies did outrageous things to
our community, and they should be held accountable. If my colleague
thinks a 35-cent check is not enough, I am with him. Let us make
minimum amounts that they pay for the injuries, that they have to get,
because the harm is so great.
I want to remind my colleagues and the citizens watching this why the
system is structured this way. Imagine for a moment if someone who is
making a shoddy automobile, who was not paying attention to whether
sharp objects got into a cereal box, did not have to be concerned about
lawsuits anymore. Do my colleagues think they would really say let us
hire that extra safety precaution, that extra employee to keep an eye
out for consumers? No. They would be less inclined to do that.
The system works as it is intended. Are there abuses? I am sorry to
say that there are some, and I wish we would address some of them in
this legislation which, of course, we do not; but frankly to stand
before the wheel of rhetoric, which really is a wheel of bad doers who
got caught by the justice system, which we are trying to dismantle here
today, and say this is evidence that the system does not work is
entirely the opposite of the truth, unless my colleagues believe that a
jury of people's peers cannot make these informed decisions, that we
are the only people brilliant enough to make these decisions. I love
these small government types who believe we have better judgment on
these things than 12 men and women in a community, then we have to
believe that the system in those cases worked.
I would say to my colleagues on both sides of the aisle that the
Conyers/Nadler/Jackson-Lee substitute only puts lipstick on a fraud. It
still leaves a very, very flawed bill; but at least we go from being
completely destructive to only being moderately destructive, and we
protect ourselves from some of the worst abuses.
{time} 1230
Mr. Speaker, I urge a ``yes'' vote on the substitute, a ``no'' vote
on the base bill, and I urge us to stop this drumbeat on the other side
of blaming average Americans for being victimized by big corporations.
Mr. SENSENBRENNER. Mr. Speaker, I yield 2 minutes to the gentleman
from Virginia (Mr. Goodlatte).
Mr. GOODLATTE. Mr. Speaker, I thank the gentleman from Wisconsin for
yielding me this time, and I thank the gentleman from New York (Mr.
Weiner) for raising the points on those cases on the class action wheel
of fortune because he makes a good point. In not one of those cases was
there any wrongdoing found on the part of any of those defendants
because all of those were settlements. They were extortionate
settlements because they are in the jurisdiction of a court where they
know they are facing a hanging judge and a hanging jury.
The gentleman also raised another good point, and we should not leave
plaintiffs in the situation where they get a 33-cent check or a coupon
for a box of Cheerios, like in another case, and that is what this bill
does. It requires extra-special scrutiny for coupon settlement cases so
the courts will no longer let the manufacturers' attorneys and the
defendants' attorneys come in with a settlement that simply gets out of
the case, that gives the plaintiffs' attorney a huge sum of money and
everyone else walks away and the plaintiffs get left holding the bag.
Mr. Speaker, the gentleman ought to talk to his colleague, the senior
Senator from New York, the predecessor of his seat, who supported this
legislation.
In addition, when the gentleman talks about abuse of plaintiffs in
these cases, take into consideration the nationwide class action
lawsuit filed in Alabama against the Bank of Boston, headquartered in
Massachusetts, over mortgage escrow accounts. The class members won the
case but actually lost money. Amazing.
Under the settlement agreement, the 700,000 class members received
small payments of just a couple of dollars or no money at all. About a
year later, they found out that anywhere from $90 to $140 had been
deducted from their escrow accounts. For what? To pay their lawyers'
legal fees, of what? $8.5 million. And when some of those class
members, some of those beleaguered plaintiffs, that I am glad the
gentleman from New York is standing up for, sued their class action
lawyers for malpractice, the lawyers countersued them for $25 million
saying that their former clients were trying to harass them.
This is an extortionate practice. A small cartel of class action
lawyers around the country are abusing the system and we need to change
it.
Mr. CONYERS. Mr. Speaker, I yield 30 seconds to the gentleman from
New York (Mr. Weiner).
[[Page H751]]
Mr. WEINER. Mr. Speaker, I thank the gentleman very much for yielding
me this additional time, and I am surprised that such an able lawyer
would be unwilling to engage in a debate on his time, but I will take
30 seconds simply to rebut what the gentleman said.
In every one of those cases on the wheel of rhetoric that the
gentleman put up, those that were found guilty, those who were found to
be responsible, those who were found to be culpable of doing harmful
things to our community admitted it, paid a fine, paid a penalty, that
was approved by a judge, and that is the fact; that the gentleman took
cases of people who admitted with their actions there was wrongdoing
involved.
And if they had not been caught by this system, I ask the gentleman,
what system would they be caught by?
