[Congressional Record (Bound Edition), Volume 151 (2005), Part 2]
[Senate]
[Pages 1646-1671]
[From the U.S. Government Publishing Office, www.gpo.gov]




               CLASS ACTION FAIRNESS ACT OF 2005--Resumed

  The PRESIDING OFFICER. The Senator from Pennsylvania is recognized.
  Mr. SPECTER. Mr. President, it had been announced earlier that the 
Senator from Illinois, Mr. Durbin, would be offering an amendment on 
class action, so we will await his arrival. In the interim, I will 
yield to my distinguished colleague from Utah, Senator Hatch, who has 
some comments and who will be managing the bill this afternoon.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, what is the parliamentary state of affairs?
  The PRESIDING OFFICER. S. 5 is before the Senate.
  Mr. HATCH. Have no amendments been presented?
  The PRESIDING OFFICER. Not yet.
  Mr. HATCH. I ask the distinguished Senator from Massachusetts if he 
is prepared to submit an amendment. If he is, I would be happy to yield 
to him instead of making my comments.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. I am going to send an amendment to the desk.
  Mr. President, it is wrong to include civil rights in wage-and-hour 
cases in this bill. Families across the country are struggling to make 
ends meet. They work hard, play by the rules, and expect fair treatment 
in return, but they often don't get it.
  Unfair discrimination can lead to the loss of a job or the denial of 
a job. It can keep them from having health insurance or obtaining 
decent housing. It can deprive their children of a good education. We 
can't turn a blind eye to that enormous problem. Those who engage in 
illegal discrimination must be held accountable.
  That is why I am offering this amendment--to protect working families 
and victims of discrimination. Hard-working Americans deserve a fair 
day in court. Class actions protect us all by preventing systematic 
discrimination.
  Attorneys general from 15 States--California, Illinois, Iowa, 
Kentucky, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New 
Mexico, New York, Oklahoma, Oregon, Vermont, and West Virginia--oppose 
the inclusion of civil rights in wage-and-hour cases in the bill. The 
problems that supporters of the bill say they want to fix don't even 
rise in civil rights and labor cases. No one has cited any civil rights 
or labor cases as an example of abuses in class action cases under the 
current law.
  During the discussion of this bill in the Judiciary Committee and on 
the floor last year and during the committee's discussion last week, no 
one identified any need to fix civil rights or labor class actions. 
``If it ain't broke, Congress shouldn't try to fix it.''
  There is no good reason to include these cases in this bill, but 
there is an excellent reason not to include them. This bill will harm 
victims of civil rights and labor law abuses by delaying their cases 
and making it much more difficult and much more expensive for them to 
obtain the justice they deserve. It may even discourage many from 
seeking any relief at all.
  That is not what this bill was meant to do. We were told this bill 
was about cases in which individuals from across the country receive 
relief in State courts for relatively minor violations--sometimes 
getting just a coupon or a few dollars in a case they didn't even know 
about while a few elite attorneys receive more megadollar fees. Civil 
rights and wage-and-hour class action suits are not about minor 
violations. They are about serious, sometimes devastating harm to 
people who have been treated unfairly and are seeking their day in 
court; people such as Mary Singleton, a long-term employee at a 
scientific laboratory in California who joined a gender discrimination 
class action after her employer refused to give her and other female 
employees equal pay for equal work. Ms. Singleton and her coworkers 
filed their case in State court because State law provided greater 
protection against gender discrimination and retaliation and because 
the Federal court rules would have placed additional limits on 
discovery.
  This bill would also harm people such as Georgie Hartwig who spent 6 
years working at a national discount retailer in Colville, WA. For 
years, Ms. Hartwig and her fellow workers were forced to work off the 
clock, skipping breaks and lunch, but not being paid for their time. 
Now she is fighting, along with 40,000 coworkers, to get the wages they 
have earned. This bill was not supposed to make it harder for people 
such as Ms. Hartwig to get justice.
  We were also told this bill would not shift cases to Federal courts 
unless they truly involve national issues, while State cases would 
remain in State court. The bill's actual effects are quite different. 
It does not just affect cases where the events affect people in 
multiple States; under this bill, a corporate defendant with 
headquarters outside the State can move State class action cases, 
including civil rights cases and worker right cases, into Federal 
court, even if all the underlying facts in the case happened in a 
single State. Think about that. If 100 workers in Alabama sue their 
employer under Alabama law for job discrimination that occurred in 
Alabama, this bill says the employer can drag their case into Federal 
court if the employer happens to be incorporated in Delaware. That 
makes no sense.
  The bill would also apply to cases that seek justice for other 
strictly local events such as environmental damage. That is not what 
this amendment is about. This problem, which is affecting us now in 
Massachusetts, illustrates the fact that this bill is not just about 
truly national cases, as supporters keep insisting.
  A case now pending in a Massachusetts State court illustrates how the 
bill deprives local citizens of access to their own State courts when 
they become innocent victims of widespread pollution occurring in their 
hometowns.
  In April 2003 an oil barge ran aground on Buzzard's Bay off the coast 
of New Bedford, MA, spilling 98,000 gallons of oil into the bay and 
polluting almost 90 miles of beaches and sensitive tidal marshes in the 
area. Homeowners filed a class action suit in State court asking for 
compensation for the damage to their property. One of the defendants, 
Bouchard Transportation Company, has already been convicted of criminal 
negligence in causing the spill. The defendant companies are from out 
of State. Even though the case occurred

[[Page 1647]]

entirely under Massachusetts laws, if the current bill, the proposed 
bill, had been in effect when the case was filed, this case could be 
removed to Federal court even though all the victims are full-time 
Massachusetts residents and seeking relief in Massachusetts courts 
under Massachusetts laws.
  Because this bill is not retroactive, the case will not be affected 
by this bill, but with the passage of this act, similar future cases, 
properly brought in the courts of the State where the harm occurs, can 
be removed to the Federal courts. As a result, the victims will often 
be confronted by class action certification procedures more onerous 
than those in their State courts. They will face delays from congested 
Federal dockets. They will have to travel greater distances from their 
homes to the courthouse. The procedural changes in this bill seem 
abstract, but they will have a devastating consequence for real people.
  First and foremost, it reduces each State's power to protect its own 
citizens and enforce its own laws. Moving these cases to Federal court 
will often end them for all practical purposes. Federal courts may 
decide they do not meet the Federal rules for class certification. Even 
if the cases are not dismissed, plaintiffs forced into Federal court on 
State law claims have the decks stacked against them in Federal court 
because Federal courts take the narrowest possible view in interpreting 
State laws. The First and Seventh Circuits ruled in interpreting State 
laws Federal courts must take the view that narrows liability. State 
judges should be the ones who interpret State laws, not Federal ``big 
brother.''
  Often State laws have greater protections than Federal laws. That is 
the genius of our Federal system. Many States have stronger minimum 
wage laws and greater overtime protections than Federal law. Fourteen 
States and the District of Columbia have a higher minimum wage than the 
Federal standard. Twenty states have overtime laws that give workers 
greater protection than the Federal Fair Labor Standards Act. Over 20 
States have child labor laws that are more protective than Federal 
child labor laws.
  At a time when the administration is bent on undermining overtime at 
the Federal level, State law protections are more important than ever.
  States are also pioneers in protecting civil rights. Many States, 
such as California, Minnesota, New Jersey, New York, Rhode Island, 
Washington, and West Virginia, have greater protections for persons 
with disabilities than the Federal Americans With Disabilities Act. 
States are also in the forefront of protecting against discrimination 
based on family status or citizenship.
  A majority of States prohibits genetic discrimination in the 
workplace, a new and troubling form of discrimination where the Federal 
Government has been too slow to respond. Our proposal, to prohibit 
genetic discrimination under Federal law, passed 95-0 in the Senate, 
but it stalled in the House. When States act ahead of the Federal 
Government to provide greater rights for their citizens, State courts 
should be allowed to interpret their own laws. State courts, not 
Federal courts, have the expertise in exerting the will of the State 
legislature and they should have the right to do so.
  We all know what is going on. We should call this bill the ``Class 
Action Hypocrisy Act of 2005.'' Our colleagues love to proclaim States 
rights when Congress tries to expand the rights of law in all 50 
States, but they do not hesitate to override States rights to help 
their business friends. This bill is a windfall for guilty corporate 
offenders. It even allows repeat offenders to drag State cases into 
Federal court and allows them to spend months litigating whether the 
case belongs there. If the Federal court decides that the case does not 
fit the narrow rules set by the bill and should be sent back to State 
court, that will cause another delay because the employer can appeal 
the decision. Delay is a serious problem today in many Federal trial 
courts across the country.
  Paul Jones, an employee of Goodyear Tire Company in Ohio, found that 
out the hard way. He and other workers in their fifties filed an age 
discrimination case in the State court in Akron. All they wanted was to 
be judged by their ability, not their age. His attorney said, We file 
our class action lawsuits in the Ohio State court system because it is 
our experience these cases move much more rapidly in the State court 
than they would if filed in the Federal court system. The difference in 
the amount of time it takes to adjudicate a State court age 
discrimination case compared to a Federal court case may be as much as 
2 years. No wonder the corporate defendants are salivating over this 
opportunity to escape the liability for their wrongs.
  Paul Jones had a State law claim in State court, but his employer 
tried to have it dismissed based on Federal court rulings that certain 
types of arguments in age discriminations were invalid. The State court 
rejected that argument. It held that Mr. Jones could proceed with his 
claim based on the disparate impact analysis, something Ohio's Federal 
courts did not allow. But a Federal court would have been much more 
likely to go along with the idea because Federal courts read the State 
law narrowly.
  The delay from moving State cases to Federal court would be 
particularly harmful for low-wage workers who have no resources to fall 
back on when litigation expenses start to mount.
  A letter by David Luna, Flora Gonzales, and dozens of coworkers who 
were housekeepers, cooks, and waiters at two luxury hotels in Los 
Angeles, makes the point. Their heavy workloads forced them to work 
through their meals and breaks.
  They write:

       [A]s cooks we . . . struggle to meet the hotel's 30 minute 
     room service guarantee, yet we work through our own 30 minute 
     meal breaks on an almost daily basis.

  These workers are working to recover wages they own, but the 
corporate defendants have been trying to slow down the case by removing 
it to Federal court. The harm of such delays is very real to these 
workers, as they so poignantly described:

       For some, delays in getting your day in court may be only 
     an inconvenience. But we are modestly paid workers with 
     physically demanding jobs. For us, delays mean that we must 
     continue to work without breaks, our work days are harder 
     than they should be, and we must wait longer to be paid the 
     extra wages we have earned.

  If this bill passes, big corporations will have free rein to use 
procedural maneuvers to delay these cases and deny these workers their 
day in court. Why should we make it harder for those workers to get 
their claims decided?
  Abuses by large companies are widespread. Right now, class action 
cases are proceeding in State courts in Massachusetts, Minnesota, and 
California for hundreds of thousands of low-wage workers who were 
required by Wal-Mart to work extra hours ``off the clock'' without 
being paid for their extra time. It is wrong for Congress to side with 
the big guy.
  These men and women deserve to recover their lost wages to pay their 
rent, pay their medical bills, and put food on the table. The longer 
they wait for justice, the heavier the burden on these workers and 
their families. And the Senate is about to tell them to take a hike? It 
is outrageous.
  Supporters of the bill talk a lot about fairness. We hear that word 
again and again. It has even been put into the title of the class 
action bill. Labeling it ``fair'' does not make it fair.
  Fair does not mean punishing those who are mistreated on the job. 
Fairness does not mean making it harder for honest working men and 
women to obtain justice when they have been cheated out of their wages. 
It does not mean denying victims of discrimination their day in court 
under the laws of their State.
  It is wrong for Congress to side with corporate abusers and tell the 
victims of discrimination and unfair practices they cannot count on 
their own State courts to give them the justice they deserve. But that 
is what this bill is all about. At the very least, we should exclude 
civil rights and labor cases from its harsh provisions. I urge my 
colleagues on both sides of the aisle to support this amendment to 
protect

[[Page 1648]]

these basic civil rights of hard-working Americans in communities 
across the country.
  Mr. President, I received many letters from working Americans and 
victims of discrimination who support this amendment. I ask unanimous 
consent to have some of these letters printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

     Hon. Dianne Feinstein,
     U.S. Senate, Washington, DC
     Hon. Edward M. Kennedy,
     U.S. Senate, Washington, DC
       Dear Senators: We are writing to share our concerns about 
     the Class Action Fairness Act, which would force workers with 
     claims under state wage and hour laws to bring their suits in 
     federal courts. Based on our own experience in trying to 
     enforce state law labor protections in a class action 
     lawsuit, we urge you to work to exclude wage and hour class 
     action cases from this bill.
       We work at the Century Plaza and the St. Regis Hotels, two 
     luxury hotels in Los Angeles, California. We are 
     housekeepers, cooks, room service waiters, bartenders, 
     servers, mini bar restockers, valets, or work at other hourly 
     jobs. We are employed by Starwood Hotels & Resorts Worldwide, 
     Inc., which manages and operates these hotels.
       Under California law, employees must be allowed two paid 
     ten minute rest breaks and one half-hour unpaid meal break 
     every shift. If employees cannot take their break, they are 
     supposed to be paid an extra hour's wages.
       At the Century Plaza and the St. Regis, workers are 
     routinely unable to take meal and rest breaks either because 
     no one is scheduled to relieve us or because our workload is 
     so heavy that we cannot take the time off. We believe that 
     Starwood has sought to boost profits by increasing our 
     workloads and by reducing staff, which means we cannot stop 
     working long enough to take our breaks.
       For example, cooks in the Century Plaza room service 
     department struggle to meet the hotel's 30 minute room 
     service guarantee, yet we work through our own 30 minute meal 
     breaks on an almost daily basis. Housekeepers at both hotels 
     face quotas of up to 15 luxury rooms per day. Each room must 
     be spotlessly cleaned and restocked, with towels and linens 
     changed, carpeting vacuumed, and bathrooms left sparkling. We 
     spend our entire shifts rushing to meet the hotel's high 
     standards and often cannot rest until the end of our shifts. 
     A Los Angeles Times article concerning the inability of 
     housekeepers to take their breaks is attached for your 
     reference.
       Last fall, we filed a class action in California superior 
     court seeking to enforce the state's laws regarding meal and 
     rest breaks. By now, we expected to have completed initial 
     hearings and be well on our way to preparing for our trial. 
     But because our employer has moved our case to federal court 
     and is trying to have it dismissed, we have been forced to 
     endure delays.
       For some, delays in getting your day in court may only be 
     an inconvenience. But we are modestly paid workers with 
     physically demanding jobs. For us, delays mean that we must 
     continue to work without breaks, our work days are harder 
     than they should be, and we must wait longer to be paid the 
     extra wages we have earned. As our situation shows, delays 
     are a significant burden to those seeking basic rights and a 
     fair day's wage for a fair day of work. We urge you to work 
     to keep state wage and hour class action cases in state 
     court, where they belong.
           Sincerely,
     (Signed by 85 employees)
                                  ____



                                            Mary F. Singleton,

                            Truchas, New Mexico, February 2, 2005.
     Attn: Judiciary Committee

     Re Federal Class Action Legislation

     Hon. Edward M. Kennedy,
     U.S. Senate, Russell Senate Office Building, Washington, DC
       Dear Senator Kennedy: I am writing because I understand 
     that Congress is considering legislation which might place 
     certain limitations on class action lawsuits and require that 
     many class actions be filed in federal court. As a woman who 
     was the lead plaintiff and class representative in a gender 
     discrimination lawsuit against a major employer in state 
     court, I am concerned that such legislation will limit the 
     ability of victims of discrimination and civil rights 
     violations to adequately redress their grievances. I urge you 
     to do what you can to preserve the rights of state citizens 
     to pursue class action cases in their own state.
       As a long term career employee of a large scientific 
     research laboratory in California, I tried for many years to 
     convince management to evaluate its compensation and 
     promotional practices and take steps to correct long-standing 
     and widespread disparities in salaries and promotions between 
     men and women at the institution. When these efforts 
     ultimately proved to be unsuccessful, five colleagues and I 
     reluctantly decided that the only way that the civil rights 
     of women at the organization would ever be addressed was 
     through litigation. We retained counsel and filed a class 
     action in state court, alleging violations of anti-
     discrimination law on behalf of ourselves and approximately 
     3,000 female co-workers.
       My understanding from our attorneys was that we could have 
     filed our case in federal or state court, since both have 
     laws against employment discrimination. After considering the 
     options, we decided to file in state court because we felt 
     that it would provide a better opportunity to fairly and 
     fully present our case. Among other things, because of the 
     size and nature of the organization, we knew our employer 
     would try to make the case very complicated, and that a 
     considerable amount of ``discovery'' would be necessary, 
     including a number of depositions. Our understanding was that 
     the state court procedures would offer more flexibility in 
     this regard, allowing our attorneys a fair opportunity to 
     obtain the information necessary to present our case on 
     behalf of the class.
       In addition, we wanted to include claims based upon state 
     laws because, in some respects, they provide stronger 
     protection against discrimination and retaliation. Although 
     we knew that we could include state law claims in a federal 
     court lawsuit, our understanding is that federal courts may 
     not be as familiar with state laws and may not be willing to 
     interpret state law as opposed to rigidly apply past 
     interpretations.
           Yours very truly,
     Mary F. Singleton
                                  ____



                                  Law Office of John C. Davis,

                           Tallahassee, Florida, January 14, 2005.
     Re: Proposed Legislation Federalizing Class Actions

     Hon. Edward M. Kennedy,
     U.S. Senate, Russell Senate Office Building, Washington, DC.
       Dear Senator Kennedy: I am a lawyer working in the Florida 
     panhandle doing employment and civil rights cases. I am class 
     counsel along with Wes Pittman of Panama City in a certified 
     class action against the Florida Department of Corrections 
     brought by a class of hard working women who are health care 
     providers and non-security personnel in the corrections 
     systems. They daily serve the citizens of Florida by 
     providing health care and other essential services to 
     inmates. As a condition of their employment they have been 
     subjected to unrelenting sexual harassment by certain male 
     inmates. The Department has known of this for years and can 
     stop the harassment, but has ignored and belittled their 
     plight.
       The Circuit Court in Washington County, Florida, certified 
     this case as a class action and the Florida First District 
     Court of Appeal affirmed that certification because they saw 
     the injustice suffered daily by these courageous women. The 
     case is reported at Rudolph v. Department of Corrections, 
     2002 WL 32182165, aff'd, 855 So.2d 59 (F1a. 1st DCA 2003). 
     The lower court's opinion, which is published on Westlaw, 
     describes in detail the facts of the case.
       This case cried out for class action treatment because that 
     is the only way to effect the kinds of change that will get 
     the attention of the Department of Corrections. Individual 
     cases rarely if ever effect change beyond the circumstances 
     of the individual bringing the case. They are usually settled 
     confidentially.
       We filed this case is state court, however, because it 
     would have had little chance in the federal court. The 
     federal courts in Florida would not certify the case because 
     of what can only be viewed as a profound hostility to these 
     kinds of cases by the Eleventh Circuit Court of Appeals. 
     Thus, absent a state court class action, there is simply no 
     way that all of the individuals affected by the Department's 
     practices would ever get relief.
       Permitting employers to remove class actions like this to 
     the federal courts will effectively deny any opportunity for 
     the kind of systemic relief that results in real change. The 
     irony that the interests driving this ill-conceived 
     legislation are usually states' rights proponents shouldn't 
     be lost on anyone. State courts are as well suited, if not 
     better suited, to adjudicate these controversies.
       This legislation will not promote justice and will upset 
     the federal-state balance. If the legislation cannot be 
     defeated in its entirely at the very least an exception to it 
     should be made for civil rights and employment litigation. I 
     strongly urge you to do all you can to defeat the legislation 
     and continue to fight for the rights of working Americans.
       Please do not hesitate to call me if I can do anything to 
     help.
           Sincerely,
                                                    John C. Davis.

