[House Report 107-14]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     107-14

======================================================================



 
  MULTIDISTRICT, MULTIPARTY, MULTIFORUM TRIAL JURISDICTION ACT OF 2001

                                _______
                                

 March 12, 2001.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                     MINORITY AND DISSENTING VIEWS

                        [To accompany H.R. 860]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 860) to amend title 28, United States Code, to allow 
a judge to whom a case is transferred to retain jurisdiction 
over certain multidistrict litigation cases for trial, and to 
provide for Federal jurisdiction of certain multiparty, 
multiforum civil actions, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     2
Hearings.........................................................     5
Committee Consideration..........................................     5
Vote of the Committee............................................     5
Committee Oversight Findings.....................................     5
Performance Goals and Objectives.................................     5
New Budget Authority and Tax Expenditures........................     5
Congressional Budget Office Cost Estimate........................     5
Constitutional Authority Statement...............................     7
Section-by-Section Analysis and Discussion.......................     7
Changes in Existing Law Made by the Bill, as Reported............     9
Minority Views...................................................    37
Dissenting Views.................................................    41

                          Purpose and Summary

    H.R. 860 would allow a designated U.S. district court (a 
so-called ``transferee'' court) under the multidistrict 
litigation statute \1\ to retain jurisdiction over referred 
cases arising from the same fact scenario for purposes of 
determining liability and punitive damages, or to send them 
back to the respective courts from which they were transferred. 
In addition, the legislation would streamline the process by 
which multidistrict litigation governing disasters are 
adjudicated. The bill would save litigants time and money, but 
would not interfere with jury verdicts or compensation rates 
for attorneys.
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    \1\ 28 U.S.C. Sec. 1407.
---------------------------------------------------------------------------