Mr. CONYERS. Mr. Speaker, I am pleased to yield the balance of my
time to the gentlewoman from Texas (Ms. Jackson-Lee), a cosponsor of
the substitute amendment.
(Ms. JACKSON-LEE of Texas asked and was given permission to revise
and extend her remarks.)
Ms. JACKSON-LEE of Texas. Mr. Speaker, that pig may have lipstick,
but I can tell my colleagues that it is still pretty unattractive.
It is interesting that my good friend from Virginia keeps talking
about coupons and this 30 cents. What he is not telling those of us who
understand what class action settlements really mean is that in the
settlement comes the punishment for not doing or the incentive to not
violate the law again. In the settlement comes an injunction that
argues or stops the culprit, the violator, from doing harm again. There
is an action. Class actions do not always generate into dollars to
petitioners. If you have been done harm, you want that harm to stop
immediately so someone else cannot be harmed.
And the class action lawsuit and the so-called millions of dollars to
attorneys for attorneys fees does not take into account the preparation
for that case, the depositions, the travel. So it looks as if there is
a great bounty or a gift being given to lawyers who are working to
ensure that the punitive entity, the entity that has caused thousands
of employees to lose pensions from corporations, the entity such as MCI
and others who have thrown away their corporate responsibility to their
employees and caused them to lose all their money, who violated
corporate laws and had the violation of trust and made sure that they
did the self-dealing, these class actions were to say ``and do that no
more,'' and ``we will not allow you to do that anymore.''
For example, the particular amendment that is included in the
Conyers-Nadler-Jackson-Lee substitute, which I rise enthusiastically to
support, the tax traitor corporation which leaves America and
incorporates somewhere else and depletes all of its savings accounts,
or all of its accounts, so therefore if there is an action, if you are
harmed, if you are hurt and you sue here in the United States, you look
up in the court and you find out there is empty pockets. Why? Because
they have overcome the laws of this land. They have absconded and you
have no way of seeking relief. The substitute includes the relief that
is necessary to ensure that citizens and consumers are protected.
There is a civil rights carveout, so that you have a right to address
your grievances without the expenses of a Federal Court. There is a
wage and hour carveout, so that you can file against a company in your
local jurisdiction as a class action when you have been violated on the
minimum wage. Physical injuries, so that when your child is injured in
a park because of a defective product you have the right to go into
your State courts and seek relief.
Now, I want to share with those who feel that we are now opening the
doors of opportunity with the Federal courts. Let me share this with
you. This is why this is a bogus litigation or legislation that will
not work. Arizona has 159 State judges, only 13 Federal courts. Tell me
the difference in being able to go into a court that has 159 judges
versus those who have 13.
What about the State of South Carolina, with 48 State judges and
merely 10 federal judges; or Rhode Island with 22 State judges and
three Federal judges; New York with 593 State judges and a mere 52
Federal courts; Louisiana, 211 State judges and 22 Federal courts?
Frankly, there is a farce going on here. At the end of the 108th
Congress there were 35 judicial vacancies in the Federal courts. There
is no opportunity to go into the Federal courts. They are overburdened
and overworked. Justice Rehnquist said something very important. He
said, ``I have criticized Congress and the President for their
propensity to enact more and more legislation which brings more and
more cases into the Federal Court system. This criticism received
virtually no public attention. If Congress enacts and the President
signs new laws, allowing more cases to be brought into the Federal
courts, just filling the vacancies will not be enough. We need
additional judgeships.''
This is a farce, I am saddened to say, even with the compromise. We
all want to see the judicial system work. I know my good friend from
Virginia has good intentions, but this responds to a noncrisis with no
resources, no added courts to the Federal bench, and the backlog of
cases all over America simply slams the door to injured parties across
this land.
The substitute is fair. It allows you to go into the State courts
that have a bounty of judges, allows you to be heard, and it allows
those corporate offenders or those products that have offended and
harmed and maybe killed, those defective automobiles, to be in the
courthouse and to have their concerns heard.
Mr. Speaker, I rise in opposition to this bill, S. 5, the Class
Action Fairness Act. Unfortunately for the millions of aggrieved
plaintiffs in America with legitimate claims, this body has brought yet
another piece of legislation to the floor that threatens to close the
doors of the court.
This bill, despite its name, is not fair to all complainants who come
to the courts for relief. In addition, it fails to render
accountability to parties who are in the best financial position. One
issue that I planned to address by way of amendment was that of
punishing fraudulent parties to class action proceedings by preventing
them from removing the matter to federal court.