[[Page 1649]]

     
                                  ____
                                                State of New York,


                               Office of the Attorney General,

                                Albany, New York, February 7, 2005
     Hon. Bill Frist,
     U.S. Senate, Dirksen Senate Office Building, Washington, DC.
     Hon. Harry Reid, Minority Leader,
     U.S. Senate, Hart Senate Office Building, Washington, DC.
       Dear Mr. Majority Leader and Mr. Minority Leader: On behalf 
     of the Attorneys General of California, Illinois, Iowa, 
     Kentucky, Maine, Maryland, Massachusetts, Minnesota, New 
     Jersey, New Mexico, New York, Oklahoma, Oregon, Vermont, and 
     West Virginia, we are writing in opposition to S. 5, the so-
     called ``Class Action Fairness Act,'' which will be debated 
     today and is scheduled to be voted on this week. Despite 
     improvements over similar legislation considered in prior 
     years, we believe S. 5 still unduly limits the right of 
     individuals to seek redress for corporate wrongdoing in their 
     state courts. We therefore strongly recommend that this 
     legislation not be enacted in its present form.
       As you know, under S. 5, almost all class actions brought 
     by private individuals in state court based on state law 
     claims would be removed to federal court, and, as explained 
     below, many of these cases may not be able to continue as 
     class actions. We are concerned with such a limitation on the 
     availability of the class action device because, particularly 
     in these times of tightening state budgets, class actions 
     provide an important ``private attorney general'' supplement 
     to the efforts of state Attorneys General to prosecute 
     violations of state consumer protection, civil rights, labor, 
     public health and environmental laws.
       We recognize that some class action lawsuits in both state 
     and federal courts have resulted in only minimal benefits to 
     class members, despite the award of substantial attorneys' 
     fees. While we support targeted effort to prevent such abuses 
     and preserve the integrity of the class action mechanism, we 
     believe S. 5 goes too far. By fundamentally altering the 
     basic principles of federalism, S. 5, if enacted in its 
     present form, would result in far greater harm than good. It 
     therefore is not surprising that organizations such as AARP, 
     AFL-CIO, Consumer Federation of America, Consumers Union, 
     Leadership Conference on Civil Rights, NAACP and Public 
     Citizen all oppose this legislation in its present form.
     1. Class Actions Should Not Be ``Federalized''
       S. 5 would vastly expand federal diversity jurisdiction, 
     and thereby would result in most class actions being filed in 
     or removed to federal court. This transfer of jurisdiction in 
     cases raising questions of state law will inappropriately 
     usurp the primary role of state courts in developing their 
     own state tort and contract laws, and will impair their 
     ability to establish consistent interpretations of those 
     laws. There is no compelling need or empirical support for 
     such a sweeping change in our long-established system for 
     adjudicating state law issues. In fact, by transferring most 
     state court class actions to an already overburdened federal 
     court system, this bill will delay (if not deny) justice to 
     substantial numbers of injured citizens. Moreover, S. 5 is 
     fundamentally flawed because under this legislation, most 
     class actions brought against a defendant who is not a 
     ``citizen'' of the state will be removed to federal court, no 
     matter how substantial a presence the defendant has in the 
     state or how much harm the defendant has caused in the state.
     2. Clarification Is Needed That S. 5 Does Not Apply to State 
         Attorney General Actions
       State Attorneys General frequently investigate and bring 
     actions against defendants who have caused harm to our 
     citizens, usually pursuant to the Attorney General's parens 
     patriae authority under our respective state 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. We 
     are concerned that certain provisions of S. 5 might be 
     misinterpreted to impede the ability of the Attorneys General 
     to bring such actions, thereby interfering with one means of 
     protecting our citizens from unlawful activity and its 
     resulting harm. That Attorney General enforcement actions 
     should proceed unimpeded is important to all our 
     constituents, but most significantly to our senior citizens 
     living on fixed incomes and the working poor. S. 5 therefore 
     should be amended to clarify that it does not apply to 
     actions brought by any State Attorney General on behalf of 
     his or her respective state or its citizens. We understand 
     that Senator Pryor will be offering an amendment on this 
     issue, and we urge that it be adopted.
     3. Many Multi-State Class Actions Cannot Be Brought in 
         Federal Court
       Another significant problem with S. 5 is that many federal 
     courts have refused to certify multi-state class actions 
     because the court would be required to apply the laws of 
     different jurisdictions to different plaintiffs--even if the 
     laws of those jurisdictions are very similar. Thus, cases 
     commenced as state class actions and then removed to federal 
     court may not be able to be continued as class actions in 
     federal court.
       In theory, injured plaintiffs in each state could bring a 
     separate class action lawsuit in federal court, but that 
     defeats one of the main purposes of class actions, which is 
     to conserve judicial resources. Moreover, while the 
     population of some states may be large enough to warrant a 
     separate class action involving only residents of those 
     states, it is very unlikely that similar lawsuits will be 
     brought on behalf of the residents of many smaller states. 
     This problem should be addressed by allowing federal courts 
     to certify nationwide class actions to the full extent of 
     their constitutional power--either by applying one State's 
     law with sufficient ties to the underlying claims in the 
     case, or by ensuring that a Federal judge does not deny 
     certification on the sole ground that the laws of more than 
     one State would apply to the action. We understand that 
     Senator Jeff Bingaman will be proposing an amendment to 
     address this problem, and that amendment should be adopted.
     4. Civil Rights and Labor Cases Should Be Exempted
       Proponents of S. 5 point to allegedly ``collusive'' 
     consumer class action settlements in which plaintiffs' 
     attorneys received substantial fee awards, while the class 
     members merely received ``coupons'' towards the purchase of 
     other goods sold by defendants. Accordingly, this ``reform'' 
     should apply only to consumer class actions. Class action 
     treatment provides a particularly important mechanism for 
     adjudicating the claims of low-wage workers and victims of 
     discrimination, and there is no apparent need to place 
     limitations on these types of actions. Senator Kennedy 
     reportedly will offer an amendment on this issue, which also 
     should be adopted.
     5. The Notification Provisions Are Misguided
       S. 5 requires that Federal and State regulators, and in 
     many cases State Attorneys General, be notified of proposed 
     class action settlements, and be provided with copies of the 
     complaint, class notice, proposed settlement and other 
     materials. Apparently this provision is intended to protect 
     against ``collusive'' settlements between defendants and 
     plaintiffs' counsel, but those materials would be unlikely to 
     reveal evidence of collusion, and thus would provide little 
     or no basis for objecting to the settlement. Without clear 
     authority in the legislation to more closely examine 
     defendants on issues bearing on the fairness of the proposed 
     settlement (particularly out-of-State defendants over whom 
     subpoena authority may in some circumstances be limited), the 
     notification provision lacks meaning. Class members could be 
     misled into believing that their interests are being 
     protected by their government representatives, simply because 
     the notice was sent to the Attorney General of the United 
     States, State Attorneys General and other Federal and State 
     regulators.
       Equal access to the American system of justice is a 
     foundation of our democracy. S. 5 would effect a sweeping 
     reordering of our Nation's system of justice that will 
     disenfranchise individual citizens from obtaining redress for 
     harm, and thereby impede efforts against egregious corporate 
     wrongdoing. Although we fully support the goal of preventing 
     abusive class action settlements, and would be willing to 
     provide assistance in your effort to implement necessary 
     reforms, we are likewise committed to maintaining our Federal 
     system of justice and safeguarding the interests of the 
     public. For these reasons, we oppose S. 5 in its present 
     form.
           Sincerely,
       Eliot Spitzer, Attorney General of the State of New York.
       Bill Lockyer, Attorney General of the State of California.
       Tom Miller, Attorney General of the State of Iowa.
       G. Steven Rowe, Attorney General of the State of Maine.
       Tom Reilly, Attorney General of the State of Massachusetts.
       Patricia A. Madrid, Attorney General of the State of New 
     Mexico.
       W.A. Drew Edmondson, Attorney General of the State of 
     Oklahoma.
       Lisa Madigan, Attorney General of the State of Illinois.
       Gregory D. Stumbo, Attorney General of the State of 
     Kentucky.
       J. Joseph Curran, Jr., Attorney General of the State of 
     Maryland.
       Mike Hatch, Attorney General of the State of Minnesota.
       Hardy Myers, Attorney General of the State of Oregon.
       William H. Sorrell, Attorney General of the State of 
     Vermont.
       Darrell McGraw, Attorney General of the State of West 
     Virginia.

  Mr. KENNEDY. Mr. President, I would like to anticipate some of the 
arguments that may be made by those who question whether cases based on 
truly local events would really be affected by the class action bill. 
Some have claimed that the bill will bring only national multi-State 
cases into Federal court, where they belong. They say it doesn't affect 
purely State cases, because it keeps class actions in State court if 
plaintiffs live in the same State as the defendant.

[[Page 1650]]

  But in reality, the bill will move many State law cases to Federal 
court even if the people bringing the suit all live in the same State, 
and were hurt by a company doing business in that State. This is 
because the bill lets a case stay in State court only if the defendant 
is a ``citizen'' of the same State as the plaintiffs who brought the 
case, and companies are citizens of the State where they were 
incorporated, regardless of where they do business. As a result, 
plaintiffs who live in one State who file a case against a company with 
many offices in that State, would not be able to keep their case in 
State court if the company is incorporated somewhere else.
  To show the scale of this problem, let's look at the figures. More 
than 308,000 companies are incorporated in Delaware, including 60 
percent of Fortune 500 firms and 50 percent of the corporations listed 
on the New York Stock Exchange. Most of these companies also do 
business in many other States. But plaintiffs in those other States 
will not be able to file State cases against these companies without 
being dragged into Federal court. That violates the principle of simple 
fairness.
  The bill lets corporations stay in State court when it's to their 
advantage. Businesses will still have their day in State court. But 
corporate employees whose civil or labor rights have been violated will 
be denied the same access.
  Some have suggested that my amendment is not necessary because 
Federal courts have traditionally been protectors of civil rights.
  It is true that our Federal courts perform the important job of 
protecting rights under Federal law and the U.S. Constitution. And my 
amendment will still allow those claims to be heard in Federal court. 
But in cases involving State civil rights or wage and hour laws, State 
courts should make these decisions. When States step ahead of the 
Federal government to give their citizens greater protection than 
Federal law--as several States have done in the area of genetic 
discrimination of discrimination based on marital status--State, not 
Federal courts, should interpret those laws. That is what my amendment 
would ensure.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I listened carefully to my friend and 
colleague from Massachusetts, and I do think he has a few things wrong. 
For instance, if the vast majority of the people bringing the suit are 
Massachusetts citizens, under this bill they have a right to bring it 
in State court, if they want to, although most civil rights cases are 
brought in Federal court because these are 14th amendment cases.
  I remember years ago arguing on this floor on these issues, and, of 
course, the distinguished Senator from Massachusetts and others wanted 
these cases brought to the Federal courts because they were so afraid 
some of the State courts would not do justice in civil rights cases. 
They were right. They wanted them in Federal court. I do not blame 
them.
  The Federal courts are made up of judges who are nominated and 
confirmed for life. Because of that, they should not have any political 
forces that would take them away from doing justice. In all honesty, 
nothing in this bill would stop Massachusetts classes made up wholly of 
Massachusetts citizens or even a majority of Massachusetts citizens 
from bringing these cases in State court, if they want.
  One reason the Federal courts are so clogged is because of a wide 
variety of cases that are now being brought in Federal court, partly 
caused by people on both sides of the aisle. But there is no question 
Federal courts are not only good courts, by and large they are 
basically fair courts. And by and large they are basically very 
sophisticated courts. And by and large they apply, in these particular 
cases, the laws of the States in which the suits are brought--I might 
add, unless there are reasons from the Federal standpoint in applying 
otherwise.
  Now, there is nothing in this bill that stops legitimate cases from 
proceeding. There is nothing in this bill that takes consumer rights 
away. There is nothing in this bill that will not give consumers or 
those who are injured a day in court. There is a lot in this bill to 
prevent some of the phony approaches that are taken by some in the 
legal profession who should be ashamed of themselves. This bill 
corrects those kinds of injustices, those kinds of excesses, those 
kinds of problems.
  I urge my colleagues to vote against this carve-out amendment offered 
by my distinguished friend from Massachusetts, Senator Kennedy.
  This amendment excludes from the bill's existing jurisdictional 
provisions those class actions involving civil rights violations and 
class actions involving wage-hour disputes. But before I address the 
imprudence of carving out these types of cases, I would like to make it 
perfectly clear, as I think I have up to now, that S. 5 in no way 
impairs the substantive rights of litigants to bring, among other 
claims, civil rights and wage-hour claims. Some opponents of this bill 
seem ready to conveniently gloss over this critical fact in their 
efforts to pass bad information about what this bill does.
  S. 5 is procedural in nature and simply moves larger interstate class 
actions to the appropriate forum where they belong in the first place: 
in Federal court. These class actions often involve the most money, 
parties from different States, and issues that transcend State lines. 
Yet by the same token, the bill preserves States rights to adjudicate 
truly local disputes on behalf of their citizens.
  Now, those are facts. This bill does not take any rights away from 
anybody. But what we are trying to do is stop the forum shopping; in 
other words, finding jurisdictions that will render outrageous verdicts 
that basically benefit the attorneys, the lawyers, not the people for 
whom they are suing.
  Well, let me say, first, an affirmative exclusion of civil rights 
cases from Federal jurisdiction runs counter to the bedrock principles 
of encouraging our Federal courts to adjudicate civil rights disputes. 
I remember, in days gone by, there was a demand that these cases be in 
Federal court because they are courts of primary jurisdiction under the 
Constitution and because, as a general rule, more justice was done.
  I think this principle speaks for itself when you look at the 
plethora of Federal civil rights statutes extending protections against 
employment, housing, race, and gender discrimination. That is just to 
name a few. Indeed, the Federal courts' involvement with civil rights 
is so pervasive that Federal courts routinely hear claims brought under 
State civil rights laws. This is not unusual.
  The Federal judiciary's extensive involvement in civil rights matters 
has also led to favorable results for civil rights litigants. Honest 
litigants are not going to lose in Federal court. It is just that 
simple. And they are probably more greatly protected because there is 
naturally less politics in Federal court.
  Federal courts have a long record of certifying discrimination class 
actions and approving generous settlements in most of these cases.
  Take, for instance, the recent Home Depot gender discrimination 
settlement which paid class members somewhere in the neighborhood of 
$65 million or the $192 million Coca-Cola race discrimination 
settlement in which each class member was guaranteed a recovery of at 
least $38,000 in cold hard cash. And, of course, there is the recent 
Federal court certification of the largest civil rights class action in 
U.S. history involving 1.6 million former and current female employees 
of Wal-Mart.
  These are successful, proven results that belie any claim that 
Federal courts are somehow hostile to civil rights actions. In fact, it 
is laughable to now say that we have to have these in State courts when 
all these years we have been working hard to get these cases to Federal 
court so they would be adjudicated more fairly.
  Some of those who support a civil rights carve-out also contend the 
Federal courts are overworked and incapable of handling such matters, 
that the State courts are better equipped. Give me a break. We have 
heard this concern raised repeatedly from opponents

[[Page 1651]]

of this bill who apparently believe that if they say it enough times, 
the proposition may somehow turn out to be true and, at the very least, 
to minimize the significant deficiencies in our State courts. These 
critics claim that it takes 5 years to get a class action to trial in 
Federal courts. But do they have the raw data to back these claims? Of 
course, they don't.
  In reality, the median time for final disposition of a civil claim 
filed in Federal court is 9.3 months, and the median time to trial in a 
civil matter in Federal court is 22.5 months. Moreover, what some of 
the critics hide is the fact that the State courts have experienced a 
much more rapid growth in civil filings than have the Federal courts. 
Civil filings in State trial courts of general jurisdiction have 
increased 21 percent since 1984, and there are delays in many State 
courts on civil actions that are longer than they are in Federal court.
  As for filings in some of the more notable magnet State court 
jurisdictions, let's look at some of the figures. Just look at this 
chart. The number of class actions filed in State courts have 
skyrocketed in State courts under current law. Take Palm Beach County, 
FL. It has gone up 35 percent between 1998 and 2000. In Jefferson 
County, TX, a notorious jackpot jurisdiction, it has gone up 82 
percent. In Madison County, IL, another notorious jackpot 
jurisdiction--in other words, a jurisdiction where defendants don't 
have a chance because of politics and moneys donated to judges from the 
trial lawyers in that particular jurisdiction, primarily--over 5,000 
percent between 1998 and 2003. Why? Because it is a county that is out 
of whack. If the plaintiffs' attorneys can get cases in Madison County, 
they are going to get big verdicts, outrageous verdicts for people who 
aren't even sick, people who don't even have problems in some cases.
  The overall increase in State courts is 1,315 percent. So don't use 
that argument. If you add the fact that State courts are almost always 
courts of general jurisdiction where they hear matters ranging from 
traffic violations to domestic disputes, I think you get a pretty clear 
picture of what our State courts are faced with in terms of workload.
  As a final point, I would like to note that the Judiciary Committee 
soundly defeated this very amendment of the distinguished Senator from 
Massachusetts during markup last Congress. We reported the bill in a 
bipartisan 13-to-5 vote in this Congress. The committee voted against 
the civil rights carve-out on a solid bipartisan basis and understood 
the inherent problems with this amendment. This amendment lost footing 
in committee and should not gain traction here.
  The second carve-out excludes wage and hour or timesharing claims 
from the bill. These are actions brought by employees against their 
employers for violating wage and hour restrictions imposed under 
applicable labor laws. While these actions are certainly important for 
working Americans, there is no principled basis to exclude them from 
this bill, not one principled reason.
  Again, let me be clear about S. 5. This bill in no way affects the 
substantive rights of these workers to seek redress for these wage and 
hour claims. In other words, employees who bring wage and hour claims 
against their employers will still have the exact same rights they do 
now if this bill is enacted. The only way the bill could possibly 
affect these cases is by moving them to Federal court. But what the 
proponents of this amendment overlook is that if a wage and hour case 
meets the interstate criteria of the bill, then there is absolutely no 
reason to exclude them from Federal court. It makes no difference if 
the case involves a defective product, a false advertising claim, or a 
breach of warranty. If the class action lawsuit involves parties from 
different States and involves a large amount in controversy, regardless 
of whether the claims are predicated on State law, then the case should 
be heard in Federal court. This is why we have diversity jurisdiction 
in the first place, and it is certainly what the Founding Fathers had 
in mind when they drafted our Constitution.
  I urge my colleagues to vote against this amendment. It establishes 
bad policy and is nothing more than yet another attempt to weaken the 
bill. This amendment, including all other carve-outs, for that matter, 
also flies in the face of the bipartisan compromise that is now 
embodied in S. 5. I intend to honor this compromise and encourage my 
colleagues to do the same.
  Let me just say, it is unseemly to claim that the Federal courts are 
not as good as the State courts. And it is even worse to claim that the 
Federal courts should not have jurisdiction in these matters. The fact 
is, we have provided through the Feinstein amendment language that 
permits certain cases to be in State courts. But when they get to the 
size of the 100 or more in a class and over $5 million, these cases 
have to be brought in Federal court. And the reason is because of these 
jackpot jurisdictions that I have been pointing out that really do not 
do justice and are not fair.
  Earlier, the distinguished Senator from Illinois was talking about 
how few cases are filed in Madison County, IL. What he doesn't tell you 
is that the minute the lawyers start talking about a class action and 
they send a demand letter, the companies know they are dead if the case 
is brought in Madison County, IL. No matter how right they may be, they 
are dead because the judges in that particular jurisdiction are in the 
pockets of the local lawyers with whom the out-of-State lawyers who 
have these class actions align themselves in order to go in there and 
get these outrageous verdicts that would not be obtained in any fair 
court of law.
  So what do the companies do? They have no choice. They will settle 
for what they estimate the defense costs to be because why should they 
take a chance on jackpot justice? And it then becomes, in the eyes of 
many, a broken system of extortion, extortion by attorneys, extortion 
by the judges over companies that probably have little or nothing to do 
with Madison County, IL, but because of the current system, wind up 
there, either getting staggered with unjust judgments or doing what 
prudence tells them they have to do, and that is paying whatever they 
estimate the defense costs to be to get rid of the lawyers. It comes as 
close to legal extortion as anything I have seen.
  That is what we are trying to solve here. It doesn't take away 
anybody's rights. It just means they will have to prove their case in 
Federal courts. And Federal courts are very competent courts. Judges 
are appointed for life. They are less political, although every once in 
a while you see some politicization of Federal court, but nothing like 
these jackpot justice jurisdictions that are constantly used by some of 
these unscrupulous lawyers to get outrageous verdicts so they can 
collect great big fees.
  Yesterday, we talked about coupon settlements--the lawyers get huge 
fees and the person winds up with a $5 coupon that is meaningless. That 
doesn't mean that some of these cases are not valid, but they could 
just as easily be won in Federal court, if they are valid, as they can 
in State courts, but not as easily as in these jackpot justice 
jurisdictions where justice is denied. We can throw around big 
corporations all we want, but businesses in this country are not all 
big and, even if they are, they deserve to be treated justly.
  That is what our court system should be doing. It should not 
discriminate against them because they are large corporations. If they 
are fair and right, they should be treated just as fairly and rightly 
as anybody else.
  We have come close on this bill now a number of times, very close. In 
November of 2003, we struck a deal that gave the Class Action Fairness 
Act the requisite number of votes to pass even if the bill was 
filibustered. We got the votes, guaranteed up to 62. It was a 
bipartisan compromise that allowed us to reach this commonsense 
agreement. Believe me, this compromise does not satisfy everybody or, 
for that matter, doesn't satisfy anybody.
  The fact is, it is what it is--a bipartisan compromise. If I would be 
permitted to write the bill the way I think