                Background and Need for the Legislation


      Section 2: Multidistrict Litigation/the ``Lexecon'' Decision

    The Administrative Office of the U.S. Courts (the ``AO'') 
is concerned over a recent Supreme Court interpretation of 28 
U.S.C. Sec. 1407, the Federal multidistrict litigation statute. 
The case in question is commonly referred to as ``Lexecon.'' 
\2\
---------------------------------------------------------------------------
    \2\ Lexecon v. Milberg Weiss Bershad Hynes & Lerach, et. al., 118 
S. Ct. 956 (1998).
---------------------------------------------------------------------------
    Under Sec. 1407, a Multidistrict Litigation Panel (MDLP) 
``a select group of seven Federal judges picked by the Chief 
Justice'' helps to consolidate lawsuits which share common 
questions of fact filed in more than one judicial district 
nationwide. Typically, these suits involve mass torts--a plane 
crash, for example--in which the plaintiffs are from many 
different states. All things considered, the panel attempts to 
identify the one U.S. district court nationwide which is best 
adept at adjudicating pretrial matters. The panel then remands 
individual cases back to the districts where they were 
originally filed for trial unless they have been previously 
terminated.
    For approximately 30 years, however, the district court 
selected by the panel to hear pretrial matters (the 
``transferee court'') often invoked Sec. 1404(a) of Title 28 to 
retain jurisdiction for trial over all of the suits. This is a 
general venue statute that allows a district court to transfer 
a civil action to any other district or division where it may 
have been brought; in effect, the court selected by the panel 
simply transferred all of the cases to itself. According to the 
AO and the current Chairman of the MDLP, this process has 
worked well since the transferee court was versed in the facts 
and law of the consolidated litigation. This is also the one 
court which could compel all parties to settle when 
appropriate.
    The Lexecon decision alters the Sec. 1407 landscape. This 
was a 1998 defamation case brought by a consulting entity 
(Lexecon) against a law firm that had represented a plaintiff 
class in the Lincoln Savings and Loan litigation in Arizona. 
Lexecon had been joined as a defendant to the class action, 
which the MDLPtransferred to the District of Arizona. Before 
the pretrial proceedings were concluded, Lexecon reached a 
``resolution'' with the plaintiffs, and the claims against the 
consulting entity were dismissed.
    Lexecon then brought a defamation suit against the law firm 
in the Northern District for Illinois. The law firm moved under 
Sec. 1407 that the MDLP empower the Arizona court which 
adjudicated the original S&L litigation to preside over the 
defamation suit. The panel agreed, and the Arizona transferee 
court subsequently invoked its jurisdiction pursuant to 
Sec. 1404 to preside over a trial that the law firm eventually 
won. Lexecon appealed, but the Ninth Circuit affirmed the lower 
court decision.\3\
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    \3\ 102 F.3rd 1524 (9th Cir. 1996).
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    The Supreme Court reversed, however, holding that Section 
1407 explicitly requires a transferee court to remand all cases 
for trial back to the respective jurisdictions from which they 
were originally referred. In his opinion, Justice Souter 
observed that ``the floor of Congress'' was the proper venue to 
determine whether the practice of self-assignment under these 
conditions should continue.
    Section 2 of the bill responds to Justice Souter's 
admonition. In the absence of a Lexecon ``fix,'' the MDLP will 
be forced to remand cases to their transferor districts, and 
then have each original district court decide whether to 
transfer each case back to the transferee district for trial 
purposes under Sec. 1404. This alternative, to invoke the 
Chairman of the MDLP, would be ``cumbersome, repetitive, 
costly, potentially inconsistent, time consuming, inefficient, 
and a wasteful utilization of judicial and litigant 
resources.'' \4\
---------------------------------------------------------------------------
    \4\ Hearing on H.R. 2112 Before the Subcomm. on Courts and 
Intellectual Property of the House Comm. on the Judiciary, 106th Cong., 
1st Sess. (June 16, 1999) (statement of the Honorable John F. Nangle, 
Chairman, Judicial Panel on Multidistrict Litigation, at 5).
---------------------------------------------------------------------------
    Since Lexecon, significant problems have arisen that have 
hindered the sensible conduct of multidistrict litigation. 
Transferee judges throughout the United States have voiced 
their concern to the MDLP about the urgent need to clarify 
their authority to retain cases for trial. Indeed, transferee 
judges have been unable to order self-transfer for trial, even 
though all parties to constituent cases have agreed on the 
wisdom of self-transfer for trial.\5\ Instead, complex 
multidistrict cases should be streamlined as much as possible 
by providing the transferee judge as many options as possible 
to expedite trial when the transferee judge, with full input 
from the parties, deems appropriate. In other words, there is a 
pressing need to recreate the multidistrict litigation 
environment pre-Lexecon.
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    \5\ See, e.g., MDL-1125 - In re Air Crash Near Cali, Columbia, on 
12/20/95, S.D. Fla. (Judge Highsmith).
---------------------------------------------------------------------------
    The change advocated by the MDLP and other multidistrict 
practitioners makes sense in light of judicial practice under 
the Multidistrict Litigation statute for the past 30 years. It 
promotes judicial administrative efficiency and will encourage 
parties to complex Federal litigation to settle.

  Section 3: Multiparty, Multiforum Jurisdiction of District Courts/ 
                        ``Disaster'' Litigation

