[Congressional Record (Bound Edition), Volume 151 (2005), Part 2]
[Senate]
[Pages 2071-2099]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   CLASS ACTION FAIRNESS ACT OF 2005

  The PRESIDING OFFICER. Under the previous order, the Senate will 
resume consideration of S. 5, which the clerk will report.
  The legislative clerk read as follows:

       A bill (S. 5) to amend the procedures that apply to the 
     consideration of interstate class actions to assure fairer 
     outcomes for class members and defendants, and for other 
     purposes.

  Pending:

       Durbin (Modified) Amendment No. 3, to preserve State court 
     procedures for handling mass actions.
       Feingold Amendment No. 12, to establish time limits for 
     action by Federal district courts on motions to remand cases 
     that have been removed to Federal court.

  Mr. SPECTER. Mr. President, I thank Senators on both sides of the 
aisle for their cooperation in moving this class action bill. We 
reported it out of committee a week ago today and started the opening 
debate on it on Monday afternoon and then proceeded in a very timely 
fashion. The prospects are good that we will conclude action on the 
bill today. A unanimous consent agreement is currently in the process 
of being worked out, and we will know in the next few minutes precisely 
what will happen.
  We are going to proceed in a few minutes to the amendment offered by 
the Senator from Wisconsin, Mr. Feingold, which would impose some time 
limits on the courts which, as I said at the committee hearing last 
week, I think is a good idea. I advised Senator Feingold that I would 
feel constrained to oppose it on this bill because of the procedural 
status, where the House of Representatives has been reported to accept 
the Senate bill provided it comes over as what we call a clean bill, 
without amendments.
  But as I said to Senator Feingold, and will repeat for the record, I 
had heard many complaints about delays in our Federal judicial system. 
I believe that is an appropriate subject for inquiry by the Judiciary 
Committee on a broader range than the issue specifically proposed by 
Senator Feingold. It is in the same family.
  I want to be emphatic. We are not impinging in any way on the 
independence of the Federal judiciary, their discretionary judgments. 
But when it comes to time limits, how long they have these matters 
under advisement, I think that is an appropriate matter for 
congressional inquiry. It bears on how many judges we need and what 
ought to be done with our judicial system generally. So that will be a 
subject taken up by the Judiciary Committee at a later date.
  I think the Senate bill--this may be a little parochial pride--is 
more in keeping with an equitable handling of class action bills than 
is the House bill. For example, the House bill would be retroactive and 
apply to matters now pending in the State courts, which would be 
extraordinarily disruptive of many State court proceedings. I think it 
is fair and accurate to say that the House bill is more restrictive 
than the Senate bill and our Senate bill, I think, is a better measure 
to achieve the targeted objective of having class actions decided in 
the Federal court with balance for plaintiffs and for defendants as 
well.
  So we are moving, I think, by this afternoon, to have a bill which 
will be ready for concurrence by the House, and signature by the 
President, and that I think will be a sign that we are moving forward 
on the legislative calendar.
  The Senator from Louisiana is going to seek recognition in a few 
minutes. I thank my distinguished colleague, Senator Hatch, the former 
chairman, who has agreed to come over and manage the bill during my 
absence. We are, at the moment, having hearings on the bankruptcy bill 
which we hope to have in executive session next Thursday, to move ahead 
on our fast moving, ambitious judiciary calendar.
  I now yield to my distinguished colleague from Louisiana.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Mr. VITTER. Mr. President, I rise in strong support of S. 5, the 
Class Action Fairness Act of 2005. In doing so, I wish to recognize and 
thank them for their leadership, so many Senators who have moved the 
bill thus far, certainly including the chairman of the Judiciary 
Committee who just spoke, also the Senator from Iowa, the chief sponsor 
of the bill, and also the Senator from Utah, the former chairman of the 
Judiciary Committee.
  I am also an original cosponsor of this bill, because it would 
protect consumers from some of the most egregious abuses in our 
judicial system.
  Let me begin by saying that class actions are an important part of 
our justice system. They serve an important purpose when properly 
defined. No one would dispute they are a valuable feature of the legal 
system. This bill doesn't do away with them.
  As stated so eloquently by the bill's chief sponsor, my colleague 
from Iowa, S. 5 is really court reform more than tort reform. What does 
it reform? What is the problem?
  The reason we need to pass this bill is that there are loopholes in 
the class action system, and it allows bad actors to game the system. 
As a result, in recent years class actions have been subject to abuses 
that actually work to the detriment of individual consumers, plaintiffs 
in such cases. That is exactly who the law is supposed to help.
  Additionally, this gaming of the system clearly works to the 
detriment of business and our economy, and the need for job creation in 
forging a strong economy.
  Such abuses happen mainly in State and local courts in cases that 
really ought to be heard in Federal court.
  We currently have a system, therefore, which some trial lawyers 
seeking to game the system in an effort to maximize their fees seek out 
some small jurisdiction to pursue nationwide cookie-cutter cases, and 
they act against major players in a targeted industry. Often, these 
suits have very little, if anything, to do with the place in which they 
are brought. Rather, lawyers select the venues for strategic reasons, 
or for political reasons, a practice known as forum shopping.
  These trial lawyers seek out jurisdictions in which the judge will 
not hesitate to approve settlements in which the lawyers walk away with 
huge fees and the plaintiff class members often get next to nothing. 
The judges in these jurisdictions will decide the claims of other State 
citizens under their unique State law. They will use litigation models 
that deny due process rights to consumers and defendants.
  Often the decisions coming out of these hand-picked and carefully 
selected venues are huge windfalls for trial lawyers and big law firms 
and a punch line for consumers and the people the lawyers claim to 
represent. There is now in our country a full blown effort aimed at 
mining for jackpots in sympathetic courts known as ``magnet courts'' 
for the favorable way they treat these cases.
  Let us look at a few examples of exactly what I am talking about. 
Perhaps the best example nationwide, in terms of preferred venues for 
trial lawyers, is Madison County, IL, where class action filings 
between 1998 and 2000 increased nearly 2,000 percent. There is actually 
an example of a South Carolina law firm filing a purported class action 
on behalf of three named plaintiffs. None of them lived in Madison 
County, IL, but the lawsuit was filed in that jurisdiction against 31 
defendants throughout the United States. None of those defendants were 
located in Madison County. These lawyers based the alleged jurisdiction 
on the mere allegation that some as yet unknown class

[[Page 2072]]

 member might happen to live in Madison County.
  I have a law degree. That is stunning to me. You can imagine how 
astounding and silly and ridiculous that seems to the American people, 
small business owners, and consumers around the country. So Madison 
County is a great example of one of these magnet jurisdictions. Once 
their reputation as a magnet jurisdiction is established, they attract 
major nationwide lawsuits that deal with interstate commerce--exactly 
the types of lawsuits that should be decided in the Federal court.
  As noted in one study:

       Virtually every sector of the United States economy is on 
     trial in Madison County, Palm Beach County, FL, and Jefferson 
     County, TX--long distance carriers, gasoline purchasers, 
     insurance companies, computer manufacturers and 
     pharmaceutical developers.

  Let us review some of the outrageous decisions that this gaming of a 
broken system produces.
  The Bank of Boston case, where class action members actually lost 
money when their accounts were debited to pay their lawyers $8.5 
million; the Blockbuster settlement, where the class action members 
received coupons off their next rentals while their lawyers were paid 
$9.25 million; and, the Cheerios case where the plaintiffs got coupons 
for cereal, while the lawyers reaped $1.75 million--coupons that, quite 
frankly, they could have gotten in the Sunday local newspaper.
  Sad to say, this is hitting home in my home State of Louisiana as 
well, because one of the jurisdictions that is appearing more and more 
on the list of these magnet jurisdictions is in Louisiana, Orleans 
Parish, the city of New Orleans.
  I have mentioned how this gaming of the system is a huge disservice 
so many times to the consumers that were allegedly harmed. They get 
coupons or next to nothing. In one case, they had to pay even after the 
award. It is also a huge cost to business and a huge drain on the 
American economy.
  Small businesses are already spending, on average, $150,000 annually 
on legal fees. The tort system costs U.S. small business $88 billion 
per year. This is all money that could be used to hire new employees or 
to improve benefits. I have long been concerned that Louisiana is 
increasingly becoming a part of this trend.
  I mentioned a minute ago Orleans Parish, which is clearly showing up 
more and more on the list of these magnet jurisdictions. This is bad 
for our Louisiana efforts at job creation. It is a serious negative for 
companies looking to locate in our State.
  I will quote from an amicus brief filed at the Louisiana Supreme 
Court in the case of Sutton Steel and Supply, Inc., Kate Davis, and 
Mestayer and Mestayer, APLC v. Bellsouth Mobility, Inc. In that brief, 
they said:

       In a recent poll of more than 1,400 in-house general 
     counsel and other senior litigators at public corporations . 
     . . Louisiana was ranked 46th for its treatment of class 
     actions, out of the 48 States that permit class action suits 
     in their courts.

  The study they cited is the Chamber of Commerce study done in March 
2004, and the amicus brief continues:

       Importantly, 80 percent of the respondents--these are 
     businesses now, job creators--indicated that they perceive 
     fairness of the litigation environment in a State ``could 
     affect important business decisions at their company, such as 
     where to locate or do business'' and with good reason.

  Of course, many small businesses are dragged down by what are known 
as Yellow Page lawsuits. In these cases, hundreds of defendants are 
named in a lawsuit, and it is their responsibility to prove they are 
not culpable. In many cases, plaintiffs named defendants using vendor 
lists, or even lists literally from the Yellow Pages of certain types 
of businesses, be they auto supply stores, drugstores, what have you, 
in a particular jurisdiction.
  Imagine what this means to your State's job creation efforts when 
national attention is brought to your local jurisdiction because it is 
a new magnet jurisdiction--a new Madison County, IL. The only jobs that 
you will be creating are legal positions for the flyby lawsuit filed by 
out-of-Staters hoping for a payoff from your local industries and 
companies.
  I have identified the problem, gaming a broken system. We have 
identified the real and negative results of that problem, hurting the 
actual consumers who are supposed to be helped, and costing business 
and job creation in your State, including my home State of Louisiana, 
enormous amounts, including in terms of jobs not created or lost jobs.
  Why is S. 5 the solution?
  I believe S. 5 is a careful, reasonable, and moderate response to the 
problem with our class action system. We have a bipartisan compromise 
that has been in the making for 6 years: 6 years of negotiation, 
careful study, and careful compromise. It deserves our support.
  The House of Representatives has already passed similar class action 
reform legislation more than once. I have personally supported and 
worked for that, and voted for that when I served in the House.
  S. 5 provides for Federal district court jurisdiction for interstate 
class action, specifically those in which the aggregate amount in 
controversy exceeds $5 million and any member of a plaintiff class is a 
citizen of a different State from any defendant. Under the bill, 
certain class actions with more than 100 plaintiffs also would be 
treated as class actions and subject to Federal jurisdiction.
  The bill provides exceptions for cases in which Federal jurisdiction 
is not warranted. Under the so-called home State exception and the 
local controversy exception, class action cases will remain in State 
courts if there is significant connection to a local issue or event or 
a significant number of plaintiffs are from a single State.
  The bill includes consumer protections so the real little guy, the 
plaintiff, the consumer who is wronged, is truly made whole. The bill's 
consumer bill of rights would require, among other things, that judges 
review all coupon settlements and limit attorney's fees paid in such 
settlements to the value actually received by class members. It would 
also require judges to carefully scrutinize net law settlements in 
which the class action members end up losing money in a class action 
settlement, and would prohibit settlements in which parochial judges 
allow some class action members to have a larger recovery because they 
simply live closer to the courthouse.
  I am pleased there is bipartisan, bicameral support for a carefully 
crafted, well-thought-out measure. S. 5 is long overdue.
  It is also important to say what we are not doing. This bill is not 
an attempt to eliminate class action lawsuits. Time and again, it has 
been said by parties on all sides that class actions have a proper 
place in the legal system. This bill is a modest effort to swing the 
pendulum back toward common sense, making the system work as it was 
intended.
  This bill will not move all class actions to Federal court, only the 
ones most appropriately settled there. This bill will not overload 
Federal courts with class actions. They are prepared to deal with these 
cases far better than State courts, many of whom are overburdened now. 
We are also not delaying justice for plaintiffs. Federal courts have as 
good or better records of dealing with class actions in a timely 
manner.
  In closing, our class action system is rife with abuses. It is gamed. 
It is broken. We need to fix it. First, we need to fix it for the 
consumers who are hurt by alleged abuses which are the subject of this 
class action litigation. Plaintiffs leave feeling cheated because they 
receive a token settlement in many cases for their efforts while 
lawyers reap all of the financial benefits.
  Second, the system is broken and we need to fix it so we do not hurt 
legitimate business, legitimate job-creation efforts in Louisiana and 
elsewhere. Right now, businesses, fearing the mere threat of legal 
action, settle cases--a form of judicial blackmail. The whole economy 
is dragged down and fewer jobs are created as a result.
  Third, our system of federalism is undermined today because one 
State's legal system, rather than the legal system of the Federal 
branch of the courts, is making decisions that affect many or even all 
other States. So the

[[Page 2073]]

system is not working for anyone but the lawyers and law firms gaming 
that system.
  A lot of good, hard work has been put into S. 5. I compliment again 
the prime sponsor, Senator Grassley, as well as the Judiciary 
Committee, led by the Senator from Pennsylvania. I compliment all of 
their leadership and their respective staff members for their efforts. 
I am proud to be a cosponsor of S. 5. I urge my colleagues to support 
and vote for the Class Action Fairness Act.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, today is going to be an important day for 
the American public because the Senate will adopt legislation that 
takes a significant step forward in improving our Nation's civil 
justice system. I commend my colleagues on both sides of the aisle for 
coming together on this very important bipartisan bill. Our work in 
this body bodes well for the Senate's ability to tackle important 
issues in the 109th Congress.
  Let me now take a couple of minutes to address the pending amendment, 
Senator Feingold's amendment, that would add a provision to S. 5 
requiring Federal courts to consider remand motions in class actions 
within a specified period. This amendment is based on the questionable 
premise that Federal courts move too slowly and consumer claims will 
stall while plaintiffs are waiting for courts to rule on jurisdictional 
issues.
  In fact, in many cases, Federal courts move more quickly than the 
State courts. Resolving remand motions is always their first course of 
business, and we are moving these cases to Federal courts.
  The amendment also fails to recognize the important considerations a 
judge must make as part of a remand decision. Like other amendments 
that have been offered, this proposal would result in a less workable 
bill, not a better one. This amendment should be rejected.
  The fact is, the Federal courts do not drag their feet in dealing 
with remand motions. Federal courts always consider jurisdictional 
issues first, as they must, before allowing discovery or other 
substantive motions. The Supreme Court has repeatedly held that 
jurisdiction is a threshold matter that must be decided prior to other 
substantive issues in a case. Courts take up jurisdiction as the first 
course of business already. The amendment is, therefore, unnecessary.
  I also want to correct the misunderstanding that Federal courts drag 
their feet in dealing with class actions generally. This is not the 
case. In fact, Federal courts generally move more quickly than State 
courts when it comes to class actions. A recent 2004 study by the 
Federal Judicial Center found that State courts are far more likely 
than Federal courts to let class actions linger without ruling on class 
certification. Moreover, the median time for final disposition of a 
civil claim filed in Federal court throughout this country is 9.3 
months; the median time to trial in a civil matter in State court is 
22.5 months. Let me repeat that: 9.3 months in Federal courts versus 
22.5 months in State courts for civil claims to be disposed. The dates 
showing the Federal courts act more than twice as fast as State courts 
come from the nonpartisan Administrative Office of the United States 
Courts. There is simply no evidence that States proceed more quickly. 
Thus, the alleged problem that this amendment would fix is nonexistent. 
It does not exist.
  Take, for example, the case cited by Senator Feingold yesterday, 
Lizana v. DuPont. It did take a year to rule on the motion to remand, 
but it is my understanding that the court's docket reveals at the time 
the court was considering the motion, there were numerous briefings and 
motions on both sides and numerous hearings to determine whether to 
remand. The court was hardly sitting on its hands. If anything, this 
case shows that the courts may require more than 180 days to make a 
correct decision. They were moving, and moving ahead, and moving ahead 
with dispatch. But it was a complicated case and it took a little 
longer. It may very well take more than 180 days, and in some cases, it 
certainly will.
  Another case cited in support of the amendment was Gipson v. Sprint. 
But when you look at the facts, the facts do not show much support for 
the amendment at all. Again, it is my understanding the docket reveals 
that the court was very busy on the case before the ruling on the 
motion to remand was even handed down. In fact, one of the motions the 
court was contending with was a motion for continuance filed by, you 
guessed it, plaintiffs' counsel. This means it was the plaintiffs who 
wanted the court to delay its ruling. How can anyone complain about the 
time it takes for a district court not to rule on a remand motion when 
there are scores of docket entries in a single year and the plaintiffs 
themselves were seeking delays?
  Some opposed to this amendment suggested that defendants will use 
removal as a delay tactic, but Federal law already penalizes defendants 
who engage in such tactics. The Federal law governing removal gives 
judges discretion to make a defendant pay the plaintiff's attorney's 
fees if remand is granted. In addition, rule 11 of the Federal Rules of 
Civil Procedure gives Federal judges the authority to levy sanctions 
for frivolous filings. Thus, the law already addresses concerns about 
improvident removals.
  The bottom line is that this amendment will make it unnecessarily 
difficult for judges to issue fair rulings in these more complicated 
cases. And class actions generally are more complicated cases. By 
forcing judges to decide remand motions by a certain date, as the 
Feingold amendment would do, that amendment fails to recognize that in 
some cases the jurisdictional issues will be complex, requiring 
discovery, substantial briefing, and hearings before the judge.
  At times, courts consider several remand motions jointly in order to 
conserve judicial resources, such as in multidistrict litigation, or 
MDL, as it is called, and this may, in a limited number of complex 
cases, result in a slightly longer time period for resolution as well. 
Forcing judges to rush these issues in all cases regardless of their 
complexity could result in a denial of due process in these cases where 
the judge cannot fully comprehend and resolve the issue, or issues, in 
the time allotted by the Feingold amendment.
  The reality is that most remand motions will be decided in less time 
than the amendment requires, but in some cases they will require more 
time. We should not create rules of law that force judges to decide 
issues without full and fair consideration. And that is exactly what 
the Feingold amendment would do.
  Finally, there is a reason the time limits make sense for remand 
appeals and not for initial rulings on remand motions. In contrast to 
district courts, which often must develop a factual record to address 
remand issues, an appeals court that is asked to review a remand order 
will be provided with a full record from which to reach a decision. 
Often, the appeals court's decision will be based simply on a reading 
of the law, and it will, thus, be less time-consuming than the district 
court's decision.
  Even a 180-day time limit may be too stringent in some circumstances. 
Extending it to district court judges will make it more difficult for 
them, in some cases, to do their jobs in a fair and efficient fashion.
  So I hope our colleagues will vote down the Feingold amendment. 
Frankly, it is another poison pill amendment that would probably 
scuttle this bill for another year. We have already been on this bill 
for 6 solid years. We have a consensus in this body to pass it. We know 
if we pass it in the form that it is in, the House will take it. We 
know it will become law because the President will sign it into law. 
Frankly, I hope this amendment will be voted down for all of those 
reasons.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The senior assistant bill clerk proceeded to call the roll.

[[Page 2074]]


  Mr. HATCH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Graham). Without objection, it is so 
ordered.
  Mr. HATCH. Mr. President, I would like to talk more generally about 
the Class Action Fairness Act because it responds to a serious abuse of 
the class action system that is on the rise; namely, the filing of 
copycat or duplicative lawsuits in State courts.
  Over the past several years, we have seen a rise in the number of 
class action lawsuits filed in a few State courts known for tilting the 
playing field in favor of the plaintiffs' bar; in other words, 
dishonestly, basically, getting the courts to not do justice. These 
courts, referred to as ``magnet courts'' for their attractive qualities 
to enterprising plaintiffs' lawyers, certify class actions with little 
regard to defendants' due process rights. They award substantial 
attorneys' fees as part of class settlements, and they approve coupon 
settlements to the class members that are sometimes worth little more 
than the paper on which they are printed.
  It has not taken the plaintiffs' lawyers long to figure out which 
courts are good for their bank accounts. There was an 82-percent 
increase in the number of class actions filed in Jefferson County, TX, 
between the years of 1998 and 2000. During the same time span, Palm 
Beach County, FL, saw a 35-percent increase. The most dramatic 
increase, however, has occurred in Madison County, IL. Madison County 
has seen an astonishing 5,000-percent increase in the number of class 
action filings since 1998.
  Let me just refer to this bar chart. It shows that the number of 
class actions filed in State courts has skyrocketed under current law: 
Palm Beach County, 35 percent in just 2 years or 3 years; Jefferson 
County, 82 percent in the same 2 or 3 years; and Madison County, over 
5,000 percent. And then this chart shows the overall increase in State 
courts: 1,315-percent growth.
  Now, in their effort to gain a financial windfall in class action 
cases, some aggressive plaintiffs' lawyers file copycat class action 
lawsuits. This tactic helps explain the dramatic increase in filings in 
these magnet courts. Here is how the copycat class action strategy 
works: Competing groups of plaintiffs' lawyers, and sometimes even the 
same lawyers, file nearly identical class action lawsuits asserting 
similar claims on behalf of essentially the same class in State courts 
around the country. Some lawyers file duplicative actions in an effort 
to take a potentially lucrative role in an action. Other times, these 
duplicative actions are the product of forum shopping by the original 
lawyers who file similar actions in different State courts around the 
country, perhaps with the sole purpose of finding a friendly judge 
willing to certify the class.
  Because these duplicative actions are filed in State courts of 
different jurisdictions, there is no way to consolidate or coordinate 
these cases. As a result of the separate, redundant litigation of 
copycat lawsuits, our already overburdened State courts can become 
clogged with complicated class actions that potentially affect the 
rights and recoveries of class members throughout the entire country.
  There is not a single magnet State court in this country that has not 
encountered the copycat phenomenon. For example, it is my understanding 
that in Shields v. Allstate County Mutual Insurance Company, filed in 
Jefferson County, TX, in the year 2000, three named plaintiffs sought 
certification of a nationwide class comprised of members who were 
insured by three insurance companies. At the very same time this action 
was brought in Jefferson County, no fewer than nine similar actions, 
representing a similarly situated class and alleging the identical 
claims, were pending in Madison County, IL, against the same insurance 
companies.
  Another example of copycat lawsuits is Flanagan v. Bridgestone/
Firestone, filed in Palm Beach County, FL. Now, this lawsuit was but 
one of the approximately 100 identical class actions filed in State 
courts throughout the country in the wake of the Ford/Firestone tire 
recall in the year 2000.
  One of the most obvious problems with copycat lawsuits is that they 
place new burdens on an already stressed State court system. Class 
actions are large, complex lawsuits with potential ramifications in 
jurisdictions across the country. Our State courts are courts of 
general jurisdiction that deal with issues ranging from domestic 
disputes to routine traffic offenses. They are simply not the best 
entity to handle the growing number of these complex lawsuits being 
filed across the country where multiple parties and multiple issues are 
involved.
  S. 5 will mitigate the growing burden on our State courts by 
providing a means through which truly national class actions will be 
resolved in the most appropriate forum; that is, the Federal courts.
  Over the past several months, I have heard some opponents of this 
bill argue that the Class Action Fairness Act will somehow result in a 
delay or even a denial of justice to consumers. They have argued that 
State courts resolve claims more quickly, and that removing these 
actions will result in the overburdening of our Federal courts. I have 
yet to see or hear a single shred of persuasive evidence to support 
these claims. In fact, according to the data, a strong case in the 
opposite direction can be made. According to two separate examinations 
of the State and Federal court systems conducted by the Court 
Statistics Project and Administrative Office of the U.S. Courts, the 
average State court judge is assigned nearly three times--nearly three 
times--as many cases as a Federal court judge. The increase of State 
court class actions further compounds this burden and interferes with 
the ability of the State court judges to provide justice to their 
citizens.
  In fact, the Illinois Supreme Court has repeatedly criticized its own 
Madison County, IL, State court for its horrible backlog. The backlog 
is the result of the local court's willingness to take on cases that 
have nothing to do with Madison County, the county in which they sit. 
In fact, one Madison County State court judge expressed his willingness 
to take on cases that have little or no connection to Madison County, 
or even Illinois, for that matter, when he stated:

       I am going to expand the concept that all courts in the 
     United States are for all citizens of the United States. . . 
     .

