[Congressional Record (Bound Edition), Volume 151 (2005), Part 2]
[Senate]
[Pages 1551-1552]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       CLASS ACTION FAIRNESS ACT

  Mr. FRIST. Madam President, in about 40 minutes or so we will be 
formally bringing to the floor S. 5, the Class Action Fairness Act. 
There will be opening statements over the course of the afternoon. We 
will not be submitting amendments specifically on the bill today or 
voting on the bill this afternoon, but I would like to take a few 
minutes and introduce my strong support on this important bill, a bill 
we have worked on for several years now in a bipartisan way. It is 
important, I believe, to put the debate in context.
  This particular bill gives us the first opportunity to take a major 
step forward on this floor to halt lawsuit abuses that occur across the 
country. Every 2 seconds a lawsuit is filed in America--every 2 
seconds. In 2002, that added up to 16.3 million lawsuits filed in State 
courts.
  In the past decade, litigation has skyrocketed, creating the most 
expensive litigation system in the world. In 2003, the tort system cost 
an incredible $246 billion. In other words, that is approximately $845 
for every man, woman, and child.
  At the current rate of increase, it is estimated that the per capita 
cost of the tort system will go up to $1,000 per person by 2006. That 
is $4,000 for a family of four. Nationally, the tort system costs more 
than the entire economic output of my own State of Tennessee.
  The result of this runaway litigation? Clogged courts, wasted 
taxpayers' dollars, restrained competitiveness, and unjust settlements 
that award huge attorney fees at the expense of injured victims who 
often get a coupon or nothing at all.
  Businesses spend millions of dollars each year defending themselves 
against lawsuits, many of them frivolous.
  Home Depot is now one of America's largest and most successful 
companies, but Bernie Marcus, who cofounded Home Depot back in 1978, 
says his business could never have gotten off the ground in the current 
legal climate. That is thousands of jobs that would have never been 
created, millions of products never sold, and prices that would never 
have been introduced for the benefit of consumers.
  Contrary to popular perception, small businesses, which are the 
engine of economic growth in our country, are the ones which are 
hardest hit by the lawsuit industry--not the large corporations. Small 
businesses take in 25 percent of America's business revenue but they 
bear 68 percent of the business tort costs.
  Let me repeat: Small businesses take in 25 percent of America's 
business revenue but they bear 68 percent of the tort costs.
  They spend a staggering $88 billion a year on legal fees--$88 billion 
that could be used to hire more workers, create more jobs, expand their 
businesses, or develop new products and services.
  Many small businesses can't afford the legal burden, so they close up 
shop and jobs are lost--and the economy overall suffers.
  Clearly, it is time for reform. We simply cannot afford the status 
quo. The cost of doing business in America keeps going up while respect 
for our legal system goes down.
  That is why today, as a first step, we are tackling class action. We 
should consider focusing on other areas of lawsuit abuse, including 
medical liability, asbestos, and bankruptcy--and in due time we will do 
just that. But we are beginning with class action to help those injured 
by negligence who often receive little or nothing while their attorneys 
pocket millions.
  Class action serves an important purpose in our justice system. We 
all know that. Class action lawsuits allow plaintiffs whose injuries 
are not big enough to justify the legal expense individually to combine 
their claims into one suit against a common defendant. This is an 
important and valuable tool to keep unscrupulous companies honest and 
to compensate legitimate victims.
  But the system has gotten off track. Opportunistic attorneys are 
distorting

[[Page 1552]]

the process to generate excessive attorney fees at the expense of the 
injured plaintiffs. Take, for example, a case in my home State 
involving faulty plastic pipes.
  Throughout the 1970s and the 1980s, 6 million to 10 million new homes 
and apartments were fitted with the plastic piping. PB pipes, as they 
are known, were generally considered cheaper and more durable than 
either copper or galvanized steel systems. They were especially popular 
in the Sun Belt where we were experiencing a huge housing boom. Before 
long, however, the pipes and the fittings began to fail, causing leaks 
and property damage.
  A class action suit was filed on behalf of the homeowners who were 
stuck with these defective pipes. After extensive litigation, the 
lawyers reached a deal. The homeowners were eligible to receive less 
than 10 percent of the total settlement fund--less than 10 percent. 
Meanwhile, the plaintiffs' attorneys negotiated for themselves a $45 
million payday--the equivalent of $2,000 per hour. This is just one of 
many examples of consumers getting a fraction of the total settlement, 
while the lawyers got millions.
  In fact, the Class Action Fairness Act enumerates a consumer class 
action bill of rights which will put an end to these unfair 
compensation packages. Under the Class Action Fairness Act, lawyers' 
fees for coupon settlements must be based either on the value of the 
coupons that are actually redeemed or the hours actually billed in 
prosecuting the class action. The consumer provisions will also require 
settlement deals to be written in plain English so plaintiffs know what 
is being negotiated and can make informed decisions about how to 
proceed.
  Second, the bill before the Senate will help end the phenomenon of 
forum shopping. Aggressive trial lawyers have found there are a few 
counties that are what is known as lawsuit friendly. These elected 
State court judges are quick to certify a class action and juries are 
known to grant extravagant damage awards.
  The same defendant can face copycat cases in different States, each 
granting a different result. These counties may have little or no 
geographic relationship to the plaintiffs or the defendant, but the 
trial lawyers know that simply the threat of suing in these counties 
can lead to large cash settlements. One study estimates that virtually 
every sector of the U.S. economy is on trial in only three State 
courts.
  The Class Action Fairness Act moves those large nationwide cases that 
genuinely impact the interstate commerce to the Federal courts where 
they belong. These are commonsense reforms that will bring fairness 
back to the system.
  For these reasons, the Class Action Fairness Act enjoys strong 
bipartisan support. It was reported out of the Senate Judiciary 
Committee with a bipartisan majority. I am confident if we continue 
working together to pass a clean bill without amendment, it will pass 
the House of Representatives quickly and be ready for the President's 
signature. Class action is an important tool of justice, but it is a 
tool that has been badly abused. Class Action Fairness Act will bring 
rationality to the system which will benefit the truly injured, keep 
America competitive, and restore the public respect for the law.
  I yield the floor.
  Mrs. BOXER. 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.
  Mrs. BOXER. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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