I am a co-sponsor of the amendment in nature of a substitute that
will be offered by my colleagues. With the provisions that it contains,
requirements for Federal diversity jurisdiction will not be watered
down resulting in the removal of nearly all class actions to Federal
court. A wholesale stripping of jurisdiction from the State courts
should not be supported by this body. Therefore, it needs to be made
more stringent as to all parties and it needs to contain provisions to
protect all claimants and their right to bring suit.
Contained within the amendment in nature of a substitute is a section
that I proposed in the context of the Terrorist Penalties Enhancement
Act that was included in the bill passed into law. This section relates
to holding ``tax traitor corporations'' accountable for their terrorist
acts. With respect to S. 5, the right to seek removal to Federal courts
will be precluded for tax traitor corporations.
The ``tax traitor corporation'' refers to a company that, in bad
faith, takes advantage of loopholes in our tax code to establish bank
accounts or to ship jobs abroad for the main purpose of tax avoidance.
A tax-exempt group that monitors corporate influence called ``Citizen
Works'' has compiled a list of 25 Fortune 500 Corporations that have
the most offshore tax-haven subsidiaries. The percentage of increase in
the number of tax havens held by these corporations since 1997 ranges
between 85.7 percent and 9,650 percent.
This significant increase in the number of corporate tax havens is no
coincidence when we look at the benefits that can be found in doing
sham business transactions. Some of these corporations are tax traitor
corporations because they have given up their American citizenship;
however, they still conduct a substantial amount of their business in
the United States and enjoy tax deductions of domestic corporations.
The provision in the substitute amendment will preclude these
corporations from enjoying the benefit of removing State class actions
to Federal court. Forcing these corporate entities to defend themselves
in State courts will ensure that these class action claims will be
fairly and fully litigated.
Mr. Speaker, S. 5 applies not only to class actions but to all tort
cases. It is highly inefficient to overwhelm the Federal courts with
the massive number of State claims that will come their way. Not only
are the Federal courts less sympathetic to this kind of litigation, the
practical effect will be that many cases will never be heard.
The barriers to gaining Federal jurisdiction to have a case heard is
much higher than in State courts by virtue of their creation. As a
result, the Federal courts will be quick to
[[Page H752]]
refuse class certification in complex litigation matters. State courts
are better suited to adjudicate complex class actions.
I oppose this legislation and urge my colleagues to join me.
Mr. Speaker, I ask my colleagues to vote for the substitute and
defeat the underlying bill.
Mr. SENSENBRENNER. Mr. Speaker, I yield myself the balance of my
time.
Mr. Speaker, the amendment in the nature of a substitute completely
guts this bill. Every crippling amendment that was rejected either in
this House or the other body in this Congress or the previous Congress
is incorporated in this amendment. They do not have any new ideas over
there. They just repackage and try to regurgitate the old ideas that
have been found lacking.
The issue in this bill is very clear, and that is that we have to
restore some sanity to the civil justice system by dealing with the
abuses that a small group of lawyers have turned the class action
system into.
When the framers of the Constitution wrote that inspired document,
they gave Congress the power to regulate interstate Congress. What has
happened as a result of the abuse of the class action system is that
judges in small out-of-the-way counties, like Madison County, Illinois
and Jefferson County, Texas end up being the ultimate arbiters of
interstate commerce.
This bill puts some balance back into the system. The amendment
perpetuates the existing system. Vote ``no'' on the amendments, vote
``no'' on the motion to recommit, and pass the bill.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Cole of Oklahoma). Pursuant to House
Resolution 96, the previous question is ordered on the bill and on the
amendment in the nature of a substitute offered by the gentleman from
Michigan (Mr. Conyers).
The question is on the amendment in the nature of a substitute
offered by the gentleman from Michigan (Mr. Conyers).