[[Page 1652]]

it should be done, I think it would be perfect, and others in this body 
would feel the same way. But we have worked out this bipartisan 
compromise and we need to stick with it.
  Senator Cornyn explained this morning why he believes the bill should 
go further in correcting abuses in the current system, and he explained 
how he would fix some of these problems legally. He is not wrong, by 
the way. He also said he would not advance these amendments at this 
time because he understands the complex dynamics in arriving at the 
compromise bill. We have been at this for the last 6 years. That is how 
long we have tried to get this bill through. This bill is not perfect, 
by any stretch of the imagination. No bill is around here, because we 
have to work with 535 Members of Congress. Depending on your 
perspective, this bill either gave away too much or not enough.
  The fact is, this bill is just about right and it is time to get it 
done. We know we should get it done. A supermajority of those in this 
body should get it done. But nearly a year and a half after we struck a 
deal to get it done, a series of amendments are still being offered 
that would scuttle this bill and, unfortunately, the amendment by the 
Senator from Massachusetts happens to be one of them. Let us get down 
to the brass tacks. It is rug-cutting time. If any amendments upset the 
essential compromises that have been negotiated over a long period of 
time, this bill will not become law. The purpose of these amendments is 
not to improve the bill but to destroy it. The House of Representatives 
will not agree--they have made it super clear--to a bill that includes 
amendments that gut this bill's modest and reasonable reforms. I have 
to say I don't blame them. They have seen this process for the last 6 
years. The American people have waited for this reform for far too 
long. I should remind my colleagues that if we fail our constituents at 
this time, the memory of the American people is a long one.
  I will speak today about a number of amendments that will likely be 
offered. In my opinion, and in the opinion of those most familiar with 
the bill, these amendments are poison pills, and everybody knows it. 
These amendments were not part of our discussions with Senators 
Schumer, Dodd, and Landrieu that resulted in the current bipartisan 
legislation. I don't mean to limit it to them. There were a whole raft 
of Senators on both sides of the aisle.
  I will repeat that for emphasis. We had a deal. None of these 
amendments were part of this deal. What happened to the days when a 
deal was a deal? These amendments are quite literally being offered at 
the eleventh hour and I think for a purpose other than to improve the 
bill.
  Let's be honest about it. Consumers, plaintiffs, and others who have 
rights are not going to be foreclosed from vindicating their right in a 
court of law. It is just that they are not going to be able to take 
these cases--and certainly outrageous cases--to these jackpot justice 
jurisdictions where justice is denied any longer--except under some 
loophole exceptions in this bill. But the vast majority of the problems 
should be solved by this bill. There are a lot of people out there who 
have been very badly mistreated because of the current broken tort 
process, who are praying we will be able to get this bill through.
  Let me make this clear. If we add one of these amendments, I think 
the bill is dead again, even though it has had 62 prime sponsors--
people who will automatically vote for this bill and who understand the 
game here is to get a bill out that will do some justice in this 
country and stop some of the jackpot justice that has been going on.
  I don't mean to denigrate anybody's amendment, but let's be fair and 
make it clear that this bill does not take away rights. This bill 
enhances rights for both sides, and not just for plaintiffs but also 
for defendants. So fairness in the tort system will be brought back to 
the forefront. In the case of civil rights and wage-and-hour disputes, 
look, for years we have argued they should be in Federal court. Now, 
all of a sudden, they don't want them in Federal court. All you can do 
is surmise: why is that? I think everybody knows why.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Alabama is recognized.
  Mr. SESSIONS. Mr. President, it is always a pleasure for me to hear 
Senator Hatch discuss legal issues. He has had great experience with 
them over the years, in the long time he has served on the Judiciary 
Committee and as a lawyer in his own right. I think he summed up the 
situation we are in and I thank him for doing so.
  Actually, I believe that those who are seeking class action reform 
have been very generous in reaching out to people who had some doubts 
to try to gain their votes in support, to make sure no one is hurt in 
any unfair way through the passing of this legislation. We are now at a 
point where the time has come for us to pass class action reform.
  I do not believe, and have never believed, we should be in the 
business of eliminating class actions. They are not a bad thing in 
themselves. Class actions, in fact, serve an important purpose. In many 
instances, they are the only viable form of relief, where an individual 
has claims that are so small it would not be economically feasible for 
an attorney to take an individual's case; but maybe thousands of people 
have been unfairly treated in the same manner and an attorney can bring 
one case and everybody can be compensated and the system can work very 
effectively. That is the whole theory behind class actions. It has 
always been a good process under certain circumstances, but we have 
always known it could also be abused. For the most part, I think 
Federal courts have done a good job handling those cases. Many State 
courts have done a good job of handling those cases, but is now a 
pattern by which some attorneys have learned to pick and choose States, 
even counties, where there may be only one judge, and they know how 
that judge thinks about these cases, and they file the class action 
lawsuit there. The fact is that most nationwide class actions can be 
filed anyplace in America--it makes sense that lawyers, therefore, 
chose to find the most favorable forum they can find in the entire 
United States. That is selective choice of forum. There are other 
problems that arise with class actions, problems which have been around 
for a long time. We have come to understand them and we need to do 
something about it. We can do something about it. It is the right thing 
to do. It will improve our system of justice.
  The Class Action Fairness Act does not close doors to class action 
plaintiffs; rather it opens doors to fairness in this entire process. I 
agree with those who have said that the bill does not go far enough. I 
think there are going to be many opportunities for clever attorneys to 
draft complaints and conduct their litigation in a way that would avoid 
being covered by this act, when in fact they ought to be covered by 
this act. Senator Cornyn has made a number of those suggestions, and I 
have made some of those suggestions. But the perfect, as they say, can 
be the enemy of the good.
  An agreement has been reached that people feel comfortable with. I 
have been prepared not to offer a lot of amendments so we can get this 
bill to final passage and quick approval and end the years and years 
and years of debate on this matter that we know we ought to deal with.
  As you look about and review what you hear and see who is making 
comments on it, some of the things your read on the issue appeal to 
you. Let me tell you about a Washington Post editorial I read a few 
years ago that summed it up the class action issue quite well. 
Politically, the Washington Post is a Democratic paper, a liberal 
newspaper. But their editorial writers made some very important points 
that I agree with. They said this:

       Congress' first priority in the world of civil lawsuits 
     should be to change the rules of class actions.

  In other words, of all of the problems we have in litigation, the one 
this Congress ought to deal with first is class action lawsuits.


[[Page 1653]]

       When working properly, class actions are an important 
     component of the American legal system, one that allows 
     efficient court consideration of numerous identical claims 
     against the same defendant.
       In practice, no component of the legal system is more prone 
     to abuse.

  Their analysis is that there is no component of the American legal 
system more prone to abuse than class actions.

       For unlike normal lawyers who are retained by people who 
     actually feel wronged, class counsel, having alleged that a 
     product deficiency caused some small monetary damage to some 
     discernible group of people, largely appoint themselves.

  In other words, a lot of people have difficulties, and the class 
action lawyer may discover what he thinks is a wrong. Then he appoints 
himself to be the righter of that wrong. Then he goes out and 
identifies a class. He does not talk to the individual clients, as 
lawyers do in a normal situation; he appoints himself to take on these 
cases.

       The clients may not even be dissatisfied with the goods and 
     services they bought.

  They may not be unhappy at all.

       But unless they opt out of a class whose existence they may 
     be unaware, they become plaintiffs anyway.

  I heard a Senator recently say he was involved in a class action, and 
the person who was being sued was a friend, and he did not even know he 
was involved.
  Continuing to quote:

       Class actions present almost infinite venue shopping.

  Infinite venue shopping, that is what I was saying. We have had 
lawsuits filed in Alabama. We have seen identical lawsuits filed in 
Mississippi. We have seen them filed in Madison County, IL. Why? 
Because a plaintiff in a large action that involves people throughout 
the United States under current law can choose their place to file the 
lawsuit. When they get an appeal, it goes to the State of Illinois, 
Mississippi, or Alabama's appellate courts, their supreme court, for 
final review. That is a legitimate concern and a matter that impacts 
people throughout the United States.

       National class actions can be filed just about anywhere, 
     and they are disproportionately brought in a handful of State 
     courts whose judges get elected with lawyers' money.

  This is the Washington Post I am quoting. It is the same thing 
Senator Hatch indicated earlier. It is the reality, unfortunately.

       These judges effectively become regulators of the products 
     and services produced elsewhere--

  Not even in their county or State--

     and sold throughout the Nation. And when cases are settled, 
     the clients get token payments while the lawyers get enormous 
     fees.

  I am continuing to quote from the Washington Post:

     This is not justice. It is an extortion racket that only 
     Congress can fix.

  That is, unfortunately, the sad truth too often.
  Some years later now, Senator Frist has made this Class Action 
Fairness Act his first civil lawsuit priority. I know there are some 
who see this bill as a moving train and they would like to add this or 
that provision as a caboose to that train, but I hope we will exercise 
restraint and pass a clean bill without amendments.
  I know some have legitimate concerns and others want to put on poison 
pills. They want to adopt amendments that will cause so much 
controversy that it can end up killing the entire bill. In my view, 
anything that does not make this bill stronger is a poison pill. We do 
not need to, and must not, weaken this bill in any way. I have seen 
very few amendments that are being offered that will make it stronger.
  I believe in America's legal system. The Senator from Florida, the 
Presiding Officer, believes in our legal system. He believes in the 
right of people to sue in court and have redress for all and has given 
a lot of his professional life to that cause. But for the most part, we 
do have outstanding judges on Federal and State benches. They manage 
their dockets well and rule justly. There are some problems, however, 
that Congress must resolve. The class action problem is certainly one 
of them.
  To the extent possible, I believe that the courts have reached a 
limit on what they can do through judicial interpretations to resolve 
the issue. There was a time when ``drive-by'' class action 
certifications were par for the course, and class actions were 
certified without notice being given to the defendant even. Those 
times, have been eliminated for the most part by judicial ruling, in 
part, I believe, because of the Supreme Court decision in the Amchem 
case where the Court made clear that even in conditional 
certifications, rigorous analysis is required to certify a class and 
must be conducted.
  This ruling had far-reaching implications and limited the ability of 
plaintiff lawyers and the defendant companies to engage in collusion to 
the detriment of whom? The class. Don't you think in these odd cases 
where the lawyer does not even know the members of the class he 
represents that ethical concerns are implicated? The situation simply 
is this: You sue a big company, you allege lots of problems, you talk 
with their lawyers, and a wink and a nod occurs and you say: We will 
give coupons to the people I am alleging to be victims, but you have to 
compensate me as a lawyer for all this time I have spent in it; how 
about $10 million?
  The defendants go back and say: If we pay the lawyer $10 million and 
we pay the coupons to these people--most of them will never use them--
this will get us out of the lawsuit. Yes, it is too much money to pay 
the lawyer, but we will get it over with. Let's do it.
  Who is looking out for the class members, the people in whose name 
the lawsuit was brought? The answer is no one.
  These problems, unfortunately, are not currently subject to being 
settled by the courts or handled by the courts. I believe this 
legislation will take a strong step toward fixing that kind of problem.
  There are some who will argue that reform is not needed and this 
legislation is even unfair. Let me ask this: Is it fair to be a member 
of a lawsuit of which you are unaware and do not even know you are a 
party to it? Is it fair to receive a coupon settlement that basically 
requires you to do business with a company that presumably cheated you 
in the first place? Is it fair to lose money even though you prevail in 
the underlying lawsuit? And there have been instances--cases such as 
the infamous Bank of Boston case--where plaintiffs, not even knowing 
they are a member of the lawsuit, have had their bank accounts debited 
to pay for their portion of the attorney's fees--sometimes their 
portion of the attorney's fees is much more than the small coupon or 
monetary amount they received as part of the settlement. That is simply 
not right.
  These questions of fairness represent the current status of many 
class action lawsuits. In my view, there is nothing fair about the 
answers we just mentioned. When we approved modifications to rule 23 
not too long ago, one of the primary goals was to ``assure adequate 
representation of class members who have not participated in shaping 
the settlement.'' After all, if the settlement is going to bind the 
class member, it would seem they should not only be adequately 
represented, but they would be aware of the terms of that settlement 
and the compromises that were involved in making the settlement. We can 
achieve fairness and several other logical goals such as that with this 
Class Action Fairness Act.
  That class actions are beneficial is not in doubt. They serve to the 
benefit of America by limiting the number of times you have to try the 
same issues in separate places, in differ courts with different judges.
  They serve the interests of consistency and finality by avoiding 
inconsistent outcomes in separate trials where the cases revolve around 
identical claims. They are to serve the interests of the class members, 
however, but that is, in fact, not the outcome of too many of these 
cases and therefore we need to reform this system.
  So what we would strive to do with this legislation is to make the 
plaintiffs the real beneficiaries of such a lawsuit. It will provide 
protections to class members, such as limiting the

[[Page 1654]]

ability to award coupon settlements and preventing class members from 
being harmed twice, once by the defendant company, and the second time 
by class action settlement.
  I believe we can make some great progress with this legislation if we 
keep it clean. I hope we can exercise restraint and that we can do just 
that.
  Some have said Federal Government has no business with these 
lawsuits. As a person who does believe that States have constitutional 
rights and they have presumptions that cause us in Congress to be 
reluctant to violate either explicit constitutional requirements or to 
violate maybe presumptions or indications or contemplations of the 
Constitution, I am extremely cautious about expanding federal 
jurisdiction in Constitutionally questionable ways. But I do not 
believe this bill expands federal jurisdiction in any way that is 
Constitutionally questionable. I would like to read what the 
Constitution says about diversity and where a case of this kind should 
be tried. Article III, section 2 of the Constitution, talks about the 
power of Federal courts and what their jurisdiction is. This is the 
power given to Federal courts by the U.S. Constitution at the beginning 
of our Republic. It states: ``The judicial Power shall extend to all 
Cases, in Law and Equity, arising under this Constitution''--disputes 
of the Constitution--``the Laws of the United States . . .''--involving 
laws that we passed explicitly in Congress to Controversies to which 
the United States shall be a party; to Controversies between two or 
more States; between a State and Citizens of another State; between 
Citizens of different States . . .''

  So our Founding Fathers thought seriously about this and stated in 
the Constitution that if there is a lawsuit filed between people from 
different States, there needs to be a neutral forum in which to try the 
case. If there is a person from Alabama and a person from Massachusetts 
suing one another, the person from Massachusetts might not feel 
comfortable being tried in Alabama, and the person from Alabama might 
not feel comfortable being tried in Massachusetts. That is what they 
put it in there for.
  The home State plaintiff would always want to choose a more favorable 
forum. Perhaps he would choose his own State, would he not? That is 
what our Founding Fathers were concerned about.
  In football, we call it ``home cooking.'' The Founders sought to 
prevent ``home cooking'' of lawsuits by putting Federal jurisdictional 
rules into the Constitution for these kinds of cases. Cases involving 
citizens of different States were intended from the beginning to be 
tried in Federal court where judges are not elected but serve lifetime 
appointments and are answerable to the U.S. Supreme Court, not to any 
one State court. That is the theory and it is important.
  There are counties in Alabama where I personally know all the judges. 
I go to church with some of them. So if I am going to sue somebody, I 
am likely to choose a place where I would have the man who is in my 
church supper club try my case. Well, maybe they will strike him for 
cause, but what about his brother, who could also be a judge? My friend 
who is a judge might say to his brother: Jeff is a good boy, make sure 
you give him a fair trial. Whether we like it or not, these kinds of 
things are reality, and that is what the Founders had in mind when they 
wrote the Constitution. That is why when there is a group of plaintiffs 
being represented by a lawyer that may not even know their names, this 
lawyer is going to look around and try to file the case where he thinks 
he can have the best chance of success.
  As a matter of fact, I do not even dispute him or her making that 
choice. That is what lawyers are paid to do, to find the best place to 
file the lawsuit.
  That is taught in law school. They ask, well, where do you want to 
file a lawsuit?
  Well, I think it would be better to file in Federal court.
  Then one is taught to study the case and justify filing it in Federal 
court. Or maybe a lawyer thinks it is better for his client to file it 
in State court. Lawyers are taught they should file the case where it 
is best for their client. I do not blame the lawyers. They are using 
the law as we have now configured it.
  I say it is our responsibility to look at the judicial system. If we 
love it and care about it, respect it, and want it to be better, we 
will continue to look at the legal system, and if the legal system has 
a problem, it is our duty to examine how to fix it.
  We have spent years now determining how to fix class action problems. 
We have a bipartisan coalition in this Senate that has come together 
and is prepared to support this legislation. I say let us do it. Let us 
observe how the system is working. From that observation, we can 
realize that it can be made better. Let us step up to the plate and fix 
it.
  I thank the Chair and the Senator from Utah. It is a pleasure to work 
with him, Senator Grassley, and Senator Specter, who have all worked so 
hard on this legislation.
  The PRESIDING OFFICER. The Senator from Utah is recognized.
  Mr. HATCH. Mr. President, I notice the distinguished Senator from 
Wisconsin is in the Chamber, but I would like to make a few more 
remarks if he does not feel too badly about it.
  I support this bill. I have been working on it for 6 years. It is a 
grand compromise. We have Democrats and Republicans. It is bipartisan. 
It is not perfect, but it is as good as we can do and it will do an 
awful lot of good.
  The evidence is clear and undeniable; the well-documented abuse of 
the class action litigation device too often ends up victimizing 
plaintiffs, the very people that class actions are supposed to benefit.
  These abuses cheat millions of consumers who unwittingly have their 
legal rights adjudicated in local courts thousands of miles away. They 
deny the due process rights of defendants who are relentlessly hauled 
into a handful of small county courts where the playing field is 
unfairly tilted in favor of the personal injury bar, the plaintiffs' 
bar.
  If that were not enough, class action abuses are eroding public 
confidence in our civil justice system. When abuses do occur in the 
class action system, the public can ultimately pay dearly through 
spiraling prices, lost jobs, and even bankrupt companies.
  I have been listening to arguments from the other side, but to give 
the class action problem some perspective, I want to consider just the 
effect of this litigation in one locale, Madison County, IL. There we 
find a case study in rampant misconduct within the class action system, 
its corrupting effect on the courts, and the desperate need for reform.
  This small county in the southwestern part of that State provides all 
the evidence necessary to convince anyone that the legal system is 
currently being exploited by shameless and self-seeking plaintiffs' 
lawyers. Madison County, IL is a rural county. I imagine it is the type 
of county where maybe Abraham Lincoln first got his start as a young 
lawyer and an advocate for justice.
  In some notes perhaps taken in preparation for a law lecture around 
1850, Lincoln set the ideal for his profession, a profession practiced 
by many in this Chamber, including myself.
  No. 1, ``Discourage litigation . . . Point out how . . . the nominal 
winner is often a real loser--in fees, expenses, and waste of time.''
  No. 2, ``Never stir up litigation. A worse man can scarcely be found 
than one who does this. Who can be more nearly a fiend than he who 
habitually overhauls the register of deeds in search of defective 
titles, whereon to stir up strife, and put money in his pocket? A moral 
tone ought to be infused into the profession which should drive such 
men out of it.''
  And No. 3, ``An exorbitant fee should never be claimed.''
  These words were uttered during a time when being a lawyer 
automatically carried with it a title of honor, integrity, and trust.
  Unfortunately, Lincoln's words no longer carry much meaning for some 
of the lawyers who have descended on Madison County. In the land of 
Lincoln, the rule of law has too often been

