[Congressional Record (Bound Edition), Volume 149 (2003), Part 18]
[Senate]
[Pages 25218-25220]
[From the U.S. Government Publishing Office, www.gpo.gov]




     CLASS ACTION FAIRNESS ACT OF 2003--MOTION TO PROCEED--Resumed

  Mr. GRASSLEY. I am pleased that the Senate is finally reaching the 
point of moving ahead with this very important legislation. We call 
this the Class Action Fairness Act of 2003 because, quite frankly, 
everything dealing with class action lawsuits--maybe I should not say 
everything because I admit there is a very important role in some 
instances for class action lawsuits, but the way the regime is working 
out now is very unfair, particularly in instances where consumers get 
practically nothing and lawyers representing the class get millions.
  That is not an occasional happening. That is happening quite 
regularly. So the current class action system is rife with problems 
which undermine the rights of both the plaintiffs and defendants alike; 
hence, our legislation. Class members are often in the dark about their 
rights, with class lawyers driving lawsuits and driving the settlement. 
Class members receive court and settlement notices in hard-to-
understand legalese. Many class action settlements only benefit the 
lawyers, with little or nothing going to the class members. We are all 
familiar with class action settlements where the plaintiffs received 
coupons of little value or no value, and the lawyers received all the 
money available in the settlement agreements.
  More and more, we are seeing lawyers bringing frivolous lawsuits 
which are of no real interest to class members but are just a bonanza 
of quick and easy legal fees for the class lawyers because companies 
want to settle those cases rather than expend lots of money in 
frivolous litigation defense.
  I have been invited into class action lawsuits. One gets a notice in 
the mail, probably because they did business with a particular company. 
Maybe it is because I am in agriculture and a family farmer that I 
might get some notices of this, but I can speak to the fact that--and 
obviously I hope people know I am not a lawyer, but the legalese that 
comes in these notices informing you why you might possibly be a member 
of a class, or you might possibly benefit, quite frankly I do not give 
those notices much consideration. Maybe I should. Maybe there is a 
jackpot out there that I could get something out of. I do not know.
  It really is not very inviting to the people who may have been 
injured. Even if it is inviting, and they join it and they win, they 
could get a coupon; whereas the lawyers are going to get millions of 
dollars.
  In addition to current class action rules, the current ones are such 
that a majority of the large nationwide class actions can only proceed 
in our State courts, when these are clearly the kinds of cases that 
should, in fact, be heard in Federal courts. It makes sense that these 
class action cases have the opportunity to be heard in Federal courts 
because these cases involve lots of money, citizens from all across the 
country, and issues of nationwide interest.
  To further compound the problem, the present rules are easily gamed 
by unscrupulous lawyers who steer class actions to certain preferred 
State courts where judges are quick to certify a class and approve a 
settlement with little regard to class member interest and the parties' 
due process rights. For example, class lawyers manipulate pleadings to 
avoid removal of the lawsuit to Federal court by claiming that their 
client suffered under $75,000 in damages in order to avoid meeting a 
Federal threshold, even though their client may have suffered greater 
injury. Class lawyers craft lawsuits to defeat the complete diversity 
requirements by ensuring that at least one named class member is from 
the same State as the defendant.
  These are just a few of the games that are played and the 
gamesmanship tactics that we have heard of that lawyers like to utilize 
to bring down the entire class action legal system.
  The Class Action Fairness Act that is before us will address some of 
the most egregious problems with the class action system; yet 
preserving class action lawsuits is an important tool which brings 
representation to the unrepresented.
  I will briefly summarize what this bipartisan bill does. First, the 
act requires that notice of proposed settlements in all class actions, 
as well as all class notices, must be in clear, easily understood 
English and must include all material settlements, including amounts 
and sources of attorney's fees.
  When that happens, and I get one of those notices, I am going to read 
it and maybe I can make a decision that I ought to join that class. But 
I am not going to mess around with trying to