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. CONYERS. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
The vote was taken by electronic device, and there were--yeas 178,
nays 247, not voting 9, as follows:
[Roll No. 36]
YEAS--178
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldwin
Barrow
Bean
Becerra
Berkley
Berman
Berry
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Brady (PA)
Brown (OH)
Brown, Corrine
Butterfield
Capps
Capuano
Cardin
Cardoza
Carnahan
Carson
Chandler
Clay
Cleaver
Clyburn
Conyers
Costa
Costello
Crowley
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
DeFazio
DeGette
Delahunt
DeLauro
Dicks
Dingell
Doggett
Doyle
Edwards
Emanuel
Engel
Etheridge
Evans
Fattah
Filner
Frank (MA)
Gonzalez
Green, Al
Green, Gene
Grijalva
Gutierrez
Harman
Hastings (FL)
Herseth
Higgins
Hinchey
Hinojosa
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick (MI)
Kind
Kucinich
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren, Zoe
Lowey
Lynch
Maloney
Markey
McCarthy
McCollum (MN)
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Melancon
Menendez
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Mollohan
Moore (KS)
Moore (WI)
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Pomeroy
Price (NC)
Rahall
Reyes
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Salazar
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Schakowsky
Schiff
Schwartz (PA)
Scott (VA)
Serrano
Sherman
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Strickland
Tauscher
Thompson (CA)
Thompson (MS)
Tierney
Towns
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Wasserman Schultz
Waters
Watson
Watt
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NAYS--247
Aderholt
Akin
Alexander
Bachus
Baker
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Biggert
Bilirakis
Bishop (UT)
Blackburn
Blunt
Boehlert
Boehner
Bonilla
Bonner
Bono
Boozman
Boren
Boucher
Boustany
Boyd
Bradley (NH)
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burton (IN)
Buyer
Calvert
Camp
Cannon
Cantor
Capito
Carter
Case
Castle
Chabot
Chocola
Coble
Cole (OK)
Conaway
Cooper
Cox
Cramer
Crenshaw
Cubin
Cuellar
Culberson
Cunningham
Davis (KY)
Davis (TN)
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
Dent
Diaz-Balart, L.
Diaz-Balart, M.
Doolittle
Drake
Dreier
Duncan
Ehlers
Emerson
English (PA)
Everett
Feeney
Ferguson
Fitzpatrick (PA)
Flake
Foley
Forbes
Ford
Fortenberry
Fossella
Foxx
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Gohmert
Goode
Goodlatte
Gordon
Granger
Graves
Green (WI)
Gutknecht
Hall
Harris
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hobson
Hoekstra
Holden
Hostettler
Hulshof
Hunter
Hyde
Inglis (SC)
Issa
Istook
Jenkins
Jindal
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
Kuhl (NY)
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas
Lungren, Daniel E.
Mack
Manzullo
Marchant
Marshall
Matheson
McCaul (TX)
McCotter
McCrery
McHenry
McHugh
McKeon
McMorris
Mica
Miller (FL)
Miller (MI)
Miller, Gary
Moran (KS)
Moran (VA)
Murphy
Murtha
Musgrave
Myrick
Neugebauer
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Otter
Oxley
Paul
Pearce
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Poe
Pombo
Porter
Portman
Price (GA)
Pryce (OH)
Putnam
Radanovich
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schwarz (MI)
Scott (GA)
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (NJ)
Smith (TX)
Sodrel
Souder
Stearns
Sweeney
Tancredo
Tanner
Taylor (MS)
Taylor (NC)
Terry
Thornberry
Tiahrt
Tiberi
Turner
Upton
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Westmoreland
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
NOT VOTING--9
Davis (IL)
Eshoo
Farr
Rangel
Reichert
Stupak
Sullivan
Thomas
Young (FL)
{time} 1308
Messrs. CULBERSON, SIMMONS, BASS, GOODE, GARY G. MILLER of
California, HOBSON, FORD, CUELLAR, and Mrs. CUBIN changed their vote
from ``yea'' to ``nay.''
Messrs. GEORGE MILLER of California, SMITH of Washington, and
MOLLOHAN changed their vote from ``nay'' to ``yea.''
So the amendment in the nature of a substitute was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore (Mr. Cole of Oklahoma). The question is on
the third reading of the Senate bill.
The Senate bill was ordered to be read a third time, and was read the
third time.
Motion to Commit Offered by Mr. Brown of ohio
Mr. BROWN of Ohio. Mr. Speaker, I offer a motion to commit.
The SPEAKER pro tempore. Is the gentleman opposed to the bill?
Mr. BROWN of Ohio. I am, Mr. Speaker.
The SPEAKER pro tempore. The Clerk will report the motion to commit.
The Clerk read as follows:
Mr. Brown of Ohio moves to commit the bill S. 5 to the
Committee on the Judiciary with instructions that the
Committee report the same back to the House forthwith with
the following amendments:
In section 1711(2) of title 28, United States Code, as
added by section 3(a) of the bill, add after the period the
following: ``The term `class action' does not include any
action arising by reason of the use of the drug Vioxx.''.
[[Page H753]]
In section 1332(d)(1)(B) of title 28, United States Code,
as amended by section 4(a)(2) of the bill, insert before the
semicolon the following ``, except that the term `class
action' does not include any action arising by reason of the
use of the drug Vioxx''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Ohio (Mr. Brown) is recognized for 5 minutes in support of his motion.
Mr. BROWN of Ohio. Mr. Speaker, Janet Huggins died last September.