    The genesis of Sec. 3 took place during oversight hearings 
conducted in the 95th Congress by the House Subcommittee on 
Courts, Civil Liberties and the Administration of Justice (now 
Courts, the Internet and Intellectual Property). These efforts 
were joined by those of the Carter Administration to improve 
judicial machinery by abolishing diversity of citizenship 
jurisdiction and to delineate the jurisdictional 
responsibilities of state and Federal courts. These efforts 
fell short, however, based on Senate opposition. Thereafter the 
Subcommittee narrowed its focus and began to concentrate on the 
problem of dispersed complex litigation arising out of a single 
accident resulting in multiple deaths or injuries.\6\
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    \6\ Letter from Michael J. Remington, former Chief Counsel to the 
Subcommittee on Courts, Civil Liberties and the Administration of 
Justice of the Committee on the Judiciary, U.S. House of 
Representatives, to Representative F. James Sensenbrenner, Jr. (July 
14, 1999).
---------------------------------------------------------------------------
    Legislation on this more specific issue was introduced in 
both the 98th and 99th Congresses. The House of Representatives 
subsequently approved legislation highly similar to Sec. 3 of 
H.R. 860 in the 101st and 102nd Congresses; and the full 
Committee on the Judiciary favorably reported this language in 
the 103rd Congress as well. Moreover, Sec. 3 of H.R. 860 is 
highly similar to that set forth in Sec. 10 of the Subcommittee 
substitute to H.R. 1252, the ``Judicial Reform Act,'' from the 
105th Congress, which the House passed in amended form with 
Sec. 10 fully intact. In addition, during the 106th Congress 
the House of Representatives passed the precursor to H.R. 860, 
H.R. 2112, by voice vote under suspension of the rules. The 
Judicial Conference and the Department of Justice have also 
supported these previous legislative initiatives.
    The need for enactment of Sec. 3 of H.R. 2112 was 
articulated by an attorney who testified on behalf of a major 
airline manufacturer at the June 16, 1999, hearing on H.R. 
2112.\7\ It is common after a serious accident to have many 
lawsuits filed in several states, in both state and Federal 
courts, with many different sets of plaintiffs' lawyers and 
several different defendants. Despite this multiplicity of 
suits, the principal issue that must be resolved first in each 
lawsuit is virtually identical: Is one or more of the 
defendants liable? Indeed, in lawsuits arising out of major 
aviation disasters, it is common for the liability questions to 
be bifurcated and resolved first, in advance of any trial on 
individual damage issues. The waste of judicial resources--and 
the costs to both plaintiffs and defendants--of litigating the 
same liability question several times over in separate lawsuits 
can be extreme.
---------------------------------------------------------------------------
    \7\ Hearing on H.R. 2112 Before the Subcomm. on Courts and 
Intellectual Property of the House Comm. on the Judiciary, 106th Cong., 
1st Sess. (June 16, 1999) (statement of Thomas J. McLaughlin, Esq., 
Perkins Coie, LLP, Attorneys for the Boeing Company at 4-9).
---------------------------------------------------------------------------
    Different expert consultants and witnesses may be retained 
by the different plaintiffs' lawyers handling each case. The 
court in each lawsuit can issue its own subpoenas for records 
and for depositions of witnesses, potentially conflicting with 
the discovery scheduled in other lawsuits. Critical witnesses 
may be deposed for one suit and then redeposed by a different 
set of lawyers in a separate lawsuit. Identical questions of 
evidence and other points of law can arise in each of the 
separate suits, meaning that the parties in each case may have 
to brief and argue--and each court may have to resolve--the 
same issues that are being briefed, argued, and resolved in 
other cases, sometimes with results that conflict.
    Current efforts to consolidate all state and Federal cases 
related to a common disaster are incomplete because current 
Federal statutesrestrict the ways in which consolidation can 
occur--apparently without any intention to limit consolidation. For 
example, plaintiffs who reside in the same state as any one of the 
defendants cannot file their cases in Federal court because of a lack 
of complete diversity of citizenship, even if all parties to the 
lawsuit want the case consolidated. For those cases that cannot be 
brought into the Federal system, no legal mechanism exists by which 
they can be consolidated, as state courts cannot transfer cases across 
state lines. In sum, full consolidation cannot occur in the absence of 
Federal legislative redress.
    The changes set forth in Sec. 3 of H.R. 860 speak directly 
to these problems. The revisions should reduce litigation costs 
as well as the likelihood of forum-shopping in airline accident 
cases; and an effective one-time determination of punitive 
damages would eliminate multiple or inconsistent awards arising 
from multiforum litigation.

                                Hearings

    H.R. 860 was referred to the Committee on the Judiciary on 
March 6, 2001. No hearings on the bill were held, given the 
ample legislative history that preceded it from the 95th 
Congress through the 106th.