  The fact is, when cases are accepted that have nothing to do with the 
State in which they are filed, it is difficult to see how justice is 
served. When the cases are forced to remain in State court because some 
plaintiff's lawyers have exploited the system by engineering the 
composition of the class and the defendants, both the class members and 
the defendants can easily be deprived of justice. In some cases, it 
appears that the interests disproportionately served are those of the 
class counsel who stand to receive millions in attorney's fees upon the 
swift approval of a proposed settlement while their clients receive 
next to nothing.
  Despite claims to the contrary, S. 5 will not flood or remove all 
class actions to Federal court. Instead the bill acts to decrease the 
number currently falling in State court dockets. Most of the cases that 
would be removed to the Federal courts under the bill are precisely the 
type of cases that should be heard by such courts in the first place; 
namely, large national class actions affecting citizens in and around 
the country, including the very copycat lawsuits I have discussed 
today.
  Class actions generally have three things in common. No. 1, they 
involve the most people. No. 2, they involve the most money. And No. 3, 
they involve the most interstate commerce issues. Taken as a whole, the 
national implications of class actions are far greater than many of the 
cases filed and heard by the Federal courts today. With this in mind, 
one is left to wonder how anyone could argue that these actions are not 
deserving of the attention of our Federal courts.
  As Chief Justice Marshall noted:

       However true the fact may be, that the tribunals of the 
     States will administer justice as impartially as to those of 
     the nation, to

[[Page 2075]]

     parties of every description, it is not less true that the 
     Constitution itself either entertains apprehensions on this 
     subject, or views with such indulgence the possible fears and 
     apprehensions of suitors, that it has established national 
     tribunals for the decision of controversies between aliens 
     and citizens, or between citizens of different States.

  When the Framers of the Constitution created the Federal courts in 
article 3 of the Constitution, they gave them jurisdiction over cases 
involving large interstate disputes, cases such as class actions. 
Contrary to the claims of opponents of this bill, article 3 does not 
require complete diversity amongst parties to a claim.
  The Class Action Fairness Act will also help protect the interests of 
consumer class members from copycat lawsuits. When duplicative lawsuits 
are pending in different States, a settlement or judgment in any one 
case has the potential to make every other pending case moot. This 
winner-takes-all scenario acts as an incentive for plaintiffs' lawyers 
with multiple class actions to seek a quick settlement in the case, 
even if the settlement does no more than make the lawyers involved 
rich. The bona fide claims of the plaintiffs to the other class actions 
are wiped out by the settlement. That is not fair, but that is what is 
happening. Sometimes they file multiple suits so they can force a 
settlement with a simple settlement demand. And what company wouldn't 
pay the defense costs to get out of this type of abusive jurisdiction 
of the various courts throughout the country.
  What this means is that while one injured consumer in one court of 
the country recovers for their injuries, an identically injured 
consumer in another part of the country may get nothing. The quick 
settlement of a copycat lawsuit may essentially steal the ability for 
similarly situated plaintiffs to fully or fairly recover for their 
injuries, especially if the forum-shopped court is going to pull this 
kind of stuff and favor certain attorneys over others and certain 
clients over others rather than do what is just under the law.
  Under S. 5, many of these copycat lawsuits would be removed to 
Federal court and consolidated to ensure that all similarly situated 
plaintiffs received the same recovery under any settlement. Unlike 
State courts, Federal courts are equipped with a mechanism for 
consolidating similar claims. In the Federal court system, a judge may 
consolidate multiple identical lawsuits found in various jurisdictions 
into one proceeding before a single Federal court known as the 
multidistrict litigation panel or MDL. The MDL panel has proven to be a 
valuable tool for preventing abuse, judicial waste, and disparate 
outcomes in Federal courts.
  Under this system, much of the time-consuming pretrial activity in 
the lawsuit is heard by a single court. This serves to help protect 
against the plaintiffs' lawyer from making a separate deal for some 
plaintiffs that is not in the best interests of all class members. And 
by the way, for those who argue that consumers are being hurt by this 
bill, guess how many consumers are hurt by a collusion between 
plaintiffs' counsel and a particular corporation to settle in one State 
that wipes out everybody else throughout the country.
  That happens. It happens because we have not solved these problems. 
This bill goes a long way toward solving some of these problems.
  S. 5 solves this very problem by ensuring that a plaintiff's claim is 
not extinguished by the settlement of the duplicative action in another 
part of the country. This bill protects consumers in areas where they 
are not protected under current law.
  Before I close, I want to stress that this bill does not change 
substantive law. The Class Action Fairness Act does not make it any 
harder or easier to file or win a lawsuit unless, of course, winning is 
unjustly based upon an uneven playing field. In other words, courts who 
homer the cases because they want to help certain attorneys who have 
supported them for their election to those State court positions.
  This bill is one that is long overdue. As Chief Justice Rehnquist 
stated:

       We can no longer afford the luxury of State and Federal 
     courts that work at cross-purposes or irrationally duplicate 
     one another.

  This bill is a procedural bill that applies common sense to 
streamline the court system. The underlying substantive law is the same 
for class actions whether they are in Federal or in State court. This 
bill is a balanced, modest approach to solving some of the most abusive 
problems in our current civil justice system. Members on both sides of 
the aisle have worked long and hard to formulate a bipartisan bill, and 
we are succeeding in this bipartisan effort on behalf of the American 
people.
  I steadfastly support the Class Action Fairness Act and urge my 
colleagues to do so as well, because it is the right thing to do. It is 
the right thing to do for the legal profession and for the plaintiffs 
who deserve compensation.
  I have been in some pretty tough cases in my day, but I have never 
seen a case I could not win if the case was the right thing to bring. I 
would not bring it if it were not the right thing to bring. I loved 
being in Federal court, time I could get there. I also loved being in 
State court. I never wanted a judge to lean my way or the other way. I 
wanted the judge to be down the middle, and if that is the case, I 
thought I stood a good chance of winning the case.
  We are talking about unfair advantage here in these magnet courts, 
these forum-shopped areas. Madison County has become the ``poster 
child'' for magnet courts. It deserves its reputation.
  This is an important bill. This is a bill that makes sense. This bill 
does not deprive anybody of rights. This is a bill that will resolve a 
lot of these conflicts and problems, and it is a bill that I think will 
help all within the legal community to live within certain legal and 
moral constraints.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. HATCH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HATCH. Mr. President, I ask unanimous consent that at 12:30, the 
Senate resume debate on the Feingold amendment, and that the time be 
equally divided in the usual form; provided that at 12:40, 10 minutes 
later, the Senate proceed to a vote in relation to the Feingold 
amendment, with no intervening action or debate and no amendments in 
order to the amendment prior to the vote. I further ask consent that 
following that vote, debate be equally divided between the two leaders 
or their designees until the hour of 3 p.m.; provided further that the 
time between 2:20 and 2:40 be equally divided between Senator Specter 
and Senator Leahy; and that at 2:40, the final 20 minutes be reserved, 
with the Democratic leader in control of 10 minutes, to be followed by 
the majority leader for the final 10 minutes; provided further that at 
3 o'clock, the Senate proceed to a vote in relation to the Durbin 
amendment, with no amendment in order to the amendment prior to the 
vote. I further ask unanimous consent that following that vote the bill 
be read the third time and the Senate proceed to a vote on passage of 
the bill, with no intervening action or debate. Finally, I ask that no 
other amendments be in order other than the two above-mentioned 
amendments.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. HATCH. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. GRAHAM. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Hatch). Without objection, it is so 
ordered.
  Mr. GRAHAM. Mr. President, in light of the unanimous consent 
agreement that will bring this bill to closure, there is something I 
needed to get on

[[Page 2076]]

the record. I appreciate getting a few minutes. I intend to vote for 
the bill. Everything the Senator said about the bill is very much true. 
The Senator from Utah has been working as chairman for years. The legal 
abuse that the Senator described is real. This bill really brings it to 
an end.
  I found Federal court to be a fair place to try cases. The Senator is 
also right about the scope of class action lawsuits. They involve many 
people from different places throughout the country. We have a good 
balance in the bill of when you can be removed. Every class action is 
not going to go to Federal court. If the formula is right, and if it 
has enough national impact, Federal court will be the place to go 
because of the abuses described.
  Those of us who practiced law for a living before we got here 
understand that the legal system can be reformed. I admire what the 
Senator from Utah and Senators Specter and Grassley have done to bring 
about reform. But we find ourselves in a unique political dynamic with 
this bill. Our friends in the House say they want it like we have it. 
We all agree there are amendments that could make the bill better that 
we would vote for, but the political moment will not allow that to 
happen. I regret not offering in committee the amendment I am going to 
speak about. I learned from my mistakes there.
  One of the things we have done by federalizing certain class action 
lawsuits is we have taken the abuse out of the system, and we have gone 
to Federal court to have a more fair way of doing business when the 
formula is right and when there is a national impact to stop home 
cooking.
  The reason the diversity clause exists to begin with is that when you 
have two people from different States, you want to pick a neutral 
sight. You do not want to do home cooking. Really, the whole goal of 
this bill is to get it in a neutral site where people can have their 
fair day in court. I certainly appreciate that.
  But there is another component to class actions that is missing in 
this bill. Class actions, by their very nature, as Senator Hatch 
described, involve a lot of people from different places and usually a 
lot is at stake. Sometimes it is money. Sometimes it is a business 
practice that does not have a lot of economic effect on one person, but 
when you add up the economic effect, it is bad for the country. People 
are cheating. People are nickel and diming folks, getting rich at the 
expense of the elderly or the infirm, by taking a few dollars here, and 
it adds up to be a very bad situation for the country. Those type cases 
lend themselves to class action.
  There is another group of cases that could lend themselves to class 
action, too. That is when products are not designed right. They are 
consumer cases where consumers throughout the country are affected by 
the particular behavior in question.
  Most States have a procedure, when such cases exist affecting the 
public at large, where the judge is able to determine what is fair in 
terms of sealing documents relating to settlements. I had an amendment 
that was modeled after a South Carolina statute--and over 20 States 
have a similar statute--that says in cases where the public's interest 
is present, where there is a consumer case that affects the health or 
well-being of the community at large, settlements can be sealed, 
documents can be made secret to protect business interests, but only if 
the judge determines that the public interest is also being met.
  The amendment I proposed would have received well over 50 votes in 
this body, and I think Senator Hatch would have been friendly to it. 
But I understand the effect it would have on the bill.
  The current chairman, Senator Specter, and I will have a colloquy for 
the record. This is the point of my seeking recognition.
  This bill will leave the Senate and go to the House in a way to solve 
abuse, but I think it is lacking in consumer protections. The reason I 
am speaking today is this colloquy for the record with Senator Specter 
recognizes the value of this amendment and a commitment on his part and 
the committee's part to allow this amendment to move forward at another 
date, another time, in another place.
  The reason I am agreeing to that is enough of my colleagues who are 
sympathetic to the amendment do not want to vote for anything that 
would derail the bill. I very much appreciate that because that is the 
way politics is, and there is nothing wrong with that as long as we do 
not lose sight of the goal. And the goal is to have a balance, to take 
care of abuses, but at the same time protect the public when the public 
needs to be protected.
  What I am trying to say is I will not put my colleagues in a bad spot 
of having to vote down an amendment with which they agree because I do 
not have 50 votes. I am mature enough to know when you can win and when 
you cannot. Sometimes it is OK to lose. Losing is not bad as long as 
you feel good about what you are doing.
  I do not want to offer the amendment, have colleagues vote against 
it, and create problems unnecessarily, but I do want my colleagues to 
know--and this colloquy will express this--that this bill needs to be 
amended and this problem needs to be addressed. We need to have a 
provision that is married up with the bill that is about to leave the 
Senate and go to the House that will allow a judge, upon motion of the 
parties, to determine in a situation where there is a request to keep 
the settlement secret and seal the documents from public review, to 
have a judge to determine what documents should be sealed in secret and 
what documents should be released to the public, balancing the needs of 
business and the right of the public to know what they should know 
about their health and their safety.
  There were class action cases with the sunshine statute, about which 
I am talking, in effect. Without that statute, deadly lighters, 
exploding tires, defective drugs, toxic chemicals, and faulty 
automobile designs would not have been known if it were not for a 
procedure for the judge to release certain documents because the 
request was: We will give you money, but you cannot tell anybody about 
the underlying problem.
  Sometimes that is very much unfair. I have case after case of 
sunshine statutes allowing the judge to determine what was in the 
public interest, to inform the public of deadly events, and peoples 
lives were saved and their health was protected.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. GRAHAM. I ask unanimous consent for 2 more minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           protective orders

  Mr. GRAHAM. Mr. President, I appreciate Chairman Specter taking the 
time to join me in discussing a concern I have regarding S. 5, the 
class action bill. I am still prepared to seek a vote on my amendment, 
but based on my conversations with a number of senators this week, 
including Chairman Specter, and in a desire to see this bill pass as 
soon as possible, I have decided not to offer my amendment.
  I agreed to support this bill some time ago because I believe we are 
long overdue for reform in the class action area. Over the last few 
years, I have worked to support this bill in both the Judiciary 
Committee and on the senate floor.
  While I have fully supported this reform, I have also noticed some 
areas where the bill could be improved. I had hoped to offer an 
amendment on the floor regarding protective orders during discovery. I 
am confident that the amendment that I had hoped to introduce with 
Senator Prior of Arkansas would have made a significant improvement in 
the area of class action discovery.
  Our amendment is very simple. It is based on the local rule in South 
Carolina Federal Courts for obtaining protective orders for documents. 
All it says is, if you want a protective order, you must make a motion 
at the beginning of trial, explain why it is necessary for the court to 
seal your documents, and provide public notice of the motion and a 
description of the documents. That's it.

[[Page 2077]]

  At least 20 states have taken action to limit secrecy agreements. 
This type of scrutiny should be extended throughout the nation, 
especially where we are removing parties from the protections afforded 
them by their States.
  And let me be clear. This is not an onerous burden to place on those 
seeking protective orders. It is not that far a departure from the 
current discovery rules. We could have gone a lot further; with higher 
standards, a presumption against sealing, and other controversial 
discovery reforms. However, we are not seeking to tilt the playing 
field to one side or the other, just make sure some reasonable, well-
thought out ground rules are applied to everyone.
  My amendment creates a presumption of openness--it would require the 
parties in class action lawsuits to justify their requests for secrecy, 
followed by a medical review of the information they want the court to 
keep under seal.
  They would have to identify the documents or information they want 
sealed--and most importantly the reasons why it's necessary to keep 
them secret.
  They also would have to explain why a protective order approach is 
necessary and justify the request based on controlling case law.
  The public would be notified of the information that was being put 
under seal--and a descriptive non-confidential index of the secret 
documents would be provided.
  In the end, however, it is still up to the judge's discretion, albeit 
with a slightly higher standard than currently exist under the Federal 
rules of civil procedure.
  I am doing this because I am convinced Federal Judges will come down 
on the side of consumer protection where it's in the public interest 
and come down on the side of secrecy where merited. In short, while the 
burden here is on any party that wants to keep something secret, it is 
not an onerous task, nor impossible.
  Valid trade secrets and proprietary information--sensitive 
information that goes to the heart of a company being able to compete 
in the market place should and will be protected. There must be 
safeguards for businesses--they have a right to protect valid trade 
secrets--patents and other proprietary information. But this isn't 
something that can just go on automatic pilot--there has to be some 
judicial review and I am confident the procedures protect all the 
parties in a class action lawsuit.
  So again, we have merely tried to find a way to balance the 
legitimate interests of companies, who we want to remain strong 
competitors in the marketplace, with the public's interest in 
disclosing potentially harmful products or practices.
  Our amendment strikes the right balance because it raises the bar 
only slightly for companies to justify why they need to impose secrecy, 
using our courts to do so, but does not force them to open up their 
companies to every passerby simply because they are defending a 
lawsuit.
  Now there are critics who warn that an amendment like this is going 
to create a number of problems in the judicial system, making discovery 
more difficult and deterring settlements.
  I do not agree. Take a look at Florida, which has one of the most 
stringent sunshine laws. I don't think anyone can tell you Florida is a 
magnet for class actions. In fact, the most recent studies in the 20 
States that have sunshine laws show that limiting court secrecy has not 
led to more litigation or curtailed the number of case that are 
settled.
  In fact I do not believe there is any evidence that supports the 
proposition that more cases will go to trial and fewer settlements will 
be reached if some procedural safeguards are put in place.
  Also, you have to remember that our amendment only applied to court-
ordered secrecy. Parties would still have been free to privately agree 
upon secrecy between them.
  In closing Mr. President, I must say I have been a bit taken aback by 
all the turmoil this amendment has caused. I am pretty sure we can all 
agree that ours was a fairly benign procedural amendment, one that 
serves both the public and those before our courts.
  Toward that end, I very much appreciate the understanding I and 
Senator Pryor have been able to reach with Chairman Specter regarding 
the substance of our amendment. The chairman has graciously agreed to 
assist us with this amendment in the Judiciary Committee. I thank the 
chairman and look forward to working with him to address this issue in 
the near future.
  Mr. SPECTER. I appreciate Senator Graham's willingness to help us 
move forward on this bill. He and I have agreed that, due to the 
procedural posture of this particular bill, we should address the 
substance of his amendment in committee in the future.
  Mr. GRAHAM. I thank my chairman for his future assistance.
  Mr. President, I say to my colleagues that they will have done a good 
thing by passing this bill. They will do a very good thing if we can 
take up this amendment at another time to make this bill more balanced 
because the abuses as described by Senator Hatch are real. My 
colleagues have worked a long time to bring about this date. They 
should be proud of it.
  There is a way to make this bill better, and if we do not address 
this problem, I predict something is going to happen out there without 
a sunshine amendment. There is going to be a class action case 
involving consumer interests, and if there is no procedure for the 
judge to balance the public interests against business interests, we 
are going to shield the public from something they should know. There 
is no reason we cannot do both: Stop the legal abuse and help 
consumers. It is my pledge and my promise to work with everybody in 
this body to make that happen.
  I yield the floor and thank the Senate for its indulgence.
  The PRESIDING OFFICER. The Senator from Iowa. Without objection, the 
Senator is recognized on the minority time.


                            amendment no. 12

  Mr. GRASSLEY. Mr. President, I rise in opposition to Senator 
Feingold's amendment which would add a provision to the bill requiring 
the Federal courts to consider remand motions in class actions within a 
set timetable. This amendment needs to be rejected because it is 
unnecessary.
  There is not any evidence that the Federal courts are particularly 
slow in dealing with class actions, or specifically that they are slow 
relative to remand motions. In fact, there is evidence that the Federal 
courts move more quickly than State courts in considering these motions 
because they always consider jurisdictional issues first. Senator 
Feingold cites three examples of delay to support his amendment, but I 
do not think that is enough to start placing strict time limits on 
court procedure. I think that Senator Feingold is in search of a 
problem that does not really exist.
  Also, the amendment could make it hard for judges to issue fair 
rulings in complicated class action cases because judges would be 
forced to make rushed decisions. This deadline may be too stringent and 
inflexible to deal with complex cases, where sometimes several remand 
motions are considered jointly in order to conserve judicial resources. 
These motions may require hearings, and the timeframe provided in 
Senator Feingold's amendment may not be enough time for a court to 
schedule a hearing and consider all the evidence.
  I also understand that Federal judges who have learned of this 
possible time limitation on deciding these kinds of motions are 
concerned that it would place an unreasonable restriction on their 
ability to fairly decide cases. The Judicial Conference sent a letter 
opposing a previous iteration of Senator Feingold's amendment that was 
more stringent that the current language. However, this amendment still 
puts significant time constraints on Federal judges that could prove to 
be too stringent.
  So there just is not any evidence that there is a problem with remand 
motions in class action cases that requires this time limitation that 
Senator Feingold is proposing. This is just an attempt to weaken the 
bill. So I urge my colleagues to reject this amendment.

[[Page 2078]]

  The PRESIDING OFFICER (Mr. Graham of South Carolina). The Senator 
from Wisconsin.
  Mr. FEINGOLD. Mr. President, I ask unanimous consent that I have 
restored the full 5 minutes I was originally given.
  The PRESIDING OFFICER. The Senator has 3 seconds remaining.
  Mr. FEINGOLD. I ask unanimous consent to have the 5 minutes restored. 
I would appreciate that, because the chairman who is handling this bill 
on the floor asked me to stay in committee and finish the bankruptcy 
hearing. I feel justified in asking for my time to be restored.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. FEINGOLD. Mr. President, everyone understands that this bill will 
allow many more class actions to be removed from State to Federal 
court, but as the supporters have been proclaiming all week long, there 
are still class actions that belong in State court, even under this 
bill. Unfortunately, that may not stop defendants from removing cases 
that should still be in State court.
  When a notice of removal is filed, the case is removed to Federal 
court. There is no proceeding in the State court to make sure the 
removal is proper. It is up to the Federal court to decide that 
question, but only if the plaintiffs file a motion to remand to return 
the case back to the State court.
  The amendment I have offered is designed simply to make sure that 
this process of removal and remand does not become a tool for delaying 
cases that actually belong in State court. It requires a district court 
to take a look at a motion to remand within 60 days of filing and then 
do one of two things: Decide it, which I hope will be possible in 
almost all cases, or issue an order stating why a decision is not yet 
possible. If the court issues that order, it must then reach a decision 
within 180 days of filing. The parties can agree on an extension of any 
length.
  I want to make this clear because I heard Senator Grassley responding 
to my original argument when I came on the floor. The amendment before 
us actually gives the court a great deal of flexibility. It will also 
assure that a motion to remand does not languish for months, or even 
years, before a court reviews it and says, oops, this case really 
should be back in State court.
  As I noted last night, we have many examples of remand motions 
sitting unresolved for a year and then the case goes back to State 
court.
  As the Senator from Iowa pointed out, the Judicial Conference did 
oppose my amendment in committee that had a strict limit of 60 days, 
but what I have done to try to accommodate this concern, which I 
believe moves in their direction, is tripled that limit in the pending 
amendment. I think that is eminently reasonable, as the Senator from 
Delaware, a strong supporter of this bill, acknowledged last night on 
this floor.
  The bill itself provides that appeals of remand motions must be 
decided within 60 days. So why would there be any substantive argument 
against having a similar limitation at the district court level?
  I heard the Senator from Utah suggesting that somehow my amendment 
denies due process, but I suggest that 180 days is enough time to 
handle any remand motion. That is time for discovery and for an 
evidentiary hearing. The problem is that without a deadline, the motion 
can sit there for a year or longer without any action.
  What I am hearing from some of my colleagues who support the bill and 
recognize that what I am trying to do is reasonable is that they cannot 
upset the delicate agreement that has been reached with the House. On 
this one, I cannot accept that. It makes no sense to me that Senators 
would give up their independent judgment because of a fear of the 
leadership of the other body. Does anyone think, after everything this 
bill has been through, that the House leadership is going to refuse to 
pass this bill if my very reasonable amendment, simply making sure that 
motions to remand are decided on time, is included? Are they going to 
further delay this bill for this? I do not think so.
  This amendment does not blow the bill up. It is not a poison pill. 
Everyone I have talked to says this amendment basically makes sense. So 
I implore my colleagues to exercise their own good judgment, accept 
this amendment, and persuade their colleagues on the House side and the 
business community, which several of my colleagues have told me 
privately, that this amendment makes sense.
  It does not harm the bill. In fact, it makes the bill better because 
it means all the cases we agree on should remain in State court will 
actually proceed in State court without delay.
  I thank the Chair for according me this additional time. I yield the 
floor, and I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The question is on agreeing to amendment No. 12.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. McCONNELL. The following Senators were necessarily absent: The 
Senator from New Hampshire (Mr. Sununu) and the Senator from Indiana 
(Mr. Lugar).
  The PRESIDING OFFICER (Mr. Martinez). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 37, nays 61, as follows:

                       [Rollcall Vote No. 8 Leg.]