She was 39 years old. She had a 9-year-old son.
She had no personal or family history of heart problems, but she
suffered a fatal heart attack just a month after she began taking a new
medicine for her early-onset arthritis.
That medicine she took was Merck's anti-inflammatory drug, Vioxx.
Cardiologist, Dr. Eric Topol, and other researchers at the Cleveland
Clinic sounded the alarm in August of 2001.
Their article in the Journal of the American Medical Association
pointed to increased occurrence of heart problems in patients taking
Vioxx and similar Cox-II anti-inflammatory drugs. Dr. Topol even called
Merck's CEO and research director to talk about his concerns. His calls
went unanswered. His warnings went unheeded.
Instead, Merck continued to sell Vioxx, continued to spend $100
million a year on direct-to-consumer advertising, encouraging more and
more Americans to buy Vioxx. That is what Ms. Huggins did. She was
buried the same day that Merck finally took Vioxx off the market.
Her husband Monty has filed suit against Merck. His suit will be
captured, along with thousands of other Vioxx suits, under the mass
actions provisions of S. 5. This bill is designed to make it more
difficult for Monty Huggins and others to pursue their claims that
companies like Merck will never be held accountable.
S. 5 will make it more expensive for him and much harder for him to
travel for court proceedings. It may even dead-end Monty Huggins' claim
entirely.
Federal Courts have repeatedly refused to certify multistate class
actions because they found them too complex to choose one State law
over the other. So Monty Huggins may arrive in Federal Court only to
find that is the end of the line.
The bitter irony here is that Vioxx claims are not really class
actions at all.
Here is a good example of the sort of things settled by class action
lawsuits. This iPod portable music player is all the rage. There are
some people out there who thought the batteries on these things run out
too quickly. They have filed a class action lawsuit against the
manufacturer. If they win, everybody in the class probably gets a few
bucks and the whole thing is done.
That is what class action lawsuits are about. They do not generally
involve personal injuries. They do not generally involve huge losses.
There is a world of difference, Mr. Speaker, between a faulty battery
in this, and the death of a 39-year-old wife and mother.
Perhaps the worst aspect of this bill is that it treats these suits
the same. We should strip out the whole class action, the mass action
provision, but that is not realistic in this political environment.
My motion to commit prevents harm so obvious it cannot be ignored by
specifically exempting Vioxx lawsuits.
Dr. Topol at the Cleveland Clinic, who I mentioned earlier wrote,
``Neither of the two major forces in this 5-and-a-half year affair,
neither Merck nor the FDA, fulfilled its responsibilities to the
public.''
This motion to commit offers an opportunity for someone at last to
act responsibly.
If we adopt this motion to commit, Monty Huggins will have a fighting
chance for justice. If we do not, the U.S. House of Representatives
will join the list of those who betrayed the public's trust.
Mr. Speaker, I yield the reminder of my time to my friend, the
gentleman from Arkansas (Mr. Ross).
Mr. ROSS. Mr. Speaker, the Class Action Fairness Act could not be
more inappropriately named, and this motion to commit shows why.
Since 1999, Merck has spent over $100 million a year to advertise
Vioxx. More than 80 million people took Vioxx, and the drug generated
sales of $2.5 billion for Merck.
Merck should take responsibility for the harm their products may
cause. Thousands, literally thousands of American families believe they
lost a loved one or suffered personal harm because Vioxx was unsafe.
These families believe Merck knew of the danger Vioxx was causing,
but allowed the drug to remain on the market anyway. Maybe they are
right. Maybe they are not. But the point is that the so-called Class
Action Fairness Act does not give them a fair chance to make their case
before a jury of their peers.
The Class Action Fairness Act makes it very difficult for those who
feel they were harmed by drugs like Vioxx from getting the justice they
deserve. We should adopt this motion to commit and pass a Class Action
Fairness Act worthy of the name.
Mr. GOODLATTE. Mr. Speaker, I rise in opposition to the motion to
commit.
The SPEAKER pro tempore. The gentleman from Virginia (Mr. Goodlatte)
is recognized for 5 minutes.
Mr. GOODLATTE. Mr. Speaker, first let me thank Chairman Sensenbrenner
for his leadership in bringing us to this historic point. He and I have
been working on this for over 6 years. It has passed the House of
Representatives three times before.
Due to his good work, it has now passed the Senate and we have the
opportunity to send it to the President. He is waiting to sign it and
we shouldn't waste any more time.