[[Page 1655]]

corrupted almost beyond recognition by self-interested plaintiffs' 
lawyers and seemingly pliant public officials. Some unscrupulous 
personal injury attorneys go forum shopping to find friendly 
jurisdictions. Certainly Madison County, IL is one of them.
  Then some judges in those jurisdictions, some of whom are compromised 
by campaign contributions from the very same law firms arguing in their 
courtrooms, sometimes certify these cases with the proverbial rubber 
stamp, even though they are not worthy of being certified.
  Finally, sympathetic local juries trying out-of-State corporations 
have sometimes bestowed unjustified and sometimes outrageous awards. 
This pattern of behavior is not only an affront to the due process 
rights of defendants, but it breeds disrespect for the rule of law 
itself.
  I have heard colleagues on the other side of the aisle say, `Well, 
these are big corporations.' First, they aren't all big corporations, 
and second, even if they were, they still deserve fair treatment, due 
process, and an impartial justice system.
  And make no mistake about it. These suits are not free. We all pay 
for them. The American consumer pays for the costs of these class 
actions.
  The courthouse in Madison County, IL is what scholars now describe as 
a magnet court. Always on the lookout to find suitable venues for 
enriching themselves, entrepreneurial plaintiffs' attorneys--many of 
whom practice in the field of personal injury--are sucked into its 
orbit. The numbers alone tell the story. Over the last 5 years the 
number of class actions filed in the county has increased by 5,000 
percent.
  Let me repeat that so that astronomical figure can sink in. A 5,000-
percent increase. It almost defies logic that so many national class 
actions are being brought in this small rural county.
  In 1998, there were only two class actions filed in this county. In 
2000, that number rose to 39. In 2001, there were 43 new class actions. 
One year later, the bridges leading to the riches of Madison County 
were clogged with carpetbagging lawyers as word hit the street that the 
local court there was giving away money as though it was Christmas 
morning. Enterprising plaintiffs' lawyers looking to make a quick buck 
knew Madison County was the place for business.
  In 2004, 77 class action suits were filed. In 2003, there were 
another 106. Between 1998 and 2003, the number of class actions in the 
county rose from 2 to 106 per year. In the last 4 years, the lawyers 
who flocked to Madison County succeeded in having the following cases 
certified.
  All Sprint customers in the entire Nation who have ever been 
disconnected on a cell phone call. That is a class action in Madison 
County.
  Every Roto-Rooter customer in the country whose drains might have 
been repaired by a nonlicensed plumber.
  All consumers who purchased limited edition Barbie dolls that were 
later allegedly offered for a lower price elsewhere.
  These are just three examples of the abuses that are going on.
  I know my friend from Illinois, the minority whip, Senator Durbin, is 
understandably protective about the state of affairs in Madison County. 
He points out that while many class actions are filed in Madison 
County, few are certified. It does not take a lot of cases like the 
ones I talked about to create an environment that encourages cases that 
are marginal at best. Through their increased filings, class action 
attorneys tell us a great deal of what we need to know about Madison 
County. That many of these cases are settled upon filing or even before 
they are filed tells us a lot. A demand letter from a class action 
attorney with a Madison County address is a dreaded piece of 
correspondence for any company or any defendant. If these types of 
cases were not such a drain on our economy, it would almost be easy to 
laugh at some of these cases.
  We question the efficiency and fairness of a small county courthouse 
in Illinois adjudicating cases against national companies involving 
various State and Federal regulations and involving millions, if not 
billions, of dollars in settlements where neither the majority of 
plaintiffs nor the defendants are typically residents of the county. 
These locally elected judges, with the close assistance of interested 
plaintiffs' attorneys, in effect set policy for the entire Nation, 
defying the principles of self-government on which our Federal system 
is based.
  This situation is a colossal mess, and a few plaintiffs' lawyers are 
exploiting it to the hilt, and giving all of us who love the practice 
of law a bad name.
  The same five firms appeared as counsel in 45 of all cases filed 
between 1999 and 2000. Of the 66 firms appearing in these cases, 56 of 
them--85 percent--had office addresses outside of Madison County.
  In this small county, with a population of only 259,000, there are 
somehow more mesothelioma claims from asbestos exposure than in all of 
New York City with its population of better than 8 million. One nine-
member firm with an office in Madison County claims to handle more 
mesothelioma cases than any firm in the country.
  Who benefits from all of this litigation? One Madison County judge 
approved a $350 million settlement against AT&T and Lucent for 
allegedly billing customers who leased telephones at an unfair rate. 
What did the lawyers get? Forty-four lawyers from four firms will split 
$80 million for legal fees and $4 million for expenses. And the 
customers? They actually lost money. After their legal fees, the 
average class member got hit for $6.49.
  Think about that.
  Lincoln's principles are a distant memory in Madison County. The 
Washington Post succinctly described the situation. ``Having invented a 
client, the lawyers also get to choose a court. Under the current 
absurd rules, national class actions can be filed in just about any 
court in the country.''
  And those lawyers often pick Madison County. They are picking it 
because it is what some call a magic jurisdiction.
  Let me refer to this chart, called ``Magic Jurisdictions.'' This is 
Dickie Scruggs, one of the best plaintiffs' lawyers in the country, a 
man I have great respect for. But in a luncheon talk on the asbestos 
situation at a panel discussion at the Prudential Securities Financial 
Research and Regulatory Conference on May 9, 2002, he had this to say. 
This is Dickie Scruggs. You can believe him. This man understands the 
litigation field. He is a billionaire from practicing law. He said:

       What I call the ``Magic Jurisdictions'' is where the 
     judiciary is elected with verdict money. The trial lawyers 
     have established relationships with the judges that are 
     elected. They are State court judges. They are populists. 
     They have large populations of voters who are in on the deal. 
     They are getting their piece, in many cases. And so it's a 
     political force in their jurisdiction and it's almost 
     impossible to get a fair trial if you are a defendant in some 
     of these places. The plaintiff lawyer walks in there and 
     writes the number on the blackboard, and the first juror 
     meets the last one coming out the door with that amount of 
     money. The cases are not won in the courtroom. They're won on 
     the back roads long before the case goes to trial. Any lawyer 
     fresh out of law school can walk in there and win the case, 
     so it doesn't matter what the evidence or the law is.

  That is one of the leading plaintiffs' lawyers in the country. He was 
honest enough to call it the way it is in Madison County. Madison 
County is not the only jackpot jurisdiction, but I am concentrating on 
it since the distinguished Senator from Illinois has focused his 
remarks on our criticism of this jurisdiction.
  Dickie Scruggs is a fine lawyer. I have said that. I worked with him 
on the tobacco settlement. He and Mississippi Attorney General Mike 
Moore did a good job for their clients and the American public. I am 
very familiar with what they did. I am familiar with the Castano Group 
as well, which risked millions of dollars to bring the tobacco suits. 
They had an entire multifloor building filled with documents they 
accumulated at the cost of millions of dollars to make their case in 
the tobacco suits.
  Dickie Scruggs is a fine lawyer. So is Mike Moore. So are the Castano 
Group lawyers.
  Having said that, there is a reason the Super Bowl is held at a 
neutral

[[Page 1656]]

site. It is clear that Madison County is not a neutral site. When it 
comes to class action defendants trying a class action case in Madison 
County, it is like shooting fish in a barrel.
  Dickie Scruggs is simply too good of a lawyer to need any unfair 
advantage and that goes for the vast majority of plaintiffs' attorneys 
in our country. But there are a minority of lawyers who are causing the 
vast majority of our problems.
  What makes for a magical jurisdiction? In a magic jurisdiction, the 
supposedly objective judges and jury, all stand to gain from a 
settlement. Madison County, as the Chicago Tribune notes, is a jackpot 
jurisdiction where local newspapers ``sport advertisements looking for 
the local plaintiff that can provide a convenient excuse to file.''
  Some have concluded that this choice of venue might have something to 
do with the fact that in recent years the elected judges of the circuit 
court of Madison County have received at least three-quarters of their 
campaign funding from the lawyers who appear before them in these class 
action suits. In a simpler time, the State court would only certify a 
class if there was a substantial local connection. Some of the judges 
in Madison County have created an environment where a lifelong resident 
of Washington State, who worked in Washington, was allegedly exposed to 
asbestos in Washington, never received medical treatment in Illinois, 
and had no witnesses in Illinois to testify in his behalf, actually 
thought it was worth a shot to bring suit in a strange town halfway 
across the country. What was his connection to Madison County? He 
vacationed in Illinois for 10 days with his family nearly 50 years ago.
  In this case, the court did the right thing and refused to certify 
this man's claim. But that a lawyer would even consider bringing it 
shows how far gone Madison County is. So far, the Illinois Supreme 
Court has taken the extraordinary step of rebuking it. As legal ethics 
professor Susan Koniak of Boston University School of Law explains:

       Madison County judges are infamous for approving anything 
     put before them, however unfair to the class or suggestive of 
     collusion that is.

  This is not justice. This is a travesty. The St. Louis Post-Dispatch, 
one of this Nation's great newspapers, has followed this epidemic of 
litigation closely. They describe the run on the Madison County 
courthouse as resembling ``gleeful shoppers mobbing a going out of 
business sale.''
  Due process itself is corrupted by this circus. What is going on in 
Madison County too closely resembles legalized extortion in the eyes of 
many observers. The deck is stacked against these companies hauled to 
Illinois to answer these charges. The cases are sometimes heard on an 
expedited basis. Under these pressures they are typically given an 
offer they cannot refuse. Once the class is certified, they feel 
compelled to settle, regardless of the merits of the case. The risk of 
loss is simply too high. They do not even have to wait until the class 
is certified. They know that in most cases the class will be certified 
by the judges of Madison County. A simple demand causes many companies 
to say, `let's buy out of this for the lowest price we can, even though 
we do not owe them a dime. We will just settle for the attorney's 
fees.' These settlements are to the detriment of legitimate claims.
  The class never has to be certified. No self-respecting lawyer will 
want to try a case in a county where the deck is totally stacked 
against his client. And so they settle.
  Let us be clear, these are not truly local disputes.
  S. 5 does nothing to remove local disputes from local courts. The 
suits we are talking about in Madison County and other jackpot 
jurisdictions are on behalf of nationwide classes of clients against 
corporations that do business in every State. Madison County is not 
chosen as the venue because of its quaint scenery. It is chosen because 
defendants in these class actions often do not get a fair shake in 
Madison County.
  This is not a triumph of federalism and local decisionmaking. It is 
the evisceration of federalism and fairness. A bedrock principle of our 
federal system is that states are largely free to regulate their own 
particular affairs. To allow one State, in effect, to legislate for 
another is to violate an important principle of self-government that 
this country is built upon. Madison County has been flooded with class 
action claims and now the Nation is drowning in them. This is a classic 
case for Federal intervention. In fact, this is a case study for the 
type of intervention in Federal affairs the Constitution was meant to 
allow.
  What happens in Madison County affects the whole country. The 
overwhelming majority of class actions filed in Madison County are 
nationwide lawsuits in which 99 percent of the class members live 
outside the county. As a result, decisions reached in Madison County 
courts affect consumers all over the country and the county's elected 
judges effectively set national policies on important commercial 
issues.
  There is a place for personal injury law in the American justice 
system. I understand that. I am an attorney. I have tried many cases. I 
know that there is a legitimate and honest place for personal injury 
suits in our civil justice system. Americans have a sacred right to 
take their case to court when they are harmed by a person or product. 
Yet this right is seriously undermined by a seriously compromised class 
action regime. To help rescue it, we need to enact this reform. Today's 
lawyers do not take cases that come to them. They invent cases. They 
behave more like entrepreneurs than counsel, trying to find an issue 
and income stream before they find a plaintiff. They act like 
businessmen--the CEOs of Trial Lawyers, Incorporated.
  The problem is that their business plan makes hash out of our system 
of impartial justice. It simply defies belief that county courts are 
the proper venue for multijurisdictional litigation. Some of the 
plaintiffs' bar have put a ``pay the lawyer first'' business model in 
motion in Madison County. First, find sympathetic judges. Then bankroll 
their campaigns. And to seal the deal, move the case through the system 
so fast that the defendants do not always get a fair opportunity to 
fully investigate the claim. Justice does demand fairness, but our 
system of decentralized class action litigation is fundamentally unfair 
to defendants, plaintiffs, and the average American who ends up footing 
the bill for the unjustified billion-dollar settlements.
  If this were a board game, it would be ``Class Action Monopoly.'' 
Start at `Go', and come up with an idea for a lawsuit. Find a named 
plaintiff to pay off. Make allegations, no proof needed. Get out of 
rule 23, the Federal rule 23, free. Convince your magnet State court 
judge to certify the ``class.'' File copycat lawsuits in State courts 
all over the country. Sue as many companies in as many States possible 
even if they have no connection to the State.
  Who gets the money? In the Columbia House case, $5 million for 
lawyers, discount coupons for plaintiffs. In the Blockbuster case, 
$9.25 million for lawyers, free movie coupons for plaintiffs. In the 
Bank of Boston case, $8.5 million for lawyers; some claimants even had 
to pay themselves.
  But ``What happens to me?'' Your employer takes a hit, maybe lays you 
off. Your health and car insurance premiums go up. And we are all 
familiar with that. The lawyers win, you lose. This game gets pretty 
old, pretty quick. But this is this jackpot monopoly system we have in 
Madison County, and a whole bunch of jackpot jurisdictions in this 
country.
  Now, the Class Action Fairness Act is an important but modest reform. 
It does not deprive substantive legal rights to any American. All it 
does is make it easier to put these national cases where they belong, 
and that is in our Federal courts.
  According to one study, 98 of the 113 class actions filed in Madison 
County from 1998 to early 2002 could have been moved to Federal court 
under this legislation. Justice demands that we act. We cannot play 
around with this any more. Those who are injured will get their day in 
court, but it will be Federal court, with sophisticated judges

[[Page 1657]]

who are appointed for life, who have no reason to be unfair. By voting 
for S. 5, we will help make sure they get it in a court where justice 
can be dispensed.
  I yield the floor to the distinguished Senator from Wisconsin.
  The PRESIDING OFFICER. The Senator from Wisconsin is recognized.
  Mr. FEINGOLD. Mr. President, I thank the Senator from Utah.
  Mr. President, I oppose the Class Action Fairness Act, S. 5. 
Notwithstanding its title, I do not think this bill is fair. I do not 
think it is fair to citizens who are injured by corporate wrongdoers 
and are entitled to prompt and fair resolution of their claims in a 
court of law. I do not think it is fair to our State courts, which are 
treated by this bill as if they cannot be trusted to issue fair 
judgments in cases brought before them. And I do not think it is fair 
to State legislatures, which are entitled to have the laws that they 
pass to protect their citizens interpreted and applied by their own 
courts. This bill is not only misnamed, it is bad policy, and I do 
think it should be defeated.
  Make no mistake, by loosening the requirements for Federal diversity 
jurisdiction over class actions, S. 5 will result in nearly all class 
actions being removed to Federal court. This is a radical change in our 
Federal system of justice. We have 50 States in this country, each with 
its own laws and courts. State courts are an integral part of our 
system of justice. They have worked well for our entire history. It is 
hard to imagine why this Senate, which includes many professed 
defenders of federalism and the prerogatives of State courts and State 
lawmakers, would support such a wholesale stripping of jurisdiction 
from the States over class actions. By removing these actions from 
State court, Congress would shift adjudication away from State 
lawmakers and State judges towards Federal judges, who are often not as 
familiar with the nuances of State law. In my opinion, the need for 
such a radical step has not been demonstrated.
  Actually, the leaders of the Federal and State judiciary agree. I 
don't know if it has taken a position on this particular bill, but the 
Judicial Conference of the United States has opposed legislation like 
S. 5 that would remove most class actions from State to Federal court. 
Federal judges don't particularly like diversity jurisdiction cases. 
They certainly are not in favor of legislation that would bring many 
more large, complicated civil cases brought under State law to their 
courts. And the Board of Directors of the Conference of State Chief 
Court Justices expresses quite well the concerns of State judges about 
this bill. Its letter states:

       Absent hard evidence of the inability of the state judicial 
     systems to hear and fairly decide class actions brought in 
     state courts, we do not believe such a procedure [transfer of 
     class actions to federal court] is warranted. . . . Our 
     position is not new and it is consistent with the position of 
     our counterparts in the federal judicial system.

  Class actions are an extremely important tool in our system of 
justice. They allow plaintiffs with very small claims to band together 
to seek redress. Lawsuits are expensive. Without the opportunity to 
pursue a class action, an individual plaintiff often simply cannot 
afford his or her day in court. But through a class action, justice can 
be done and compensation for real injuries can be obtained.
  Yes, I do agree, there are abuses in some class action suits. Some of 
the most disturbing have to do with class action settlements that offer 
only discount coupons to the members of the class and a big payoff to 
the plaintiffs' lawyers. I am pleased that the issue of discount 
coupons is addressed in the bill, because the bill we considered in 
October 2003 did nothing about that problem. The bill now requires that 
contingency fees in coupon settlements will be based on coupons 
redeemed, not coupons issued. Attorney's fees will also be determined 
by reasonable time spent on a case and will be subject to court 
approval. The bill also allows a court to require that a portion of 
unclaimed coupons be given to one or more charitable organizations 
agreed to by the parties. I do agree, these are all good changes, but 
they do not change my view that the bill, as a whole, unfairly 
interferes with the States' administration of justice.
  I appreciate that the supporters of S. 5 modified the new diversity 
jurisdiction rules for class actions in an effort to allow plaintiffs 
in State class actions more opportunities to remain in State court. 
Under the new bill, a district court must decline jurisdiction if two-
thirds of the plaintiffs and the primary defendants are from the State 
where the action was filed, and there is at least one defendant who is 
a citizen of that State from whom significant relief is sought and 
whose alleged conduct forms a significant basis for the claims asserted 
by the proposed class. In addition, the principal injuries resulting 
from the alleged conduct of each defendant must have occurred in the 
State in which the action was originally filed.
  These criteria are an improvement on the underlying bill. But the 
jurisdictional requirements for class actions to remain in State courts 
are still too burdensome. Under the new language, for example, a class 
action brought by Wisconsin citizens against a Delaware-based company 
for selling a bad insurance policy would probably be removed to Federal 
court even if Wisconsin-based agents were involved in selling the 
policies.
  In addition, the new bill provides that district courts can only 
decline jurisdiction if during the 3-year period preceding the filing 
of the action no other similar class action has been filed against any 
of the defendants even if the case is filed on behalf of other 
plaintiffs. Thus, the filing of a class action in one State court may 
lead to the successful removal of a similar case filed in another State 
on behalf of plaintiffs in that State. If a defendant is engaging in 
conduct in number of different States that violates the separate laws 
of those States, why shouldn't that defendant be held accountable in 
different State courts under different state laws? Do we really need 
the Federal courts to get involved in these State law cases?
  The bottom line is that this bill still sends the majority of class 
actions to Federal court. The proponents of this bill have chosen a 
remedy that goes far beyond the alleged problem.
  Furthermore, under S. 5, many cases that are not class actions at all 
are included in the definition of ``mass action,'' a new term coined by 
this bill. S. 5 simply requires that the plaintiffs be seeking damages 
of more than $75,000 for the case to be considered a mass action and, 
therefore, removable to Federal court. This provision unfairly limits 
State court authority to manage its docket and to consolidate claims in 
order to more efficiently dispense justice.
  A particularly troubling result of this bill will be an increase in 
the workload of the Federal courts. We all know these courts are 
already overloaded. In the 2004 Year End Report on the Federal 
Judiciary, for example, Chief Justice Rehnquist reported that the 
current budget crisis in the Federal judiciary has forced courts to 
impose hiring freezes, furloughs, and reductions in force. He noted 
that there is a dire need for additional federal judgeships to deal 
with the Federal courts' ever-increasing caseload. The Congress has led 
the way in bringing more and more litigation to the Federal courts, 
particularly criminal cases. Criminal cases, of course, take precedence 
in the Federal courts because of the Speedy Trial Act. So if you look 
at this bill in the context, the net result of removing virtually all 
class actions, civil cases, of course, to Federal court will be to 
delay those cases.
  There is an old saying with which everyone is familiar: ``justice 
delayed is justice denied.'' I hope my colleagues will think about that 
aphorism before voting for this bill. Let's think about the real world 
of Federal court litigation and the very real possibility that long 
procedural delays in overloaded Federal courts will mean that 
legitimate claims may never be heard. My colleagues who support this 
bill tend to dismiss these arguments. They say that the Federal courts 
will offer adequate redress for legitimate claims, that they will 
faithfully apply State