                                YEAS--37

     Akaka
     Baucus
     Biden
     Bingaman
     Boxer
     Byrd
     Carper
     Clinton
     Conrad
     Corzine
     Dayton
     Dorgan
     Durbin
     Feingold
     Feinstein
     Harkin
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Lautenberg
     Leahy
     Levin
     Lincoln
     Mikulski
     Murray
     Nelson (FL)
     Obama
     Pryor
     Reed
     Reid
     Rockefeller
     Salazar
     Sarbanes
     Stabenow
     Wyden

                                NAYS--61

     Alexander
     Allard
     Allen
     Bayh
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Burr
     Cantwell
     Chafee
     Chambliss
     Coburn
     Cochran
     Coleman
     Collins
     Cornyn
     Craig
     Crapo
     DeMint
     DeWine
     Dodd
     Dole
     Domenici
     Ensign
     Enzi
     Frist
     Graham
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Inhofe
     Isakson
     Kohl
     Kyl
     Landrieu
     Lieberman
     Lott
     Martinez
     McCain
     McConnell
     Murkowski
     Nelson (NE)
     Roberts
     Santorum
     Schumer
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stevens
     Talent
     Thomas
     Thune
     Vitter
     Voinovich
     Warner

                             NOT VOTING--2

     Lugar
     Sununu
       
  The amendment (No. 12) was rejected.
  Mr. GRASSLEY. I move to reconsider the vote, and I move to lay that 
motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. Under the previous order, the time until 2:20 
p.m. is equally divided between the leaders or their designees. Who 
yields time?
  The Senator from Delaware.
  Mr. CARPER. Mr. President, in an hour or two or three, we will have 
the opportunity to vote final passage on class action reform 
legislation.
  The goals of this legislation are fourfold: One is to make sure when 
people--I say ``little'' people--are harmed by companies, big or small 
companies, that the little people have the opportunity to band together 
and be made whole and compensated for harm. The second goal is to make 
sure the companies know that if they shortchange their customers or 
others in our country, there will be a price to pay if they get caught. 
The third goal is to make sure when companies are called on the carpet 
and are involved in class action litigation, they are in a court, in a 
courthouse, with a judge, where the companies have a fair shake and the 
deck is not stacked against them. Finally, our goal is to make sure 
that, in shifting some class action litigation of a national scope with 
hundreds of or thousands of plaintiffs across the Nation, multimillions 
of dollars involved and defendants scattered across the country in 
different States than the plaintiffs, to make sure we move some

[[Page 2079]]

class action litigation to Federal courts, we do not overburden the 
already busy Federal judiciary.
  I take a moment or two today to go through and cite examples--not all 
of them; this is not an exhaustive list--but some of the examples we 
have sought to make sure in many instances that the majority of class 
action litigation remains in State court where it belongs.
  Let me cite a couple of examples where this bill has been modified 
over the years to enable a majority of class action litigation cases to 
stay in State courts. For example, these are cases where the litigation 
will remain in State courts: No. 1, cases against State and State 
officials will remain in state court. Smaller cases will remain in 
State court. Cases where there are fewer than 100 plaintiffs or in 
which less than $5 million is at stake, those cases are not eligible 
for removal from State to Federal court. Cases in which two-thirds or 
more of the plaintiffs are from the same State as the defendant will 
remain in State court. Cases in which between one-third and two-thirds 
of the plaintiffs are from the same State as the defendant may well 
remain in State court. It is left to the discretion of the Federal 
judge to decide whether it is Federal or State based on the criteria 
laid out in the bill.
  Similarly, cases involving a local incident or controversy, where the 
people involved are local, where at least one of the significant 
defendants involved in the litigation is within the same State, in 
those instances as well, the cases can and probably should remain in 
State courts.
  That is a handful of the examples where we make sure a lot of the 
class action litigation remains in State courts where it belongs.
  If you go back, the first bill introduced on class action litigation 
goes back about 7 years, I think, to 1997. That initial bill, along 
with a number of bills that were introduced in subsequent Congresses, 
was opposed by the Federal bench. There is an arm of the Federal 
judiciary called the Judicial Conference of the United States. They 
have a couple different committees, and from time to time they are 
asked, and they respond with their opinion, about whether certain 
legislation is needed, is appropriate, as it pertains to them and the 
work they are doing.
  The initial legislation proposed, I think, in 1997, 1998, was opposed 
by the Federal judiciary through their Judicial Conference of the 
United States. In the next Congress, again, the Federal judiciary 
opposed that legislation. As the legislation has evolved, we have gone 
back to ask the Federal judiciary: What do you think? We know you were 
opposed to original versions of this bill in the late 1990s. How about 
this latest revision? They continued to oppose subsequent versions of 
the class action reform until the last Congress.
  The Federal judiciary has the same concerns a lot of us have, the 
wholesale shifting of class action cases from the State courts to the 
Federal courts. Federal judges are busy, and they do not want to see an 
avalanche of litigation coming to them. With the adoption of a number 
of provisions in this legislation that comes to us today, the Judicial 
Conference wrote to the Senate in 2003 that, particularly given the 
changes Senator Feinstein proposed, their concerns about the wholesale 
shifting of State class action litigation to the Federal courts, for 
the most part, had been met and been satisfied.
  They are not taking a position, saying the Senate should vote for 
this legislation. That is not what they are about. But the concerns 
they had expressed earlier, year after year after year, have been 
addressed.
  Mr. President, I ask unanimous consent to have printed in the Record 
a letter from the Judicial Conference of the United States, dated April 
25, 2003.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                               Judicial Conference


                                         of the United States,

                                   Washington, DC, April 25, 2003.
     Hon. Patrick J. Leahy,
     Ranking Member, Committee on the Judiciary,
     U.S. Senate, Washington, DC.
       Dear Senator Leahy: Thank you for your letters of April 9, 
     2003, and April 11, 2003. In those letters, you requested 
     that the Judicial Conference provide the Senate Judiciary 
     Committee with legislative language implementing the Judicial 
     Conference's March 2003 recommendations on class-action 
     litigation and the views of the Conference on S. 274, the 
     ``Class Action Fairness Act of 2003,'' as reported by the 
     Senate Judiciary Committee on April 11, 2003.
       As you know, at its March 18, 2003, session, the Judicial 
     Conference adopted the following resolution:
       That the Judicial Conference recognize that the use of 
     minimal diversity of citizenship may be appropriate to the 
     maintenance of significant multi-state class action 
     litigation in the federal courts, while continuing to oppose 
     class action legislation that contains jurisdictional 
     provisions that are similar to those in the bills introduced 
     in the 106th and 107th Congresses. If Congress determines 
     that certain class actions should be brought within the 
     original and removal jurisdiction of the federal courts on 
     the basis of minimal diversity of citizenship and an 
     aggregation of claims, Congress should be encouraged to 
     include sufficient limitations and threshold requirements so 
     that the federal courts are not unduly burdened and states' 
     jurisdiction over in-state class actions is left undisturbed, 
     such as by employing provisions to raise the jurisdictional 
     threshold and to fashion exceptions to such jurisdiction that 
     would preserve a role for the state courts in the handling of 
     in-state class actions. Such exceptions for in-state class 
     actions may appropriately include such factors as whether 
     substantially all members of the class are citizens of a 
     single state, the relationship of the defendants to the forum 
     state, or whether the claims arise from death, personal 
     injury, or physical property damage within the state. 
     Further, the Conference should continue to explore additional 
     approaches to the consolidation and coordination of 
     overlapping or duplicative class actions that do not unduly 
     intrude or state courts or burden federal courts.
       S. 274, as reported by the Senate Judiciary Committee, 
     generally provides for federal jurisdiction of a class action 
     based on minimal diversity of citizenship if the matter in 
     controversy exceeds the sum of $5 million, exclusive of 
     interest and costs. (S. 274 as introduced established a $2 
     million minimum amount in controversy.) The bill also now 
     permits a federal district court, in the interests of 
     justice, to decline to exercise jurisdiction over a class 
     action in which greater than one-third but less than two-
     thirds of the members of all proposed plaintiff classes in 
     the aggregate and the primary defendants are citizens of the 
     state in which the action was originally filed. The court 
     would be required to consider five specified factors when 
     exercising this discretion. (This discretionary provision was 
     not included in the bill as introduced.)
       In addition, S. 274 as reported provides that the federal 
     district courts shall not have original jurisdiction over any 
     class action in which: (A) two-thirds or more of the members 
     of all proposed plaintiff classes in the aggregate and the 
     primary defendants are citizens of the state in which the 
     action was originally filed; (B) the primary defendants are 
     states, state officials, or other governmental entities 
     against whom the district court may be foreclosed from 
     ordering relief; or (C) the number of members of all proposed 
     plaintiff classes in the aggregate is less than one hundred. 
     As introduced, the second and third exceptions were the same, 
     but the first one originally precluded federal jurisdiction 
     where ``the substantial majority of the members of the 
     proposed plaintiff class and the primary defendants are 
     citizens of the State in which the action was originally 
     filed'' and ``the claims asserted therein will be governed 
     primarily by the laws of that state. The replacement language 
     in essence substitutes a numerical ratio for ``substantial 
     majority'' and eliminates the choice-of-law requirement.
       We are grateful that Congress is working to resolve the 
     serious problems generated by overlapping and competing class 
     actions. The Judicial Conference ``recognizes that the use of 
     minimal diversity of citizenship may be appropriate to the 
     maintenance of significant multi-state class action 
     litigation in the federal courts.'' At the same time, the 
     Judicial Conference does not support the removal of all state 
     law class actions into federal court. Appropriate legislation 
     should ``include sufficient limitations and threshold 
     requirements so that federal courts are not unduly burdened 
     and states' jurisdiction over in-state class actions is left 
     undisturbed.'' Finding the right balance between these 
     objectives and articulating that balance in legislative 
     language implicate important policy choices.
       Any minimal-diversity bill will result in certain cases 
     being litigated in federal court that would not previously 
     have been subject to federal jurisdiction. The effects of 
     this transfer should be assessed in determining the 
     appropriateness of various limitations on the availability of 
     minimal diversity jurisdiction.
       Certain kinds of cases would seem to be inherently ``state-
     court'' cases--cases in which a particular state's interest 
     in the litigation is so substantial that federal court 
     jurisdiction ought not be available. At the same

[[Page 2080]]

     time, significant multi-state class actions would seem to be 
     appropriate candidates for removal to federal court.
       The Judicial Conference's resolution deliberately avoided 
     specific legislative language, out of deference to Congress's 
     judgment and the political process. These issues implicate 
     fundamental interests and relationships that are political in 
     nature and are peculiarly within Congress's province. 
     Notwithstanding this general view, we can, however, confirm 
     that the Conference has no objection to proposals: (1) to 
     increase the threshold jurisdictional amount in controversy 
     for federal minimal diversity jurisdiction; (2) to increase 
     the number of all proposed plaintiff class members required 
     for maintenance of a federal minimal-diversity class action; 
     and (3) to confer upon the assigned district judge the 
     discretion to decline to exercise jurisdiction over a 
     minimal-diversity federal class action if whatever criteria 
     imposed by the statute are satisfied. Finally, the Conference 
     continues to encourage Congress to ensure that any 
     legislation that is crafted does not ``unduly intrude on 
     state courts or burden federal courts.''
       We thank you for your efforts in this most complex area of 
     jurisdiction and public policy.
           Sincerely,
                                           Leonidas Ralph Mercham,
                                                        Secretary.

  Mr. CARPER. We are going to vote on final passage in an hour or two. 
I think Senator Durbin is going to come to the floor. He may ask for a 
vote on his amendment. I am not sure he will. He cares deeply, 
passionately about these issues and has sought to try to make sure that 
we end up not making bad, unwise public policy decisions. My guess is, 
he is not going to come to the floor and urge us to vote for the bill 
or say he is going to vote for it. I know he has serious misgivings 
about this legislation. But he has worked constructively, as have 
people on our side and the Republican side, to get us to this point in 
time.
  Senator Reid of Nevada is our new leader on the Democratic side. He 
is not on the floor, but I express to him and my colleagues, if he is 
listening, my heartfelt thanks for working with the Republican 
leadership and those on our side who support this legislation, to 
enable us to have this opportunity to debate it fairly and openly, 
allowing people who like it, people who do not like it, those who 
wanted to offer amendments, those who did not want to offer amendments, 
to have a chance for the regular order to take place, to debate the 
issues and vote, and then to move on.
  I do not know if this legislation, the way we have taken it up and 
debated it, can serve as a template or example to use in addressing 
other difficult issues--energy policy, asbestos litigation, a variety 
of other issues--but it might. Because in this case, Democratic and 
Republican leaders have worked together, have urged us, the rank and 
file in the Senate, to work together.
  Each of the folks in the private sector--people who have an interest 
in this bill, not only the business side, but the plaintiffs' lawyers 
side, and other interested parties, labor, and so forth, consumer 
groups--I think everybody has acted in good faith to get us to this 
point in time.
  Whether you like the bill, I urge my Democratic colleagues, if you 
are on the edge and not sure which way to go--you may have voted for 
all these amendments, and you are not sure how to vote on final passage 
of the bill--I urge you to vote for this bill.
  I do not know if it is possible to have a big margin. I would love to 
have 70 votes, 75 votes for this bill. I hope we can do that.
  Let me close, if I can, by saying, whether you are for the bill or 
against it, for the amendments or against them, I hope there is one 
thing we can all agree upon. I will bring to mind the words of one of 
our colleagues, a legendary trial lawyer from Illinois, who has gone on 
to be elected and serves with us in the Senate. I will close my 
comments with his admonition. That admonition is the old Latin phrase: 
semper ubi sub ubi. Whether you like the bill, I think we can all agree 
on that admonition today.
  With that having been said, I yield back my time and suggest the 
absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. CARPER. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CARPER. Mr. President, I ask unanimous consent that again we go 
into a quorum call, but that the time be equally divided.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CARPER. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. SESSIONS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Alexander). Without objection, it is so 
ordered.
  Mr. SESSIONS. Mr. President, this week's debate is the culmination of 
more than 6 years of work in the Senate on a very important piece of 
legislation, reform that is needed in the U.S. legal system--class 
action reform.
  I practiced law for most of my adult life and have litigated in a 
number of different forums. I believe in our legal system. It is 
critical for America's economic vitality and our liberty to have a good 
legal system. There is no doubt in my mind that the strength of this 
American democracy, the power of our economy, and our ability to 
maintain freedom and progress are directly dependent on our commitment 
to the rule of law and a superb legal system, and we can make it 
better.
  To keep our system strong, we in this Congress have to meet our 
responsibility to pass laws that improve litigation in America. Our 
court system must produce effective results that further our national 
policy, correct wrongs, punish wrongdoers, and generate compensation 
for those who suffer losses in a fair and objective way. We, therefore, 
as a Congress must periodically review what is happening in our courts 
and make adjustments if they are needed. That is what we are here for.
  This class action fairness bill, S. 5, seeks to make the adjustments 
we currently need, in my opinion. It will guarantee that the plaintiffs 
in a class action, the people who have been actually harmed and have a 
right to be compensated, are the actual beneficiaries of the class 
action and not just their attorneys and not sometimes the defendants 
who benefit by being able to get rid of a bunch of potential litigation 
by settleing the case and paying less to the plaintiffs than the case 
is really worth.
  The Class Action Fairness Act will not move ``all class actions'' to 
Federal Court or ``shut the doors to the courthouse'' as some have 
claimed--rather it will provide fairness for the class action parties 
by allowing a class action to be removed from a State court where it 
has been filed to a Federal court when the aggregate amount in question 
exceeds $5 million and the home State plaintiffs make up two-thirds or 
less of the plaintiff class.
  The Act contains a bill of rights for class action plaintiffs to 
ensure that coupon settlements or net loss awards receive special 
scrutiny. We have had some real problems with those. The stories are 
painful to recite by those of us who believe in a good legal system.
  Furthermore, the Class Action Fairness Act will provide notice to 
public officials of proposed settlements--I was an attorney general, 
and I know that notice is given to the proper official in a State so 
that public officials can react if the settlement appears to be unfair 
to some or all of the class members.
  The Class Action Fairness Act has been through the proper channels in 
the Senate. The Act has been through the Judiciary Committee not just 
once but twice. The bill originally passed out of the Judiciary 
Committee by a 12 to 7 vote over a year ago in June of 2003. It was a 
bipartisan vote. Since then, it has gone through two substantive 
negotiations, each bringing on more Senators to support the bill. Just 
last week, we again passed a bill out of the Judiciary Committee, this 
time with an even stronger vote of 13 to 5.

[[Page 2081]]

Today, we expect that more than 70 Senators will support it. The bill 
is a responsible, restrained bill that will curb class action abuses 
and further productive class action litigation.
  The concept of class actions is a good one. Class actions can be 
extraordinarily effective tools in helping us deal with legal problems 
confronting America. Sometimes error or negligence is committed by more 
than one defendant which harms multiple litigants. In such cases, the 
number of cases filed can quickly become unmanageable if separate 
individual lawsuits are required by each person who suffered the harm. 
One hundred thousand individual lawsuits would not be appropriate when 
one case could settle the issue for all involved.
  Anyone looking closely at our legal system today knows that we have a 
number of problems to address. One of the main problems is how much the 
system costs the average American. Americans pay these costs primarily 
through increased insurance premiums. They also pay it in increased 
costs for our judiciary.
  The 2004 Tillinghast study on the cost of U.S. tort systems found 
that the U.S. tort system--a tort is a lawsuit or an act that has 
wronged or injured someone--cost $246 billion in 2003. That is $845 per 
person. That is a significant number. It is worthy of repeating. The 
tort system cost $246 billion at an average cost per American citizen 
of $845. That is an average of $70 a month out of somebody's 
livelihood. Now, $246 billion is equivalent to 2 percent of GDP, gross 
domestic product. That is a stunning number. By 2006, the study 
estimates that the U.S. tort system will cost over $1,000 per person.
  Most Americans would be surprised to know that the 2003 version of 
the Tillinghast study found that the U.S. tort system returned less 
than 50 cents on the dollar to the people it is designed to help--the 
plaintiffs--and only 22 cents on the dollar to compensate for actual 
economic loss. Who, then, would appear to be making the money out of 
our current tort system? An earlier Tillinghast study reported that the 
income of litigation attorneys, trial lawyers, in 2001 was $39 billion. 
That same year Microsoft made only $26 billion, and Coca-Cola, $17 
billion.
  As a Washington Post editorial has noted: No portion of the American 
civil justice system is more of a mess than the world of class action.
  There are a number of problems with the class action system currently 
making up the mess The Washington Post referred to.
  The number of class actions pending in State courts, many of them 
nationwide, increased 1,042 percent from 1988 to 1998, while the number 
pending in Federal courts increased only 338 percent during that same 
period.
  State courts are being overwhelmed by class actions. A number of 
State courts lack the necessary resources to supervise the class or the 
proposed settlements affected. Many State judges do not have even one 
law clerk, and most of the class actions involve citizens from a number 
of different States, requiring the application of multiple State laws. 
Some times a state court dockets becomes jammed while the judge 
researches out-of-State law to get up to speed.
  Some say it is a burden on the Federal courts, but Federal judges 
have on their docket a fraction of the cases of most State court judges 
in America. Some cases are complex, but that is the nature of Federal 
court cases for the most part. They have at least two law clerks. The 
occupant of the chair, Senator Alexander, clerked for Federal judges. 
District court judges all have at least two clerks, and appellate 
Federal judges have three or more. Some of them have their clerical 
support become on staff lawyers and then they really end up with three 
clerks. At any rate, they have a greater ability to give the time and 
attention to a major interstate class action involving over $5 million 
and maybe thousands of plaintiffs than an average circuit judge in a 
State court system in America. I do not think that can be disputed.
  The class action settlement process is problematic because many of 
the class members have no part in shaping the settlement agreement. In 
fact, many of the members of the class have no knowledge they have even 
been involved in a lawsuit or one has been filed on their behalf, 
leading to an abuse of the settlement process. In this scenario, 
plaintiffs' attorneys can find themselves in a position where their 
loyalty is not to these class members. It creates an unhealthy 
situation. For example, a plaintiffs' lawyer does not know the 1,000 or 
10,000 members of his class. He is talking regularly with the 
defendant's company, and they say: Let us settle this case.
  The plaintiffs' lawyer says: We would like to settle this case.
  They say: What will it take?
  He says: The plaintiffs want $50 million to settle it.
  They say: Well, that is too much. Look, why do we not give you 
$10,000 in coupons for all of your victims and we will give you $10 
million or $20 million in legal fees?
  Now, most lawyers handle themselves well, but that plaintiffs lawyer 
now finds themselves in an ethical dilemma. His oath as a lawyer says 
that he or she should defend the interests of the client, get the most 
money for their client, but the defendant is dangling out a personally 
large fee in exchange for a settlement to end the litigation. We have 
had that happen, frankly, and we have seen that too often. Too often, 
the attorneys are the ones who received the big fees, and the named 
plaintiffs, the victims, have gotten very little. It is appropriate, 
then, that we in this Congress examine this difficulty in our legal 
system and tighten it up so we have less of that occur.
  Many class actions appear to be filed solely for the purpose of 
forcing a settlement, not the protection of an interest of a class, and 
that has been referred to in debate frequently as ``judicial 
blackmail.'' Rather than losing a public relations battle, going 
through court for several years, the defendants often feel they have to 
settle these cases even if they are frivolous so they do not risk the 
cost of litigation and the embarrassment and difficulty of explaining 
some complex transaction.
  There are several other problems. One is forum shopping, and another 
is settlements detrimental for class members.
  Forum shopping occurs when the attorney sets out to try to find the 
best place to file the class action lawsuit. You could have a case 
involving an attorney from New York with California plaintiffs filing a 
class action lawsuit in Mobile, AL. Where can national class action 
lawsuits be filed today? Amazingly, the answer is in almost any venue, 
any court, county, circuit court in America. A plaintiff can search 
this country all over and select the single most favorable venue in 
America for filing their lawsuit--that is, if it is a broad-based class 
action that covers victims in every state and county in America, and 
some of them do. Some may just cover a region or half the counties in 
America or involve 10 percent of the States. At any rate, they are able 
to search within that area for the most favorable venue.
  I believe that is not healthy. A report issued this year by the 
American Tort Reform Association about the abuse of this choice named 
the various counties around the country as ``judicial hellholes.'' The 
study pointed to the large number of frivolous class actions found in 
counties it named, citing judicial cultures that ignore basic due 
process and legal protections and efforts by the county's judges to 
intimidate proponents of tort reform.
  By bringing their suits in one of these areas, plaintiffs' attorneys 
can defeat diversity by naming a single defendant and a single 
plaintiff who have citizenship in the same State, thus preventing a 
Federal court from hearing the case and allowing a State court in a 
single county to bind people all over the country under that one State 
or county's laws.
  Let me read what the Constitution says about diversity:

       The judicial Power of the United States shall extend to all 
     Cases, in law and equity, arising under this Constitution, 
     the Laws of the United States . . . to Controversies which 
     the United States shall be a party;--Controversies between 
     two or more States, between a State and a Citizen of another 
     State;--between Citizens of different States. . . .


[[Page 2082]]


  Our Founding Fathers thought about this issue, and they concluded 
that, if a person from Alabama wanted to sue a person from Illinois, 
the person in Illinois might not be comfortable being sued in an 
Alabama state court. They might think that might not be a favorable 
forum. There might be ``home cooking'' for the Alabama citizen there. 
So they said those cases ought to be in Federal court.
  As history developed, pretty early in our process it was concluded 
that diversity required complete diversity; that is, if one plaintiff 
and one of a host of potential defendants was a local defendant, then 
that could be kept in State court.
  I am not disputing that. All I am saying is I believe the Founding 
Fathers would have believed that a lawsuit that is predominantly 
intrastate in nature, involving the real defendant, should be in 
Federal court.
  So what happens is if you sue a drug company and you want to keep it 
in State court, you sue the lady in small town Mississippi who sells 
the prescription at her store--she is a local defendant, whereas the 
person who is going to be paying the judgment is out of State. If the 
drug company had been sued directly, it would have been in Federal 
court, but by suing one local State defendant along with the big-money 
deep-pocket in New York, that is not the case.
  The PRESIDING OFFICER. The time controlled by the majority has 
expired.
  Mr. SESSIONS. Mr. President, I thank the Chair. I will conclude by 
saying there are a lot of reasons we ought to support this bill. It has 
been thought out very carefully. A lot of work has gone into it over a 
number of years. We are in a position to pass good legislation at this 
time.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, I would like to spend a few minutes to 
discuss my amendment No. 3, which is pending at this time, and then ask 
that it be withdrawn. This is the amendment I had offered on Tuesday to 
clarify the scope of the ``mass action'' provision in Section 4(a) of 
the bill.
  As I had explained earlier this week, this provision requires that 
mass actions be treated the same as class actions under this bill, and 
therefore taken out of State courts and removed to Federal courts. But 
it was still unclear to me--and to many of the injured people who will 
be affected by this bill--what precisely the drafters had in mind in 
coming up with this ``mass action'' language in the bill.
  When I last took the floor, I had raised some questions about the 
differences between ``mass actions'' and ``mass torts,'' and whether 
mass torts would be ,I affected by the language in S. 5. I heard from 
proponents of this bill that these are two very different types of 
cases, and that the bill is designed to affect only mass actions and 
not mass torts.
  In fact, Senator Lott of Mississippi the other day explained on the 
floor that:

       Mass torts and mass actions are not the same. The phrase 
     ``mass torts'' refers to a situation in which many persons 
     are injured by the same underlying cause, such as a single 
     explosion, a series of event, or exposure to a particular 
     product. In contrast, the phrase ``mass action'' refers to a 
     specific type of lawsuit in which a large number of 
     plaintiffs seek to have all their claims adjudicated in one 
     combined trial. Mass actions are basically disguised class 
     actions.