{time} 1315
Now the truth about class action fairness and Vioxx. Critics have
been arguing in the press that S. 5 should be rejected because it will
hurt consumers bringing Vioxx cases against Merck. The truth is,
however, that this legislation will have absolutely no effect on Vioxx
suits, and here is why. The majority of personal injury cases brought
against Merck are individual cases that would not be affected by the
bill in any manner whatsoever. These include more than 400 personal
injury cases that are part of a coordinated proceeding in New Jersey
State Court. None of these cases will be affected by the bill because
they are neither class actions nor mass actions.
Merck has been named in more than 75 statewide and nationwide class
actions involving Vioxx, but only a small percentage are personal
injury class actions. To the extent these cases do involve personal
injury, most were already brought in or removed to Federal Court
because each potential class member's claims exceeds $75,000. Thus,
these cases are removable to Federal Court under the old rules.
There are a few cases which plaintiffs have joined together in mass
action-type cases against Merck. However, not a single Vioxx case has
been brought against Merck in State court by more than 100 plaintiffs,
one of the requirements for removal to Federal Court under the class
action legislation. Thus, there is no reason to believe that the mass
action provision would affect any Vioxx-related cases whatsoever.
Most of the class actions have been brought against Merck. Since the
legislation is not retroactive, it would absolutely have no effect on
the 75 class actions already filed against Merck in the wake of the
Vioxx withdrawal.
Mr. BROWN of Ohio. Mr. Speaker, I have a parliamentary inquiry.
The SPEAKER pro tempore (Mr. Cole of Oklahoma). Does the gentleman
from Virginia yield to the gentleman from Ohio for a parliamentary
inquiry?
Mr. GOODLATTE. Mr. Speaker, I do not yield.
The SPEAKER pro tempore. The gentleman from Virginia (Mr. Goodlatte)
may continue.
Mr. GOODLATTE. Mr. Speaker, given the large number of suits already
filed and the fact that every former Vioxx taker in America is already
a proposed class member in numerous class actions, it is unlikely there
will be many more class actions after the legislation is enacted.
It is bad legislation to have something pass that covers all class
actions in the country for all time and name one specific product or
one specific company in the legislation. It is irrelevant anyway.
Now, let me tell you the kinds of cases that are affected by this
legislation. Take a look at the ``Class Action Wheel of Fortune'' on
this chart. It will tell you what we are doing here today.
[[Page H754]]
You have got the case against Ameritech. Ameritech, the attorneys for
the plaintiffs got $16 million in attorneys fees. What did the
plaintiffs they represent get? Five-dollar phone cards.
The Premier Cruise Line case, the lawyers got almost $1 million; the
consumers got a $30- to $40-off coupon for their next cruise.
The computer monitor litigation case, the lawyers, $6 million in
fees; the consumers, a $13 rebate against your next future purchase of
the alleged defective product.
Register.com, $650,000 for the lawyers; $5 for the consumers.
KB Toys, $1 million for the lawyers; 30 percent off your selected
product in a unadvertised 1-week sale at KB Toys.
Poland Spring Water, $1.35 million for the lawyers; a coupon for more
of the allegedly defective water for the consumers.
My favorite case, however, is this one, the Chase Manhattan Bank
case, where the lawyers got $4 million in attorneys fees; the
plaintiffs, a check, we have got one right here, for 33 cents. But
there was a catch, because if you wanted to accept the 33 cents, you
had to use a 34-cent postage stamp to send in your acceptance notice.
How is that for a bargain for you?
And how about the $22 million case that President Bush cited last
week against Thompson Electronics? The lawyers got $22 million in
attorneys fees; the plaintiffs, one of whom was there, got a $25- to
$50-off coupon to buy more of what? The very television set that she
was complaining was defective in the first place.
It is a racket, it is extortionate. The people of the country know
it. When they are asked the question, who benefits from our class
action industry today, 47 percent say it is the plaintiffs' lawyers; 20
percent say it is the lawyers for the companies; 67 percent of our
public recognizes it is the lawyers who benefit from this system.
It is time we change it. This bill does just that. It protects
American consumers and makes sure that they get justice by examining
these ridiculous coupon settlements.
Mr. Speaker, I urge my colleagues to support this legislation, defeat
the motion to commit, and send the bill to the President, and starting
very soon, we will have justice for American consumers.
Mr. Speaker, I yield back the balance of my time.
Parliamentary Inquiry
Mr. BROWN of Ohio. Mr. Speaker, I have a parliamentary inquiry.
The SPEAKER pro tempore. The gentleman will state it.
Mr. BROWN of Ohio. Mr. Speaker, under provisions of this bill, is it
not the case that all future Vioxx cases are prohibited?
The SPEAKER pro tempore. The gentleman has not stated a proper
parliamentary inquiry.