                        Committee Consideration

    On March 8, 2001, the House Committee on the Judiciary met 
in open session and ordered reported the bill H.R. 860 by voice 
vote, a quorum being present.

                         Vote of the Committee

    The Committee on the Judiciary rejected a motion by 
Representative Watt to recommit H.R. 860 to the appropriate 
Subcommittee for hearings by a vote of 6-23.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

                    Performance Goals and Objectives

    Because H.R. 860 does not authorize funding, clause 3(c) of 
House Rule XIII does not apply.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 860, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 12, 2001.
Hon. F. James Sensenbrenner, Jr.,
Chairman, Committee on the Judiciary, House of Representatives, 
        Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 860, the 
Multidistrict, Multiparty, Multiforum Trial Jurisdiction Act of 
2001.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Lanette J. 
Walker.
            Sincerely,
                                  Dan L. Crippen, Director.

Enclosure.

H.R. 860--Multidistrict, Multiparty, Multiforum Trial Jurisdiction Act 
        of 2001

    CBO estimates that enacting H.R. 860 would result in no 
significant impact on the federal budget. Because this bill 
would not affect direct spending or receipts, pay-as-you-go 
procedures would not apply. H.R. 860 contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act and would have no significant 
effect on the budgets of state, local, or tribal governments.
    Enacting this bill would remove existing impediments to the 
effective consolidation of certain lawsuits within the federal 
judicial system. Section 2 of H.R. 860 would permit the federal 
judge before whom the cases were consolidated for pretrial 
proceedings to consolidate them for trial on the common issues 
of liability and punitive damages. Under current law, cases 
related by one or more common questions of fact that are 
pending in multiple federal judicial districts may be 
consolidated before a single federal judge only for pretrial 
proceedings. At the end of those proceedings, each case is 
required to be remanded for trial to the judicial district from 
which it had been transferred.
    Under certain conditions, section 3 of H.R. 860 would 
confer original jurisdiction on federal district courts over 
civil actions involving only minimal diversity that arise out 
of a single accident that results in multiple deaths or 
injuries. (Minimal diversity exists if adverse parties are 
citizens of different states, or if one is a foreign state or a 
citizen of a foreign state.) Current statutes make it difficult 
to remove certain cases to federal court, resulting in 
incomplete consolidation of the cases. Section 3 would make 
iteasier for plaintiffs in such cases to file in federal court and for 
defendants to remove cases filed in state court to federal court.
    CBO expects that enacting this bill would result in a more 
efficient use of federal judicial resources. However, CBO 
estimates that any savings realized by the federal court system 
would be negligible and might be offset by increased court 
costs that could arise from additional cases being moved from 
state court to federal court under the bill. Thus, CBO 
estimates that enacting H.R. 860 would result in no significant 
impact on the federal budget.
    The CBO staff contact for this estimate is Lanette J. 
Walker. This estimate was approved by Robert A. Sunshine, 
Assistant Director for Budget Analysis.

                   Constitutional Authority Statement

    Pursuant to rule XIII, clause 3(c)(3) of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article III, section 1, of the 
Constitution.

               Section-by-Section Analysis and Discussion


                          Sec. 1. Short Title

    The act may be cited as the ``Multidistrict, Multiparty, 
Multiforum Trial Jurisdiction Act of 2001.''

                    Sec. 2. Multidistrict Litigation

    Section 2 of H.R. 860 would simply amend Sec. 1407 by 
explicitly allowing a transferee court to retain jurisdiction 
over referred cases of a consolidated action for trial, or 
refer the cases to the respective transferor districts, as it 
sees fit, unless the terms of Sec. 3 of the bill would apply to 
the action.
    In addition, based on a colloquy between Representative 
Sensenbrenner and Representative Berman during the July 15, 
1999, Subcommittee markup of H.R. 2112, staff was instructed to 
develop an amendment for consideration at a subsequent full 
Committee markup on the issue of compensatory damages. 
Representative Berman expressed his concern that, pursuant to 
Sec. 3 of the bill, a transferee judge was not permitted to 
retain referred cases for the adjudication of compensatory 
damages, unless done so ``in the interest of justice and for 
the convenience of the parties and witnesses.'' There was no 
comparable presumption of remand on the matter of compensatory 
damages for actions litigated under Sec. 2 as originally 
drafted in the 106th Congress. Accordingly, Representatives 
Berman and Sensenbrenner proceeded to offer an amendment during 
the full Committee markup on July 27, 1999, which conformed the 
compensatory damage remand standard in Sec. 2 with that in 
Sec. 3. The amendment passed by voice vote and was incorporated 
in H.R. 2112 as amended and favorably reported at the time. 
This change has been preserved in Sec. 2 of H.R. 860 as well.