[[Page 25219]]

have some lawyer interpret to me whether or not I ought to be in a 
class action lawsuit when I get those notices.
  These notices that most plaintiffs receive are written in small print 
and in confusing legal jargon. Since plaintiffs are giving up their 
right to sue, it is important that they understand what they are doing 
and the ramifications of their actions.
  Second, this act requires that State attorneys general, or other 
responsible State government officials, be notified of any proposed 
class settlement that would affect the residents of their State. This 
provision helps protect class members because such notice would provide 
these State officials with an opportunity to object if the settlement 
terms are unfair for their citizens.
  Third, this act disallows bounty payments to lead plaintiffs so 
lawyers looking for victims cannot promise them unwarranted payoffs to 
be their excuse for filing a suit. The bill also prevents class action 
settlements that discriminate on the basis of geography so that one 
plaintiff does not receive more money than other class members who have 
been equally injured just because that plaintiff lives near the 
courthouse.
  Fourth, the act requires that courts closely scrutinize settlements 
where the plaintiffs only receive coupons or noncash awards while the 
lawyers get the bulk of the money. The bill requires the judge to make 
a written finding that the settlement is fair and reasonable for class 
members. A court will still be able to find that a noncash settlement, 
as in the case of injunctive relief banning some type of bad conduct, 
is fair and reasonable, but a court would also be able to throw out 
sham settlements where lawyers get big paychecks while the plaintiffs 
get nothing or, as I have said before, worthless or almost worthless 
coupons.
  The bill also requires the judicial conference to report back to 
Congress on best practices in class action cases and how to best ensure 
fairness of a class action settlement. Finally, the Class Action 
Fairness Act allows more class action lawsuits to be removed from State 
court to Federal court, either by a defendant or even by an unnamed 
class member. However, the bill is drafted to ensure that truly local 
disputes would continue to be litigated in State court. Current law 
provides that class lawyers can avoid removal of a class action to 
Federal court if the individual claims are $75,000 or less, even if 
hundreds of millions of dollars in total are at stake, or if just one 
class member is from the same State as the defendant.
  Our bill would eliminate the ``complete diversity'' rule but leave in 
State court class actions with fewer than 100 plaintiffs, class actions 
that allow less than $5 million, class actions in which a State entity 
is a primary defendant, and class actions brought against a company in 
its home State if two-thirds or more of the class members are residents 
of that State.
  We have been working on finding a fair solution to the class action 
problem for several years. For the past four Congresses, Senator Kohl, 
Senator Hatch, and others have joined me, as the main sponsor of this 
bill, in studying the problems with the class action system and working 
on a way to deal with such egregious abuses of our tort system.
  Over the years, the House and Senate Judiciary Committees have 
convened numerous hearings on these class action abuses, making very 
obvious the need for reform. The House has passed similar versions of 
the class action bill in several Congresses, and they have done it with 
strong bipartisan support, so frankly I don't understand why we are 
running up against opposition on the other side to even bringing this 
bill up for discussion.
  In the Senate, in the 105th Congress, I held hearings in the 
Judiciary Committee's Administrative Oversight Subcommittee and then 
marked up the first Grassley-Kohl class action bill. In the 106th 
Congress my subcommittee held another hearing on class actions and the 
Judiciary Committee marked up and reported out class action 
legislation. The Judiciary Committee held a hearing on class actions in 
the 107th Congress, and in this Congress the Judiciary Committee marked 
up the language of the bill we are considering today.
  Chairman Hatch, Senator Kohl, and I worked closely with Senator 
Feinstein of California to make sure that more in-State class actions 
stayed in State court. We also worked with Senator Specter to make sure 
his concerns relative to class actions were also addressed.
  The bill then was approved by the Judiciary Committee and it was 
approved on a solid, bipartisan vote. I wanted to elaborate on the 
history of this bill to show how much time Congress has spent on the 
problems with our class action system and all the work and all the 
compromises that have been put into this bipartisan bill.
  The Class Action Fairness Act has garnered increasing support over 
the years and I expect it will receive even greater support now with 
the significant changes we have made in the Judiciary Committee several 
months ago. We need class action reform badly. Both plaintiffs and 
defendants alike are calling for change in the area of tort and class 
actions. The Class Action Fairness Act is a good, modest bill that will 
help curb many problems that have plagued the class action system. The 
bill will help class members know what their rights are, increase their 
members' protection, and ensure the approval of fair settlements. It 
will allow nationwide class actions to be heard in the proper forum, 
and that is the Federal courts, but keep primarily State class actions 
where they ought to be, in State court.
  It will preserve the process, but put a stop to the more egregious 
abuses. It will also help to put a stop to the more frivolous lawsuits 
that are very much a drag on the economy.
  I hope we can proceed to this bill. We are very happy to consider 
amendments. This bill is something that has had so much work on it over 
the last four Congresses that it should move ahead. The situation has 
not improved any during that period of time. In fact, TV magazine-type 
programs are full of stories about continuous abuse of the tort class 
action system. We have situations where someone, a lowly county judge 
in some State, is making a decision that is applicable to all 50 States 
in a way that should not be done by one isolated judge. These are cases 
that should be decided at the Federal level and have something that is 
going to be a Federal policy applying to all 50 States done by a 
Federal court as opposed to a county court system.
  There are a lot of things we can say about this bill, but it is about 
time. I would think there would be some embarrassment on the other side 
of the aisle, considering the fact of the bipartisan support of this 
bill in the House of Representatives and how it has come out of our 
Senate Judiciary Committee with solid, bipartisan support, considering 
modifications that have been made for Democratic Senators who were not 
part of the original bipartisan coalition putting this bill together, 
that the legislative process is working, the Senate is working its 
will, and now we are up against what could be a stone wall of 
resistance that is unjustified.
  I hope we can move forward. We will find out with votes very shortly.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. McCONNELL. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. McCONNELL. Mr. President, I ask unanimous consent that the Senate 
now proceed to the consideration of S. 1751, with all first-degree 
amendments relevant to the bill.
  The PRESIDING OFFICER. Is there objection?
  Mr. REID. Mr. President, reserving the right to object, this is a 
very important piece of legislation. A significant majority of Senators 
on this side of the aisle want to do something