Without objection, the previous question is ordered on the motion to
commit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to commit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Recorded Vote
Mr. BROWN of Ohio. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The SPEAKER pro tempore. Pursuant to clauses 8 and 9 of rule XX, this
15-minute vote on the motion to commit will be followed by 5-minute
votes on the passage of S. 5, if ordered, and the motion to suspend the
rules on H. Res. 91.
The vote was taken by electronic device, and there were--ayes 175,
noes 249, not voting 10, as follows:
[Roll No. 37]
AYES--175
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldwin
Barrow
Bean
Becerra
Berkley
Berman
Berry
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Brady (PA)
Brown (OH)
Brown, Corrine
Butterfield
Capps
Capuano
Cardin
Cardoza
Carnahan
Carson
Chandler
Clay
Cleaver
Clyburn
Conyers
Costa
Costello
Crowley
Cummings
Davis (CA)
Davis (FL)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Dicks
Dingell
Doggett
Doyle
Edwards
Emanuel
Etheridge
Evans
Fattah
Filner
Frank (MA)
Gonzalez
Green, Al
Green, Gene
Grijalva
Gutierrez
Harman
Hastings (FL)
Herseth
Higgins
Hinchey
Hinojosa
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick (MI)
Kind
Kucinich
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren, Zoe
Lowey
Lynch
Maloney
Markey
McCarthy
McCollum (MN)
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Melancon
Menendez
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Mollohan
Moore (KS)
Moore (WI)
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Price (NC)
Rahall
Reyes
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Salazar
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Schakowsky
Schiff
Schwartz (PA)
Scott (VA)
Serrano
Sherman
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Stark
Strickland
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Tierney
Towns
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Wasserman Schultz
Waters
Watson
Watt
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NOES--249
Aderholt
Akin
Alexander
Bachus
Baker
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Biggert
Bilirakis
Bishop (UT)
Blackburn
Blunt
Boehlert
Boehner
Bonilla
Bonner
Bono
Boozman
Boren
Boucher
Boustany
Boyd
Bradley (NH)
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burton (IN)
Calvert
Camp
Cannon
Cantor
Capito
Carter
Case
Castle
Chabot
Chocola
Coble
Cole (OK)
Conaway
Cooper
Cramer
Crenshaw
Cubin
Cuellar
Culberson
Cunningham
Davis (AL)
Davis (KY)
Davis (TN)
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
Dent
Diaz-Balart, L.
Diaz-Balart, M.
Doolittle
Drake
Dreier
Duncan
Ehlers
Emerson
Engel
English (PA)
Everett
Feeney
Ferguson
Fitzpatrick (PA)
Flake
Foley
Forbes
Ford
Fortenberry
Fossella
Foxx
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Gohmert
Goode
Goodlatte
Gordon
Granger
Graves
Green (WI)
Gutknecht
Hall
Harris
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hobson
Hoekstra
Holden
Hostettler
Hulshof
Hunter
Hyde
Issa
Istook
Jenkins
Jindal
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
Kuhl (NY)
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas
Lungren, Daniel E.
Mack
Manzullo
Marchant
Marshall
Matheson
McCaul (TX)
McCotter
McCrery
McHenry
McHugh
McKeon
McMorris
Mica
Miller (FL)
Miller (MI)
Miller, Gary
Moran (KS)
Moran (VA)
Murphy
Murtha
Musgrave
Myrick
Neugebauer
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Otter
Oxley
Paul
Pearce
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Poe
Pombo
Pomeroy
Porter
Portman
Price (GA)
Pryce (OH)
Putnam
Radanovich
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schwarz (MI)
Scott (GA)
Sensenbrenner
Sessions
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (NJ)
Smith (TX)
Sodrel
Souder
Spratt
Stearns
Sullivan
Sweeney
Tancredo
Tanner
Taylor (NC)
Terry
Thomas
Thornberry
Tiahrt
Tiberi
Turner
Upton
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Westmoreland
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NOT VOTING--10
Buyer
Cox
Eshoo
Farr
Inglis (SC)
Jones (OH)
Rangel
Reichert
Shadegg
Stupak
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. Cole of Oklahoma) (during the vote).
Members are advised there are 2 minutes remaining in this vote.
{time} 1341
So the motion to commit was rejected.
The result of the vote was announced as above recorded.
Mr. MARKEY changed his vote from ``aye'' to ``no.''