     Sec. 3. Multiparty, Multiforum Jurisdiction of District Courts

    Section 3 of H.R. 860 would bestow original jurisdiction on 
Federal district courts in civil actions involving minimal 
diversity jurisdiction among adverse parties based on a single 
accident where at least 25 persons have either died or 
sustained injuries exceeding $150,000 per person. The district 
court in which such cases are consolidated would retain those 
cases for determination of liability and punitive damages.
    More specifically, subsection (a) creates a new Sec. 1369 
of Title 28 of the U.S. Code which confers original 
jurisdiction upon the Federal district courts of any civil 
action
        (1) Linvolving minimal diversity between adverse 
        parties
        (2) Lthat arise from a single accident
        (3) Lwhere at least 25 people have either died or 
        incurred injury in the accident
        (4) Land, in the case of injury, the injury has 
        resulted in damages which exceed $150,000 per person 
        (exclusive of interest and costs) if
                (a) La defendant resides in a state and a 
                substantial part of the accident occurred in 
                another state or other location (regardless of 
                whether the defendant is also a resident of the 
                state where a substantial part of the accident 
                occurred);
                (b) Lany two defendants reside in different 
                states (regardless of whether such defendants 
                are also residents of the same state or 
                states); or
                (c) Lsubstantial parts of the accident occurred 
                in different states.
    Subsection (b) of new Sec. 1369 creates an exception to the 
minimum diversity rule. In brief, a U.S. district court may not 
hear any case in which a ``substantial majority'' of plaintiffs 
and the ``primary'' defendants are all citizens of the same 
state; and in which the claims asserted are governed 
``primarily'' by the laws of that same state. In other words, 
only state courts may hear such cases. (This feature was one of 
three changes proffered to the Senate in an effort to develop 
greater support for H.R. 2112 in the waning days of the 106th 
Congress. The other two revisions--also incorporated in H.R. 
860--consisted of an increase in the damages threshold from 
$75,000 to $150,000, and the deletion of the old choice-of-law 
section in H.R. 2112. The first two changes make it more 
difficult to file or remove to Federal court under the terms of 
H.R. 860. The choice of law section was thought to confer too 
much discretionary authority on district judges to select the 
relevant law that would apply in a given case.)
    Subsection (c) of new Sec. 1369 sets forth certain 
``special rules'' and definitions. They include the following:
        (1) LMinimal Diversity. Exists between adverse parties 
        if any party is a citizen of a state and any adverse 
        party is a citizen of another state, a citizen/subject 
        of a foreign state, or a foreign state.
        (2) LCorporation. Deemed to be a citizen of any state, 
        and a citizen or subject of any foreign state, in which 
        it is incorporated or has its principal place of 
        business; and is deemed to be a resident of any state 
        in which it is incorporated or licensed to do business.