  I am glad that the proponents of this bill agree with me that there 
is a very significant difference between these two types of cases. Mass 
torts are large scale personal injury cases that result from accidents, 
environmental disasters, or dangerous drugs that are widely sold.
  Cases like Vioxx that I described earlier, and cases arising from 
asbestos exposure, are examples of mass torts. These personal injury 
claims are usually based on State laws, and almost every State has well 
established rules of procedure to allow their State courts to customize 
the needs of their litigants in these complex cases.
  Senator Lott also explained on the floor that:

       There are a few States, like my State--I think, and West 
     Virginia is another one and there may be some others--which 
     do not provide a class action device. In those States, 
     plaintiffs' lawyers often bring together hundreds, sometimes 
     thousands of plaintiffs, to try their claims jointly without 
     having to meet the class action requirements. And often the 
     claims of the multiple plaintiffs have little to do with each 
     other.

  So, it seems to me that the authors of this bill are trying to 
include only these so-called mass actions and not mass torts.
  And I understand from the statements made by Senator Lott, the U.S. 
Chamber of Commerce, and many other proponents of the bill, that these 
so-called mass actions are currently filed only in Mississippi and West 
Virginia. In other words, this provision of S. 5 will have no impact on 
mass torts cases filed in the other 48 States.
  That is good news because I would hate to see this bill--which 
already turns the idea of federalism on its head--preempt any more 
State rules and procedures than it already does with the diversity 
provisions.
  I agree with the proponents that the scope of this language is 
limited.
  It is my understanding from conversations with my colleagues who 
support this bill that a mass action, as used in this section of the 
bill, is simply a procedural device designed to aggregate for trial 
numerous claims. If that is the case, I believe my amendment would not 
be necessary.
  I had offered my amendment as a good faith effort to keep mass tort 
cases from being impacted negatively by this provision. But if the 
language affects only a narrow set of procedural devices in a limited 
number of States, then I believe that is consistent with what I had 
attempted to achieve with my amendment.
  Accordingly, I ask unanimous consent that my amendment, Amendment No. 
3, be withdrawn.
  The PRESIDING OFFICER. Is there objection to the request of the 
Senator to withdraw the amendment? Without objection, it is so ordered.
  Mr. DURBIN. Mr. President, I would also like to talk about the bill 
generally.
  Why are we even debating a question about whether a lawsuit can be 
filed in a State court or a Federal court? If you can file a lawsuit, 
you are supposed to have your day in court. But it is not that simple.
  The reason why the business lobbies have spent millions of dollars in 
Washington pushing for this bill, the reason why this bill is the 
highest priority of the Bush administration and the Republican 
leadership in Congress, is because of one simple fact: Class action 
cases removed from State courts to Federal courts are less likely to go 
forward to be tried, they are less likely to reach a verdict where 
someone wins or loses, and if there is a decision on behalf of the 
plaintiffs, they are less likely to pay a reasonable amount of money in 
Federal court than in State court.
  What I say to you is not idle speculation; it is based on Federal 
court decisions. That is why the business community has worked so long 
and so hard to remove the rights of consumers and citizens to sue in 
their own State courts. Rather, they want them removed to Federal 
courts where they have a better chance to win. The businesses know they 
can win more class action cases in Federal courts than they could ever 
win in State courts. That is what this whole debate is about. So you 
hear all of this talk about whether class action suits are filed here, 
whether they are filed there--frankly, many of these discussions 
overlook what these class action lawsuits are all about.
  I had my staff compile some information on some of these lawsuits 
because people tell me: I don't understand what is a class action. I 
can understand if I am in an automobile accident, I get hurt, and I sue 
the person who ran into me. Is this what we are talking about? That 
probably wouldn't be a class action.
  Let me give you some examples of real class action lawsuits. These 
cases will be more difficult to file and more difficult to be 
successful because the business interests are going to pass this bill.
  U.S. postal workers given Cipro after the anthrax attacks in 2001 
found out

[[Page 2083]]

there were many damages that came from the drug, and the postal workers 
came together as a group to sue the company that made Cipro. This is a 
class action lawsuit.
  Then we had a group of people in Rhode Island who were harmed because 
they were exposed to lead in paint. They sued, as a class, the 
manufacturers of lead paint that caused the damage to them physically. 
But because the manufacturers are not based in Rhode Island, this class 
action might be removed to a Federal court under this bill.
  Then there was a court in Illinois in a class action lawsuit in one 
of the counties the proponents of this bill like to rail about. It was 
against Ford Motor Company because they were selling Ford Crown 
Victoria vehicles to police departments alleging they were better cars 
for police use. It turned out they had a defective fuel tank that made 
them dangerous for policemen. So, all of the police departments that 
bought these cars sued Ford Motor Company as a class because of a 
defective product. But because Ford Motors is based in Michigan, the 
Illinois police officers might have to litigate this case in a Federal 
court.
  Here is another one against Foodmaker, which ran Jack-in-the-Box 
restaurants. It turned out thousands of their patrons were subjected to 
food contamination and serious illness. The patrons sued as a class. 
Why? Because any individual might say: I took my child to Jack-in-the-
Box, my child became sick and went to the hospital, and was there for 
two days. The medical bills came to $1,500. But I can't file a lawsuit 
against the restaurant for $1,500.
  Then, the parent finds out that the same thing happened to hundreds 
of other kids, so all the parents come together and say: Jack-in-the-
Box, you should have done a better job. And this class of plaintiffs 
went forward in a State court. But they would have less of a chance for 
success under this bill. That is what it is about.
  A suit was brought by mothers and fathers when they discovered that 
Beech-Nut was selling apple juice for infants that turned out to be 
nothing but sugar water.
  What is the damage to an individual infant, or a single family? How 
do you measure it? If a company sold millions of bottles of this 
defective product, shouldn't that company be held accountable?
  That is what this debate is all about. It is about accountability for 
those who cause harm to the public. The businesses that are responsible 
for environmental contamination, for producing dangerous products that 
cause injuries, for manufacturing items that shouldn't be sold, or for 
overcharging customers, should be held liable.
  But these business interests come to Congress for help, and they are 
going to win today. As a result of this victory, fewer consumers and 
fewer families are going to have a chance to succeed in court.
  The Government closes down the agencies to protect you, Congress will 
not pass the laws to protect you, and now this Senate will pass a law 
to close the courthouse doors in your States when you want to come 
together as a group and ask for justice. This is the highest priority 
of the Bush administration: closing that courthouse door, making sure 
these families and these individuals don't have a fighting chance.
  I think there are a lot of other priorities we should consider, such 
as the cost of health care in America. We will not even talk about that 
issue on the Senate floor, let alone discuss bipartisan options for 
addressing that pressing problem.
  This so-called Class Action Fairness Act may pass today, but the 
ultimate losers are going to be families across America who are hoping 
that Congress will at least consider their best interests in the very 
first piece of legislation that we consider.
  I yield the floor.
  Mr. LEVIN. Mr. President, I will vote against the Class Action 
Fairness Act of 2005 because, although this bill is an improvement over 
previous versions, it still has significant deficiencies that would 
have been corrected by a number of common sense amendments that were 
not adopted.
  For example, forty seven attorneys general, including the attorney 
general of Michigan, expressed concern that this legislation could 
limit their powers to investigate and bring actions in their State 
courts against defendants who have caused harm to their citizens. The 
attorneys general supported an amendment offered by Senator Pryor that 
would have exempted all actions brought by State Attorneys General from 
the provisions of S. 5 stating, ``It is important to all of our 
constituents, but especially to the poor, elderly and disabled, that 
the provisions of the act not be misconstrued and that we maintain the 
enforcement authority needed to protect them from illegal practices.'' 
The Pryor amendment was defeated.
  Federal courts generally do not certify class actions if laws of many 
states are involved. However, this legislation would force nationwide 
class actions into Federal courts where they would likely be dismissed 
for involving too many state laws. This would deprive the plaintiffs 
from the opportunity to have their case heard. An amendment sponsored 
by Senator Feinstein, a cosponsor of this legislation, and Senator 
Bingaman would have fixed this problem by prohibiting the district 
court from denying class certification in whole or in part on the 
ground that the law of more than one State will be applied. However, 
that amendment failed.
  Senator Feingold offered an amendment that would have set a time 
limit for a district court to assume jurisdiction or rule on a remand 
motion to State court. The amendment, which failed, would have provided 
protection for plaintiffs against attempts to remove cases to Federal 
court merely to delay the outcome.
  We do need class action reform, however this bill fails to adequately 
protect the rights of our citizens and therefore I cannot support it.
  Mr. SCHUMER. Mr. President, I rise today to express my support for S. 
5, the Class Action Fairness Act, and to explain why I supported the 
amendment proposed by my friend from California, Senator Feinstein, for 
herself and on behalf of my friend from New Mexico, Senator Bingaman.
  I support the class action legislation before us today. Certain 
lawsuits have become a concern to many Americans. Many lawsuits have 
been filed in local State courts that have no connection to the 
plaintiff, the defendant, or the conduct at issue. This allows forum 
shopping, which undercuts the basic fairness of our justice system.
  Having said that, I am not one of those who think access to the 
courts should be unduly blocked. Our citizens' use of the courts has 
led to many reforms in the protection of civil rights and the 
environment, and has held corporate malefactors accountable for 
improper conduct that has cost victims billions of dollars. Often for 
those without power, a lawsuit is the only avenue for redress. We need 
lawsuits, but the rules governing them should be fair.
  As we have heard yesterday and today, courts in some places have 
become magnets for all kinds of lawsuits. Some of these lawsuits are 
meritorious; some are not. In either scenario, if the case affects the 
Nation as a whole, it should be heard in Federal court. Judges in small 
counties should not make law for all of America. Although those judges 
might make good law, there is a real risk that parochial concerns would 
dominate in that type of decision. That is not to say that there are 
not judges in the Federal courts who do not have extreme views on both 
sides of the issues, much as we try not to confirm judges who fall out 
of the mainstream.
  Consequently, we need to rein in forum shopping. When consumers 
allege that a product sold nationwide to consumers in all 50 States is 
defective, a Federal court should decide that case.
  It is for these reasons that I joined with my colleagues, the Senator 
from Connecticut, Mr. Dodd, and the Senator from Louisiana, Ms. 
Landrieu, to help craft the compromise that led to the bill before us.

[[Page 2084]]

  The spirit of the compromise we reached would not create a new 
mechanism to dismiss class actions, but instead would remove the large 
and national class actions to the Federal courts.
  But when Senators Dodd, Landrieu, Carper, Kohl, and I, all of whom 
have worked so long and hard on this bill, met with the majority leader 
and others 2 years ago, we made perfectly clear the right of the 
minority to offer amendments. That right remains an essential part of 
my participation in the compromIse.
  Although we worked hard to improve the bill, we wanted to make sure 
that our colleagues had the opportunity to offer amendments because no 
bill is perfect.
  One area where the bill could be improved stems from a real concern 
that many of the consumer class actions removed to Federal court might 
not be certified on the grounds that there would be too many non-common 
issues due to differences among State laws that would apply to 
different members of the national class. To date, at least 26 Federal 
district courts have refused to certify class actions on those grounds.
  Some of us believed that not certifying could have resulted in a 
problem because it would effectively mean the weakening, if not the 
disappearance, of the class members' ability to get remedies, 
particularly with the changes made to current law by this bill. Not 
certifying could also create a practical problem for lawyers, who have 
the opportunity to try their class action before one court, and post-
decertification might have to re-plead and try several class actions in 
several courts, thereby destroying the sought-after efficiency of class 
actions and creating the risk that the results would not be uniform.
  This was not the desired outcome of our compromise: We intended to 
send national class actions to Federal court, not to their graves.
  The amendment that my friend from California, Senator Feinstein, and 
my friend from New Mexico, Senator Bingaman, introduced would not only 
have improved the bill, but would have also furthered the spirit of the 
compromise by clarifying our intention that the bill remove, but 
preserve class actions, even when Federal judges face choice of law 
issues.
  Importantly, this amendment would not have aided forum-shopping 
plaintiffs' lawyers. Instead, it would have clarified options for a 
Federal judge facing a choice of law question. That clarification would 
have helped to grind to a halt the class action merry-go-round between 
the State and Federal courts. I hope that Federal judges view this 
bill, even without the amendment, as a vehicle that was intended to 
bring national class actions to the Nation's courts and not as a 
vehicle to balk at certification. The use of subclasses to protect 
people's rights under their State laws is now in the hands of Federal 
judges. They have the tools to protect those rights. This bill was not 
intended to destroy them.
  That view will protect an important instrument of deterrence against 
future wrongdoing and an important adjunct to regulators in the 
enforcement of laws protecting our citizens.
  Mr. ENZI. Mr. President, today I rise in support of S. 5, the Class 
Action Fairness Act of 2005. The class action system in our country is 
broken. Over the past decade, class action lawsuits have grown by over 
1,000 percent nationwide. This extraordinary increase has created a 
system that produces hasty claims that are often unjust. Lawsuits that 
have plaintiffs and defendants from multiple States are tried in small 
State courts with known biases. This leads to irrationally large 
verdicts that make little sense legally or practically.
  The U.S. Constitution gives jurisdiction to the Federal Government 
when cases involve citizens of differing states. It makes sense, that, 
in a case involving plaintiffs from Wyoming and Alabama and defendants 
from New York and Idaho, that no party be given the inevitable ``home-
court'' advantage that comes when a case is tried in your backyard. 
Regrettably, for years, Congress has required all plaintiffs to be 
diverse from all defendants. In large class action lawsuits, with 
plaintiffs or defendants from states throughout the Nation, it is 
increasingly difficult for this requirement of complete diversity to be 
met.
  In the system we have created, we see lawyers seeking out victims 
instead of victims seeking out lawyers. We see lawsuits being 
adjudicated in a select few courts with proven track records for 
delivering large verdicts instead of lawsuits being tried in courts 
with the most appropriate jurisdiction.
  S. 5 is a step in the right direction. It eliminates the lottery-like 
aspect of civil liability that individuals now face by moving 
interstate cases to the federal level. If passed, S. 5 makes it so that 
class action cases involving citizens from Wyoming, Utah, Kansas and 
Texas will not be adjudicated at a courthouse in Madison County, 
Illinois. In the same vein, it ensures that cases involving folks from 
Illinois, Arkansas, and Mississippi are not decided in a State court in 
Wyoming. These are interstate cases and should decided without a home 
state bias that can exist in some State courts.
  When the Founding Fathers drafted the Constitution and its provisions 
regarding the filing of interstate cases, they could never have 
imagined that our court system would be used someday to engage almost 
every sector of the U.S. economy in just three counties. That statistic 
should be a wake up call that something is dreadfully wrong and that 
the system is not working as the designers intended. By placing cases 
in Federal court, we avoid the forum shopping that has become so 
commonplace over the past few decades. S. 5 gives the defendants in a 
lawsuit a chance to have their day in an impartial court.
  While State courts undoubtedly have their place, and in many 
instances operate more effectively than Federal courts, a select few 
have become notorious for delivering outrageous verdicts. Consequently, 
many of our most costly class action lawsuits end up in these courts. 
This should not be the case.
  S. 5 will not only benefit the defendants, it will also make the 
system more fair for the plaintiffs. Weak oversight of class action 
lawsuits has created a system that returns less than 50 cents on the 
dollar to plaintiffs in a case. Compensation, when compared to actual 
economic loss, is approximately 22 cents per dollar. Settlement 
notifications are often times so confusing that plaintiffs do not 
understand what they are receiving. Plaintiffs are signing off on 
agreements they do not even understand, with even less understanding 
about how to challenge the settlement. They are getting a raw deal.
  I am pleased that the Class Action Fairness Act addresses this 
problem by including a ``Consumer Class Action Bill of Rights.'' The 
``Bill of Rights'' includes a provision requiring the Federal court to 
hold a hearing and find that a settlement is fair before it can be 
approved. It includes provisions that make more fair what have become 
known as ``coupon settlements,'' in which the attorneys receive real 
money and the victims receive the equivalent of a Sunday newspaper 
clipping.
  S. 5 works to reign in the only people who covertly benefit from the 
way the class action system works today, a select group of defense 
attorneys who seem more interested in profits than process. These 
lawyers are more concerned with reaching a settlement than helping 
their victims. They push for quick class certification, and once they 
have crossed that hurdle, they push for a quick settlement by 
threatening the defendants with large monetary verdicts that have come 
about in past cases.
  In the face of these ridiculous verdicts, defendants settle quickly. 
They know the stars are lined up against them if the case goes all the 
way to trial and often times, by agreeing to coupon settlements, the 
defendants pay only a fraction of the stated damages. The Class Action 
Fairness Act takes steps to change this practice. It takes steps to 
ensure that when a settlement is reached, the lawyers and the 
defendants do not come out ahead when the victims come out behind.

[[Page 2085]]

  Is S. 5 perfect? Absolutely not. It does not require that individuals 
opt-in to class action lawsuits. It does not require sanctions be 
brought against attorneys who file frivolous lawsuits over and over 
again. There are a number of provisions that I believe should be 
included in the bill that did not make the cut.
  But S. 5 is the true example of a bipartisan compromise. S. 5 takes 
into account the wants of the various parties. It took a lot of give 
and take to get to this point, and now, we have a bill that does some 
good. We have a bill that takes a first step toward reforming our court 
system to make it more fair for both the plaintiffs and the defendants.
  I look forward to voting in favor of the Class Action Fairness Act 
later today, and I will encourage all my colleagues to do the same.
  Mr. KOHL. Mr. President, I rise today on the final day of debate on 
the class action reform bill to say a final word in support of the 
legislation. We have worked for many years on this bill through 
numerous hearings, committee markups and repeated floor consideration. 
We can proudly say that we are about to succeed in passing modest, yet 
important changes to the class action process. Consumers and businesses 
across the country will benefit and not a single case with merit will 
go unheard.
  Today is the culmination of many years of our bipartisan efforts on 
this issue as we have attempted to make the class action system fairer 
for both consumers and businesses alike. Our success once again 
demonstrates that the Congress works best when we work together. I am 
most proud that we were able to construct a bipartisan core of 
supporters to pass this bill.
  While this bill does not solve all of the problems in the system, 
consumers will never again need to worry about being injured and 
receiving worthless coupons as damages. Businesses will never again 
need to fear being sued in a small county court where the rules are 
stacked against them. Most importantly, under our bill every claim with 
merit will still go forward and the court house doors will always be 
open.
  It is a well-known saying that success has many fathers, so many will 
deserve thanks for their work leading to the passage of this bill 
today. I would like to mention a few people specifically who have been 
indispensable to the passage of this legislation. Senator Grassley and 
I have worked on this bill for 7 years now. He has been a good partner 
and leader. He deserves tremendous credit for his willingness to accept 
bipartisan compromises in an effort to get this bill done.
  Senators Carper and Hatch also deserve praise for the tremendous 
energy that they have brought to this bill over the past two 
Congresses. Without them, class action reform certainly would not have 
made it to the verge of passage today.
  In addition, Senators Dodd, Feinstein, Schumer and Landrieu 
contributed significantly in this process by making important changes 
to the bill. They were successful in identifying ways to ensure that 
primarily State cases stayed in state court and only truly national 
cases could be removed to the Federal courts. This has been our goal 
all along. With their assistance we have accomplished it.
  I would be remiss if I did not thank the many very fine staffers 
whose work often goes unheralded. This bill addresses a very technical 
and difficult area of the law, so their contribution to this bill was 
truly indispensable. All of the following were essential to the final 
passage of this bill: Rita Lari with Senator Grassley; Jonathon Jones, 
Sheila Murphy and John Kilvington with Senator Carper; David Hantman 
with Senator Feinstein; Jeff Berman with Senator Schumer; Shawn Maher 
with Senator Dodd; and Harold Kim with Senator Hatch.
  Finally, Paul Bock and Jeff Miller, my chief of staff and chief 
counsel respectively, deserve significant credit for the passage of 
this bill. They have worked tirelessly on this legislation for several 
years and have provided wise counsel during the long and difficult 
negotiations on this legislation. With their assistance, we succeeded 
in crafting a moderate bill that will help business and consumers 
alike. For that, we should all be proud.
  Mr. ALLEN. Mr. President, I rise today in support of the Class Action 
Fairness Act.
  This legislation we are considering today is crucial to ensuring that 
there is fairness in our courtrooms, that claimants receive the 
judicial consideration they deserve, and that the American economy and 
small businesses are able to stay competitive.
  This class action reform legislation is primarily designed to allow 
defendants to move a class action lawsuit from State court to Federal 
court when there is diversity or citizens from different States 
involved in the litigation. This concept is as old as our Republic. No 
one will be denied access to the courts. It is simply allowing most 
litigants to find the most appropriate court to decide the case. In 
significant cases with diversity, the Federal courts are the proper 
choice.
  We have heard about cases where lawyers shop around to find courts in 
particular counties that have a proven track record of being 
sympathetic to class action lawsuits with absurdly large judgments. 
When justice arbitrarily hinges on what county in which a case is 
tried, that is not fair.
  A recent study found that 89 percent of Americans believe the legal 
system is in need of reform. The statistics are indeed alarming: Over 
the past decade, the number of class action lawsuits has increased by 
over 1,000 percent nationwide. And the cost of the U.S. tort system has 
increased one hundred fold over the last 50 years. Lloyd's of London 
estimates that the tort system cost $205 billion in 2001, or $721 per 
U.S. citizen. Most importantly, Lloyd's estimates this number to rise 
to $298 billion by this year. At current levels, U.S. tort costs are 
equivalent to a five percent tax on wages.
  The implications of an abused tort system on the American economy are 
of legitimate concern. While there is no doubt that many class action 
lawsuits are legitimate, the inadequacies of the system have resulted 
in frequent abuses. And the increased cost to businesses has an 
enormous impact--tying the hands of businesses and restricting their 
ability to expand, provide additional jobs, or contribute to the 
economy. Even the threat of class action lawsuits forces businesses to 
spend millions of dollars. Defendants face the risk of a single 
judgment in the tens of millions or even billions of dollars, simply 
because a State court judge has rushed to certify a class without 
proper review. The risk of a single, bankrupting award often forces 
defendants to settle the case with sizable payments even when the 
defendant has meritorious defenses.
  Believe it or not, some opponents of the Class Action Fairness Act 
are still urging that the current class action system works well and 
that class action reform is unnecessary. Apparently, they do not think 
it is a problem when consumers take home 50-cent coupons to compensate 
them for their injuries, while their lawyers pocket millions in cash. 
Take for example a case against Blockbuster, Inc., where customers 
alleged they were charged excessive late fees for video rentals. These 
customers received $1 coupons while their attorneys received over $9 
million. Or when one State court prevents citizens from litigating 
their claims under the law of their home State. Or when attorneys file 
the same lawsuit in dozens of State courts across the country and file 
the same lawsuit in a race to see which judge will certify the fastest 
and broadest class.
  In fact, numerous studies have documented class action abuses taking 
place in a small number of ``magnet'' State courts, and by now, it is 
beyond legitimate debate that our class action system is in shambles. 
As the Washington Post editorial page has noted, ``[n]o portion of the 
American civil justice system is more of a mess than the world of class 
action.''
  A RAND Institute for Civil Justice, ICJ, Study on U.S. class actions 
released at the end of 1999 empirically confirms what has long been 
widely believed--State court consumer class actions primarily benefit 
lawyers, not