[[Page 25220]]

about this legislation which is known as the class action legislation. 
But we are terribly disappointed with the procedure that has been used 
to get us to where we are. For example, Senator Breaux has been one of 
our point people on this and has worked very hard to try to get the 
issues resolved. Everyone knows how fair he is and how he is the 
dealmaker here in the Senate.
  For this and many other reasons, on behalf of many Senators on this 
side, we reluctantly object.
  The PRESIDING OFFICER. Objection is heard.


                             CLOTURE MOTION

  Mr. McCONNELL. Mr. President, on behalf of the majority leader, I 
send a cloture motion to the desk to the pending motion to proceed.
  The PRESIDING OFFICER. The cloture motion having been presented under 
rule XXII, the Chair directs the clerk to read the motion.
  The assistant legislative clerk read as follows:

                             Cloture Motion

       We the undersigned Senators, in accordance with the 
     provisions of Rule XXII of the Standing Rules of the Senate, 
     do hereby move to bring to a close debate on the motion to 
     proceed to S. 1751, a bill to amend the procedures that apply 
     to consideration of interstate class actions to assure fairer 
     outcomes for class members and defendants, and for other 
     purposes.
         Bill Frist, Orrin G. Hatch, Charles Grassley, George 
           Allen, Kay Bailey Hutchison, Rick Santorum, Susan M. 
           Collins, Elizabeth Dole, Lindsey Graham of South 
           Carolina, Wayne Allard, Pat Roberts, John Ensign, Thad 
           Cochran, John Warner, Jon Kyl, John E. Sununu, Saxby 
           Chambliss.

  Mr. McCONNELL. Mr. President, the vote on the motion to invoke 
cloture will occur on Wednesday of this week.
  I now ask unanimous consent that the live quorum as required under 
rule XXII be waived.
  Mr. REID. No objection.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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