        (3) LInjury. Physical harm to a person, and physical 
        damage or destruction of tangible property, but only if 
        physical harm exists.
        (4) LAccident. A sudden accident, or a natural event 
        culminating in an accident, that results in death or 
        injury incurred at a discrete location by at least 25 
        natural persons.
        (5) LState. Includes the District of Columbia, the 
        Commonwealth of Puerto Rico, and any territory or 
        possession of the United States.
    Subsection (d) of new Sec. 1369 permits any person with a 
claim arising from an accident as defined by the terms of the 
bill to intervene as a party plaintiff, even if that person 
could not have brought an action in district court as an 
original matter.
    Pursuant to subsection (e) of new Sec. 1369, a Federal 
district court in which an action is pending under the terms of 
the bill must promptly notify the MDLP of the pendency.
    Section 3(b) of the act amends the general Federal venue 
statute \8\ by permitting any action under the bill to be 
brought in any district court in which any defendant resides or 
in which a substantial part of the accident giving rise to the 
action took place.
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    \8\ 28 U.S.C. Sec. 1391.
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    Section 3(c) of H.R. 860 creates a new subsection (j)(1) to 
Sec. 1407. This change allows a transferee court, which 
acquires jurisdiction over an action under the terms of the 
bill, to retain the action for determination of liability and 
punitive damages. The transferee court must remand the action, 
however, to the district court from which it was transferred 
for determination of damages (other than punitive damages), 
unless the transferee court finds, for the convenience of 
parties and witnesses and in the interest of justice, that the 
action should be retained for the determination of damages.
    New Sec. 1407(j)(2)-(3) sets forth the terms by which an 
action is remanded, as well as the criteria for an appeal of 
decisions governing liability and punitive damages. Any 
decision concerning remand for the determination of damages is 
not reviewable under new Sec. 1407(j)(4). The transferee court 
is also empowered to transfer or dismiss an action on the 
ground of inconvenient forum pursuant to new Sec. 1407(j)(5).
    Section 3(d) permits a defendant in a civil action in state 
court to remove to the appropriate Federal district court under 
28 U.S.C. Sec. 1441 if
        (1) Lthe action could have been brought under the terms 
        of H.R. 860, or
        (2) Lthe defendant is a party to an action which is or 
        could have been brought pursuant to the terms of the 
        bill in a Federal district court and arises from the 
        same accident as the state court action.
    New Sec. 1441(e)(2)-(5), as created by Sec. 3(d) of the 
act, also sets forth the procedure for removal, along with the 
terms by which an action is remanded back to state court for 
determination of damages, including appellate procedures 
governing liability. Any decision under Sec. 1441(e) concerning 
remand for the determination of damages is not reviewable by 
appeal or otherwise under new paragraph (6).
    Finally, Sec. 3(e) of the bill establishes service-of-
process authority for actions brought under its terms.