[[Page 1658]]

laws. I certainly hope they are right because this bill seems to be 
headed for enactment. But if they are wrong, citizens and consumers 
will be the ones who suffer.
  One little-noticed aspect of this bill illustrates the possibilities 
for delay that the bill provides, even to defendants who are not 
entitled to have a case removed to Federal court under the bill's 
relaxed diversity jurisdiction standards.
  Under current law, if a Federal court decides that a removed case 
should be remanded, or returned, to State court, that decision is 
generally not appealable. It would be different under this bill, if it 
becomes law. This bill allows defendants to immediately appeal a 
decision by a Federal district court that a case does not qualify for 
removal to Federal court and should be remanded to State court.
  Fortunately, the revised bill now requires such appeals to be decided 
promptly. It does not, however, do anything about the fact that the 
lower court may take months or even years to make a decision on the 
motion to remand. That means that a plaintiff class that is entitled, 
even under this bill, to have a case heard by a State court may still 
have to endure years of delay while its remand motion is pending in the 
Federal district court. Where is the ``fairness'' in that? I plan to 
offer an amendment to address that problem, and I certainly hope the 
bill's sponsors and supporters will give it serious consideration.
  When I offered this amendment in the Judiciary Committee, I learned 
that a number of the supporters of the bill recognize the importance of 
the issue that my amendment raises. The chairman of the Judiciary 
Committee indicated that he would take a serious look at it and see if 
there is an accommodation that can be reached. So I did not seek a vote 
in committee on the amendment. I stand ready to negotiate on this issue 
and I hope there will be a serious effort here to reach agreement.
  We have heard a lot of talk on this floor about the need to pass this 
bill without amendment--without any amendment at all--to protect some 
kind of ``delicate balance'' with the House and with the corporate 
supporters of the bill like the Chamber of Commerce. I ask my 
colleagues who support this bill, why would you not support a 
reasonable amendment that will make this bill fairer to plaintiffs who 
bring cases that under the bill's own terms should remain in State 
court? Please don't let this so-called delicate balance override your 
duty as legislators to do what is right.
  It is important to remember that this debate is not about resolving 
questions of Federal law in the Federal courts. Federal question of 
jurisdiction already exists for that. Any case involving a Federal 
statute can be removed to Federal court under current law. This bill 
takes cases that are brought in State court solely under State laws 
passed by State legislatures and throws them into Federal court. This 
bill is about making it more time-consuming and more costly for 
citizens of a State to get the redress that their elected 
representatives have decided they are entitled to if the laws of their 
State are violated.
  Diversity jurisdiction in cases between citizens of different States 
has been with us for our entire history as a nation. Article III, 
section 2 of the Constitution provides: ``The judicial Power shall 
extend . . . to Controversies between Citizens of different States.'' 
This is the constitutional basis for giving the Federal courts 
diversity jurisdiction over cases that involved only questions of State 
law.
  The very first Judiciary Act, passed in 1789, gave the Federal courts 
jurisdiction over civil suits between citizens of different States 
where over $500 was at issue. In 1806, in the case of Strawbridge v. 
Curtiss, the Supreme Court held that this act required complete 
diversity between the parties. In all other instances, the Court said, 
a case based on State law should be heard by the State courts. So this 
bill before us changes a nearly 200-year-old practice in this country 
of preserving the Federal courts for cases involving Federal law or 
where no defendant is from the State of any plaintiff in a case 
involving only State law.
  Why is such a drastic step necessary? Why do we need to prevent State 
courts from interpreting and applying their own State laws in cases of 
any size or significance? One frequent argument is that businesses 
cannot get a fair day in court because of renegade State court judges. 
Yet, there really is no evidence to back up these claims. Of the 3,141 
counties, parishes, and boroughs in the State court systems of the 
United States, the so-called American Tort Reform Association could 
only identify nine jurisdictions that they consider ``unfair'' to 
defendants. Four other jurisdictions were declared as ``dishonorable 
mentions.'' But, the association only provided data on two of these 
jurisdictions--Madison County, IL, which the Senator from Utah was 
talking about, and St. Clair County, IL. The Senator from Utah cited 
statistics of increases in class action filings up through 2003. Yet in 
Madison County, the villain in the story told by the Senator from Utah, 
the number of class action filings has decreased by 30 percent between 
2003 and 2004. So defendants have decided that State judges are unfair 
in two jurisdictions out of 3,000, but how does this constitute a 
crisis? The answer is simple there isn't one.
  Another argument we hear is that the trial lawyers are extracting 
huge and unjustified settlements in State courts, which has become a 
drag on the economy. We also hear that plaintiffs' lawyers are taking 
the lion's share of judgments or settlements to the detriment of 
consumers. But a recent empirical study contradicts these arguments. 
Theodore Eisenberg of Cornell Law School and Geoffrey Miller of NYU Law 
School recently published the first empirical study of class action 
settlements. Their conclusions, which are based on data from 1993-2002, 
may surprise some of the supporters of this bill.
  First, the study found that attorneys' fees in class action 
settlements are significantly below the standard 33 percent contingency 
fee charged in personal injury cases. The average class action 
attorney's fee is actually 21.9 percent. In addition, the attorneys' 
fees awarded in class action settlements in Federal court are actually 
higher than in State court settlements. Attorney fees as a percent of 
class recovery were found to be between 1 and 6 percentage points 
higher in Federal court class actions than in State court class 
actions.
  A final finding of the study is that there has been no appreciable 
increase in either the amount of settlements or the amount of 
attorneys' fees awarded in class actions over the past 10 years. The 
study, therefore, indicates that there is no crisis here, no explosion 
of huge judgments, no huge fleecing of consumers by their lawyers. This 
bill is a solution in search of a problem. It is a great piece of 
legislation for wrongdoers who would like to put off their day of 
reckoning by moving cases to courts that are less convenient, slower, 
and more expensive for those who have been wronged. It is a bad bill 
for consumers, for State legislatures, and for State courts.
  This bill seems not to be about class action abuses, but about 
getting cases into Federal court where it takes longer and is more 
expensive for plaintiffs to get a judgment. The cumulative effect of 
this bill is to severely limit State court authority and ultimately 
limit victims' access to prompt justice. Despite improvements made 
since the last time the Senate considered this bill, the bill will 
still place significant barriers for consumers who want to have their 
cases heard in State court. Remand orders are still appealable, and the 
mass tort definition does not protect State courts' authority to 
consolidate cases and manage their dockets more efficiently. All the 
elements outlined in the bill before us will result in the erosion of 
State court authority and the delay of justice for our citizens. 
Therefore, I cannot support this unfair ``Class Action Fairness Act'' 
bill.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. KOHL. Mr. President, I rise today in support of the Class Action

[[Page 1659]]

Fairness Act of 2005. This legislation addresses the continuing 
problems in class action litigation, particularly unfair and abusive 
settlements that shortchange consumers across America.
  The time for this bill has come. We have worked very closely on a 
bipartisan basis with Senator Grassley, Senator Carper, and Senator 
Hatch for several Congresses and, more recently with Senators 
Feinstein, Dodd, Schumer, and Landrieu. Without this close cooperation 
and tremendous effort, we would not be on the verge of passing class 
action reform. Finally, Senators Frist and Reid deserve praise for 
crafting a fair process for the consideration of this legislation.
  Class action cases are an important part of our justice system 
because they enable people who have been harmed in similar ways to 
pursue claims collectively that would otherwise be too expensive to 
bring individually. When these cases proceed as intended, injured 
parties are able to successfully pursue lawsuits in cases involving 
defective products or employment discrimination, or other wrongs, and 
recover fair damages.
  Unfortunately, the system does not always work as it should. In fact, 
consumers are frequently getting the short end of the stick in class 
action cases, recovering only coupons or pocket change while their 
lawyers reap millions. Too often, the class action system is being 
taken advantage of to the detriment of consumers and others who have 
been harmed. The Washington Post put it clearly:

       No portion of the American civil justice system is more of 
     a mess than the world of class actions.

  Our bill addresses the problem in a few straightforward ways. First, 
the bill helps consumers by guaranteeing that they receive a better 
understanding of their rights and responsibilities in a class action 
lawsuit. Our bill includes a class action consumer bill of rights to 
limit coupon cases and other unfair settlements.
  Second, this bill provides that state attorneys general are notified 
of proposed class action settlements. This encourages a neutral third 
party to weigh in on whether a settlement is fair for the plaintiffs 
and to alert the court if they do not believe that it is.
  Finally, we allow some class action lawsuits to be removed to Federal 
court. As we all know, some are concerned about this provision. Yet, 
moving some class action cases to Federal court is only common sense. 
When a problem affects people in many States or involves a national 
problem, it is only fitting that the case be heard in Federal court.
  We took special care during the course of our negotiations to ensure 
that the appropriate courts heard the right cases. This bill has never 
been an effort to either stop class action cases or send them all to 
the Federal courts. Rather, those cases that primarily involve people 
from only one State will remain in that State's court. These changes 
will ensure that class action cases are handled efficiently and in the 
appropriate venues and that no case that has merit will be turned away.
  Stories of nightmare class action settlements that affect consumers 
around the country are all too frequent. For example, a suit against 
Blockbuster video in Texas yielded dollar off coupons for future video 
rentals for the plaintiffs while their attorneys collected $9.25 
million. In California State court, a class of 40 million consumers 
received $13 rebates on their next purchase of a computer or monitor--
in other words they had to purchase hundreds of dollars more of the 
defendants' product to redeem the coupons. In essence, the plaintiffs 
received nothing, while their attorneys took almost $6 million in legal 
fees. We could list many more examples of abuses in State court, but 
let me discuss just one more case that is almost too strange to 
believe.
  I am speaking about the notorious Bank of Boston class action suit 
and the outrageous case of Martha Preston from Baraboo, WI. She was an 
unnamed class member of a lawsuit in Alabama State court against her 
mortgage company that ended in a settlement. The settlement was a bad 
joke. She received $4 and change in the lawsuit, while her attorneys 
pocketed $8 million.
  Yet the huge sums that her attorneys received were not the worst of 
the story. Soon after receiving her $4, Ms. Preston discovered that her 
lawyers took $80, twenty times her recovery, from her escrow account to 
help pay their fees. Naturally shocked, she and the other plaintiffs 
sued the lawyers who quickly turned around and sued her in Alabama, a 
State she had never visited, for $25 million. Not only was she $75 
poorer for her class action experience, but she also had to defend 
herself against a $25 million suit by the very people who took 
advantage of her in the first place.
  The class action process is clearly in serious need of reform. 
Comprehensive studies support this position. For example, a study on 
the class action problem by the Manhattan Institute finds that class 
action cases are being brought disproportionately in a few State courts 
so that the plaintiffs' lawyers may take advantage of those specific 
courts that have relaxed class action rules.
  A RAND study offered three primary explanations for why national 
class action cases should be in Federal court. ``First, Federal judges 
scrutinize class action allegations more strictly than State judges . . 
. Second, State judges may not have adequate resources to oversee and 
manage class actions with a national scope. Finally, if a single judge 
is to be charged with deciding what law will apply in a multistate 
class action, it is more appropriate that this take place in Federal 
court than in State court.
  Our bill attempts to follow these recommendations and ensure that 
cases with a national scope are heard in Federal court. All the while, 
cases that are primarily of a single state interest remain in State 
court under our bill. Let me emphasize the limited scope of this 
legislation. We do not close the courthouse door to any class action. 
We do not deny reasonable fees for class lawyers. We do not cause undue 
delays for these cases. And we do not mandate that every class action 
be brought in Federal court. Instead, we simply promote closer and 
fairer scrutiny of class actions and class settlements.
  Right now, people across the country can be dragged into lawsuits 
unaware of their rights and unarmed on the legal battlefield. What our 
bill does is give back to regular people their rights and 
representation. This measure may not stop all abuses, but it moves us 
forward. It will help ensure that unsuspecting people like Martha 
Preston don't get ripped off.
  Mr. President, we believe this is a moderate approach to correct the 
worst abuses, while preserving the benefits of class actions. The bill 
represents a finely crafted compromise. We believe it will make a 
difference. We urge its passage.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Burr). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DURBIN. 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. DURBIN. Mr. President, I was on the floor of the Senate earlier 
preparing to offer an amendment, and I lost my voice. There was 
cheering in the galleries, but I have decided to soldier on and try to 
present this amendment again. I will try to abbreviate any remarks to 
spare the audience from what may be a painful process for them.
  We are considering the Class Action Fairness Act of 2005. I have 
listened to some of the speeches on the Senate floor. Senator Lott of 
Mississippi said: Do not be confused. This is not tort reform, this is 
court reform. I thought that was an interesting comment because there 
has been some concern over whether this class action change would 
affect a body of lawsuits known as mass torts--in other words, the 
types of class actions that relate to physical injuries that are common 
to mass tort cases.
  Section 4(a) of S. 5 talks about ``mass actions,'' a different term 
altogether.

[[Page 1660]]

It requires mass actions be treated the same as class actions under the 
bill. The big question is whether that kind of lawsuit will be taken 
out of a State court and put into a Federal court. As I mentioned in my 
earlier remarks, Federal courts are not friendly to class actions. They 
are very strict in those that they would consider, and then they are 
very limited in their scope of liabilities. The business interests that 
are pushing for this change in the law know that if they can get these 
lawsuits into a Federal court, they are less likely to be found liable. 
That is what this whole debate is all about.
  I have tried to take a close look at the mass actions section of this 
class action bill and ask how it would apply to a mass tort situation. 
Mass torts are large-scale personal injury cases resulting from 
accidents, environmental disasters, or dangerous drugs that are widely 
sold. The asbestos exposure situation we will be considering this year 
is another example of a mass tort.
  These personal injury claims are usually based on State laws, and 
almost every State has established rules of procedure allowing their 
State courts to customize the needs of their litigants in these complex 
cases. I am afraid if S. 5 becomes law, the so-called mass action 
provision will preempt all of these State procedures and take them out 
of State courts.
  The supporters of the bill claim that mass actions are not the same 
as mass torts and that they have no desire to affect mass tort cases. I 
know that is their position, but it is not what their bill says. If the 
goal is to federalize all State personal injury cases, supporters 
should be open about it and say it publicly.
  I am sure the U.S. Chamber of Commerce, the American Tort Reform 
Association, all the business and insurance groups that support this 
bill would like to see all cases sent to Federal court. I knew from my 
years in practice in downstate Illinois, that Federal courts were more 
conservative than State courts.
  But even these groups do not believe they can be that lucky with this 
bill. Instead, they came to us and said: No, our bill is very narrow, 
it only deals with class actions and not all cases. When I take a look 
at section 4, though, I am concerned about it. It sounds an awful lot 
like mass torts. Here is how they describe it. Section 4(A) defines it:

     . . . any civil action . . . 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 . . .

  I am sure for anyone who has been patient enough to follow this 
debate this is a little confusing, so let me try by an example to give 
an idea of what is at stake in changing this law.
  Everybody in America knows that in late September 2004, Merck & Co., 
a pharmaceutical giant, pulled its blockbuster pain medication Vioxx 
off the market. The largest prescription drug recall in history 
occurred as a result of a new study that showed that Vioxx doubled the 
risk of heart attack and stroke in some patients. With annual sales of 
$2.5 billion, Vioxx was one of the most successful new drugs ever. It 
was one of a new class of drugs called COX-2 inhibitors.
  Some 20 million Americans took Vioxx in the 5\1/2\ years it was sold, 
but we don't know how many thousands had heart attacks and strokes that 
could have been attributed to this drug.
  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 thousands more.
  I would say as a former trial lawyer who served as both defense 
counsel in some cases and plaintiff's counsel in others, this is a 
pretty serious situation for Merck, and they know it. They have 
conceded the fact that the drug was dangerous. They took it off the 
market. Having taken it off the market, it is understandable that some 
who were injured are going to seek just compensation.
  Let us look at a few cases. Let us take the case of Janet Huggins, 
which is just one of hundreds of similar cases working their way 
through the court system today.
  Mrs. Huggins of Tennessee was a 39-year-old woman who died of a 
sudden heart attack after taking Vioxx. She was the mother of a 9-year-
old son. When she was diagnosed with the early onset of rheumatoid 
arthritis, Vioxx was prescribed. She had no former cardiac problems or 
family history. According to her medical records, Mrs. Huggins was in, 
otherwise, excellent health.
  But on September 25, 2004, she died of a sudden heart attack--less 
than a month after she started taking Vioxx. She was buried on the very 
day in September that Merck took Vioxx off the market.
  On October 28, 2004, her husband Monty filed a claim against Merck in 
the Superior Court of New Jersey, Atlantic City Division. Why New 
Jersey? This couple is from Tennessee. Because that is the State where 
Merck is headquartered.
  In an interview on ``60 Minutes,'' Mr. Huggins said: ``I believe my 
wife would be here'' if Merck had decided to take Vioxx off the market 
just 1 month earlier.
  Then there was Richard ``Dickie'' Irvin of Florida, who was a 53-
year-old former football coach, and president of the athletic booster 
association.
  He had received his college football scholarship and was inducted 
into the school's football hall of fame. He went on to play in the 
Canadian League Football until suffering a career-ending injury.
  In addition to coaching, he worked at a family-owned seafood shop 
where he was constantly moving crates of seafood. He rarely went to see 
a doctor and had no major medical problems.
  In April 2001, Mr. Irvin was prescribed Vioxx for his football knee 
injury from years ago. Approximately 23 days after he began taking 
Vioxx, Mr. Irvin died from a sudden, unexpected heart attack. An 
autopsy revealed that his heart attack was caused by a sudden blood 
clot. This is the exact type of injury that has been associated with 
Vioxx use.
  Mr. Irvin and his wife of 31 years had four children and three 
grandchildren.
  John Newton of Texas, father of two, took Vioxx for osteoarthritis. 
On April 1, 2003, without warning, he began coughing violently and 
within minutes was coughing up blood. Before emergency medical services 
could be called, he collapsed in the arms of his 17-year-old son and 
died.
  It was later determined that Mr. Newton died of a blood clot in his 
lung. He had no prior history of blood clots, or pulmonary disease. The 
cases go on and on in State after State.
  Some of these cases such as the one brought by Mrs. Huggins' family 
have already been filed against Merck. Others are in the works.
  But if the victims of Vioxx file suit in New Jersey, because that is 
where Merck is headquartered, their cases are automatically sent to the 
State's special mass torts court.
  New Jersey is one of those States where the legislature established 
specialized courts to handle certain types of cases. The courts in New 
Jersey have the authority to combine cases. They can consolidate cases. 
That seems reasonable, when you consider all of the people who will be 
suing Merck in New Jersey, where they are headquartered, from all over 
the United States with similar situations as the ones I just described.
  What is so outrageous about having a lot of State-based personal 
injury claims filed separately which are then consolidated as the New 
Jersey courts can do by their own motion?
  But under the mass action language of S. 5, their case and all other 
similar Vioxx cases will be taken out of the New Jersey special court 
and removed to a Federal court to be treated like a class action.
  Why? If you take a look at the language in S. 5, the fact pattern 
fits nicely under the definition of a ``mass action'' to remove the 
case to Federal court, while at the same time none of the exemptions 
apply to keep Vioxx cases in State court.
  So understand, for those who are arguing that this law we are 
considering is simply a case of changing jurisdictions in courts and 
stopping righteous

[[Page 1661]]

lawyers from filing class action lawsuits, that it is much more.
  For Merck, this law is the answer to a prayer. They will take their 
case out of the State court into a Federal court as a class action, 
which is less likely to certify the class even though the series of 
mass tort cases were not even filed as a class action.
  That is why I am offering this amendment. My amendment would make two 
small, narrow, and common sense changes.
  First, it would allow State courts to continue to consolidate these 
individual personal injury cases on their own motion without losing 
jurisdiction to a federal court under S. 5.
  Second, it would also allow courts that consolidate cases not just 
for pretrial but all the way through trial or settlement to retain 
their jurisdiction and not lose it to a Federal court.
  My amendment provides parity in the litigation process because one of 
the exceptions to the mass action definition in S. 5 already provides 
for defendants to consolidate cases without losing jurisdiction to a 
Federal court. I think it is important for the court--in addition to 
the defendant--to have this right as well.
  I also think it is important for courts to be able to schedule their 
own calendar of cases without having to worry whether they would lose 
jurisdiction over their consolidated cases at certain phases of 
litigation. They should not be limited ``solely'' to the pretrial 
proceedings.
  These two small changes will ensure that mass tort cases involving 
personal injury claims that are not intended to be affected by S. 5 can 
continue to remain in State courts throughout the duration of the 
proceeding. The supporters of this bill claim that is their intent, and 
I want to make sure the language in S. 5 reflects this purpose.


                            Amendment No. 3

  (Purpose: To preserve State court procedures for handling mass 
actions)
  Mr. DURBIN. Mr. President, I send the amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Illinois [Mr. Durbin] proposes an 
     amendment numbered 3.

  Mr. DURBIN. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 20, before the semicolon at the end of line 23, 
     insert ``or by the court sua sponte''.
       On page 21, line 5, strike ``solely''.

  Mr. DURBIN. Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Tennessee is recognized.
  (The remarks of Mr. Alexander pertaining to the submission of S. Res. 
44 are printed in today's Record under ``Submitted Resolutions.'')
  The PRESIDING OFFICER. The Senator from Washington.
  Mrs. MURRAY. Mr. President, this afternoon the Senate is debating a 
class action lawsuit bill. This afternoon in Detroit, President Bush 
said:

       Congress needs to pass meaningful class action and asbestos 
     legal reform this year.

  My response is, before we pass something, we better understand how it 
will affect the rights and the lives of everyday, average Americans.
  Unfortunately, the bill before the Senate will unfairly tip the 
scales of justice against average citizens. It will give big businesses 
even more power to avoid responsibility for their actions and it will 
delay justice for many victims who deserve justice.
  We do not have to look very far to see why average citizens need 
access to courts. Look at this morning's newspaper from Seattle, WA. It 
reports that the Federal Government indicted the W.R. Grace Company for 
knowingly sickening workers and residents of Libby, MT, where hundreds 
of people have died from asbestos exposure. The indictment charges that 
the company officials knew of the dangers to workers in the community 
and created a conspiracy to hide those dangers.
  I hope these indictments will bring a small measure of justice to the 
thousands of people who have suffered in Libby and around the country. 
These people worked hard. They provided for their families. But the 
company they worked for knowingly poisoned them and then covered it up.
  The Federal Government is finally going after the company and the 
executives who made the decisions that put workers and the entire 
community at risk.
  Here is the story from today's Seattle P-I:

       Grace indicted in asbestos deaths. Mine Company and seven 
     executives face criminal charges.