[[Page 2086]]

the consumers on whose behalf the actions ostensibly are brought. Case 
studies in the ICJ piece confirm that in State court consumer class 
actions--that is, cases not involving personal injury claims--the fees 
received by attorneys are typically larger than the total amount of 
monetary benefits paid to all of the class members combined. In short, 
the lawyers are the primary beneficiaries. The ICJ Study contains no 
data indicating that this problem exists in Federal court class 
actions.
  If we do not pass this vital legislation, the class action process 
will remain a system ripe for exploitation, and the harm to the 
fundamental fairness of the civil justice system will continue to grow. 
Excessive and frivolous class action lawsuits stifle innovation, 
discourage risk-taking, and harm the entrepreneurship that drives our 
Nation's economic growth and job creation.
  This commonsense, bipartisan legislation will help alleviate the 
dramatic effects that have resulted from an abuse of the class action 
system. This legislation ensures that legitimate class action cases are 
given full consideration and that prevailing plaintiffs receive the 
compensation they deserve. Americans deserve to have a judicial system 
that is effective and efficient, and, most importantly, fair--this 
legislation goes a long way toward accomplishing these objectives. I 
urge my colleagues to support this legislation. In the 108th Congress, 
this legislation came up one vote short. We now have four more Senators 
on our side of the aisle, so I am confident in its success in the 109th 
Congress. This is a success that people in States desire, and it will 
be a promise kept.
  Mrs. CLINTON. Mr. President, I oppose this legislation called the 
Class Action Fairness Act of 2005, because I do not believe it is fair 
to litigants who have legitimate claims that are most appropriately 
addressed by our state courts.
  Yes, there are some problems in the use of class actions, and in some 
cases there are excessive fees or inappropriate coupon settlements. I 
am pleased that after many years of seeking to move class action 
``reform'' legislation, the bill proponents finally agreed to include 
language that addresses some of the abuses concerning ``coupon'' 
settlements, in which plaintiffs who have proven their case in court 
receive in turn coupons for products or services that have little 
value. This language has long been advocated by the distinguished 
ranking member of the Senate Judiciary Committee, Senator Leahy, and it 
is a good provision because in contrast to most of the bill, it is 
narrowly crafted to address an actual problem that the legal system and 
litigants confront.
  But the vast majority of the provisions in this legislation are not 
narrowly crafted to address discrete problems. Instead, this 
legislation is an extremely blunt instrument that I believe will result 
in justice delayed and justice denied for many Americans.
  There have been many claims about ``judicial hellholes'' and ``magnet 
jurisdictions'' but the evidence shows that these claims are, at best, 
overstated, and are certainly not so widespread so as to justify 
passage of this legislation that turns 200 years of federalism on its 
head. Indeed, a recent report by Public Citizen found that there were, 
at most, two jurisdictions--Madison County and St. Clair County, IL--of 
the 3,141 court systems in the United States for which bill proponents 
have provided limited data that they are ``magnet jurisdictions.'' As 
to Madison County in particular, the facts also do not support the 
rhetoric. In 2002, only 3 of 77 class actions were actually certified 
to proceed to trial, and in 2003, only 2 of 106 class actions filed 
were certified.
  Moreover, the Public Citizen report notes that, in recent years, at 
least 11 states have made major changes to the class action process 
used in their States to aid in the administering of justice, and in 
fact Illinois is in the process of doing the same.
  The legislation purports to help Americans but I believe it will hurt 
them. The legislation itself states its purpose is to: ``(1) assure 
fair and prompt recoveries for class members with legitimate claims; 
(2) restore the intent of the framers of the United States Constitution 
by providing for Federal court consideration of interstate cases of 
national importance under diversity jurisdiction; and (3) benefit 
society by encouraging innovation and lowering consumer prices.''
  As to assuring ``fair and prompt recoveries,'' hundreds of consumer 
rights, labor, civil rights, senior, and environmental organizations, 
esteemed legal experts, and many State Attorneys General believe, as I 
do, that this legislation will do just the opposite.
  There is also no reasonable basis for the assertion that this 
legislation ``will restore the intent of the framers'' with respect to 
the role of our Federal courts. As Arthur Miller, the distinguished 
Harvard Law School professor, author, and expert in the fields of civil 
procedure, complex litigation, and class actions noted with respect to 
similar legislation considered last year: it is a ``radical departure 
from one of the most basic, longstanding principles of federalism [and] 
is a particular affront to state judges when we consider the 
unquestioned vitality and competence of state courts to which we have 
historically and frequently entrusted the enforcement of state-created 
rights and remedies.''
  As a Senator representing the great State of New York, I have worked 
closely with many businesses in my state to help them with their 
efforts to grow and create jobs, and I am a firm believer in 
encouraging innovation and lowering consumer prices. But even if we 
assume there is a strong connection between this legislation and those 
goals, there are many more appropriate means to achieve those ends 
without doing the harm to the administration of justice that I believe 
this legislation will impose.
  In addition to being unfair to the American people, I do not believe 
this legislation is fair to our State or Federal judiciaries. This bill 
will effectively preclude state courts in many instances from employing 
their expertise and experience in class action cases based on state law 
that they have historically considered. I believe that state courts 
should determine matters of state law whenever possible. It is not fair 
to our Federal judiciary, which simply does not have the resources or 
experience to handle a mass influx of class action cases to our federal 
courts.
  Indeed, the Judicial Conference of the United States has expressed 
its opposition to similar legislation introduced in prior Congresses 
because it ``would add substantially to the workload of the federal 
courts and [is] inconsistent with principles of federalism.'' 
Similarly, the Board of Directors of the Conference of Chief Justices 
representing the Chief Justices of our state courts has said that 
legislation of this kind is simply unwarranted ``absent hard evidence 
of the inability of the state judicial systems to hear and decide 
fairly class actions brought in state courts.'' That evidence simply 
does not exist.
  As the National Conference of State Legislatures, NCSL, has noted in 
its strong opposition to this legislation, the legislation ``sends a 
disturbing message to the American people that state court systems are 
somehow inferior or untrustworthy.'' The NCSL went on to say that the 
effect of the legislation ``on state legislatures is that state laws in 
the areas of consumer protection and antitrust, which were passed to 
protect the citizens of a particular state against fraudulent or 
illegal activities, will almost never be heard in state courts. 
Ironically, state courts, whose sole purpose is to interpret state 
laws, will be bypassed and the federal judiciary will be asked to 
render judgment in those cases.''
  Although bill proponents have sometimes suggested the contrary, make 
no mistake: if enacted, this legislation will not only result in the 
majority of class action lawsuits being transferred from our state to 
Federal courts, but it will also serve to terminate some class action 
lawsuits that seek to provide justice to everyday Americans.
  Proponents of this legislation refer to an alleged abuse by lawyers 
in bringing class actions and assert that too many cases are instituted 
that are

[[Page 2087]]

without merit. As I have already noted, I believe some proponents of 
this legislation have mischaracterized the extent of the problems 
concerning class actions. But, even if these assertions were true, the 
proponents have failed to justify the rejection of the very reasonable 
amendments offered by my colleagues that sought to address major 
concerns with the legislation without undermining its spirit or intent.
  One such amendment was offered by my colleague Senator Pryor of 
Arkansas, a former Arkansas State Attorney General. It would have 
clarified the role that State Attorneys General would continue to play 
in State class action cases. That amendment had the express written 
support of 47 of the 50 State Attorneys General in our Nation. As the 
highest law enforcement officers in their respective States, I cannot 
imagine that anyone in this body would believe that such public 
servants would bring ``frivolous lawsuits'' or would seek to abuse the 
class action process. And yet, that amendment failed, primarily along 
party lines.
  The remaining amendments met a similar fate, including one offered by 
Senators Bingaman and Feinstein. There is no general Federal consumer 
protection statute, which is why consumer fraud, deceptive sales 
practices, and defective product cases are almost always commenced in 
state courts.
  Yet, the legislation before us would effectively move many of these 
cases to Federal courts, courts that are already overburdened and have 
neither the experience nor the expertise to handle these cases. If such 
cases are forced into Federal courts through consolidation of many 
state court cases, a Federal court hearing such a case must then decide 
which state laws should be applied. Because these kinds of 
circumstances have presented enormous challenges to our Federal courts, 
many Federal judges have simply, and understandably, denied 
certification of nationwide consumer fraud cases. Yet, the bill 
language would preclude the consideration of many of these cases in 
state courts, creating what many have described as the bill's ``Catch-
22.'' At that point, such cases would literally be in justice ``limbo'' 
because a federal court would have dismissed the case but under the 
provisions of the legislation, the case could not withstand a 
defendant's challenge to maintain the case in a State court.
  The amendment offered by Senator Feinstein, an original cosponsor of 
the underlying legislation, and Senator Bingaman, would have provided a 
process to handle such cases to increase the likelihood that such cases 
would be certified by a Federal court and the appropriate State laws 
would be applied. This was a more than reasonable effort to address a 
significant concern with this legislation without undermining the 
legislation's intent to transfer many class actions to Federal courts. 
But, once again, a majority of the Members of this body chose to reject 
it.
  The Leadership Conference on Civil Rights has stated, and no one has 
refuted, that ``there is no evidence that lawsuits brought by workers 
seeking justice in state courts on issues ranging from overtime pay to 
working off the clock are abusing the system. To the contrary, failure 
to exempt such lawsuits in this legislation is an abusive act against 
every hard-working American seeking fair pay and a better life.'' Yet, 
the amendment offered by Senator Kennedy that would have carved out 
such cases from this legislation was rejected as well.
  In short, this bill currently stands now in the same shape as when it 
was introduced. Though valiant efforts were made to improve it, none 
were successful. Eliot Spitzer, the distinguished New York State 
Attorney General, and a number of other State Attorneys General, 
expressed their overall concern with the bill, including the fact that 
the legislation still ``unduly limits the right of individuals to seek 
redress for corporate wrongdoing in their state courts.'' I could not 
agree more.
  In speaking in opposition to this legislation on the Senate floor 
earlier this week, Senator Leahy, the Ranking Member of the Senate 
Judiciary Committee, reminded all of my colleagues that sometimes 
individual claims are so small that even though a harm was done for 
which a plaintiff should receive relief, it is not worth it for him or 
her to spend significant financial resources to obtain that relief 
through the judicial process. Unfortunately, as he said, ``[s]ometimes 
that is what cheaters count on, and it is how they get away with their 
schemes. [Yet,] cheating thousands of people is still cheating. Class 
actions allow the little guys to band together, allow them to afford a 
competent lawyer, and allow them to redress wrongdoing.'' With the 
expected passage of this legislation today, I believe the ``little 
guy'' loses, and I believe that is neither fair nor just. That is why I 
cannot support this legislation.
  I appreciate the concerns raised by businesses in New York and around 
the country about the cost of litigation. I too believe that litigation 
costs have increased significantly. Any legislation that seeks to 
address discrete problems with class action litigation should address 
this and other concerns without unnecessarily and negatively affecting 
the ability of Americans to seek and obtain justice through our courts. 
A proper balance must be struck. The so-called Class Action Fairness 
Act simply does not strike that balance.
  Mrs. DOLE. Mr. President, I rise today in support of the Class Action 
Fairness Act of 2005, legislation that is greatly needed to restore 
public confidence in our Nation's judicial system and protect jobs in 
my own State and throughout the country.
  Frivolous litigation has helped drive the total cost of our tort 
system to more than $230 billion a year. Tort costs in America are now 
far higher than those of any other major industrialized nation, and in 
our global economy, this has become a tremendous disadvantage for 
American manufacturers and entrepreneurs, who have long sought reform. 
But this affects not just certain businesses; this affects our overall 
economy and all Americans.
  The Class Action Fairness Act will provide that some class action 
suits be litigated in the Federal courts rather than allowing venue 
shopping for a sympathetic State court. The measure will also ensure 
that cases of national importance are not overlooked. Most importantly, 
this legislation will ensure that class members with legitimate claims 
are fairly compensated.
  Class action suits are an important part of our legal system. They 
originated to make our courts more efficient by joining together 
parties with a common claim. However, growing abuses by opportunistic 
plaintiffs' attorneys--coupled with the skyrocketing costs of runaway 
litigation and excessive awards--have had a dramatic impact on 
America's interstate commerce.
  Over the past decade, the number of class action lawsuits has grown 
by over 1,000 percent nationwide. And the jury awards are sharply 
increasing over time as well. In 1999, the top 10 awards totaled $9 
billion; by 2002, that number had jumped to $32.7 billion.
  Businesses, like those in my home State of North Carolina, are losing 
out because the rules in place today allow lawyers to ``shop'' for the 
``friendliest'' court to hear their case. And it is not just large 
companies being sacked with enormous payouts in class action lawsuits. 
Small businesses are bearing the majority of tort liability costs. 
According to a study conducted for the U.S. Chamber of Commerce, small 
businesses bear 68 percent of tort liability costs but take in just 25 
percent of business revenue.
  We all know that small businesses are the job creators and the 
engines of our economy. They create 70 percent of all new jobs in 
America. Yet the rules in place today allow for a judicial system that 
is truly hurting them and causing them to spend money--on average 
$150,000 a year--on litigation expenses rather than on business 
development and equipment and expansion--the very things that can lead 
to more jobs.
  Our goal in reforming class action lawsuits is to provide justice to 
the truly injured parties, not to deny victims their day in court and 
their just compensation. Lawsuit costs have

[[Page 2088]]

risen substantially over the past several decades, and a significant 
part of these costs is going towards paying exorbitant lawyers' fees 
and transaction costs. And some injured plaintiffs are suffering 
because of weak State court oversight of class action cases. In fact, 
under the current U.S. tort system, less than 50 cents on the dollar 
finds its way to claimants, and only 22 cents compensate for actual 
economic loss.
  And sometimes class members don't receive cash at all. For example, 
in a settlement with Crayola, approved by a State court in Illinois, 
crayon purchasers in North Carolina and around the country received 75-
cent coupons for the purchase of more crayons; their lawyers, however, 
received $600,000 in cash.
  And in the Cheerios class action settlement, also approved by State 
court in Illinois, consumers in North Carolina and around the country 
received coupons for buying a single box of cereal, while lawyers got 
$1.75 million.
  I hardly think it's in the best interest of the class member to 
actually have to purchase more of a product to receive any benefit. And 
it isn't fair that class members are losing out while their attorneys 
are cashing in.
  This legislation establishes a ``Consumer Class Action Bill of 
Rights'' that will ensure that class actions do not harm the intended 
beneficiaries--people who were actually harmed by the actions of a 
defendant. And it does nothing to prevent class members from having 
their cases heard--it just establishes that some of these cases may be 
heard in Federal courts.
  It is time we do what is right and repair this broken system--for 
claimants in class action cases, for our Nation's economy, businesses 
large and small, and for all Americans.
  Mr. VOINOVICH. Mr. President, I rise today to speak on behalf of the 
Class Action Fairness Act, a bill to stop unfair and abusive class 
action lawsuits that ignore the best interests of injured plaintiffs. 
This legislation is sorely needed to help people understand their 
rights in class action lawsuits and protect them from unfair 
settlements.
  It is also needed to reform the class action process, which has been 
so manipulated in recent years that U.S. companies are being driven 
into bankruptcy to escape the rising tide of frivolous lawsuits and has 
resulted in the loss of thousands of jobs, especially in the 
manufacturing sector.
  Unfortunately, not enough Americans realize that we are in a global 
marketplace and businesses now have choices as to where they 
manufacture their products. Many of our businesses are leaving our 
country because of the litigation tornado that is destroying their 
competitiveness. The Senate must start taking into consideration the 
impact of its decisions on this Nation's competitive position in the 
global marketplace.
  I believe that for the system to work, we must strike a delicate 
balance between the rights of aggrieved parties to bring lawsuits and 
the rights of society to be protected against frivolous lawsuits and 
outrageous judgments that are disproportionate to compensating the 
injured and made at the expense of society as a whole. This is what the 
Class Action Fairness Act, does, and I am proud to cosponsor it.
  Since my days as Governor of Ohio, I have been very concerned with 
what I call the ``litigation tornado'' that has been sweeping through 
the economy of Ohio, as well as the Nation.
  Ohio's civil justice system is in a state of crisis. Ohio doctors are 
leaving the State and too many have stopped delivering babies because 
they can't afford the liability insurance.
  From 2001-02, Ohio physicians faced medical liability insurance 
increases ranging from 28 to 60 percent. Ohio ranked among the top five 
States for premium increases in 2002. General surgeons pay as much as 
$74,554, and OB-GYNs pay as much as $152,496. Comparatively, Indiana 
general surgeons pay between $14,000-$30,000; and OB-GYNs pay between 
$20,000-$40,000.
  Further, Ohio businesses are going bankrupt as a result of runaway 
asbestos litigation. And today, one of my fellow Ohioans can be a 
plaintiff in a class action lawsuit that she doesn't know about and 
taking place in a State she has never even visited.
  In 1996, as Governor of Ohio, I was proud to sign H.B. 350, strong 
tort reform legislation that became law in Ohio for a while. It might 
have helped today's liability crisis, but it never got a chance.
  In 1999, the Supreme Court of Ohio, in a politically motivated 4-3 
decision, struck down Ohio's civil justice reform law, even though the 
only plaintiff in the case was the Ohio Academy of Trial Lawyers--the 
personal injury bar's trade group.
  Their reason for challenging the law? They claimed their association 
would lose members and lose money due to the civil justice reform laws 
we enacted.
  The bias of the case was so great that one of the dissenters, Justice 
Stratton, had this to say:

       This case should have never been accepted for review on the 
     merits. The majority's acceptance of this case means that we 
     have created a whole new arena of jurisdiction--advisory 
     opinions on the constitutionality of a statute challenged by 
     a special interest group.

  From this, it is obvious to me that the way we currently administer 
class actions is not working.
  While we were frustrated at the State level, I'm proud to have 
continued my fight for a fair, strong civil justice system in the 
United States Senate.
  To this end, a few years ago I worked with the American Tort Reform 
Association to produce a study entitled ``Lawsuit Abuse and Ohio'' that 
captured the impact of this rampant litigation on Ohio's economy, with 
the goal of educating the public on this issue and sparking change.
  Can you imagine what this study found? In 2002 in Ohio, the 
litigation crisis costs every Ohioan $636 per year, and every Ohio 
family of four $2,544 per year. These are alarming numbers. And this 
study was released on August 8, 2002--imagine how high these numbers 
have risen in 2\1/2\ years.
  In tough economic times, families can not afford to pay over $2,500 
to cover other people's litigation costs. Something needs to be done, 
and passage of this bill will help!
  Mr. President, this legislation is intended to amend the federal 
judicial code to streamline and curb abuse of class action lawsuits, a 
procedural device through which people with identical claims are 
permitted to merge them and be heard at one time in court.
  In particular, this legislation contains safeguards that provide for 
judicial scrutiny of the terms of class action settlements in order to 
eliminate unfair and discriminatory distribution of awards for damages 
and prevent class members from suffering a net loss as a result of a 
court victory.
  This bill would establish a concept of diversity jurisdiction that 
would allow the largest interstate class actions into Federal court, 
while preserving exclusive State court control over smaller, primarily 
intrastate disputes. As several major newspaper editorial boards--
ranging from the Post to the Wall Street Journal--have recognized, 
enactment of such legislation would go a long way toward curbing 
unfairness in certain state court class actions and restoring faith in 
the fairness and integrity of the judicial process.
  This bill is designed to improve the handling of massive U.S. class 
action lawsuits while preserving the rights of citizens to bring such 
actions.
  Class action lawsuits have spiraled out of control, with the threat 
of large, overreaching verdicts holding corporations hostage for years 
and years.
  In total, America's civil justice system had a direct cost to tax 
payers in 2002 of $233.4 billion, or 2.23 percent of GDP. That is $809 
per citizen and equivalent to a 5 percent wage tax. That's a 13.3 
percent jump from the year before--a year when we experienced a 14.4 
percent increase which was the largest percentage increase since 1986.
  Now, some of my colleagues have argued that this bill sends most 
state class actions into Federal court and deprives state courts of the 
power to adjudicate cases involving their own laws. They argue that the 
bill therefore infringes upon States' sovereignty.

[[Page 2089]]

  However, in one empirical study done by two attorneys from O'Melveny 
& Myers, their data indicated that this bill would not sweep all class 
actions into Federal court. Rather, the bill is a targeted solution 
that could result in moving to Federal court a substantial percentage 
of the nationwide or multi-State class actions filed in class action 
``mill'' jurisdictions (like Madison County, IL), while allowing State 
courts everywhere to litigate truly local class actions (the kinds of 
class actions typically filed in State courts that do not endeavor to 
become ``magnet'' courts for class actions with little or no 
relationship to the forum).
  There is just no evidence for the assertion that this bill deprives 
State courts of their power to hear cases involving their own laws. In 
fact, it is the present system that infringes upon state sovereignty 
rights by promoting a ``false federalism'' whereby some state courts 
are able to impose their decisions on citizens of other States 
regardless of their own laws.
  Another argument against this bill is that it will unduly expand 
Federal diversity jurisdiction at a time when courts are overcrowded. 
However, State courts have experienced a much more dramatic increase in 
class action filings and have not proven to be any more efficient in 
processing complex cases.
  In addition, Federal courts have greater resources to handle the most 
complex, interstate class action litigation, and are insulated from the 
local prejudice problems so prevalent under current rules.
  Mr. President, I emphasize to my colleagues that this isn't a bill to 
end all class action lawsuits. It's a bill to identify those lawsuits 
with merit and to ensure that the plaintiffs in legitimate lawsuits are 
treated fairly throughout the litigation process.
  It's a bill to protect class members from settlements that give their 
lawyers millions, while they only see pennies. It's a bill to rectify 
the fact that over the past decade, State court class action filings 
increased over 1,000 percent. It's a bill to fix a broken judicial 
system.
  I am a strong supporter of this bill, and I urge my colleagues to do 
the same.
  Mr. JEFFORDS. Mr. President, I am pleased to support S. 5, the Class 
Action Fairness Act of 2005.
  I believe there are problems with our current class action system 
that should be addressed through Congressional action. These problems 
include:
  Cases and controversies that are national in scope and are currently 
being decided in State courts;
  Decisions or settlements that are determined in one State's court 
system, are being applied nationwide, and conflict with laws in other 
States; and
  Plaintiffs receiving little compensation, or in the most extreme 
example, actually owing money from the settlement of a class action 
lawsuit.
  Class action lawsuits serve a useful purpose in our judicial system. 
Class actions allow individuals to merge a number of similar claims 
into one lawsuit, which can be an efficient use of judicial resources. 
Class action lawsuits enable individuals with small claims the ability 
to seek justice.
  The legislation we are considering today will fairly determine 
whether a class action should be considered in a State court or a 
Federal court. Thus, the legislation will help ensure that issues that 
are national in scope are heard in federal court, while issues that are 
local in nature are heard in State courts.
  The Class Action Fairness Act also provides some common sense reforms 
and oversight of the class action settlement process. These changes 
will help ensure that individuals who should be compensated receive 
fair compensation for their injuries, rather than worthless coupons, or 
actually owing money.
  I cannot, and would not, support legislation that denies individuals 
their ability to pursue compensation in the legal system for damages 
they have suffered. The legislation before this body is a bipartisan 
compromise worked out over many years. It does not deny individuals 
their right to pursue justice through the legal system. Because I 
believe the Class Action Fairness Act of 2005 fairly addresses the 
problems in our class action system, I will support its passage today.
  Mr. REED. Mr. President, I rise to speak about S. 5, the Class Action 
Fairness Act.
  First and foremost, I want to commend both the Republican and 
Democratic Leaders for all the work they did to bring this bill before 
the Senate. In particular, I am pleased that the consent agreement 
allowed all relevant amendments to be offered and debated.
  I believe many of these amendments would have improved the underlying 
legislation without threatening its reforms. In particular, I think we 
should have adopted the Feinstein-Bingaman amendment, which would have 
given Federal judges clear guidance about how to apply state consumer 
laws in multi-state class action lawsuits. This would have permitted 
more multi-state consumer class actions to be certified in Federal 
court and resolved on their merits.
  After S. 5 is enacted into law, I believe we should rapidly revisit 
this issue and make sure that consumers are actually getting their day 
in court and not having their class action cases thrown out because 
Federal courts are deeming them too complex or unmanageable to certify.
  That being said, I think this legislation benefited greatly from the 
negotiations entered into by Senators Dodd, Landrieu and Schumer with 
the bill's major sponsors, Senators Grassley, Kohl, Hatch and Carper. 
Although S. 5 is not the bill I would have written, I do think it will 
address some of the well-documented problems created by overlapping 
class actions in State and Federal courts.
  In particular, the Dodd-Landrieu-Schumer language included in S. 5 
addressed some of my biggest concerns about moving class actions to 
Federal court. Many class actions involve only State law issues, are 
brought by plaintiffs from the same geographical area and have a 
defendant who is based within that same community. Moving these cases 
to Federal court is inappropriate, especially if they do not involve 
issues of national importance. In many cases, it is our State judges 
who are in the best position to make determinations about State law. 
The Dodd-Landrieu-Schumer compromise created a new exception for 
keeping cases like this in State court. Under the bill, if two-thirds 
of the plaintiffs are from a given State, the injury happened in that 
State and at least one significant defendant is from that same State, 
then the class action can remain in State court. As a result, I believe 
S. 5 ensures that ``nationwide'' class actions are separated from those 
that should continue to be heard in State courts.
  I also believe that any attempt to stop forum shopping by plaintiffs 
should minimize forum shopping by defendants. The Dodd-Landrieu-Schumer 
compromise in S. 5 addressed this issue by making it clear that there 
is a firm 30-day deadline for the removal of nationwide class actions 
to Federal court once the plaintiffs have filed papers that create 
conditions for removal.
  I also am pleased that the Dodd-Landrieu-Schumer compromise dealt 
with one of the most serious abuses in class action cases, certain 
types of collusive coupon settlements. S. 5 clarified that if a 
settlement provides coupons as a remedy, attorneys' fees will only be 
paid in proportion to the redemption of the coupons. A provision like 
this does not prohibit coupon settlements, but practically speaking, 
attorneys will not agree to such settlements unless the coupons are 
actually valuable. S. 5 also requires that a judge may not approve a 
coupon settlement until a hearing is conducted to determine if the 
settlement terms are fair, reasonable, and adequate for class members.
  Finally, I believed that is important to preserve the ability of the 
Advisory Committee on the Federal Rules, the U.S. Judicial Conference, 
and the Supreme Court to amend the class action rules or procedures to 
the extent necessary to accomplish their purposes more effectively or 
to cure any unanticipated problems. S. 5 also included a provision 
saying that the Federal courts could make such changes as appropriate.