                         Sec. 4. Effective Date

    The amendments made by Sec. 2 of the bill shall apply to 
any civil action pending on or brought on or after the date of 
enactment of the act. The amendments made by Sec. 3 shall apply 
to a civil action if the accident giving rise to the cause of 
action occurred on or after the 90th day after the date of 
enactment of the act.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                     TITLE 28, UNITED STATES CODE

           *       *       *       *       *       *       *


                    PART IV--JURISDICTION AND VENUE

           *       *       *       *       *       *       *


               CHAPTER 85--DISTRICT COURTS; JURISDICTION

Sec.
1330. Actions against foreign states.
     * * * * * * *
1369. Multiparty, multiforum jurisdiction.

           *       *       *       *       *       *       *


Sec. 1369. Multiparty, multiforum jurisdiction

    (a) In General.--The district courts shall have original 
jurisdiction of any civil action involving minimal diversity 
between adverse parties that arises from a single accident, 
where at least 25 natural persons have either died or incurred 
injury in the accident at a discrete location and, in the case 
of injury, the injury has resulted in damages which exceed 
$150,000 per person, exclusive of interest and costs, if--
            (1) a defendant resides in a State and a 
        substantial part of the accident took place in another 
        State or other location, regardless of whether that 
        defendant is also a resident of the State where a 
        substantial part of the accident took place;
            (2) any two defendants reside in different States, 
        regardless of whether such defendants are also 
        residents of the same State or States; or
            (3) substantial parts of the accident took place in 
        different States.
    (b) Limitation of Jurisdiction of District Courts.--The 
district court shall abstain from hearing any civil action 
described in subsection (a) in which--
            (1) the substantial majority of all plaintiffs are 
        citizens of a single State of which the primary 
        defendants are also citizens; and
            (2) the claims asserted will be governed primarily 
        by the laws of that State.
    (c) Special Rules and Definitions.--For purposes of this 
section--
            (1) minimal diversity exists between adverse 
        parties if any party is a citizen of a State and any 
        adverse party is a citizen of another State, a citizen 
        or subject of a foreign state, or a foreign state as 
        defined in section 1603(a) of this title;
            (2) a corporation is deemed to be a citizen of any 
        State, and a citizen or subject of any foreign state, 
        in which it is incorporated or has its principal place 
        of business, and is deemed to be a resident of any 
        State in which it is incorporated or licensed to do 
        business or is doing business;
            (3) the term ``injury'' means--
                    (A) physical harm to a natural person; and
                    (B) physical damage to or destruction of 
                tangible property, but only if physical harm 
                described in subparagraph (A) exists;
            (4) the term ``accident'' means a sudden accident, 
        or a natural event culminating in an accident, that 
        results in death or injury incurred at a discrete 
        location by at least 25 natural persons; and
            (5) the term ``State'' includes the District of 
        Columbia, the Commonwealth of Puerto Rico, and any 
        territory or possession of the United States.
    (d) Intervening Parties.--In any action in a district court 
which is or could have been brought, in whole or in part, under 
this section, any person with a claim arising from the accident 
described in subsection (a) shall be permitted to intervene as 
a party plaintiff in the action, even if that person could not 
have brought an action in a district court as an original 
matter.
    (e) Notification of Judicial Panel on Multidistrict 
Litigation.--A district court in which an action under this 
section is pending shall promptly notify the judicial panel on 
multidistrict litigation of the pendency of the action.

           *       *       *       *       *       *       *


                   PART IV--JURISDICTION AND VENUE

           *       *       *       *       *       *       *


Sec. 1391. Venue generally

    (a) * * *

           *       *       *       *       *       *       *

    (g) A civil action in which jurisdiction of the district 
court is based upon section 1369 of this title may be brought 
in any district in which any defendant resides or in which a 
substantial part of the accident giving rise to the action took 
place.

           *       *       *       *       *       *       *


Sec. 1407. Multidistrict litigation

    (a) When civil actions involving one or more common 
questions of fact are pending in different districts, such 
actions may be transferred to any district for coordinated or 
consolidated pretrial proceedings. Such transfers shall be made 
by the judicial panel on multidistrict litigation authorized by 
this section upon its determination that transfers for such 
proceedings will be for the convenience of parties and 
witnesses and will promote the just and efficient conduct of 
such actions. Each action so transferred shall be remanded by 
the panel at or before the conclusion of such pretrial 
proceedings to the district from which it was transferred 
unless it shall have been previously terminated or ordered 
transferred to the transferee or other district under 
subsection (i): Provided, however, That the panel may separate 
any claim, cross-claim, counter-claim, or third-party claim and 
remand any of such claims before the remainder of the action is 
remanded.