[[Page H755]]
The SPEAKER pro tempore (Mr. McHugh). The question is on the passage
of the Senate bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. SENSENBRENNER. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--yeas 279,
nays 149, not voting 6, as follows:
[Roll No. 38]
YEAS--279
Aderholt
Akin
Alexander
Bachus
Baird
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Bean
Beauprez
Berry
Biggert
Bilirakis
Bishop (UT)
Blackburn
Blunt
Boehlert
Boehner
Bonilla
Bonner
Bono
Boozman
Boren
Boucher
Boustany
Boyd
Bradley (NH)
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burton (IN)
Buyer
Calvert
Camp
Cannon
Cantor
Capito
Carter
Case
Castle
Chabot
Chandler
Chocola
Coble
Cole (OK)
Conaway
Cooper
Costa
Costello
Cox
Cramer
Crenshaw
Cubin
Cuellar
Culberson
Cunningham
Davis (AL)
Davis (IL)
Davis (KY)
Davis (TN)
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
Dent
Diaz-Balart, L.
Diaz-Balart, M.
Drake
Dreier
Duncan
Edwards
Ehlers
Emanuel
Emerson
English (PA)
Everett
Feeney
Ferguson
Fitzpatrick (PA)
Flake
Foley
Forbes
Ford
Fortenberry
Fossella
Foxx
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Gohmert
Gonzalez
Goode
Goodlatte
Gordon
Granger
Graves
Green (WI)
Gutknecht
Hall
Harman
Harris
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Higgins
Hinojosa
Hobson
Hoekstra
Holden
Hostettler
Hulshof
Hunter
Hyde
Inglis (SC)
Issa
Istook
Jenkins
Jindal
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Kanjorski
Keller
Kelly
Kennedy (MN)
Kind
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
Kuhl (NY)
LaHood
Larsen (WA)
Larson (CT)
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
Lipinski
LoBiondo
Lucas
Lungren, Daniel E.
Mack
Manzullo
Marchant
Marshall
Matheson
McCaul (TX)
McCotter
McCrery
McHenry
McHugh
McKeon
McMorris
Meeks (NY)
Melancon
Mica
Michaud
Miller (FL)
Miller (MI)
Miller, Gary
Moore (KS)
Moran (KS)
Moran (VA)
Murphy
Murtha
Musgrave
Myrick
Neugebauer
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Otter
Oxley
Paul
Pearce
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Poe
Pombo
Pomeroy
Porter
Portman
Price (GA)
Pryce (OH)
Putnam
Radanovich
Rahall
Ramstad
Regula
Rehberg
Renzi
Reyes
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ruppersberger
Ryan (WI)
Ryun (KS)
Saxton
Schwarz (MI)
Scott (GA)
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (NJ)
Smith (TX)
Smith (WA)
Snyder
Sodrel
Souder
Stearns
Sullivan
Sweeney
Tancredo
Tanner
Tauscher
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thornberry
Tiahrt
Tiberi
Turner
Upton
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Westmoreland
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Wu
Young (AK)
Young (FL)
NAYS--149
Abercrombie
Ackerman
Allen
Andrews
Baca
Baldwin
Barrow
Becerra
Berkley
Berman
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Brady (PA)
Brown (OH)
Brown, Corrine
Butterfield
Capps
Capuano
Cardin
Cardoza
Carnahan
Carson
Clay
Cleaver
Clyburn
Conyers
Crowley
Cummings
Davis (CA)
Davis (FL)
DeFazio
DeGette
Delahunt
DeLauro
Dicks
Dingell
Doggett
Doolittle
Doyle
Engel
Etheridge
Evans
Fattah
Filner
Frank (MA)
Green, Al
Green, Gene
Grijalva
Gutierrez
Hastings (FL)
Herseth
Hinchey
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kaptur
Kennedy (RI)
Kildee
Kilpatrick (MI)
Kucinich
Langevin
Lantos
Lee
Levin
Lewis (GA)
Lofgren, Zoe
Lowey
Lynch
Maloney
Markey
McCarthy
McCollum (MN)
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Menendez
Millender-McDonald
Miller (NC)
Miller, George
Mollohan
Moore (WI)
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Price (NC)
Ross
Rothman
Roybal-Allard
Rush
Ryan (OH)
Sabo
Salazar
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Schakowsky
Schiff
Schwartz (PA)
Scott (VA)
Serrano
Sherman
Skelton
Slaughter
Solis
Spratt
Stark
Strickland
Thompson (CA)
Thompson (MS)
Tierney
Towns
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Wasserman Schultz
Waters
Watson
Watt
Waxman
Weiner
Wexler
Woolsey
Wynn
NOT VOTING--6
Baker
Eshoo
Farr
Rangel
Reichert
Stupak
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (during the vote). Members are advised there
are 2 minutes remaining in this vote.
{time} 1349
So the Senate bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________