[[Page 2090]]

  As a result of all of these improvements, I believe S. 5 is 
legislation that addresses serious problems in our nation's class 
action system and will make the system fairer for both plaintiffs and 
defendants.
  The PRESIDING OFFICER. Twenty minutes is to be equally divided 
between the chairman and ranking member of the Judiciary Committee.
  The Senator from Vermont.
  Mr. LEAHY. Mr. President, I commend the distinguished senior Senator 
from Illinois. He is absolutely right. You have the corporate 
interests, and this administration is closing courthouse doors--one of 
the few places where people can go that are not aligned with either the 
Republican or the Democratic Party; a place where they don't need any 
political clout; a place where somebody can't say they are going to 
contribute heavily to a political party so their interests will be 
heard, or something like that. There is one place they could go--
whether they are a mechanic, a bus driver, a person raising a family, 
somebody who had been damaged by a product sold when the manufacturer 
knew of the flaw--the one place they could go would be the courthouse. 
They are not the rich, powerful, or well-connected. They could win. Or 
at least seek justice. We are going to close that door, too.
  Over the few days that the Senate has been considering this bill, 
there have been a few modest amendments that might actually keep the 
door open a tiny crack for the people who need it. There have been 
serious concerns raised by the National Conference of State 
Legislatures of our 50 States, the National Association of State 
Attorneys General, prominent legal scholars, consumers, environmental 
groups, and civil rights organizations. They asked us to at least 
consider a few improvements but the courthouse door was slammed shut. 
The Senate's door was slammed shut.
  For anybody watching this debate, they have figured out that by now 
the fix was in, despite these legitimate concerns.
  After 31 years here I am disappointed that the Senate is now taking 
its marching orders for major legislation from corporate special 
interests and the White House.
  We could have actually acted as an independent body and made some 
changes in this bill. Instead, we are saying--the 100 of us--to all 50 
of the State legislatures that we know better than they do, that they 
are irrelevant, that we could close them off.
  It is going to make it harder for American citizens to protect 
themselves against violation of State civil rights, consumer, health, 
environmental protection laws, to take these cases to State court.
  Aside from being convenient, plaintiffs actually know where the local 
state courthouse is. These courthouses have experience with the legal 
and factual issues within their States. We are simply going to sweep 
these cases into Federal court, after we have already swept so much 
criminal jurisdiction there, and you can't get a civil case heard 
anyway. We are erecting barriers to lawsuits, and we are placing new 
burdens on plaintiffs. They will languish.
  The bill contains language that would reduce the delay that parties 
can experience when a case is removed to Federal court by setting a 
limit for appeals of remand orders. But we don't say anything about how 
long the court can sit on the remand motion. They could sit on it for 
10 years if they want to before they do a thing. Plaintiffs can die, 
witnesses can move away, memories could grow dim, and nothing happens.
  Senator Feingold offered a modest amendment to set a reasonable time 
for action on remand motions. The solution received praise from one of 
the sponsors of this legislation, but the corporate masters and the 
White House said no. So it was rejected by the Senate.
  The biggest concern raised by legal scholars and agreed to by several 
Senate sponsors of the bill would address the recent trend in Federal 
courts not to certify class actions if multiple state laws are 
involved.
  The way this is set up in the bill--a lot of the business groups are 
behind this--one could easily get a case dismissed by a Federal court.
  Senator Feinstein and Senator Bingaman worked together to alleviate 
what was a legal Catch-22. The Federal court says if a case has 
complicated State laws in it, it can't hear it. But you can't bring it 
in State court either. The Federal court says the State laws are 
complicated and it should have been heard in the State court. But under 
this bill, it goes to the Federal court so, of course, the corporate 
interests win. We tried to change that.
  Cynics might even speculate that is what the business groups behind 
this purported ``procedural'' change are really seeking, the dismissal 
of meritorious cases on procedural grounds by the federal courts. 
Naturally, the orders came down from the corporate masters and the 
White House: Don't do it. We love the way this is going to allow us to 
keep things out of court. There it goes.
  Anyone who reads this bill will notice that despite its title, it 
affects more than just class actions. Individual actions, consolidated 
by state courts for efficiency purposes, are not class actions. Despite 
the fact that a similar provision was unanimously struck from the bill 
during the last Congress, mass actions reappeared in this bill this 
Congress. Federalizing these individual cases will no doubt delay, and 
possibly deny, justice for victims suffering real injuries. Senator 
Durbin's amendment sought to clarify the bill's effect on these cases. 
I'm glad the debate this week served to clarify the narrow scope of 
this provision.
  It is interesting because a similar provision to was unanimously 
struck from the bill during the last Congress--unanimously but that 
wasn't good enough for the corporate masters. It was slipped back into 
the bill this Congress.
  Class action legislation had been criticized by nearly all of the 
State attorneys general in this country, Republicans and Democrats 
alike. The distinguished former attorney general, Senator Pryor of 
Arkansas, had a concern that S. 5 would limit their official powers to 
investigate and bring actions in State courts against defendants. He 
wanted to put in minor clarifications to show they could do that. 
Although these attorneys general contacted their Senators--Republicans 
and Democrats alike--they were tossed out.
  Senator Kennedy's amendment to exempt civil rights, and wage and hour 
cases in the bill, was a sensible solution. Prominent civil rights 
organizations and labor advocates requested that the bill be modified 
to acknowledge the fact that many of our states have their own 
protective civil rights and employment laws. I was proud to cosponsor 
it and regret that with the fix being in, this amendment was rejected 
by the Senate. But the fix was in, and that is out.
  What we have done here? I will give you an example of one class 
action suit that would have been impacted under this legislation--Brown 
v. Board of Education, finally ending segregation in our schools, a 
blight on the American conscience. And how did Brown v. Board of 
Education get to the Supreme Court? Not from the three Federal courts 
in that class action suit; not the three Federal courts that said 
``separate but equal'' is the law of the land. It had been good enough 
for all of us. Send those African-American children to one school. Send 
the White kids to a much better school--because that is what it was. 
The view was that is good enough for us, always been that way.
  Only one State court in the State of Delaware said: That might be 
what the U.S. Supreme Court said, but they are wrong. They are wrong. 
We don't believe in Plessy v. Ferguson. We don't believe in the 
separate but equal. We say sending Black children to one school and 
White kids to the other is not equal. We are making second-class 
citizens of these African Americans.
  And because a State court heard and ruled on that class action, it 
went up to the U.S. Supreme Court, and the U.S. Supreme Court 
unanimously came down with Brown v. Board of Education.
  We pray there is not some class of people in this country being 
damaged

[[Page 2091]]

the way African-American children were being damaged at that time 
because if they go into the courts in the wake of this legislation, the 
fix is in, this Senate has closed the court doors to them, this White 
House has closed the court doors to them, these corporate interests 
have closed the court doors to them. It is a shame. It is wrong. It is 
one heck of a message to send to this country.
  It is disappointing to me that the Senate has refused to listen to 
wise counsel of our state legislatures, our state law enforcement 
officers, our state judges and even the views expressed by our federal 
judiciary since they are the institutions that we are affecting by 
enacting this legislation.
  I predict this legislation will be manipulated by well-paid corporate 
defense lawyers to create complex, expensive and lengthy litigation 
over the criteria and factors in the bill and whether they apply to a 
particular case. Unfortunately, one of the great boons of this 
legislation, to the extent it does not simply deter class actions 
brought by consumers, is that it will make them more costly, burdensome 
and complicated.
  The so-called Class Action Fairness Act falls short of the 
expectation set by its title. It will leave many injured parties who 
have valid claims with no avenue for relief, and that is anything but 
fair to the ordinary Americans who look to us to represent them in the 
United States Senate.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. SPECTER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SPECTER. Mr. President, I thank my colleagues for moving this 
bill through to final conclusion where we are now scheduled to vote on 
final passage at 3 o'clock this afternoon.
  We took this bill up in the Judiciary Committee a week ago today. 
Although there was some conjecture we could not pass the bill out of 
committee, in the morning we did so. We started the floor debate Monday 
afternoon. I led off in my capacity as chairman of the Judiciary 
Committee. We had a number of amendments and we have worked the will of 
the Senate. A number of amendments have been withdrawn, a number of 
amendments have been defeated.
  The Senator from Wisconsin, Senator Feingold, offered an amendment 
which would have imposed time limitations on the courts on their 
handling of class action cases. I told him I thought it was a good 
idea, but I was constrained to vote against it because we have an 
understanding--implicit or explicit, I am not quite sure which because 
I was not party to it--with the House of Representatives that if we 
sent them a so-called clean bill without amendments, they would accept 
the Senate version. I told Senator Feingold as to his issue, I have had 
a number of complaints about delays in the administration of the 
courts. That is something the Judiciary Committee will take up.
  I make it plain we will not deal with judicial independence or the 
court's discretionary functions, but when it comes to delays, that is a 
matter of congressional oversight on our fundamental responsibility to 
decide how many judges there will be at all levels. That is an issue we 
will take up.
  The Senator from South Carolina, Senator Lindsey Graham, had proposed 
an amendment on disclosure, on transparency, sunshine. There again, 
that is a good idea. We have worked through a colloquy. I have not seen 
the final form, but I was discussing it with Senator Graham again this 
morning and the staffs are working that out. I anticipate we will have 
that finished.
  The Senator from Illinois, Senator Durbin, had a proposed amendment 
on mass actions. We had worked through to see if we could formulate a 
colloquy. That has not reached fruition. Senator Durbin has decided to 
withdraw. That is a complex matter which we took up in committee 2 
years ago. We made some modifications in the bill, but it is very 
important as this bill moves forward to become law that it be dealt 
with as a procedural change, that there not be substantive changes in 
the rights of the parties.
  We have sought to move into the Federal courts in order to avoid 
forum shopping on judges or courts where there is some indication of a 
prejudicial predisposition. It is my hope as this class action bill is 
interpreted that it will not effect substantive rights.
  There is a tender issue on selection of State law where there are a 
number of States involved. There is a lot of commonality in our law 
injected through the uniform commercial code and interjected through 
the restatement of varieties of substantive matters such as torts, 
where class actions can be certified, so it is my hope this bill, this 
act, will not be interpreted to curtail a substantive right.
  There is a great deal of wisdom in the Senate on this bipartisan bill 
which has received considerable support on the Democratic side of the 
aisle as well as very strong support on the Republican side of the 
aisle to move through without a conference where we might have had a 
bill which was a great deal more restrictive of plaintiffs' rights, 
where we might have had a bill where the House provision calls for 
retroactive application. That would upset a great many existing 
lawsuits. All factors considered, we have come to a wise conclusion.
  Mr CORNYN. Mr. President, I have spoken previously on this floor 
about my concerns that this legislation does not go far enough to 
address the scandal of litigation abuse that plagues our civil justice 
system. I stand by those concerns today. We can and should do more to 
reduce the burden of frivolous, expensive litigation. Our Nation's 
economic competitiveness in the 21st century depends on it.
  We should consider additional measures that better level the playing 
field, that produce a good flow of information and transparency, and 
that provide a clear relationship between plaintiffs and their 
attorneys.
  But while this modest legislation could do more, I believe that S. 5 
is an important first step to reform--a step in the right direction.
  By providing for removal of a greater number of class action lawsuits 
from State court to Federal court and by requiring that judges 
carefully review all coupon settlements and limit attorneys' fees paid 
to these settlements to the value actually received by class members, 
it sets the groundwork for a much needed reform.
  In the spirit of bipartisan cooperation that drove this bill forward, 
I set aside my concerns for now and am proud to co-sponsor.
  I thank my friend from Iowa, Senator Grassley, for his leadership and 
persistence on this issue. For five consecutive Congresses, dating back 
to 1997, Senator Grassley has taken up the mantel of class action 
reform and he deserves a great deal of credit for it.
  Finally, I want to thank Chairman Specter and Senator Hatch for their 
continued stewardship. Without them, this bill would not be where it is 
today.
  Mr. SPECTER. Mr. President, I have a few minutes remaining on my 10 
minutes. I notice the distinguished Democratic leader is here, but I 
said I would yield to the Senator from Connecticut, Senator Dodd. He 
has a very unique spot in my evaluation of Senators because he was 
elected in the class of 1980. He reminds me there were 18 of us 
elected, and the Democrats, through their tenacity and wisdom, have 
maintained 50 percent of their class and the Republicans, on the other 
hand, have only retained 12\1/2\ percent. Of course, we started with 16 
to 2, so let the record show that the Republicans from the class of 
1980 still outnumber the Democrats 2 to 1.
  I yield to Senator Dodd.
  Mr. DODD. Mr. President, I thank my colleague from Pennsylvania. One 
of the great pleasures over the past 24 years has been to serve with 
Arlen Specter in this body.
  We are nearing the end of consideration of this bill.
  I would like to spend just a few minutes to offer some thoughts on 
it.
  First, a brief word about the process by which this bill has been 
considered

[[Page 2092]]

by the Senate. I don't think it is an overstatement to say that--aside 
from the details of the legislation itself--the most important factor 
in its expected passage is the unanimous consent agreement that was put 
into place at the onset of the Senate's deliberations on the bill.
  In that respect, the two leaders--Senator Frist and Senator Reid--are 
to be greatly commended. Either one could have refused to enter into 
such an agreement--which would have made the prospects for passage of 
this legislation far less certain.
  As I said yesterday, a determined minority of even one Senator can 
impede or block consideration of legislation in this body. Either 
Leader, by declining to enter into a consent agreement, could have 
paved the way for others to employ dilatory, delaying, and distracting 
tactics.
  However, both Senators Reid and Frist agreed that only relevant 
amendments to the bill would be in order. No doubt, that agreement 
displeased some members in both caucuses. However, it helped ensure 
that the debate we have had on this bill has been substantive, orderly, 
and deliberate. And it minimized the risk that this bill would be 
derailed by contentious issues wholly unrelated to the substance of the 
bill itself.
  So the cooperation shown by the two leaders on this legislation 
cannot be overemphasized. Senator Reid is to be particularly commended 
in this regard, given that a majority of the members of his caucus do 
not appear to support the bill.
  The consent agreement that he entered into with the majority leader 
demonstrates his commitment to working in as cooperative a manner as 
possible for the good of the Senate.
  Allow me to spend a few moments talking about the substance of this 
legislation. We have heard a lot of characterizations over the past few 
days to describe the bill and the problems it seeks to correct. I am 
among those who believe that our class action system is in need of 
reform. There are clear abuses and shortcomings that have not served 
the interests of the parties or the interests of justice. And this bill 
takes a number of significant steps to remedy those abuses and 
shortcomings.
  To those who say that this legislation will have dire consequences on 
the quality of justice in our Nation, I must respectfully disagree. And 
I do so for a number of reasons.
  First, it is important to view this legislation in a larger 
perspective. According to one estimate, .92 percent of all cases filed 
in Federal courts over the past three decades have been class actions. 
This point deserves special emphasis: from 1972 to 2002, less than one 
percent of all cases filed in the Federal courts of our Nation have 
been class actions.
  Not all states compile similar data, so there are no comparable 
statistics for class actions as a percentage of all cases filed in 
State courts. However, there is every reason to believe that the 
percentage of class actions filed in state courts is at least as 
minuscule as the percentage filed in state courts. My point is simply 
this: that this legislation will affect only a very small percentage of 
all cases filed in our courts--less than 1 percent.
  Some would argue that if even one just case in America were denied by 
this bill, that would be an unit result, and merit the defeat of this 
bill. I am not unsympathetic to that argument. Indeed, I agree 
wholeheartedly with it. Our system of justice is premised on the belief 
that equal justice under law is the right of each and every citizen.
  Even one just cause unjustly denied offends our Nation's commitment 
to justice and fair play. Any legislation that would deny to even one 
citizen the right to equal justice deserves opposition, at least in 
this Senator's opinion.
  But this bill does not deny such a right. It does not even come 
close. It will not close the courthouse door on a single citizen.
  Moreover--unlike other legislation that has been considered by this 
body--it will not cap damages in a single case.
  It will not cap attorney's fees for a single class action lawyer.
  It will not extinguish or alter in any way a single pending class 
action.
  Nor does it impose more rigorous pleading requirements or evidentiary 
standards of proof in a single class action.
  In short, no citizen will in any way lose his or her right to go to 
court and seek the redress of grievances.
  My colleagues might ask: if this bill will not do any of these 
things, then what will it do?
  First and foremost, it will put an end to the kind of abusive forum-
shopping that has grown in frequency and notoriety over the past few 
years.
  Opponents of this bill claim that, by in any way altering the 
procedural rules governing class actions, substantive rights will be 
denied.
  However, this argument is trumped by a little document called the 
U.S. Constitution.
  Article III of that document extends Federal jurisdiction to suits 
between ``citizens of different States.'' The purpose of extending this 
``diversity jurisdiction'' to citizens is to prevent the citizens of 
one State from being discriminated against by the courts of another 
State.
  However, over the years, this purpose has been increasingly thwarted 
by clever pleading practices of enterprising class action attorneys.
  By adding a plaintiff or a defendant to a lawsuit solely based on 
their citizenship, they have been able to defeat efforts to move cases 
to Federal court--even cases involving multiple parties from multiple 
States. Likewise, by alleging an amount in controversy that does not 
trigger the $75,000 threshold, they have thwarted Federal 
jurisdiction--even in cases alleging millions if not billions of 
dollars in damages.
  In short, current pleading practice by the class action plaintiffs 
bar has very effectively denied Federal jurisdiction over cases that 
are predominantly interstate in nature. These are precisely the kinds 
of cases the Framers thought deserve to be heard in Federal courts.
  All that this legislation does in this respect is bring pleading 
practice more into line with constitutional requirements. Cases that 
are primarily intra- rather than interstate in nature may continue to 
be heard in State courts.
  But those that are clearly interstate in nature will now be more 
likely to be heard in Federal court, where they belong.
  The notion that cases will be ``dismissed'' as a result of this and 
other changes created by this legislation is, in my view, patently 
absurd. No provision of this legislation requires a single case to be 
dismissed. Plaintiffs' attorneys may end up spending more time in 
Federal court than State court. They may not be able to pick a class of 
plaintiffs that is as large as they can now, or that encompasses as 
many States. They may end up bringing cases in two or more courts that 
they might have preferred to bring in a single court. But they will not 
find their cases dismissed.
  As my friend and colleague from Utah, Senator Hatch, said earlier, 
good lawyers will find a way to do well under this bill. Good lawyers 
will do well in Federal courts, as they have done well in State courts. 
In that sense, then, this bill is exceedingly modest.
  We write our laws on paper. We do not etch them in stone. I am 
confident that the bill we have written here is a good one. I believe 
that, if and when it becomes law, it will withstand the test of time. 
Likewise, I am confident that if in the future any shortcomings emerge, 
we will have the good sense to fix them.
  By way of analogy, I remind our colleagues of another reform bill 
that was considered several years ago. The Senator from New Mexico, 
Senator Domenici, and I wrote a bill to address frivolous securities 
lawsuits directed primarily at high-tech companies. The bill was on the 
floor of the Senate for about 2 weeks, if I recall correctly. A number 
of amendments were offered. It ultimately became law, despite a 
Presidential veto.
  There were those who predicted dire consequences as a result of that 
bill's enactment. We were told that securities lawsuits would dry up, 
that