  Mr. President, I ask unanimous consent that the entire article be 
printed in the Record after my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mrs. MURRAY. Mr. President, the story of what happened in Libby, MT, 
is heartbreaking.
  Years ago, when I first heard what happened there, I began a campaign 
to ban asbestos and to protect its victims. In June of 2002, I 
testified at a hearing about Libby before the Senate Subcommittee on 
Superfund, Toxics, Risk, and Waste Management. The people of Libby, MT, 
have been waiting for this day for a very long time.
  This indictment tells companies that they are responsible for their 
decisions and that human lives are more important than profits. The 
indictment sends a message that if you are putting workers and 
consumers at risk, if you try to hide the dangers, you will be 
prosecuted because at the end of the day, this is not about profits, it 
is about people.
  It is about people such as Gayla Benefield, whom I met last summer. 
Gayla's father worked at W.R. Grace's vermiculite mine and mill in 
Libby, MT, from 1954 to 1973. Her father died of asbestosis in 1974. 
Gayla's mother never worked in that mine, but she was exposed to 
asbestos fibers on her husband's work clothes. Gayla's mother died of 
asbestosis in 1996. Gayla herself was exposed to asbestos fibers. Why? 
Because she hugged her dad when he came home from work. And then, in 
December of 2001, Gayla and her husband David both were diagnosed with 
lung abnormalities.
  In all, about 37 people in Gayla's family have signs of asbestos 
disease, and only three ever worked in that mine.
  Now, as my colleagues know, for the past 4 years, I have been 
speaking about the dangers of asbestos and the need to ban it in this 
country. I have stood up for victims and their families. I have 
introduced legislation to protect workers, educate the public, and 
improve research and treatment.
  Last year, when Congress considered an inadequate trust fund bill, I 
stood up for the asbestos victims and voted against it. We still have a 
lot of work to do to take care of the current victims and to prevent 
future deaths. That is one of the reasons I am so personally concerned 
about the class action bill that is now before the Senate.
  The bill allows companies to move class action lawsuits from State 
jurisdiction to Federal jurisdiction. That could delay justice for 
years. In many cases, victims have already been waiting a long time for 
their day in court. If their cases are moved to Federal court, they 
will essentially have to start all over at the bottom of the pile. That 
is because Federal courts already have a massive backlog of cases. It 
is one of the reasons the Federal bench opposes this bill.
  If class action lawsuits are dumped on to our Federal courts, they 
will fall to the bottom of the list of priorities. Even if they work 
their way up to the top of the docket after many years, they will not 
be resolved quickly because they are such complicated cases.
  The bill that is before the Senate now could add years to the amount 
of time it takes to resolve a case. Unfortunately, asbestos victims do 
not have time on their side. Once a person is diagnosed with 
mesothelioma, they usually have only about 6 to 18 months to live. So 
if companies know, they can just play legal games, they can just wait 
it out, just move the case and hold things up until the victim dies. If 
that happens, there is no justice.
  For someone with the death sentence of an asbestos disease, justice 
delayed

[[Page 1662]]

is justice denied. That is why Congress should reject this class action 
bill.
  There are other ways this bill could deny justice. Companies could 
just wait until a victim's medical bills or lost wages are so high that 
the victim is forced into an unfair settlement. Once again, that is 
because this bill tips the scales of justice against average Americans.
  I have focused on asbestos victims, but this class action bill would 
affect many more types of victims. Anyone with a class action lawsuit 
could find themselves pushed into Federal court at the bottom of the 
list. Congress should not delay and deny justice for victims.
  As for asbestos victims, we still have a lot of work to do. Each year 
in this country 10,000 Americans die from asbestos disease--10,000 
Americans. The first thing we need to do is ban the production and 
importation of asbestos in the United States. Do you know that each 
year in this country we put asbestos into 3,000 consumer products, 
products that you buy at the store regularly? Hair dryers, floor tile, 
and automobile brakes--we put asbestos in them in this country today. 
If we know this is deadly, we should stop putting it in consumer 
products in America.
  Again, later this year, I am going to reintroduce my Ban Asbestos in 
America Act. The first year I introduced it, we only had four 
cosponsors. Last session, we had 14. We also made progress, including 
my ban in the asbestos liability legislation that was considered by the 
Judiciary Committee. My ban is also included in Senator Specter's most 
recent version of that bill.
  But we also need to help victims by investing in mesothelioma 
research and treatment. And we need to boost awareness of how 
consumers--that is all of us--and workers can protect themselves.
  Today, up to 35 million homes, businesses, and schools have the 
deadly Zonolite insulation in their attics. People need to know about 
the danger so they can protect themselves, so they do not go up in 
their attic and do their work unknowingly exposing themselves to 
asbestos.
  Many employees are still in danger--from construction workers to auto 
mechanics. And let's not forget that many asbestos victims were exposed 
to asbestos when they served our country in the military. About 32 
percent of asbestos victims happen to be Navy veterans. Many of them 
worked in the Bremerton Shipyard in my home State of Washington.
  The dangers of asbestos are not just limited to Libby, MT, or to 
military communities; they are everywhere. This Congress needs to 
address them the right way. Congress should make sure asbestos victims 
can get the justice they deserve. That is why I will vote against this 
class action bill. And that is why I am going to continue to fight to 
ban asbestos and to help the victims in this country.
  Mr. President, I yield the floor.

                               Exhibit 1

          [From the Seattle Post-Intelligencer, Feb. 8, 2005]

              W.R. Grace Indicted in Libby Asbestos Deaths


        Mine company and seven executives face criminal charges

                         (By Andrew Schneider)

       Missoula, Mont.--W.R. Grace & Co. and seven of its current 
     or former executives have been indicted on federal charges 
     that they knowingly put their workers and the public in 
     danger through exposure to vermiculite ore contaminated with 
     asbestos from the company's mine in from Libby, Mont.
       Hundreds of miners, their family members and townsfolk have 
     died and at least 1,200 have been sickened from exposure to 
     the asbestos-containing ore. The health effects also threaten 
     workers, their families and residents everywhere the ore was 
     shipped, including Seattle, and people living in millions of 
     homes nationwide where it was used as insulation.
       Yesterday, on the steps of the county courthouse here, U.S. 
     Attorney Bill Mercer announced the 10-count indictment, 
     alleging conspiracy, knowing endangerment, obstruction of 
     justice and wire fraud.
       ``A human and environmental tragedy has occurred,'' he 
     said. ``This prosecution seeks to hold Grace and its 
     executives responsible.''
       ``This is one of the most significant criminal indictments 
     for environmental crime in our history,'' said Lori Hanson, 
     special agent in charge of the Environmental Protection 
     Agency's environmental crime section in Denver.
       In a statement released for Grace by a public-relations 
     firm, the company ``categorically denies any criminal 
     wrongdoing.''
       Grace criticized the government for releasing the 
     indictment before providing a copy to the company. ``We are 
     surprised by the government's methods and disappointed by its 
     determination to bring these allegations. .  .  . We look 
     forward to setting the record straight.''
       Federal environmental officials began examining the hazards 
     in Libby after Nov. 19, 1999, when the Seattle Post-
     Intelligencer began publishing a series of stories about what 
     the government has called ``the nation's biggest 
     environmental disaster.'' Within three days of the P-I's 
     first report, an EPA emergency team arrived in the tiny 
     northwestern Montana town.
       Present at the announcement yesterday were Libby victims 
     Lester and Norita Skramstad and Gayla Benefield.
       Lester Skramstad has asbestosis, as does his wife, Norita, 
     and two of their children. He spoke softly but forcefully, 
     struggling for breath to launch his words into the wind on a 
     blustery winter afternoon. ``I've waited a long time for 
     this,'' he said. ``It's a great day to be alive.''
       If found guilty, the individual defendants face from five 
     to 15 years in prison on each count, which for some of the 
     executives could be as much as 70 years.
       Grace could be fined up to twice the profits from its 
     alleged criminal acts or twice the losses suffered by 
     victims. According to the indictments, Grace made more than 
     $140 million in after-tax profits from the Libby mine, which 
     would mean a fine of up to $280 million. Alternatively, the 
     court could fine the company twice what it computes the loss 
     to be from more than a thousand Libby victims. In addition, 
     the court could order restitution for the victims.
       ``This criminal indictment is intended to send a clear 
     message: We will pursue corporations and senior managers who 
     knowingly disregard environmental laws and jeopardize the 
     health and welfare of workers and the public,'' said Thomas 
     Skinner, EPA's acting assistant administrator for 
     enforcement, yesterday.
       The executives charged are Alan Stringer, formerly general 
     manager of the Libby mine and Grace's representative during 
     the government's Superfund cleanup; Henry Eschenbach, 
     formerly director of health, safety and toxicology in Grace's 
     industrial chemical group; Jack Wolter, formerly Grace vice 
     president and general manager of its construction products 
     division; Bill McCaig, also formerly general manager of the 
     mine; Robert Bettacchi, formerly president of the 
     construction products division and senior vice president of 
     Grace; O. Mario Favorito, former Grace general counsel; and 
     Robert Walsh, formerly a Grace senior vice president.
       The 49-page indictment accuses Grace of knowingly releasing 
     asbestos into the air, placing miners, their families and 
     townspeople at risk, and of defrauding the government by 
     obstructing the efforts of various agencies including the 
     EPA, increasing profits and avoiding liability for damages by 
     doing so.


                          P-I's Investigation

       Tens of thousands of pages of internal Grace documents and 
     court papers were the basis of scores of stories in the P-1 
     on Libby and the deadly ore that Grace shipped throughout the 
     world. Those documents show years of extensive communication 
     among Grace's top health, marketing and legal managers and 
     mine officials in Libby about concealing the danger of 
     asbestos in the ore and consumer products that were made from 
     it.
       They discussed methods to keep federal investigators from 
     studying the health of the miners, the potential harm to 
     Grace sales if asbestos warnings were posted on its products, 
     and the effort to mask the hazard of working with the 
     contaminated ore.
       ``The prosecution cannot eliminate the death and disease in 
     Libby,'' said John Heberling, a lawyer with McGarvey, 
     Heberling, Sullivan and McGarvey. ``But there is comfort in 
     the hope that criminal convictions will say to corporate 
     America . . . managers will be held criminally accountable if 
     they lie and deny and watch workers die.''
       For years, the Kalispell, Mont., firm has been fighting for 
     damages from Grace on behalf of the families of the dead and 
     the dying from Libby.


                         Mine's huge production

       Opened in 1913, the mine is six miles from Libby. Grace 
     bought it in 1963 and closed it in 1990. In its heyday, the 
     mine produced 80 percent of the world's vermiculite. The 
     company still operates smaller vermiculite mines in South 
     Carolina.
       Vermiculite, a mineral similar to mica, expands when heated 
     into featherweight pieces that have been used commercially 
     for decades in attic and wall insulation, wallboard, 
     fireproofing, and plant nursery and forestry products. It was 
     also used in scores of consumer products, such as lawn and 
     garden supplies and cat litter.

[[Page 1663]]

       Exposure to the tremolite asbestos fibers, which 
     contaminate the vermiculite ore, has caused hundreds of cases 
     of asbestosis, lung cancer and mesothelioma in Libby and an 
     untold number at hundreds of other sites across North America 
     where the ore was processed.
       Criminal investigators and lawyers from the EPA, the 
     Internal Revenue Service and the U.S. Attorney's offices in 
     Montana often put in 12- to 15-hour days while preparing the 
     case.
       Investigators and lawyers from the Justice Department and 
     the EPA's headquarters also assisted. The haste was required 
     because prosecutors were up against a five-year statute of 
     limitation, based on the arrival of the first federal team in 
     Libby after the P-1 stories. They gained a three-month 
     extension of that limitation.


                            A troubled past

       The EPA said that over the years it had filed several 
     complaints against Grace over the company's environmental 
     practices. The only previous criminal charge against the 
     Columbia, Md.-based corporation was in the mid-'80s. Grace 
     was indicted on two counts of lying to the agency about the 
     quantity of hazardous material used in its packaging plant in 
     Woburn, Mass. In 1988, the company pleaded guilty to one 
     count and was fined $10,000, the maximum at that time. The 
     charges were brought after Grace and another company were 
     sued after being accused of illegally dumping toxic 
     chemicals, contaminating two wells and, some believe, 
     resulting in the deaths of five children from leukemia. Grace 
     paid the families $8 million to settle the suits. The book 
     and movie ``A Civil Action'' were based on the Woburn case.
       Grace, which produces construction materials, building 
     materials and packaging, filed for Chapter 11 bankruptcy 
     protection in 2001 because of the ``sharply increasing number 
     of asbestos claims,'' Paul Norris, Grace's chairman and CEO, 
     said at the time.
       May 2002, the Justice Department intervened in Grace's 
     bankruptcy, the first time it had entered such a case, 
     alleging that before Grace filed for Chapter 11, it concealed 
     money in new companies it bought. Justice Department lawyers 
     said Grace's action was a ``fraudulent transfer'' of money to 
     protect itself from civil suits.
       In November of that year, just before the trial was to 
     begin, the St. Louis Post-Dispatch reported that the 
     companies returned almost $1 billion to the bankruptcy judges 
     holding Grace's assets. Grace is far from out of business. 
     Norris said the company has annual sales of about $2 billion, 
     more than 6,000 employees and operations in nearly 40 
     countries.
       Mercer refused comment on whether there would be more 
     indictments from other locations where Grace had operations. 
     Hanson said she had been discussing the investigation with 
     her counterparts in EPA regions throughout the country.
       Libby victim Benefield said yesterday that as she watched 
     the announcement of the indictments, her thoughts were with 
     her parents, Perley and Margaret Vatland, both of whom died 
     of asbestosis. She wore on her coat a costume-jewelry pin her 
     mother, who sold Avon products, bought from Avon for herself.
       ``Somewhere today they're smiling,'' she said, fingering 
     the pin. ``I just know it.''


                                 online

       Read Uncivil Action, the P-O's award-winning coverage of 
     the deadly legacy of asbestos mining, beginning with a 
     November 1999 story about hundreds dead or dying in Libby, 
     Mont.

  Mrs. MURRAY. 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. GRASSLEY. 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. GRASSLEY. Mr. President, we are in our second day of debate on 
the important Class Action Fairness Act of 2005. Because of my 
responsibilities as chairman of the Senate Finance Committee, I have 
not had a chance to participate in the debate of a bill that I have 
been the sponsor of going back to the 105th Congress. It is a pleasure 
for me to participate and anticipate the passage of this legislation.
  It is about time that the Senate gets this bill done and gets it to 
the President. Of course, I am very pleased that Majority Leader Frist 
sees this as an important enough issue to move so early in the 109th 
Congress. I also thank Chairman Specter, as new chairman of the Senate 
Judiciary Committee, for getting this class action bill through 
committee so very quickly. I hope we can move expeditiously with few or 
no amendments, pass this bill, and have the President sign it, which we 
are sure he will.
  My colleagues will recall that in the 108th Congress, Senator Frist 
brought the class action fairness bill to the floor in October 2003, 
but we were not able to proceed to the bill. We lost the vote on 
cloture on the motion to proceed by just a one-vote margin; in other 
words, 50 votes as opposed to the 60-vote supermajority that cloture 
takes.
  After that vote, I worked with Senator Hatch, who was then chairman 
of the Judiciary Committee, and our lead Democratic cosponsors, 
Senators Kohl and Carper, to modify the bill to address concerns that 
were raised by three Senators and maybe others, but I remember 
specifically Senators Dodd, Landrieu, and Schumer. Then we reintroduced 
the Class Action Fairness Act in February 2004 as a new bill with a new 
number, S. 2062. It contained the compromise language that we worked 
out with Senators Dodd, Landrieu, and Schumer. Senator Frist then 
attempted to bring up the bill last July. Unfortunately, we were once 
again denied the ability to close debate on the bill, and we lost, 
again, a cloture vote. This was because Senators wanted to offer 
nongermane amendments--amendments, as you know, Mr. President, that 
have absolutely nothing to do with the subject matter of the underlying 
bill. This was particularly disappointing to me after all of the hard 
work we had done to reach an acceptable compromise with several 
Democrats. We could have passed the bill in the 108th Congress, but raw 
politics got in the way.
  Now is the time to get this bill done. We have reintroduced the 
language contained in last year's bill, a compromise worked out with 
Senators Dodd, Landrieu, and Schumer. That is what is now before us in 
S. 5, the very same bill. We made no changes to last year's bipartisan 
compromise. So I hope we can stop having politics interfere with this 
bill and pass what is a relatively modest bill that will help reform a 
class action regime that has gotten to be very bad, which ends up most 
of the time serving no one except the lawyers who bring these class 
action suits.
  I would like to give some background on the need for this very 
important legislation. Everyone has heard about the abuses going on 
with the current class action system. These problems undermine the 
rights of both plaintiffs and defendants. Class members often do not 
understand what their rights are in a class action suit, while the 
class action lawyers drive the lawsuits and the settlements. Class 
members cannot understand what the court and the settlement notices say 
because they are in very small type and written in hard-to-understand 
legalese. So class members often do not understand their rights and 
they don't understand the consequences of their actions with respect to 
the class action lawsuit in which they are invited to participate.
  Moreover, many class action settlements only benefit the lawyers, 
with little or nothing going to the class members. We are all familiar 
with the class action settlements where the plaintiffs got coupons of 
little value, or maybe no value, and the lawyers got all of the money 
available in the settlement agreement. So what is the point of bringing 
a lawsuit? I thought it was to find redress for the plaintiffs and not 
to benefit the lawyers who bring the case. But that is what happens 
many times now in these class action lawsuits. The lawyers drive those 
cases, not the individuals who allegedly have been injured. The lawyers 
are the ones who get the millions and millions of dollars in fees while 
the people who allegedly have been injured get worthless coupons.
  In addition, the current class action rules are such that the 
majority of large nationwide class actions are allowed to proceed to 
State court when they are clearly the kinds of cases that should be 
decided in Federal Court. The U.S. Constitution provides that cases 
involving citizens of two different States and an amount of controversy 
of $75,000 can be heard in Federal Court. However, the law has been 
interpreted in such a way that class action lawsuits; that is, cases 
involving large

[[Page 1664]]

sums of money, citizens of many different States, and issues of 
national concern, have been restricted to State courts even though they 
have national consequences. Crafty lawyers game the system. Crafty 
lawyers file these large class actions in certain courts. They are 
shopping for magnet State courts, and they are able to keep them there.
  For example, in Madison County, IL, the most notorious class action 
magnet State court, which has been called a ``judicial hellhole,'' 
class action filings have jumped from 77 in 2002 to 106 in 2003. I 
understand that Madison County has had an increase of over 5,000 
percent in the number of class action filings since 1998. That surely 
says something. Clearly, the judges there are playing somewhat fast and 
loose with the class action rules when they are deciding whether to 
certify a class action lawsuit. So unscrupulous lawyers are gaming the 
present rules to steer their class action cases to these certain 
preferred State courts, such as Madison County, IL, where judges are 
quick to certify classes, quick to approve settlements, with little 
regard to the class members' interests or the parties' due process 
rights. Of course, that is the reason for this legislation. We need to 
do something about this kind of abuse of the judicial process.
  Class action lawsuits at least should have the opportunity to be 
heard in Federal court because usually they are the cases that involve 
the most amount of money, citizens from all across the country, and 
issues of nationwide concern. Why should a State county court be 
deciding these kinds of class action cases that impact people all 
across the country? Of course, that just doesn't make sense to me; 
hence, the authorship of this legislation. I hope it doesn't make sense 
to at least a majority of my colleagues.
  Both the House and Senate held numerous hearings on this legislation 
and on other kinds of class action abuse. We heard about class lawyers 
manipulating case pleadings to avoid removal of a class action lawsuit 
to Federal court, where it should be, claiming that their clients 
suffered under $75,000 in damages in order to avoid the Federal 
jurisdictional amount threshold.
  We heard about class lawyers crafting lawsuits in such a way to 
defeat the complete diversity requirement by ensuring that at least one 
named class member was from the same State as one of the defendants 
even if every other class member was from one of the other 49 States.
  We heard about attorneys who filed the same class action lawsuit in 
dozens of State courts all across the country in a race to see which 
judge would certify the fastest and the broadest of class.
  We heard about class action lawyers entering into collusive 
settlements with defendant attorneys which were not in the best 
interest of class members.
  These are only a few of the gamesmanship tactics lawyers like to 
utilize to bring down the entire class action legal system. The bottom 
line is that many of these class actions are just plain frivolous 
lawsuits that are cooked up by the lawyers to make a quick buck, with 
little or no benefit to the class members who the lawyers are supposed 
to be representing.
  Out-of-control frivolous filings are a real drag on the economy. Many 
a good business is being hurt by this frivolous litigation cost. 
Unfortunately, the current class action rules are contributing to the 
cost of business all across America, and it particularly hits small 
business because it is the small business that gets caught up in the 
class action web without the resources to fight.
  Too many frivolous lawsuits are being filed. Too many good companies 
and consumers are having to pay for this lawyer greed. Make no mistake 
about it, there is a real impact on the bottom line for many of these 
companies and, to some extent, on the economy as a whole. They have to 
eat this increased litigation cost or else it is farmed out to 
consumers, such as you and me, and this is all in the form of higher 
prices for goods and services we buy.
  This is unacceptable, and we need to do something about this. We need 
to restore some commonsense reform to our legal system. We need to 
restore common sense to the class action system. We should pass this 
bill.
  I now wish to say something about class action lawsuits. They can be 
a very good tool for many plaintiffs with the same claims to band 
together to seek redress from a company that has wronged them. I am not 
against the use of class action lawsuits, and neither are other 
supporters of this bill. We are not here to put a stop to the class 
action tool.
  I certainly know my friend and original cosponsor of this bill, 
Senator Kohl, feels the same as I do. People who have been injured 
should be able to sue companies that do not follow the law. Our problem 
is many class actions are not proceeding in the way they were 
originally intended.
  Our problem is many of these lawsuits are not fair and violate the 
due process rights of both plaintiffs as well as defendants.
  Our problem is many times these lawsuits are not helping the class 
members at all. They are an effective tool for lawyers to make a big, 
easy buck.
  Our problem is these kinds of suits should have an opportunity to be 
heard in Federal court, not stuck in a magnet court in a county that 
has no connection whatsoever to the case. That is why Senator Kohl and 
I joined forces several Congresses ago--this is the fifth Congress this 
bill has been around for us to try to do something about this 
situation. That is a period of 8 years past and 10 years including this 
Congress--to do something about the problems we were seeing and about 
the runaway abuses.
  The Class Action Fairness Act will address some of the more egregious 
problems with the class action system while preserving class action 
lawsuits as a very important tool which brings representation to the 
unrepresented.
  Let me underscore for my colleagues that S. 5 is a very delicate 
compromise. As my colleagues already know, this bill has gone through 
many changes to accommodate Democratic Senators, much to the 
frustration of some of my Republican colleagues who think we have gone 
too far.
  I worked in good faith with these colleagues on the other side of the 
aisle to bring people together and to address valid concerns to 
increase support for this bill, most importantly to, hopefully, have 60 
votes on board, the supermajority it takes to bring a halt to debate, 
to get to finality, to get this bill passed, to get it to the House 
where we are told it will pass if we do not change it, and go to the 
President very quickly.
  I did not think then that we needed to make any changes to the class 
action bill that was originally introduced several Congresses ago, but 
as compromise is often necessary in this process if I wanted to move 
the class action bill forward, I did my best to listen to the issues 
raised and to make modifications to the bill where there was room for 
that compromise.
  Nevertheless, with all the compromises we cut, S. 5 still retains the 
goal we set out to achieve: to fix some of the most egregious problems 
we are seeing in the class action system and to provide a more 
legitimate forum for nationwide class action lawsuits.
  The deal that was struck is a very carefully crafted compromise that 
does not need to be modified any further. So I am asking my colleagues 
to withhold the offering of amendments to avoid disrupting the balance 
we have achieved.
  My colleagues should not be fooled. The amendments that are going to 
be offered are an attempt to weaken or gut the bill. Some amendments 
may sound reasonable, but they pose a problem in the other body. Other 
amendments may sound good, but they do not have anything to do with 
class action reform. Other amendments are, plain and simple, poison 
pills.
  We have worked far too long and we have worked far too hard to have 
this bill come down because folks are misled into supporting an 
amendment that in reality perpetuates the problem and preserves the 
status quo.