[[Page 2093]]

harmed investors would have no recourse.
  Well, here we are, about 9 years after enactment of that law, and 
there has been no appreciable drop-off in investor lawsuits and 
recoveries. In fact, some of the most vehement opponents of that law in 
the trial bar continue to be some of the most successful under the law.
  In sum, we have written a good bill here. It deserves to become law. 
I hope that it will. I want to acknowledge those of our colleagues who 
are most responsible for bringing us to this point: Senators Frist and 
Reid, as I have already mentioned; as well as Senators Grassley, Kohl, 
Hatch, Feinstein, Carper, and others. I also want to acknowledge the 
hard work of their staff, who in some cases have worked on this 
legislation for a number of years.
  So, to briefly reiterate, I thank my leader, Senator Reid, and the 
majority leader, as well. We would not be in the position we are in, I 
have said on several occasions over the last 3 or 4 days, had the 
Democratic leader--particularly because the minority always has unique 
rights in this Senate to delay or stop legislation moving at all.
  Even though my colleague from Nevada has strong reservations, which I 
am sure he will express shortly, about the substance of this bill, as a 
result of his willingness to let a product move forward, we are here 
today about to adopt a piece of legislation. When I hear some of the 
comments being made about whether Democrats are willing to work on 
issues, even ones they disagree with, that is belied by the fact that 
the minority leader made it possible for us to be here to deal with all 
relevant, germane amendments on this bill. I thank the Senator from 
Nevada for his efforts in allowing that to go forward.
  There has been a lot of talk over the last several days. Classically, 
with a matter like this the opponents and proponents have a tendency to 
engage in, if I may say with all due respect, a little bit of 
hyperbole. But it's important to stick to the facts. And one important 
fact that should shape how we view this legislation is that less than 1 
percent of all cases filed in the Federal courts since 1972 have been 
class action cases. I searched very tirelessly to find out the 
percentages in State courts. I could not come up with an exact number. 
I am told by those knowledgeable the number of class actions filed in 
State courts as a percentage of all State actions is not substantially 
different than the Federal courts, and is likely to be even smaller 
given the large number of State cases filed generally. What is beyond 
dispute is that a very small percentage of the cases filed in our court 
systems are class actions.
  Obviously, if anyone is denied access to the courts in this country 
because of things we do here, then, obviously, justice is denied to 
someone who cannot make that case.
  We have not done that. This system of class action is in need of 
reform.
  This is about money. Unfortunately, it is not about the money that 
legitimate plaintiffs get; it is about the money that is either saved 
by a defendant or made by the plaintiffs' bar. That is what this is 
about, and forum shopping around the country, finding the venue that 
gets you the best possible result for your particular point of view--
not exactly what the Founders had in mind when they drafted the 
diversity provisions of article III of the Federal Constitution. If you 
want to change the Constitution and say that no longer should diversity 
apply, then you may try to do that. If that is what opponents of this 
legislation believe, then they can try to amend the Constitution to in 
effect keep all these cases in State courts. But since the founding of 
this Republic, the diversity clause of article III of the Constitution 
has been very clear.
  Mr. REID. Mr. President, I ask unanimous consent that the Senator 
from Connecticut be allowed 5 more minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. Mr. President, I thank my colleague. I will go quickly.
  The point is, this is about court reform more than tort reform. About 
fifteen months ago, as many of my colleagues recall, we worked out this 
bill. We struck an agreement, a good one. Unfortunately, the majority 
here, last year, decided not to bring this bill up. I believe they made 
a mistake in doing that. We could have wrapped this bill up in January 
of 2004 but did not do it. This agreement has been ready for the 
Senate's consideration for over a year. We have had good debate on some 
of these amendments, and we have drafted a pretty good bill. It is not 
written in marble; it is not written in granite; it is written on 
paper. And we think it is going to provide equal access to the courts. 
It is going to provide a fairness to plaintiffs and defendants, to see 
that they get a just decision regarding the matters that are brought 
before the courts.
  So to my colleagues who are strong opponents of all of this, believe 
me, this bill is a simple matter of court reform. It will help ensure 
that victims of wrongdoing get fair compensation and relief, rather 
than a raw deal that lines the pockets of those who either allegedly 
represent them or those who are on the defendant side who want to avoid 
some of the payments they would otherwise have to make.
  There are no caps in this bill. It does not impose any rigorous 
procedural requirements or evidentiary requirements of proof at all. In 
short, no citizen will in any way lose his or her right to go to court 
to seek redress for their grievances.
  You get anecdotal stories, hearing of one case or another. This bill 
is about court reform, getting a system right. It is long overdue. It 
does not mean that every tort reform measure that comes before us ought 
to be supported, but on this one, those of us who worked on this 
believe we have done a good job. We were asked to make four 
improvements in this bill. We made 12 of them over a year ago.
  I thank the Senator from Delaware, Mr. Carper, Senator Feinstein, 
Senator Schumer, Senator Landrieu, and other Members on the Democratic 
side who have worked on this issue to make this possible.
  Again, my thanks--and it should be noted--to the distinguished 
Senator from Nevada, Mr. Reid, and Senator Frist, who struck a 
procedural agreement so the Senate could consider this bill.
  The PRESIDING OFFICER. The Democratic leader.
  Mr. REID. Mr. President, yesterday on the Senate floor I expressed 
serious concerns about this legislation that is pending before the 
Senate. I explained at that time that this legislation, in my opinion, 
is one of the most unfair, anti-consumer pieces of legislation to come 
before the Senate in a long time. It slams the courthouse doors on a 
wide range of injury plaintiffs, it turns federalism upside down by 
preventing State courts from hearing State law claims, and it limits 
corporate accountability at a time of rampant corporate scandals. 
Instead of turning up the heat on corporate fraud, this bill lets 
corporate wrongdoers off the hook.
  At the beginning of the debate yesterday, I said this is a bad piece 
of legislation, but there are going to be some amendments offered, 
amendments that will improve this bad legislation. They would have made 
significant improvements. But my hope of these amendments passing was 
very short lived. It did not happen. Over the last 2 days, the Senate 
has turned away each and every effort to make this bill less offensive. 
Every single amendment--each a message of fairness--was debated and 
turned down. That is a shame. Proponents of this bill explained their 
opposition to the common sense amendments by describing the current 
bill as a ``delicate compromise.'' I have heard that so many times. I 
spoke to Congressman Sensenbrenner, the chairman of the Judiciary 
Committee in the House, who is supposedly the gatekeeper on this 
legislation. He said: We are going to accept legislation that is in 
keeping with what you did last time. Well, when he said, What you did 
last time, he was talking about the bill that came out of the Senate 
Judiciary committee and was here on the floor. These changes would not 
have dramatically altered that.

[[Page 2094]]

  If you went downtown to see what K Street wanted with these 
amendments, of course they were against all of them because, in my 
opinion, this legislation slams the door on most everyone who wants to 
bring a case and use class action as the tool for coming to court.
  The debate yesterday was characterized by two significant 
misunderstandings about the bill. First, proponents claimed that under 
this bill, class action lawsuits could stay in State courts as long as 
two-thirds of the plaintiffs are from a single State. Well, in fact, 
the bill reverses longstanding Federal court diversity rules by saying 
that no matter how many plaintiffs are from a single State, the case 
can still be removed to Federal court if the defendant corporation is 
incorporated in a different State. Keep in mind, of the Fortune 500 
companies, 58 percent of them are incorporated in Delaware, so the 
majority of class action lawsuits would be removable just on that 
figure alone.
  For example, in the State of Nevada, at the famous Yucca Mountain, 
the contractors were in such a rush, the Department of Energy was in 
such a rush to drill a hole in this mountain, they had a huge auger. 
The size of this auger was halfway to the top of the second story of 
this Chamber. It was a huge machine. It dug a hole almost as big as 
this Chamber--a big tool going right through that mountain. They knew 
they were coming to a formation there and that the toxic mineral dust 
from drilling the formation would cause people to get really sick with 
silicosis. They knew that, but they were in such a rush that they would 
not even wet down this big tool to prevent the dust. They drilled dry, 
so to speak, and this toxic dust flew all over and the workers inhaled 
it. And today, as we speak, people are dying as a result of that.
  Well, there has been a request for the case to be considered a class 
action--under the old law in existence before this passes--that would 
allow all those workers to join together in a class action and have it 
certified. Even though well over two-thirds of the plaintiffs are 
residents of Nevada, the harm was caused in Nevada, and the defendants 
were obviously doing business in Nevada, a defendant incorporated in a 
State other than Nevada could remove the case from Nevada State court. 
That is how this bill works. It is just unfair.
  The second mischaracterization of this legislation is that supporters 
make it sound as though all we are talking about is venue: These cases 
will simply move from State court to Federal court and proceed just the 
same. That is simply not true. Under Supreme Court precedents that this 
bill does nothing to change, Federal judges routinely dismiss class 
action lawsuits based on State law. Those cases that are not dismissed 
go to the back of a very long line in the overburdened Federal court 
system.
  One of the foremost experts on class actions is a man who is also an 
expert in antitrust law. He is a professor at Harvard Law School. His 
name is Arthur Miller. Here is what he said:

       Federal courts have consistently denied class certification 
     in multi-state lawsuits based on consumer as well as other 
     state laws. . . . not a single Federal Circuit Court has 
     granted class certification for such a lawsuit, and six 
     Circuit Courts have expressly denied certification.

  The rejection of the Feinstein-Bingaman amendment shows this bill's 
true colors. And I admire greatly Senator Feinstein for having the 
courage to do the right thing and say: I have been one of the original 
pushers of this legislation, but what we are trying to do is unfair, 
and the Bingaman amendment should be adopted. She joined with him for 
the Feinstein-Bingaman amendment.
  So, if the sponsors merely wanted Federal court review of lawsuits 
with national implications, they would not object to an amendment 
making clear that federal judges may not dismiss these cases.
  But without that change, the truth is plain to see: This bill is 
designed to bury class action lawsuits, to cut off the one means by 
which individual Americans ripped off by fraudulent or deceptive 
practices can band together to demand justice from corporate America.
  What does this change mean in the real world? It means, for example, 
that cases like the one brought by Shaneen Wahl will not be able to go 
forward. Shaneen is a 55 year old woman, and she was diagnosed with 
breast cancer. Her health insurance company raised the rates on her 
insurance premiums from $194 a month to $1,800 a month--a little jump 
in price. She found out that her insurance company was improperly doing 
this for tens of thousands of other chronically ill patients. She got a 
lawyer, they banded together in a class action lawsuit, and they 
prevailed in state court. Under this legislation, the case would be 
dismissed.
  Another breast cancer survivor also a Florida woman, is 40-year-old 
Susan Friedman. Susan's insurance company removed her case to federal 
court, where it was dismissed. She is an unlucky example of what will 
happen to more people under this legislation. This is the fate of many 
other class action lawsuits under the bill the Senate will soon pass.
  Unfortunately, insurance companies are ripping people off all the 
time, and this legislation will give the biggest, best businesses in 
the world, the insurance companies, more money.
  In the real world, this legislation means that when a phone company 
systematically bills customers for services they had cancelled or a 
plumbing company routinely overcharges customers by $10, those 
practices will not be brought to light. The dollar amounts would be too 
small. Why should the plumbing company get an extra $10 from everyone? 
I guess what this legislation means is if you cheat a lot, you can take 
them to court, but if you cheat just a little bit, lots and lots of 
times, have at it, because no one can do anything about it. This is the 
``cheat a little bit'' legislation.
  This legislation is not good. It will help the tobacco industry avoid 
accountability. It virtually guarantees that tobacco-related cases will 
end up in Federal court where they won't be able to proceed. I had a 
person, Fritz Hahn, who lived on my property in Nevada to keep an eye 
on things. He was there for many years. He started smoking when he was 
a teenager. He is now dead as a result of tobacco. He smoked too much. 
He got throat cancer. He died a slow, terrible death. But for class 
action lawyers, tobacco companies would have a free rein, and they 
would be able to kill a lot more people like Fritz Hahn.
  That is what class action is all about, joining together and going 
after those companies who do bad things to people. However, this 
legislation will make it so much more difficult. That is why numerous 
consumer groups, including the Campaign for Tobacco-Free Kids, the 
Leadership Conference on Civil Rights, the Consumers Union, the AFL-
CIO, Public Citizen, and many others have urged the Senate to reject 
the bill.
  I ask unanimous consent to print in the Record scores and scores of 
companies that support my statement against this legislation.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

 National Organizations Opposed to Federal Class Action Legislation as 
                            of May 21, 2004

       AARP, ADA Watch/National Coalition for Disability Rights, 
     AFL-CIO, Alliance for Healthy Homes, Alliance for Justice, 
     Alliance for Retired Americans, American Association of 
     People with Disabilities, American Association of University 
     Women, American Cancer Society, American Heart Association, 
     American Federation of Government Employees, American 
     Federation of State, County and Municipal Employees, American 
     Lung Association, American-Arab Anti-Discrimination 
     Committee, Americans for Democratic Action, Bazelon Center 
     for Mental Health Law, Brady Campaign to Prevent Gun 
     Violence, United with the Million Mom March, and Campaign for 
     Tobacco Free Kids.
       Center for Disability and Health, Center for Justice and 
     Democracy, Center for Responsible Lending, Center for Women 
     Policy Studies, Civil Justice, Inc., Clean Water Action, 
     Coalition to Stop Gun Violence, Commission on Social Action 
     of Reform Judaism, Communication Workers of America, Consumer 
     Federation of America, Consumers for Auto Reliability and 
     Safety, Disability Rights Education and Defense Fund,

[[Page 2095]]

     Earthjustice, Education Law Center, Environmental Working 
     Group, Epilepsy Foundation, Families USA, Federally Employed 
     Women, Friends of the Earth, and Gray Panthers.
       Greenpeace, Homeowners Against Deficient Dwellings, Jewish 
     Labor Committee, Lawyers' Committee for Civil Rights Under 
     Law, Leadership Conference on Civil Rights, Mexican American 
     Legal Defense and Educational Fund, Mineral Policy Center, 
     NAACP Legal Defense and Education Fund, National Alliance of 
     Postal and Federal Employees, National Asian Pacific Legal 
     Consortium, National Association for the Advancement of 
     Colored People, National Association for Equal Opportunity in 
     Higher Ed, National Association of Consumer Advocates, 
     National Association of Consumer Agency Administrators, 
     National Association of the Deaf, National Association of 
     Protection and Advocacy Systems, National Bar Association, 
     National Campaign for Hearing Health, National Center on 
     Poverty Law, and National Coalition on Black Civic 
     Participation.
       National Committee on Pay Equity, National Consumer Law 
     Center, National Consumer's Coalition, National Council of La 
     Raza, National Employment Lawyers Association, National Fair 
     Housing Alliance, National Gay and Lesbian Task Force, 
     National Law Center on Homeless & Poverty, National Legal Aid 
     and Defender Association, National Organization for Women, 
     National Partnership for Women & Families, Natural Resources 
     Defense Council, National Workrights Institute, National 
     Women's Health Network, National Women's Law Center, North 
     Carolina Justice Center, NOW Legal Defense and Education 
     Fund, People for the American Way, Public Citizen, and Pride 
     at Work.
       Project Equality, Religious Coalition for Reproductive 
     Choice, Sargent Shriver National Center on Poverty Law, 
     Service Employees International Union, Sierra Club, Tobacco 
     Control Resource Center, Tobacco Products Liability Project, 
     UNITE!, United Food and Commercial Workers International 
     Union, United Steelworkers of America, USAction, U.S. Public 
     Interest Research Group, Violence Policy Center, and Women 
     Employed.

      Government Organizations Opposed to Class-Action Legislation

       Conference of Chief Justices (State Supreme Court 
     Justices), Judicial Conference of the United States (Federal 
     Judges Association), Attorney General of California, Bill 
     Lockyer, Attorney General of Illinois, Lisa Madigan, Attorney 
     General of Maryland, J. Joseph Curran, Jr., and Attorney 
     General of Minnesota, Mike Hatch.
       Attorney General of Missouri, Jeremiah W. Nixon, Attorney 
     General of Montana, Mike McGrath, Attorney General of New 
     Mexico, Patricia A. Madrid, Attorney General of New York, 
     Eliot Spitzer, Attorney General of Oklahoma, W.A. Drew 
     Edmondson, Attorney General of Vermont, William H. Sorrell, 
     and Attorney General of West Virginia, Darrell Vivian McGraw, 
     Jr.

  Mr. REID. Organizations are against it. State court judges, Federal 
judges, many state Attorneys General, and the National Conference of 
State Legislators are against it. Officials in our home States are 
telling us not to do this. The only groups that want us to pass this 
bill are those representing defendants in these lawsuits. Sure, they 
want to be relieved of the burden of accountability. We shouldn't let 
them. This is not just a battle between big business and lawyers. It is 
more. It is certainly more anti-lawyer than I would like to think. But 
that is what we hear coming from the White House.
  At a meeting in Las Vegas, the President said: The most hurtful thing 
in the American economy today is lawyers. I don't believe that, as 
indicated by the instances I gave about tobacco. Sure there are bad 
lawyers who bring meritless cases, and there should be something we do 
to crack down on them. But this bill is not about punishing bad 
lawyers. More fundamentally this bill is about limiting access to civil 
courts and hurting consumers.
  One of the grievances that inspired our Founding Fathers to revolt 
against King George was they couldn't bring their grievances to a body.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. REID. What time is that? I will use leader time.
  The PRESIDING OFFICER. The Senator had 10 minutes.
  Mr. REID. I thank the Chair.
  As I was saying, one of the grievances that inspired our Founding 
Fathers to revolt against King George was limited access to the civil 
courts. That was based on the rights secured in the year 1215, when 
King John signed the Magna Carta. King John couldn't sign his name, so 
he put an X. From that day forward, one of the things that was brought 
over the ocean and is now in our common law, when the Founding Fathers 
developed our country, is that you bring to court your grievances. They 
had a jury that could sit down and talk about what was good and bad 
about your case. Access to the courts is a basic right in our 
democracy, and after today it will be a diminished right.
  These rights are being denigrated, taken away from us with this 
legislation. It is too bad. A basic right that has been in existence 
since we have been a country, they are chipping away at.
  I am going to vote against this ill-considered bill. I recognize it 
is going to pass. I think that is too bad. I can say this without any 
question: Downtown beat us. There is no question about that.
  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. FRIST. Mr. President, in a few minutes we will be voting on the 
Class Action Fairness Act. We have before us truly a bipartisan bill 
that was introduced with 32 cosponsors, 24 Republicans and 8 Democrats. 
It was voted out of the Judiciary Committee on a strong bipartisan 
vote. Every vote on every amendment that has been offered has been 
bipartisan, if we look at the vote tallies. I do anticipate that in a 
few minutes our vote on final passage will be strongly bipartisan as 
well.
  There are a few misconceptions about the bill that I would like to 
definitively dispel in these final moments. This bill does not close 
the courthouse doors to injured or aggrieved plaintiffs. It does not. 
This is court reform. It is designed to rein in lawsuit abuses, and it 
does just that. The plaintiff may end up in Federal court, yes, rather 
than State court, but no citizen will lose his or her right to bring a 
case--no citizen. In fact, the Class Action Fairness Act will protect 
plaintiffs in large interstate class action cases. No longer will 
predatory lawyers be able to negotiate deals that leave their clients 
with coupons while they take home millions. Plaintiffs will now be 
covered by a consumer bill of rights for the first time, a consumer 
bill of rights that will require lawyer's fees for coupon settlements 
to be based either on the value of the coupons that are actually 
redeemed or on the hours actually billed.
  Take the case such as the one in my home State of Tennessee involving 
a Memphis car dealer. It was discovered that a dealership was 
instructing its employees to cheat car purchasers by as much as $2,000. 
Numerous residents were affected so a class action suit was filed. The 
suit was eventually settled, and the plaintiffs received a coupon for 
$1,200, but that coupon could only be used if they went back to the 
same dealer who had cheated them in the first place and bought another 
car. Meanwhile, the trial attorneys who settled the suit received $1.3 
million in legal fees. A number of customers were understandably upset 
that in order to receive any financial benefit, they would have to take 
that coupon and go back to the very same dealer, while at the same time 
the lawyers were able to take their money and put it right into their 
pockets. The legislation before us today will put a stop to such unfair 
practices.
  Second, the class action bill will help end the phenomenon that we 
all recognize known as forum shopping. Aggressive trial lawyers have 
found that a few counties are lawsuit friendly, and in these select 
State courts, judges are quick to certify a class action and juries are 
known to grant extravagant damage awards. Meanwhile, this same 
defendant can face copycat cases all across the country, each jury 
granting a different result. These counties may have little or no 
geographic relationship to either the plaintiff or to the defendant, 
but the trial lawyers know that simply the threat of suing in these 
particular counties can lead to huge, extravagant cash settlements. One 
study estimates that virtually every sector of the U.S. economy is on 
trial in only three State courts.
  The Class Action Fairness Act moves those large nationwide cases that 
genuinely impact interstate commerce to the Federal courts where they 
belong. The Class Action Fairness Act is a

[[Page 2096]]

good bill. It is a fair bill. It is a significant first step in putting 
an end to the lawsuit abuses that undermine our legal system.
  I commend my colleagues for their hard work. I thank, in particular, 
Senator Grassley, the bill's lead sponsor, who has been working on this 
issue for a decade; Senator Specter, for leading the bill expeditiously 
through the Judiciary Committee and on to the floor; Senator Hatch, who 
has been a tireless advocate for legal reform and class action reform 
and has helped to manage this bill on the floor; Senator Cornyn, who 
has been tireless in his presence and participation on this class 
action bill over the last several days; the bill's Democratic 
supporters, especially Senator Kohl, Senator Dodd, Senator Carper, 
Senator Ben Nelson; all have worked and reached across the aisle 
despite great pressure from the bill's opponents, and for that I thank 
them.
  Finally, I thank the Democratic leader, Harry Reid, for working on a 
process. We just heard him speaking on the floor against the bill. In 
spite of that personal feeling toward this bill, he has worked in a 
real leadership manner--working with us to deal with the bill in a 
timely and expeditious manner on the floor.
  The American people expect and deserve a government that works and 
leaders who work together. I think they have seen it play out very well 
on this bill. They did elect us to govern toward meaningful solutions. 
The bill, I believe, demonstrates we are accomplishing just that. We 
are meeting the challenge and we are moving America forward. I look 
forward to quick passage of the bill in the House and being able to 
send it to the President's desk.
  Mr. President, we will vote very shortly. So that Members can plan on 
their schedules, this upcoming vote on final passage of the class 
action fairness bill will be the last vote of the evening.
  Following this vote, we will have a few Members making statements. We 
will remain in session for a short period today. The Senate will not be 
in session tomorrow and we will reconvene on Monday.
  On Monday, the plans are to begin debate on the nomination of Michael 
Chertoff to be Secretary of Homeland Security. At closing today, we 
will reach an agreement that will provide for debate on the Chertoff 
nomination during Monday's session, with a vote to occur on that 
nomination on Tuesday.
  Therefore, I am prepared to announce we will not have any votes on 
Monday. I will have more to say about the precise timing of the debate 
and vote later today when we wrap up our business. Once again, I thank 
all Members for their cooperation and assistance throughout the debate 
on the class action bill. I believe we are ready for final passage.
  Mr. President, I ask for the yeas and nays on the bill.
  The PRESIDING OFFICER (Mr. Coleman). Is there a sufficient second? 
There is a sufficient second.
  The question is on the engrossment and third reading of the bill.
  The bill was ordered to be engrossed for a third reading and was read 
the third time.
  The PRESIDING OFFICER. The bill having been read the third time, the 
question is, Shall the bill pass?
  The yeas and nays have been ordered. The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. McCONNELL. The following Senators were necessarily absent: the 
Senator from Pennsylvania (Mr. Santorum) and the Senator from New 
Hampshire (Mr. Sununu).
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 72, nays 26, as follows:

                       [Rollcall Vote No. 9 Leg.]

                                YEAS--72

     Alexander
     Allard
     Allen
     Bayh
     Bennett
     Bingaman
     Bond
     Brownback
     Bunning
     Burns
     Burr
     Cantwell
     Carper
     Chafee
     Chambliss
     Coburn
     Cochran
     Coleman
     Collins
     Conrad
     Cornyn
     Craig
     Crapo
     DeMint
     DeWine
     Dodd
     Dole
     Domenici
     Ensign
     Enzi
     Feinstein
     Frist
     Graham
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Inhofe
     Isakson
     Jeffords
     Johnson
     Kohl
     Kyl
     Landrieu
     Lieberman
     Lincoln
     Lott
     Lugar
     Martinez
     McCain
     McConnell
     Murkowski
     Nelson (NE)
     Obama
     Reed
     Roberts
     Rockefeller
     Salazar
     Schumer
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stevens
     Talent
     Thomas
     Thune
     Vitter
     Voinovich
     Warner

                                NAYS--26

     Akaka
     Baucus
     Biden
     Boxer
     Byrd
     Clinton
     Corzine
     Dayton
     Dorgan
     Durbin
     Feingold
     Harkin
     Inouye
     Kennedy
     Kerry
     Lautenberg
     Leahy
     Levin
     Mikulski
     Murray
     Nelson (FL)
     Pryor
     Reid
     Sarbanes
     Stabenow
     Wyden

                             NOT VOTING--2

     Santorum
     Sununu
       
  The bill (S. 5) was passed, as follows:

                                  S. 5

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; REFERENCE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Class 
     Action Fairness Act of 2005''.
       (b) Reference.--Whenever in this Act reference is made to 
     an amendment to, or repeal of, a section or other provision, 
     the reference shall be considered to be made to a section or 
     other provision of title 28, United States Code.
       (c) Table of Contents.--The table of contents for this Act 
     is as follows:

 Sec. 1. Short title; reference; table of contents.
 Sec. 2. Findings and purposes.
 Sec. 3. Consumer class action bill of rights and improved procedures 
              for interstate class actions.
 Sec. 4. Federal district court jurisdiction for interstate class 
              actions.
 Sec. 5. Removal of interstate class actions to Federal district court.
 Sec. 6. Report on class action settlements.
 Sec. 7. Enactment of Judicial Conference recommendations.
 Sec. 8. Rulemaking authority of Supreme Court and Judicial Conference.
 Sec. 9. Effective date.

      SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--Congress finds the following:
       (1) Class action lawsuits are an important and valuable 
     part of the legal system when they permit the fair and 
     efficient resolution of legitimate claims of numerous parties 
     by allowing the claims to be aggregated into a single action 
     against a defendant that has allegedly caused harm.
       (2) Over the past decade, there have been abuses of the 
     class action device that have--
       (A) harmed class members with legitimate claims and 
     defendants that have acted responsibly;
       (B) adversely affected interstate commerce; and
       (C) undermined public respect for our judicial system.
       (3) Class members often receive little or no benefit from 
     class actions, and are sometimes harmed, such as where--
       (A) counsel are awarded large fees, while leaving class 
     members with coupons or other awards of little or no value;
       (B) unjustified awards are made to certain plaintiffs at 
     the expense of other class members; and
       (C) confusing notices are published that prevent class 
     members from being able to fully understand and effectively 
     exercise their rights.
       (4) Abuses in class actions undermine the national judicial 
     system, the free flow of interstate commerce, and the concept 
     of diversity jurisdiction as intended by the framers of the 
     United States Constitution, in that State and local courts 
     are--
       (A) keeping cases of national importance out of Federal 
     court;
       (B) sometimes acting in ways that demonstrate bias against 
     out-of-State defendants; and
       (C) making judgments that impose their view of the law on 
     other States and bind the rights of the residents of those 
     States.
       (b) Purposes.--The purposes of this Act are to--
       (1) assure fair and prompt recoveries for class members 
     with legitimate claims;
       (2) restore the intent of the framers of the United States 
     Constitution by providing for Federal court consideration of 
     interstate cases of national importance under diversity 
     jurisdiction; and
       (3) benefit society by encouraging innovation and lowering 
     consumer prices.

      SEC. 3. CONSUMER CLASS ACTION BILL OF RIGHTS AND IMPROVED 
                   PROCEDURES FOR INTERSTATE CLASS ACTIONS.

       (a) In General.--Part V is amended by inserting after 
     chapter 113 the following:

                      ``CHAPTER 114--CLASS ACTIONS

``Sec.
``1711. Definitions.
``1712. Coupon settlements.
``1713. Protection against loss by class members.
``1714. Protection against discrimination based on geographic location.

[[Page 2097]]

``1715. Notifications to appropriate Federal and State officials.

     ``Sec. 1711. Definitions

       ``In this chapter:
       ``(1) Class.--The term `class' means all of the class 
     members in a class action.
       ``(2) Class action.--The term `class action' means any 
     civil action filed in a district court of the United States 
     under rule 23 of the Federal Rules of Civil Procedure or any 
     civil action that is removed to a district court of the 
     United States that was originally filed under a State statute 
     or rule of judicial procedure authorizing an action to be 
     brought by 1 or more representatives as a class action.
       ``(3) Class counsel.--The term `class counsel' means the 
     persons who serve as the attorneys for the class members in a 
     proposed or certified class action.
       ``(4) Class members.--The term `class members' means the 
     persons (named or unnamed) who fall within the definition of 
     the proposed or certified class in a class action.
       ``(5) Plaintiff class action.--The term `plaintiff class 
     action' means a class action in which class members are 
     plaintiffs.
       ``(6) Proposed settlement.--The term `proposed settlement' 
     means an agreement regarding a class action that is subject 
     to court approval and that, if approved, would be binding on 
     some or all class members.

     ``Sec. 1712. Coupon settlements

       ``(a) Contingent Fees in Coupon Settlements.--If a proposed 
     settlement in a class action provides for a recovery of 
     coupons to a class member, the portion of any attorney's fee 
     award to class counsel that is attributable to the award of 
     the coupons shall be based on the value to class members of 
     the coupons that are redeemed.
       ``(b) Other Attorney's Fee Awards in Coupon Settlements.--
       ``(1) In general.--If a proposed settlement in a class 
     action provides for a recovery of coupons to class members, 
     and a portion of the recovery of the coupons is not used to 
     determine the attorney's fee to be paid to class counsel, any 
     attorney's fee award shall be based upon the amount of time 
     class counsel reasonably expended working on the action.
       ``(2) Court approval.--Any attorney's fee under this 
     subsection shall be subject to approval by the court and 
     shall include an appropriate attorney's fee, if any, for 
     obtaining equitable relief, including an injunction, if 
     applicable. Nothing in this subsection shall be construed to 
     prohibit application of a lodestar with a multiplier method 
     of determining attorney's fees.
       ``(c) Attorney's Fee Awards Calculated on a Mixed Basis in 
     Coupon Settlements.--If a proposed settlement in a class 
     action provides for an award of coupons to class members and 
     also provides for equitable relief, including injunctive 
     relief--
       ``(1) that portion of the attorney's fee to be paid to 
     class counsel that is based upon a portion of the recovery of 
     the coupons shall be calculated in accordance with subsection 
     (a); and
       ``(2) that portion of the attorney's fee to be paid to 
     class counsel that is not based upon a portion of the 
     recovery of the coupons shall be calculated in accordance 
     with subsection (b).
       ``(d) Settlement Valuation Expertise.--In a class action 
     involving the awarding of coupons, the court may, in its 
     discretion upon the motion of a party, receive expert 
     testimony from a witness qualified to provide information on 
     the actual value to the class members of the coupons that are 
     redeemed.
       ``(e) Judicial Scrutiny of Coupon Settlements.--In a 
     proposed settlement under which class members would be 
     awarded coupons, the court may approve the proposed 
     settlement only after a hearing to determine whether, and 
     making a written finding that, the settlement is fair, 
     reasonable, and adequate for class members. The court, in its 
     discretion, may also require that a proposed settlement 
     agreement provide for the distribution of a portion of the 
     value of unclaimed coupons to 1 or more charitable or 
     governmental organizations, as agreed to by the parties. The 
     distribution and redemption of any proceeds under this 
     subsection shall not be used to calculate attorneys' fees 
     under this section.

     ``Sec. 1713. Protection against loss by class members

       ``The court may approve a proposed settlement under which 
     any class member is obligated to pay sums to class counsel 
     that would result in a net loss to the class member only if 
     the court makes a written finding that nonmonetary benefits 
     to the class member substantially outweigh the monetary loss.

     ``Sec. 1714. Protection against discrimination based on 
       geographic location

       ``The court may not approve a proposed settlement that 
     provides for the payment of greater sums to some class 
     members than to others solely on the basis that the class 
     members to whom the greater sums are to be paid are located 
     in closer geographic proximity to the court.

     ``Sec. 1715. Notifications to appropriate Federal and State 
       officials

       ``(a) Definitions.--
       ``(1) Appropriate federal official.--In this section, the 
     term `appropriate Federal official' means--
       ``(A) the Attorney General of the United States; or
       ``(B) in any case in which the defendant is a Federal 
     depository institution, a State depository institution, a 
     depository institution holding company, a foreign bank, or a 
     nondepository institution subsidiary of the foregoing (as 
     such terms are defined in section 3 of the Federal Deposit 
     Insurance Act (12 U.S.C. 1813)), the person who has the 
     primary Federal regulatory or supervisory responsibility with 
     respect to the defendant, if some or all of the matters 
     alleged in the class action are subject to regulation or 
     supervision by that person.
       ``(2) Appropriate state official.--In this section, the 
     term `appropriate State official' means the person in the 
     State who has the primary regulatory or supervisory 
     responsibility with respect to the defendant, or who licenses 
     or otherwise authorizes the defendant to conduct business in 
     the State, if some or all of the matters alleged in the class 
     action are subject to regulation by that person. If there is 
     no primary regulator, supervisor, or licensing authority, or 
     the matters alleged in the class action are not subject to 
     regulation or supervision by that person, then the 
     appropriate State official shall be the State attorney 
     general.
       ``(b) In General.--Not later than 10 days after a proposed 
     settlement of a class action is filed in court, each 
     defendant that is participating in the proposed settlement 
     shall serve upon the appropriate State official of each State 
     in which a class member resides and the appropriate Federal 
     official, a notice of the proposed settlement consisting of--
       ``(1) a copy of the complaint and any materials filed with 
     the complaint and any amended complaints (except such 
     materials shall not be required to be served if such 
     materials are made electronically available through the 
     Internet and such service includes notice of how to 
     electronically access such material);
       ``(2) notice of any scheduled judicial hearing in the class 
     action;
       ``(3) any proposed or final notification to class members 
     of--
       ``(A)(i) the members' rights to request exclusion from the 
     class action; or
       ``(ii) if no right to request exclusion exists, a statement 
     that no such right exists; and
       ``(B) a proposed settlement of a class action;
       ``(4) any proposed or final class action settlement;
       ``(5) any settlement or other agreement contemporaneously 
     made between class counsel and counsel for the defendants;
       ``(6) any final judgment or notice of dismissal;
       ``(7)(A) if feasible, the names of class members who reside 
     in each State and the estimated proportionate share of the 
     claims of such members to the entire settlement to that 
     State's appropriate State official; or
       ``(B) if the provision of information under subparagraph 
     (A) is not feasible, a reasonable estimate of the number of 
     class members residing in each State and the estimated 
     proportionate share of the claims of such members to the 
     entire settlement; and
       ``(8) any written judicial opinion relating to the 
     materials described under subparagraphs (3) through (6).
       ``(c) Depository Institutions Notification.--
       ``(1) Federal and other depository institutions.--In any 
     case in which the defendant is a Federal depository 
     institution, a depository institution holding company, a 
     foreign bank, or a non-depository institution subsidiary of 
     the foregoing, the notice requirements of this section are 
     satisfied by serving the notice required under subsection (b) 
     upon the person who has the primary Federal regulatory or 
     supervisory responsibility with respect to the defendant, if 
     some or all of the matters alleged in the class action are 
     subject to regulation or supervision by that person.
       ``(2) State depository institutions.--In any case in which 
     the defendant is a State depository institution (as that term 
     is defined in section 3 of the Federal Deposit Insurance Act 
     (12 U.S.C. 1813)), the notice requirements of this section 
     are satisfied by serving the notice required under subsection 
     (b) upon the State bank supervisor (as that term is defined 
     in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
     1813)) of the State in which the defendant is incorporated or 
     chartered, if some or all of the matters alleged in the class 
     action are subject to regulation or supervision by that 
     person, and upon the appropriate Federal official.
       ``(d) Final Approval.--An order giving final approval of a 
     proposed settlement may not be issued earlier than 90 days 
     after the later of the dates on which the appropriate Federal 
     official and the appropriate State official are served with 
     the notice required under subsection (b).
       ``(e) Noncompliance if Notice Not Provided.--
       ``(1) In general.--A class member may refuse to comply with 
     and may choose not to be bound by a settlement agreement or 
     consent decree in a class action if the class member 
     demonstrates that the notice required under subsection (b) 
     has not been provided.

[[Page 2098]]

       ``(2) Limitation.--A class member may not refuse to comply 
     with or to be bound by a settlement agreement or consent 
     decree under paragraph (1) if the notice required under 
     subsection (b) was directed to the appropriate Federal 
     official and to either the State attorney general or the 
     person that has primary regulatory, supervisory, or licensing 
     authority over the defendant.
       ``(3) Application of rights.--The rights created by this 
     subsection shall apply only to class members or any person 
     acting on a class member's behalf, and shall not be construed 
     to limit any other rights affecting a class member's 
     participation in the settlement.
       ``(f) Rule of Construction.--Nothing in this section shall 
     be construed to expand the authority of, or impose any 
     obligations, duties, or responsibilities upon, Federal or 
     State officials.''.
       (b) Technical and Conforming Amendment.--The table of 
     chapters for part V is amended by inserting after the item 
     relating to chapter 113 the following:

``114. Class Actions........................................1711''.....

      SEC. 4. FEDERAL DISTRICT COURT JURISDICTION FOR INTERSTATE 
                   CLASS ACTIONS.

       (a) Application of Federal Diversity Jurisdiction.--Section 
     1332 is amended--
       (1) by redesignating subsection (d) as subsection (e); and
       (2) by inserting after subsection (c) the following:
       ``(d)(1) In this subsection--
       ``(A) the term `class' means all of the class members in a 
     class action;
       ``(B) the term `class action' means any civil action filed 
     under rule 23 of the Federal Rules of Civil Procedure or 
     similar State statute or rule of judicial procedure 
     authorizing an action to be brought by 1 or more 
     representative persons as a class action;
       ``(C) the term `class certification order' means an order 
     issued by a court approving the treatment of some or all 
     aspects of a civil action as a class action; and
       ``(D) the term `class members' means the persons (named or 
     unnamed) who fall within the definition of the proposed or 
     certified class in a class action.
       ``(2) The district courts shall have original jurisdiction 
     of any civil action in which the matter in controversy 
     exceeds the sum or value of $5,000,000, exclusive of interest 
     and costs, and is a class action in which--
       ``(A) any member of a class of plaintiffs is a citizen of a 
     State different from any defendant;
       ``(B) any member of a class of plaintiffs is a foreign 
     state or a citizen or subject of a foreign state and any 
     defendant is a citizen of a State; or
       ``(C) any member of a class of plaintiffs is a citizen of a 
     State and any defendant is a foreign state or a citizen or 
     subject of a foreign state.
       ``(3) A district court may, in the interests of justice and 
     looking at the totality of the circumstances, decline to 
     exercise jurisdiction under paragraph (2) over a class action 
     in which greater than one-third but less than two-thirds of 
     the members of all proposed plaintiff classes in the 
     aggregate and the primary defendants are citizens of the 
     State in which the action was originally filed based on 
     consideration of--
       ``(A) whether the claims asserted involve matters of 
     national or interstate interest;
       ``(B) whether the claims asserted will be governed by laws 
     of the State in which the action was originally filed or by 
     the laws of other States;
       ``(C) whether the class action has been pleaded in a manner 
     that seeks to avoid Federal jurisdiction;
       ``(D) whether the action was brought in a forum with a 
     distinct nexus with the class members, the alleged harm, or 
     the defendants;
       ``(E) whether the number of citizens of the State in which 
     the action was originally filed in all proposed plaintiff 
     classes in the aggregate is substantially larger than the 
     number of citizens from any other State, and the citizenship 
     of the other members of the proposed class is dispersed among 
     a substantial number of States; and
       ``(F) whether, during the 3-year period preceding the 
     filing of that class action, 1 or more other class actions 
     asserting the same or similar claims on behalf of the same or 
     other persons have been filed.
       ``(4) A district court shall decline to exercise 
     jurisdiction under paragraph (2)--
       ``(A)(i) over a class action in which--
       ``(I) greater than two-thirds of the members of all 
     proposed plaintiff classes in the aggregate are citizens of 
     the State in which the action was originally filed;
       ``(II) at least 1 defendant is a defendant--
       ``(aa) from whom significant relief is sought by members of 
     the plaintiff class;
       ``(bb) whose alleged conduct forms a significant basis for 
     the claims asserted by the proposed plaintiff class; and
       ``(cc) who is a citizen of the State in which the action 
     was originally filed; and
       ``(III) principal injuries resulting from the alleged 
     conduct or any related conduct of each defendant were 
     incurred in the State in which the action was originally 
     filed; and
       ``(ii) during the 3-year period preceding the filing of 
     that class action, no other class action has been filed 
     asserting the same or similar factual allegations against any 
     of the defendants on behalf of the same or other persons; or
       ``(B) two-thirds or more of the members of all proposed 
     plaintiff classes in the aggregate, and the primary 
     defendants, are citizens of the State in which the action was 
     originally filed.
       ``(5) Paragraphs (2) through (4) shall not apply to any 
     class action in which--
       ``(A) the primary defendants are States, State officials, 
     or other governmental entities against whom the district 
     court may be foreclosed from ordering relief; or
       ``(B) the number of members of all proposed plaintiff 
     classes in the aggregate is less than 100.
       ``(6) In any class action, the claims of the individual 
     class members shall be aggregated to determine whether the 
     matter in controversy exceeds the sum or value of $5,000,000, 
     exclusive of interest and costs.
       ``(7) Citizenship of the members of the proposed plaintiff 
     classes shall be determined for purposes of paragraphs (2) 
     through (6) as of the date of filing of the complaint or 
     amended complaint, or, if the case stated by the initial 
     pleading is not subject to Federal jurisdiction, as of the 
     date of service by plaintiffs of an amended pleading, motion, 
     or other paper, indicating the existence of Federal 
     jurisdiction.
       ``(8) This subsection shall apply to any class action 
     before or after the entry of a class certification order by 
     the court with respect to that action.
       ``(9) Paragraph (2) shall not apply to any class action 
     that solely involves a claim--
       ``(A) concerning a covered security as defined under 
     16(f)(3) of the Securities Act of 1933 (15 U.S.C. 78p(f)(3)) 
     and section 28(f)(5)(E) of the Securities Exchange Act of 
     1934 (15 U.S.C. 78bb(f)(5)(E));
       ``(B) that relates to the internal affairs or governance of 
     a corporation or other form of business enterprise and that 
     arises under or by virtue of the laws of the State in which 
     such corporation or business enterprise is incorporated or 
     organized; or
       ``(C) that relates to the rights, duties (including 
     fiduciary duties), and obligations relating to or created by 
     or pursuant to any security (as defined under section 2(a)(1) 
     of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)) and the 
     regulations issued thereunder).
       ``(10) For purposes of this subsection and section 1453, an 
     unincorporated association shall be deemed to be a citizen of 
     the State where it has its principal place of business and 
     the State under whose laws it is organized.
       ``(11)(A) For purposes of this subsection and section 1453, 
     a mass action shall be deemed to be a class action removable 
     under paragraphs (2) through (10) if it otherwise meets the 
     provisions of those paragraphs.
       ``(B)(i) As used in subparagraph (A), the term `mass 
     action' means any civil action (except a civil action within 
     the scope of section 1711(2)) in which monetary relief claims 
     of 100 or more persons are proposed to be tried jointly on 
     the ground that the plaintiffs' claims involve common 
     questions of law or fact, except that jurisdiction shall 
     exist only over those plaintiffs whose claims in a mass 
     action satisfy the jurisdictional amount requirements under 
     subsection (a).
       ``(ii) As used in subparagraph (A), the term `mass action' 
     shall not include any civil action in which--
       ``(I) all of the claims in the action arise from an event 
     or occurrence in the State in which the action was filed, and 
     that allegedly resulted in injuries in that State or in 
     States contiguous to that State;
       ``(II) the claims are joined upon motion of a defendant;
       ``(III) all of the claims in the action are asserted on 
     behalf of the general public (and not on behalf of individual 
     claimants or members of a purported class) pursuant to a 
     State statute specifically authorizing such action; or
       ``(IV) the claims have been consolidated or coordinated 
     solely for pretrial proceedings.
       ``(C)(i) Any action(s) removed to Federal court pursuant to 
     this subsection shall not thereafter be transferred to any 
     other court pursuant to section 1407, or the rules 
     promulgated thereunder, unless a majority of the plaintiffs 
     in the action request transfer pursuant to section 1407.
       ``(ii) This subparagraph will not apply--
       ``(I) to cases certified pursuant to rule 23 of the Federal 
     Rules of Civil Procedure; or
       ``(II) if plaintiffs propose that the action proceed as a 
     class action pursuant to rule 23 of the Federal Rules of 
     Civil Procedure.
       ``(D) The limitations periods on any claims asserted in a 
     mass action that is removed to Federal court pursuant to this 
     subsection shall be deemed tolled during the period that the 
     action is pending in Federal court.''.
       (b) Conforming Amendments.--
       (1) Section 1335(a)(1) is amended by inserting ``subsection 
     (a) or (d) of'' before ``section 1332''.
       (2) Section 1603(b)(3) is amended by striking ``(d)'' and 
     inserting ``(e)''.

      SEC. 5. REMOVAL OF INTERSTATE CLASS ACTIONS TO FEDERAL 
                   DISTRICT COURT.

       (a) In General.--Chapter 89 is amended by adding after 
     section 1452 the following:

     ``Sec. 1453. Removal of class actions

       ``(a) Definitions.--In this section, the terms `class', 
     `class action', `class certification order', and `class 
     member' shall have

[[Page 2099]]

     the meanings given such terms under section 1332(d)(1).
       ``(b) In General.--A class action may be removed to a 
     district court of the United States in accordance with 
     section 1446 (except that the 1-year limitation under section 
     1446(b) shall not apply), without regard to whether any 
     defendant is a citizen of the State in which the action is 
     brought, except that such action may be removed by any 
     defendant without the consent of all defendants.
       ``(c) Review of Remand Orders.--
       ``(1) In general.--Section 1447 shall apply to any removal 
     of a case under this section, except that notwithstanding 
     section 1447(d), a court of appeals may accept an appeal from 
     an order of a district court granting or denying a motion to 
     remand a class action to the State court from which it was 
     removed if application is made to the court of appeals not 
     less than 7 days after entry of the order.
       ``(2) Time period for judgment.--If the court of appeals 
     accepts an appeal under paragraph (1), the court shall 
     complete all action on such appeal, including rendering 
     judgment, not later than 60 days after the date on which such 
     appeal was filed, unless an extension is granted under 
     paragraph (3).
       ``(3) Extension of time period.--The court of appeals may 
     grant an extension of the 60-day period described in 
     paragraph (2) if--
       ``(A) all parties to the proceeding agree to such 
     extension, for any period of time; or
       ``(B) such extension is for good cause shown and in the 
     interests of justice, for a period not to exceed 10 days.
       ``(4) Denial of appeal.--If a final judgment on the appeal 
     under paragraph (1) is not issued before the end of the 
     period described in paragraph (2), including any extension 
     under paragraph (3), the appeal shall be denied.
       ``(d) Exception.--This section shall not apply to any class 
     action that solely involves--
       ``(1) a claim concerning a covered security as defined 
     under section 16(f)(3) of the Securities Act of 1933 (15 
     U.S.C. 78p(f)(3)) and section 28(f)(5)(E) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78bb(f)(5)(E));
       ``(2) a claim that relates to the internal affairs or 
     governance of a corporation or other form of business 
     enterprise and arises under or by virtue of the laws of the 
     State in which such corporation or business enterprise is 
     incorporated or organized; or
       ``(3) a claim that relates to the rights, duties (including 
     fiduciary duties), and obligations relating to or created by 
     or pursuant to any security (as defined under section 2(a)(1) 
     of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)) and the 
     regulations issued thereunder).''.
       (b) Technical and Conforming Amendments.--The table of 
     sections for chapter 89 is amended by adding after the item 
     relating to section 1452 the following:

``1453. Removal of class actions.''.

     SEC. 6. REPORT ON CLASS ACTION SETTLEMENTS.

       (a) In General.--Not later than 12 months after the date of 
     enactment of this Act, the Judicial Conference of the United 
     States, with the assistance of the Director of the Federal 
     Judicial Center and the Director of the Administrative Office 
     of the United States Courts, shall prepare and transmit to 
     the Committees on the Judiciary of the Senate and the House 
     of Representatives a report on class action settlements.
       (b) Content.--The report under subsection (a) shall 
     contain--
       (1) recommendations on the best practices that courts can 
     use to ensure that proposed class action settlements are fair 
     to the class members that the settlements are supposed to 
     benefit;
       (2) recommendations on the best practices that courts can 
     use to ensure that--
       (A) the fees and expenses awarded to counsel in connection 
     with a class action settlement appropriately reflect the 
     extent to which counsel succeeded in obtaining full redress 
     for the injuries alleged and the time, expense, and risk that 
     counsel devoted to the litigation; and
       (B) the class members on whose behalf the settlement is 
     proposed are the primary beneficiaries of the settlement; and
       (3) the actions that the Judicial Conference of the United 
     States has taken and intends to take toward having the 
     Federal judiciary implement any or all of the recommendations 
     contained in the report.
       (c) Authority of Federal Courts.--Nothing in this section 
     shall be construed to alter the authority of the Federal 
     courts to supervise attorneys' fees.

     SEC. 7. ENACTMENT OF JUDICIAL CONFERENCE RECOMMENDATIONS.

       Notwithstanding any other provision of law, the amendments 
     to rule 23 of the Federal Rules of Civil Procedure, which are 
     set forth in the order entered by the Supreme Court of the 
     United States on March 27, 2003, shall take effect on the 
     date of enactment of this Act or on December 1, 2003 (as 
     specified in that order), whichever occurs first.

     SEC. 8. RULEMAKING AUTHORITY OF SUPREME COURT AND JUDICIAL 
                   CONFERENCE.

       Nothing in this Act shall restrict in any way the authority 
     of the Judicial Conference and the Supreme Court to propose 
     and prescribe general rules of practice and procedure under 
     chapter 131 of title 28, United States Code.

     SEC. 9. EFFECTIVE DATE.

       The amendments made by this Act shall apply to any civil 
     action commenced on or after the date of enactment of this 
     Act.

  The PRESIDING OFFICER. The Senator from Mississippi.
  Mr. LOTT. Mr. President, I move to reconsider the vote and I move to 
lay that motion on the table.
  The motion to lay on the table was agreed to.

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