[[Page 1665]]

  We have worked far too long and too hard to have this bill delayed 
and complicated with amendments that the House will never accept.
  We have also worked far too long and far too hard to have this bill 
bogged down by amendments that are not critical to the core purpose of 
the legislation.
  So then let's get this bill past the finish line, not create more 
hurdles and obstacles. I ask my colleagues to vote against the 
amendments and keep the bill clean. How often do we in this body, the 
Senate of the United States, have the respect the House is giving us by 
saying if this bill is not changed any more, they will buy it the way 
it is? That happens once in a decade. We ought to take advantage of it.
  I would like to highlight, before I sit down, some of the changes we 
made to the bill to increase support for this bill since Senator Kohl 
and I introduced the first Class Action Fairness Act in the 105th 
Congress, now 8 years ago.
  The bill, as was originally introduced, did several things. It 
required that notice of proposed settlements in all class actions, as 
well as all class notices, be in clear, easily understood English and 
include all material settlements, including amounts and sources of 
attorney's fees. Since plaintiffs give up their right to sue, they need 
to understand the ramifications of their actions and should not have to 
hire another attorney to find out what these notices mean.
  Then our bill required that State attorneys general or other 
responsible State government officials be notified of any proposed 
class settlement that would affect the residents of their States. We 
included this provision to help protect class members because such 
notice would provide State officials with an opportunity to object if 
the settlement terms are unfair to their citizens.
  Our bill also required that courts closely scrutinize class action 
settlements where the plaintiffs only receive coupons or noncash awards 
while the lawyers get the bulk of the money.
  It required the Judicial Conference to report back to the Congress on 
the best practices in class action cases and how to best ensure 
fairness of these class action settlements.
  Finally, the bill allowed more class action lawsuits to be removed 
from State court to Federal court. The bill eliminated the complete 
diversity rule for class action cases but left in State courts those 
class actions with fewer than 100 plaintiffs, class actions that 
involve less than $5 million, and class actions in which a State 
government entity is the primary defendant.
  Our bill still does many of these things, but we have made a number 
of modifications to get this bipartisan support.
  In the Judiciary Committee in the 108th Congress, we incorporated 
Senator Feinstein's amendment which would leave in State court class 
action cases brought against a company in its home State where at least 
two-thirds or more of the class members are also residents of that 
State.
  We also incorporated changes to address issues raised by Senator 
Specter relative to how mass actions would be treated under this bill. 
In our negotiations and outside the committee with Senators Schumer, 
Dodd, and Landrieu, we made numerous changes, so I will only mention a 
few of the more important compromises we reached.
  For example, we made changes to the coupon settlement provisions in 
the bill providing that attorney's fees must be based either on the 
value of the coupons actually redeemed by class members or the hours 
actually billed in prosecuting the case. We deleted for these Senators 
the bounties provision because of a concern that it would harm civil 
rights plaintiffs.
  We deleted provisions in the bill that dealt with specific notice 
requirements because the Judicial Conference had already approved 
similar notice arrangements to the Federal Rules of Civil Procedure.
  To address questions about the merry-go-round issue, we eliminated a 
provision dealing with the dismissal of cases that fail to meet rule 23 
requirements so that existing law applies.
  We deleted a provision allowing plaintiff class action members to 
remove class actions to Federal court because of gaming concerns. We 
placed reasonable time limits on the appellate review of remand orders 
in the bill. We clarified that citizenship of proposed class members is 
to be determined on the date the plaintiff filed the original complaint 
or when plaintiffs amend the complaint.
  We made further modifications to the Feinstein compromise already 
referred to and to the mass action language Senator Specter was 
concerned about. We clarified that nothing in the bill restricts the 
authority of the Judicial Conference to promulgate rules with respect 
to class actions.
  Finally, we drafted a new what is called local class action 
exception, which would allow class members to remain in State court if, 
one, more than two-thirds of the class members are citizens of this 
forum State; two, 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 for the plaintiffs' claims; three, 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, four and lastly, 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 3 years.
  We did all of this to ensure that truly local class action cases, 
such as a plant explosion or some other localized event, would be able 
to stay in State court. So we have made significant concessions to get 
our Democratic colleagues on board this Class Action Fairness Act. Of 
course, some of my Republican colleagues feel we have made too many 
compromises. But these folks on the other side of the aisle have been 
telling us that they are ready to support the bill and get it passed, 
so the time has come that hopefully no more politics are played, that 
we get down to business and we get this bill done. It is time to make 
real progress on a class of lawsuits that has become burdensome for 
business, not beneficial to the plaintiffs, and enriching of attorneys.
  If we do that--and we do that when we pass this bill--again I want to 
remind my colleagues that we have crafted a carefully balanced bill 
that consists of a number of compromises and some would say too many 
compromises. I think we have done a pretty good job of addressing 
legitimate concerns with the bill and I am hopeful we will not see a 
lot of amendments to disrupt this compromise. I am hopeful my 
colleagues will join me and vote against all killer amendments that gut 
or weaken the bill. I am hopeful my colleagues will join me and vote 
against poison-pill amendments that the House will never accept.
  All of these amendments need to be defeated because we should send a 
clean bill to the House. All of our hard work on forging a bipartisan 
compromise bill should not go down the drain.
  The bottom line is this class action reform is badly needed. Both 
plaintiffs and defendants alike are calling for change. The Class 
Action Fairness Act will help curb the many problems that have plagued 
the class action system. S. 5 will increase class members' protection 
and ensure the approval of fair settlements. It will allow nationwide 
class actions to be heard in a proper forum, the Federal courts, but 
keep primarily State class actions where they belong, in State court. 
It will preserve the process but put a stop to the more egregious 
abuses. It will also put a stop to the frivolous lawsuits that are a 
drag on the economy.
  Now that we have worked together on a very delicate compromise, we 
should be able to get this bipartisan bill done without changes.
  I see another person who has worked very hard on this bill has come 
to the Chamber and that is Senator Carper of Delaware. There is no 
person who has been more determined to get this bill passed and get it 
passed in a bipartisan way, and I appreciate very much the cooperation 
he has given us over the

[[Page 1666]]

last year but, more importantly, in a time when I have been involved 
with a lot of issues other than class action, he has kept me focused on 
this bill that I want to get passed, and he has helped me get the job 
done. I thank Senator Carper as well as other Democrats who have helped 
in this process.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. CARPER. Mr. President, before Senator Grassley leaves the floor, 
I simply want to say how much I have enjoyed and appreciated the 
opportunity to work with him on this issue. If we go back 7 years when 
this idea first took legislative form and look at the changes that have 
occurred over each of the last three or four Congresses, they have been 
dramatic.
  My goal, and I believe it is a goal many of us share who support the 
legislation, is to make sure that when what I term little people are 
harmed by the actions of big companies or small companies, those little 
people have a chance to aggregate together and be made whole. I think 
we agree on that principle.
  We want to make sure the companies that do something that is wrong or 
that are contemplating an action or behavior that is inappropriate or 
wrong, that they know if they get caught, they will pay a price, and 
class actions can help catch them at that and make sure they are put on 
notice. I think that is a principle on which we all agree.
  A third principle is to make sure the defendant companies, if they 
are called on the carpet, can go to a court where they have a fair 
chance of defending themselves and presenting their case.
  The last one is to try to do all of this in the context of not 
needlessly overburdening the Federal judiciary.
  It is tough to balance all of those different principles, but I think 
on the legislation the Senator has authored and that some of us have 
been privileged to work with the Senator to help shape, we have come 
close to realizing those principles.
  I wanted to say a special thanks to the Senator for his willingness 
to work with people on both sides of the aisle, to hear us out, to hear 
our ideas, and be willing to accept a number of the ideas we have put 
forward. My hope is at the end of this week we will have passed that 
legislation. It is a delicate compromise and balance and, God willing, 
our friends in the House of Representatives will accept that and the 
President will sign it into law.
  I thank the Senator.
  Mr. GRASSLEY. I thank my colleague from Delaware, and I suggest the 
absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. DORGAN. Mr. President, I ask unanimous consent that the order for 
the quorum call be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. Mr. President, I ask unanimous consent that I be able to 
speak for as much time as I consume in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                              The Tax Code

  Mr. DORGAN. Mr. President, something is happening in our Tax Code 
that very few people understand, and I wanted to call it to their 
attention.
  There is something going on called repatriation, which is a $2 word 
that probably people won't understand. But I want to explain it.
  Repatriation is a process by which U.S. companies that have moved 
some operations overseas, begun to manufacture and sell products 
overseas and made income overseas, are able to bring their profits back 
into this country.
  When an American corporation makes a profit as a result of selling 
overseas, or producing overseas--we have something in this country 
called deferral in our tax law. It says you can defer paying taxes on 
your foreign profits as long as you don't bring them back into this 
country. But when you bring them back--which is called repatriation--
then you must pay taxes like everybody else does.
  Let's take Huffy bicycle company, for example. The Huffy bicycle 
company made bicycles for almost 100 years in this country. They sold 
them in Wal-Mart, Sears, and Kmart. Huffy then shut down their plants 
in the United States, and got rid of their workers. Today Huffy 
bicycles are still sold in the United States but they are made in China 
for roughly 30 cents or 40 cents an hour labor by people who work 7 
days a week, 10 to 12 hours a day. The company decided they should 
actually manufacture their bicycles in China and presumably make more 
money.
  What happens to that income? We have a perverse and insidious 
provision in our tax law that says, shut your manufacturing plant, move 
those jobs overseas, and we will give you a deal. You don't have to pay 
taxes on the profits that you once made in the United States when you 
made that bicycle or the Radio Flyer little red wagon, which is now 
made in China, or the Newton cookies, but now earn on the same products 
made overseas until you bring those profits back to the United States. 
Only then do you have to pay taxes. That is the deal.
  Whenever companies defer their tax obligation, they understand that 
when they repatriate the income to the U.S., they are going to have to 
pay taxes. But they got a special deal, as is always the case, it 
seems.
  Last year a bill was passed with a tiny, little provision which was 
very controversial. I opposed the provision, but it got passed. The 
special deal is that the repatriation of income back into this country 
now by companies that earned that income overseas--in some cases by 
moving their American jobs overseas--now get to pay taxes at the 5\1/4\ 
percent tax rate.
  What prompts me to come to the floor to talk about this, despite the 
fact I opposed this last year, was a New York Times article that says, 
``Hitting the Tax Break Jackpot.''
  Let me quote a part of it.

       When Congress passed a one-time tax break on foreign 
     profits last fall, lawmakers said their main purpose was to 
     encourage American companies to build new operations and hire 
     more workers here at home. But as corporations are gearing up 
     to bring tens of billions of dollars back to the United 
     States this year, adding jobs is far from their highest 
     priority. Indeed, some companies say they might end up 
     cutting their workforces here in the U.S.
       Hewlett-Packard, which has accumulated $14 billion in 
     profits and lobbied intensely for the tax break, announced 
     January 10 that it would continue to reduce its workforce 
     this year. That would come on top of more than 25,000 jobs 
     eliminated during the previous 3 years.

  We have a provision in tax law now that says to these companies that 
have earned this money overseas, you deferred taxes on them previously, 
now you are going to bring them back. We encouraged them to bring them 
back. And, by the way, while all the other American people are working 
and paying income taxes--and, yes, those at the bottom of the ladder 
who pay income taxes pay the lowest rate of 10 percent but it is 10 
percent, 15 percent, up to 35 percent, despite the fact everybody else 
is going to pay a higher rate of taxes--you repatriate those profits, 
and we will allow you to pay an income tax rate of 5\1/4\ percent.
  There was a Governor of Texas named Ma Ferguson. Ma Ferguson became 
Governor of Texas, I believe, when her husband died. As Governor of 
Texas, Ma Ferguson got involved in a very controversial issue dealing 
with some sort of initiative in Texas about English only. She held a 
press conference. She held up a Bible. She said: If English is good 
enough for Jesus, it is good enough for Texas.
  She didn't quite understand, I guess.
  But the good enough concept is something we all talk about here. If 
the 5\1/4\ percent income tax rate is good enough for the biggest 
corporations in this country that have moved jobs overseas, and now 
bring profits back and get to pay 5\1/4\ percent, why is it not good 
enough for the Olsens, Johnsons, and the Larsens? Those are names from 
my hometown. Why is it not good enough for the people living down the 
street, or up the block, or on the farm who may pay multiples of this 
tax rate?
  Let me show a chart. These companies aren't doing anything wrong.

[[Page 1667]]

These companies are simply going to benefit handsomely from what this 
Congress did for them--to say to them: By the way, we will give you a 
very special deal. This is Exxon Mobil, IBM, Hewlett-Packard, Pepsi-
Cola, and so on--unpatriated foreign earnings totaling tens of billions 
of dollars. And they get to pay income taxes at 5\1/4\ percent. That 
sounds like a sales tax, doesn't it? That sounds like a sales tax and 
not an income tax. But do average folks get to pay an income tax at 
5\1/4\? No. Nobody else does.
  It kind of reminds me Tom Paxton's old song. He seemed to be able to 
say it in kind of a simple way. He got all excited--this folksinger--
when the Congress gave a big, old loan to Chrysler Corporation. So he 
wrote a song saying, ``I'm Changing My Name to Chrysler.''

       Oh the price of gold is rising out of sight, and the dollar 
     is in sorry shape tonight, what a dollar used to get us now 
     won't get a head of lettuce. No the economic forecast isn't 
     bright.

  He says:

       I'm changing my name to Chrysler. I am going down to 
     Washington, DC, I will tell some power broker, ``What you did 
     for Iacocca would be perfectly acceptable to me.''

  Maybe he would want to write a couple more verses. Maybe he would 
like to pay income taxes at 5\1/4\ percent. Maybe every citizen of my 
home State of North Dakota would like to be able to pay a 5\1/4\ 
percent income tax rate.
  If it is good enough for Exxon Mobil, why isn't it good enough for my 
citizens, or good enough for all the citizens of this country?
  This was done last year with very little debate; just stuck in a big 
old bill and says it is going to create jobs. Let us give a special 
deal to some big old economic interests. Nobody will care and nobody 
will know.
  Now we see the result--hitting the tax break jackpot. Those who are 
going to get the biggest benefits as a result of the generosity which I 
think has probably not ever been given before. All of these companies 
expected that the profits they earned overseas would be taxed at the 
regular tax rate when they brought the profits back. That is what they 
were told. That is what the deal was. That is what the deferral was in 
the Tax Code.
  Guess what. They got a big old fat tax break unlike any that is given 
to any other American citizen. They get to pay 5.25 percent.
  By the way, they boast that they would be creating jobs and that now 
appears not to be true. Some of the same companies that moved their 
American jobs overseas to boost foreign profits now get a special deal 
back home to pay lower taxes than virtually any other American citizen.
  Congress ought to hang its head and maybe Tom Paxton ought to write 
another song: If it is good enough for Hewlett-Packard and good enough 
for Exxon Mobil, it ought to be good enough for constituents who live 
up the block and down the street and on the farm in this country.
  Enough about that. These things happen behind closed doors with 
little debate and great complexity and people do not understand. 
Somehow at the end of the day it is always kind of the cake and crumbs 
approach to public policy: The big interests get the cake; the little 
folks get the crumbs and hope everyone is happy and nobody debates too 
much about it.


                            Social Security

  There is a lot of this influence in the Social Security debate. I 
will talk for a moment about that. I also will talk about the budget 
that was offered yesterday. The Social Security debate is an example of 
this strange approach to public policy.
  Social Security was created in 1935. The first monthly benefit was 
paid in 1940. Social Security has lifted tens of millions of senior 
citizens out of poverty. Fifty percent of America's elderly were living 
in poverty when Social Security was enacted. Today it is less than 10 
percent.
  The fact is, Social Security works. It has been a Godsend for a lot 
of people who reach retirement age. Social Security is the one 
dependable source of income they know will be there. It is the social 
insurance that they have paid for over all the years when they worked. 
Social Security includes not only old-age retirement benefits but also 
provides disability and survivor benefits. It is the one piece of that 
social insurance that workers knew would be there, and it has always 
been there.
  Now, in 1983, a commission said, when the baby boomers retire, they 
will hit the retirement rolls like a tidal wave.
  After the Second World War, the soldiers came home. We have all seen 
the pictures. We beat back the oppression of Hitler and Nazism. What a 
wonderful time. There was a great outpouring of romance and affection 
when the soldiers got home. We had the biggest baby crop in the history 
of the world. We had a lot of babies. Those GIs came home; they had 
families; they raised families; they built schools; they created jobs; 
they went to college on the GI bill. They built this country.
  There comes a time, then, when the baby boomers will retire and we 
have a strain on the Social Security system. So we decided to save for 
that. This year, for example, we collected Social Security taxes from 
worker paychecks--$151 billion more than needed to pay out current 
Social Security benefits. We are doing that every year. This will help 
grow Social Security trust assets to over $5 trillion by 2018.
  The President said the other night something that is not right or not 
accurate. He said, in the year 2018, the Social Security system will be 
paying out more than it takes in. That is just flat wrong. Our 
colleague, Daniel Patrick Moynihan, once said everyone is entitled to 
their own opinion but not everyone is entitled to their own set of 
facts.
  In the year 2018, the Social Security system will be taking in taxes 
from paychecks as well as a substantial amount of interest that will 
exist on the Treasury bonds that have been accruing over these many 
years in the Social Security trust. This interest, along with the tax 
collected from paychecks, will far exceed that which is necessary to be 
paid out. It is the year 2042 or 2052, according to either the Social 
Security actuaries or the Congressional Budget Office, where we hit the 
point we can no longer pay full benefits. It is not bankrupt at that 
point, but unless we make some adjustment, we cannot pay full benefits.
  The President's proposal for private accounts, however, anticipates a 
level of investment return on private accounts that, if realized, means 
the economic growth in the country would put Social Security in a 
position where it would not have a problem at all for the long term. 
With that kind of economic growth as projected by the President, there 
will be no problem in Social Security. It will meet its obligations 
over the long term.
  But we have a circumstance now where the President and Administration 
official say Social Security is in crisis, it is bankrupt, it is flat 
bust, depending on whom you listen to. The purpose of using that 
language is to convince people there is a very serious problem here. 
There may need to be some adjustments because people are living longer, 
better, and healthier lives. But there is not a crisis that justifies 
taking the Social Security system apart, which is what the President 
proposes to do.
  He proposes several things, none of which he talks about but all of 
which are part of his plan: First, borrow a great deal of money, from 
$1 to $3 trillion. Second, change the indexing in Social Security and 
cut benefits. Under his plan, you are borrowing money, cutting 
benefits, investing the borrowed money in the stock market, and hoping 
in the end it comes out all right.
  All the indications I have seen, whether from the Congressional 
Budget Office or the Brookings Institution or others, say that workers 
will come out further behind, not ahead, as a result of this plan.
  The question, What should we do, is answered, we preserve, protect, 
and strengthen Social Security. This program works. It is probably true 
that almost none of those who are proposing these changes--borrowing 
money and putting it in private accounts and taking the Social Security 
system apart--

[[Page 1668]]

will ever have to worry about Social Security. Almost all of them will 
have sufficient assets to not be too worried about Social Security for 
themselves. But there are a lot of people in this country who do worry 
about Social Security. It has always been there and can always be there 
as part of the social insurance that represents the foundation of 
retirement security.
  Retirement security has two parts. One part is the guaranteed 
insurance on which we pay premiums in the form of taxes every month 
from our paychecks. That is always there. The second part in retirement 
security is private investments, 401(k)s, IRAs, and others. I support 
that. I believe we ought to do even more to incentivize private 
investments. But we should do that without taking apart the Social 
Security Program.


                               The Budget

  Now, finally, I mention the budget. The budget offered yesterday is a 
budget that has a great many controversial issues. All Members would 
agree we have the largest deficits in the history of this country. This 
country is way off track in fiscal policy. It needs to be put on track. 
It is not just fiscal policy. Fiscal and trade policy, between them, 
contributed somewhere between $1 to $1.2 trillion in debt just in the 
last year. That is unsustainable. You cannot continue to do that.
  The trade deficit we will know on Thursday of this week, but the 
trade deficit is somewhere around $600 to $700 billion--just in the 
past year. The fiscal policy budget deficit is somewhere around $560 
billion. This country cannot continue it do this. It is off track.
  We have to put it on track.
  The budget that was offered yesterday claims that we will have a 
budget deficit this year of roughly $427 billion. The fact is that 
figure takes the Social Security tax money we are supposed to be 
putting into Social Security and uses it to make the deficit look 
smaller. The real budget deficit for the current year is expected to be 
about $587 billion, and although that is the real deficit, that does 
not include the costs of Iraq, Afghanistan, and prosecuting the war 
because the President does not include that in the budget. Why? Because 
he says we do not know what it will cost despite the fact we have known 
for a long while it is costing at least $5 billion a month. He is now 
saying, I want you to approve an extra $80 billion in emergency 
funding. So we have roughly a $580 billion out-of-balance budget that 
does not even include the extra money that is necessary that the 
President knows he will ask Congress to spend on Iraq and Afghanistan 
and the military budget.
  You could get a much better grip on what all this costs by taking a 
look at the numbers in his proposed budget dealing with gross debt. He 
is proposing about a $677 billion increase in gross federal debt next 
year versus this year. So that is the real measure of how much we are 
spending that we do not have--a $677 billion increase in gross debt.
  Now, we know we have to tighten our belt. There are some things in 
the budget I agree with, some I do not. I do not agree that, for 
example, we ought to shut down Amtrak except for the east coast. That 
is what the President wants to do. I do not support that. I think rail 
passenger service strengthens this country and it is good for this 
country.
  I do not agree that we should cut back on Indian tribal colleges. It 
is the one step up and out of poverty and toward hope and opportunity 
that has been remarkably successful. I could go through a list of 
things where I might disagree.
  On the spending side, I do not agree with the President that we ought 
to begin building earth-penetrating, bunker-busting, designer nuclear 
weapons. What on Earth is that about? Spending money to build more 
nuclear weapons? Bunker busters? I do not understand that. Not only is 
it the wrong message for the world, it is spending money we do not have 
on things we do not need.
  Let me give you an example of a little program in this budget that we 
have spent almost $200 million on over the years. It is Television 
Marti. It is this country deciding to send television signals to the 
Cuban people to tell them how good things are outside of Cuba. Well, I 
visited Cuba. The Cuban people know how good things are outside of 
Cuba. That is why they try to escape Cuba.
  It is interesting, we spend all this money on Television Marti to 
broadcast into Cuba. We do it through Aerostat balloons, and now we do 
it with a sophisticated C-130 airplane, which is very expensive. And 
guess what. No Cubans see the television broadcasts. Oh, we broadcast. 
We have expensive studios and expensive people, and we have balloons, 
and we have airplanes, and we broadcast these television signals to the 
Cuban people. And the President wants to double the money for it, 
despite the fact that all those signals are jammed and the people do 
not see the broadcasts. I do not understand that.
  What on Earth could they be thinking about? They are going to double 
funding for the broadcasting signals into Cuba that are jammed and that 
the Cuban people cannot see. In fact, one of the reasons he wants to 
double funding is he wants to buy another airplane for this program. So 
you talk about waste, it is unbelievable.
  I think the most important point to make about the budget, however, 
is it is time for Republicans and Democrats, for the President and the 
Congress, to level with the American people. We have a fiscal policy 
that is reckless, is way out of control and is completely 
unsustainable. You cannot spend $677 billion that you do not have--not 
next year, not last year, not the year after next. You cannot have a 
trade deficit that is wildly out of balance. And you cannot have a Tax 
Code that incentivizes shutting down American factories and sending 
American jobs overseas. You cannot keep doing these things.
  There are some who take a look at this place, and they see a bunch of 
windbags in blue suits, I suppose. They think we just talk, and 
occasionally, when the lights go out, we pass something like a 5.25 
percent special tax break for the biggest economic interests.
  The American people deserve for us to be serious about fiscal policy, 
about trade policy and about tax policy, and for us to begin to put 
together a plan to put this country back on track. It is not all the 
fault of one side or the other. But if both sides do not pull in the 
right direction, this country cannot provide economic health and 
opportunity and growth in the future.
  What is happening in this country no one on this floor recognizes 
because no one in the Senate has lost a job because of outsourcing; no 
one here has lost a job because their plant was closed.
  Let me again say, as I conclude, the people who worked for Huffy 
Bicycles know what that is like. The people who worked for Schwinn 
Bicycles know what that is like. The people who worked for Fig Newton 
know what that is like. The people who worked for Levi Strauss know 
what that is like. The people who made T-shirts and shorts for Fruit of 
the Loom know exactly what that is like. They all lost their jobs 
because they cannot compete with people who are willing to work for 30 
cents an hour overseas. The employers have found a billion people on 
this Earth who are willing to do it. And they will not only work for 30 
cents an hour, you can put them in factories and dump sewage and dump 
chemicals into the air and water. You can work them 7 days a week, and 
if they decide to create a union, you can fire all of them, just like 
that.
  If this country does not get serious about stemming the outmigration 
of jobs and about stemming the hemorrhaging of red ink in international 
trade in our trade deficit and dealing with our fiscal policy and 
budget deficit, our economic future is not going to be a bright future.
  We have far too much promise as a country to let this happen to us. 
We need leadership, yes, from the White House, and from Congress, to 
deal with serious things in a serious way. I hope that happens soon. I 
want to be a part of a group that is bipartisan that says let's put 
this country back on track. But I see precious little evidence of 
bipartisanship these days. The minute

[[Page 1669]]

you stand and talk about the facts, all of a sudden you are being 
excessively partisan, and the White House comes after you; to wit, the 
story yesterday about the RNC and what they have decided to do with 
respect to Senator Reid.
  Well, there is a lot at stake in this Congress and this President 
getting it right for a change: on budgets, on trade, on taxes. And I, 
for one, hope we can begin a serious discussion about serious issues in 
the days ahead and give people some hope that their future will be a 
brighter and better future.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER (Mr. Thune). The Senator from Kansas.
  Mr. BROWNBACK. Mr. President, I rise to speak about the Class Action 
Fairness Act. It is the pending business before the body today. I want 
to spend a few minutes talking about this bill and talking about it in 
the context of some of the issues that the prior speaker has spoken 
about, the Senator from North Dakota, whom I have worked with on a 
number of issues over time. We agree on some issues; we disagree on 
some. We hopefully are going to be able to work together on a number of 
these issues.
  I view this bill as a chance for us to grow the economy, as a chance 
for us to do something to create jobs and opportunities. We may 
disagree on what are the various issues and what we need to do to 
create those jobs, to address issues for people who have lost work in a 
certain area, and to create them in another area. But what we are 
dealing with in this class action reform bill, this Class Action 
Fairness Act--I serve on the Judiciary Committee; we passed this bill 
out on a bipartisan vote in the Judiciary Committee--is to try to deal 
with the legal system that is putting too much burden on business so 
that it cannot create jobs here, and so then those jobs and economic 
opportunities go somewhere else.
  It was a bipartisan vote coming through the Judiciary Committee. If 
you look at the membership on that committee, you can see these are 
dedicated people from both sides of the aisle. But they look at this 
issue, and they say, here is a chance for us to reform a system, create 
growth and opportunity, create fairness within the country, within the 
system.
  That is the overall way we ought to be going. That is what we ought 
to be doing. That is why this is one of the lead substantive bills 
coming from the Senate right now. That is why we are hopeful of keeping 
it amendment free, so we can get it through the House, passed, and on 
to the President, so the American people can see some product, and they 
can see us dealing with a problem that they believe is there: too much 
litigation, litigation where it is not fair, litigation in ways that 
tend to help lawyers more than helping people--lawyers are people, but 
tending to help the lawyers who are bringing the case more than the 
people who are supposed to be attracted and dealt with in the case and 
in the class.
  The prior speaker spoke about a number of different problems we have. 
The budget deficit, clearly that is an issue. Clearly that is a problem 
for the country. Clearly, that is something the President puts down a 
mark to try to correct. I think the President is right on moving to cut 
the deficit in half in 5 years. I think we need to go further and 
balance in 7 years.
  Now, you say, well, wait a minute, how are you going to do that? We 
have done it before. We do it the same way the next time that we did it 
the last time; that is, you get the economy growing and sustain that 
growth in the economy. It kicks off a lot of receipts that way. Right 
now the economy is growing. It has started to move again. We have had 
some lethargic times, but it is growing, it is moving, it is creating 
jobs, and that creates receipts at the Government level--Federal, 
State, and local. That is starting to happen.
  The second piece of that equation is you have to restrain your growth 
of Federal spending. As your receipts go up, you cannot spend it at the 
same rate. You have to spend it at a slower rate. That is what the 
President is trying to do with this budget. He is saying, OK, if we can 
get this type of growth, we will have a slower rate of growth in the 
spending areas. You have to spend it in more prioritized areas.
  Clearly, the war on terrorism, homeland defense, key areas, and 
several others the President has identified, that is how we are going 
to get at the deficit. I don't agree with the whole budget document put 
forward. I do agree with the structure of the plan, that we get the 
deficit cut in half in five and, as I say, I believe we need to get it 
balanced in seven, so we can hand it over to the next generation in a 
balanced situation.
  One plug I want to put in is, a number of us put forward a bill 
previously to create an overall commission within the Federal 
Government to identify programs that maybe have accomplished their 
purposes and we need to go on and do something differently and zero out 
programs and to identify those that have accomplished their mission or 
are wasteful Government spending and propose to the Congress to zero 
them out, and then the commission give the Congress one vote on a whole 
package of bills. Maybe it is 53 total programs that need to be, maybe 
it is 253 that need to be eliminated. Give the Congress one vote to 
eliminate all of them, keep them all, unamendable, and by that means 
then us starting to cut at some of the wasteful spending, which we do, 
which takes place.
  We used this sort of structured program to get at our military bases 
where we had too many bases around the country, and we used this to get 
fewer bases and to get those bases the needed resources to serve our 
troops. I want to use the same model throughout the Federal Government. 
That is the way we can get at the budget.
  The previous speaker also spoke about Social Security. One of the 
problems he identified and that has been spoken about is that we run a 
surplus in Social Security and then that is spent in Government and 
then you borrow against the Federal Government for that. One of the 
beauties of creating personal accounts in Social Security is the 
Government can't spend that money. That is then the money of the 
individual, and there is actually something there, instead of this 
Government borrowing on one hand off of the Social Security account and 
on another hand. So that when we get to about 2013, we are no longer 
running a surplus in Social Security, we are running a deficit. And 
then the Government has to borrow in other places to pay Social 
Security.
  That is not a good situation. That is an untenable situation. That is 
not the sort of country or structure we want to turn over to our kids. 
That is why this need to look at personal accounts, so that the money 
is not spent, the money is safe. We get a higher rate of return. We get 
a rate of return on these funds.
  But our business at hand today is on the Class Action Fairness Act. 
This bill needs to pass. I believe it will pass. I believe it will pass 
with a substantial bipartisan vote. And the reason it will pass is we 
need this to reform this portion of our legal system.
  Class action lawsuits allow plaintiffs whose injuries might not be 
worth enough to justify bringing individual suits to combine their 
claims into one lawsuit against a common defendant. That is the nature 
of a class action. It is to try to create a more efficient and 
equitable distribution. Class actions are a valuable part of the legal 
system. However, some trial lawyers have found a weakness in the 
current system and developed a class action practice devoted to finding 
opportunities to, in some cases, extract payments from American 
businesses.
  Currently in diversity cases, where plaintiffs reside in different 
States, trial lawyers can forum shop. That means they can go to a place 
where they think they will get a better jury, they think they will get 
better treatment rather than fair treatment, or a setting where the 
parties actually reside. Once a class action is certified, they can 
force businesses into paying expensive settlements, so it becomes an 
extractive process that way.
  Due to this abuse in the system, injured plaintiffs are not getting 
the recourse they are supposed to get through class actions. It is 
documented that the legal system returns less than

[[Page 1670]]

50 cents on the dollar to the people it is established to help and only 
22 cents to compensate for economic losses. Although injured plaintiffs 
are receiving little of value in class action settlements, 
unfortunately, we are seeing in too many cases trial lawyers obtaining 
large windfalls.
  I will give a couple of examples. One well-known example is the 2001 
case against Blockbuster. Customers alleged they were charged excessive 
late fees for video rentals and received $1 coupons for the next trip 
to the video store, while their attorneys received over $9 million. 
That is a lot of videos.
  Similarly, in Shields v. Bridgestone/Firestone, a 2003 suit was filed 
for customers who had Firestone tires that were among those the 
Government investigated or recalled but who did not suffer any personal 
injury or property damage. After a Federal appeals court rejected class 
certification, they rejected certifying that this was a class, both 
sides negotiated a settlement which has received preliminary approval 
of a Texas State court. Under the agreement, the company is to redesign 
certain tires, a move already under way, irrespective of the lawsuit, 
and to develop a 3-year consumer education and awareness campaign. But 
the members of the class, the actual members of the class, the 
plaintiffs, received nothing. However, if the court gives final 
approval, the lawyers will get $19 million.
  Over the past decade, class action lawsuits have grown by over 1,000 
percent nationwide, spurring a mass of these kinds of hasty, unjust 
settlements. This is because even if the class certification ruling is 
unmerited or even unconstitutional, it often cannot be appealed until 
after an expensive trial on the merits of the case. Facing the cost of 
litigation often forces defendants to settle out of court with sizable 
payments, even when the defendant will likely prevail under the law. 
These settlements have come to be known as a form of traditional 
blackmail and are problematic to all Americans because they make trial 
lawyers rich while imposing increased costs on the economy, causing 
lower wages and higher prices for consumers. They also create an 
environment of unpredictable litigation costs and serve to chill the 
investment, entrepreneurship, and the capital needed for job creation. 
In short, class action abuse shortchanges true victims while severely 
damaging the economic engines in this country.
  That is not to say all class actions are wrong, and this bill doesn't 
impact legitimate class actions. It basically deals with the issue of 
forum shopping. Class actions are still going to be brought. They still 
will be brought. They still need to be brought in this country. But you 
take away this issue, particularly this issue on forum shopping.
  In response to the growing crisis in class actions, Senator Grassley 
has authored the Class Action Fairness Act. It is a moderate, 
bipartisan approach that addresses the most serious of the class action 
abuses by allowing more large interstate class actions to be heard in 
Federal courts and by implementing a consumer class action bill of 
rights that protects consumers from some of the most egregious abuses 
in class action practice today.
  The bill is the result of a bipartisan compromise reached with 
Senators Dodd, Landrieu, and Schumer in the last session of Congress 
that narrowed the group of cases that would be removable to Federal 
court and added a Democratic provision put forward by the Democratic 
Members to build attorney's fees in coupon settlement cases. It is 
important to remember that this bill is merely court procedure reform 
that will go a long way to end abusive forum shopping.
  S. 5 does not alter substantive law at all or otherwise affect any 
injured individual's right to seek redress or to obtain damages. It 
does not limit damages, including punitive damages. It does not limit 
those. It does not impose stricter pleading requirements. Rather, the 
Federal courts will continue to apply the appropriate State or States' 
laws in adjudicating a class action suit.
  Some of the critics of this legislation have stated that S. 5 will 
move all class actions to the Federal courts, which will become 
clogged, resulting in a windfall for corporate defendants. The facts do 
not support this allegation.
  First, while S. 5 does expand Federal court jurisdiction over class 
action, the bill is drafted to ensure that truly local disputes will 
continue to be litigated in State court. Most notably, the bill will 
leave in State court class actions in which the plaintiffs and 
defendants are all residents of the same State, class actions with 
fewer than 100 plaintiffs, class actions that involve less than $5 
million, shareholder class actions alleging breaches of fiduciary duty, 
any class action in which a State government entity is a primary 
defendant, and any class actions brought against a company in its home 
State in which two-thirds or more of the class members are also 
residents of that State.
  Secondly, the average State court judge is assigned three times as 
many cases as his or her Federal counterparts. State court judges are 
assigned, on average, about 1,500 new cases each year. For example, in 
California, the average judge was assigned 1,501 cases in 2001. In 
Florida, the average was 2,210. In New Jersey, the average was 2,620. 
In Texas, it was a little over 1,600 cases. In contrast, each Federal 
court judge was assigned an average of 518 new cases during the 12-
month period ending September 30, 2002.
  The exponential growth of State court class action filings over the 
last decade has added to the workload problem of State court judges 
who, in many cases, unlike their Federal counterparts, do not have a 
number of law clerks, magistrate judges, or special masters to help 
with particularly time-consuming tasks involving supervising complex 
cases. Since many State courts or tribunals of general jurisdiction 
hear all sorts of cases, from traffic violations, to divorces, to 
felonies, judges who are distracted by class actions do not have enough 
time to focus on providing basic legal services for the community that 
they serve.
  Finally, recent surveys have shown that the majority of class actions 
in many jurisdictions would remain in State court under this bill. As 
far as those cases that could be heard in Federal court under S. 5, 
many of them involve copycat class actions filed in different 
jurisdictions, which Federal judges can consolidate under one judge. 
Therefore, moving more class actions to Federal court would actually 
reduce the burden for everyone.
  Ultimately, this bill will allow claims with merit to go forward 
while preventing judicial blackmail. That has become, unfortunately, 
something involved in our judiciary today.
  I urge my colleagues to vote a clean class action bill out of the 
Senate, to vote against any amendments that would dilute the bill and 
stop us from moving this reform forward, and that would help in job 
creation in the United States. This is a small measure. I think we 
should do more, but it is an appropriate measure. It moves us in the 
right direction. It helps in the creation of jobs in the United States 
and in litigation reform, which we desperately need in this country.
  These sort of bipartisan, modest steps, while they won't have perhaps 
as big a positive impact as we would like them to have, will have a 
positive impact on the judicial system and in helping us to reform 
that. That is something we need to do. We need to move forward on the 
budget deficit, we need to move forward to make sure we have a true 
trust fund in Social Security, and we need to move forward in 
litigation reform. All these are positive steps for our future. I hope 
we can continue, as with this bill, to work it forward on a bipartisan 
basis.
  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. DURBIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                      Amendment No. 3, As Modified

  Mr. DURBIN. Mr. President, earlier I offered an amendment at the desk 
which needs to be modified. I ask that

[[Page 1671]]

the amendment, under the rules, be modified accordingly to reflect the 
pages and lines of the bill.
  The PRESIDING OFFICER. The amendment is so modified.
  The modification is as follows:

       On page 21, before the semicolon at the end of line 2, 
     insert ``or by the court sua sponte''.
       On page 21, line 9, strike ``solely''.

  Mr. DURBIN. Thank you, 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. BROWNBACK. Mr. 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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