           *       *       *       *       *       *       *

    (i)(1) Subject to paragraph (2) and except as provided in 
subsection (j), any action transferred under this section by 
the panel may be transferred for trial purposes, by the judge 
or judges of the transferee district to whom the action was 
assigned, to the transferee or other district in the interest 
of justice and for the convenience of the parties and 
witnesses.
    (2) Any action transferred for trial purposes under 
paragraph (1) shall be remanded by the panel for the 
determination of compensatory damages to the district court 
from which it was transferred, unless the court to which the 
action has been transferred for trial purposes also finds, for 
the convenience of the parties and witnesses and in the 
interests of justice, that the action should be retained for 
the determination of compensatory damages.
    (j)(1) In actions transferred under this section when 
jurisdiction is or could have been based, in whole or in part, 
on section 1369 of this title, the transferee district court 
may, notwithstanding any other provision of this section, 
retain actions so transferred for the determination of 
liability and punitive damages. An action retained for the 
determination of liability shall be remanded to the district 
court from which the action was transferred, or to the State 
court from which the action was removed, for the determination 
of damages, other than punitive damages, unless the court 
finds, for the convenience of parties and witnesses and in the 
interest of justice, that the action should be retained for the 
determination of damages.
    ``(2) Any remand under paragraph (1) shall not be effective 
until 60 days after the transferee court has issued an order 
determining liability and has certified its intention to remand 
some or all of the transferred actions for the determination of 
damages. An appeal with respect to the liability determination 
and the choice of law determination of the transferee court may 
be taken during that 60-day period to the court of appeals with 
appellate jurisdiction over the transferee court. In the event 
a party files such an appeal, the remand shall not be effective 
until the appeal has been finally disposed of. Once the remand 
has become effective, the liability determination and the 
choice of law determination shall not be subject to further 
review by appeal or otherwise.
    (3) An appeal with respect to determination of punitive 
damages by the transferee court may be taken, during the 60-day 
period beginning on the date the order making the determination 
is issued, to the court of appeals with jurisdiction over the 
transferee court.
    (4) Any decision under this subsection concerning remand 
for the determination of damages shall not be reviewable by 
appeal or otherwise.
    (5) Nothing in this subsection shall restrict the authority 
of the transferee court to transfer or dismiss an action on the 
ground of inconvenient forum.

           *       *       *       *       *       *       *


   CHAPTER 89--DISTRICT COURTS; REMOVAL OF CASES FROM STATE COURTS

           *       *       *       *       *       *       *


Sec. 1441. Actions removable generally

    (a) * * *

           *       *       *       *       *       *       *

    (e)(1) Notwithstanding the provisions of subsection (b) of 
this section, a defendant in a civil action in a State court 
may remove the action to the district court of the United 
States for the district and division embracing the place where 
the action is pending if--
            (A) the action could have been brought in a United 
        States district court under section 1369 of this title; 
        or
            (B) the defendant is a party to an action which is 
        or could have been brought, in whole or in part, under 
        section 1369 in a United States district court and 
        arises from the same accident as the action in State 
        court, even if the action to be removed could not have 
        been brought in a district court as an original matter.
The removal of an action under this subsection shall be made in 
accordance with section 1446 of this title, except that a 
notice of removal may also be filed before trial of the action 
in State court within 30 days after the date on which the 
defendant first becomes a party to an action under section 1369 
in a United States district court that arises from the same 
accident as the action in State court, or at a later time with 
leave of the district court.
    (2) Whenever an action is removed under this subsection and 
the district court to which it is removed or transferred under 
section 1407(j) has made a liability determination requiring 
further proceedings as to damages, the district court shall 
remand the action to the State court from which it had been 
removed for the determination of damages, unless the court 
finds that, for the convenience of parties and witnesses and in 
the interest of justice, the action should be retained for the 
determination of damages.
    (3) Any remand under paragraph (2) shall not be effective 
until 60 days after the district court has issued an order 
determining liability and has certified its intention to remand 
the removed action for the determination of damages. An appeal 
with respect to the liability determination and the choice of 
law determination of the district court may be taken during 
that 60-day period to the court of appeals with appellate 
jurisdiction over the district court. In theevent a party files 
such an appeal, the remand shall not be effective until the appeal has 
been finally disposed of. Once the remand has become effective, the 
liability determination and the choice of law determination shall not 
be subject to further review by appeal or otherwise.
    (4) Any decision under this subsection concerning remand 
for the determination of damages shall not be reviewable by 
appeal or otherwise.
    (5) An action removed under this subsection shall be deemed 
to be an action under section 1369 and an action in which 
jurisdiction is based on section 1368 of this title for 
purposes of this section and sections 1407, 1660, 1697, and 
1785 of this title.
    (6) Nothing in this subsection shall restrict the authority 
of the district court to transfer or dismiss an action on the 
ground of inconvenient forum.
    [(e) The court to which such civil action is removed] (f) 
The court to which a civil action is removed under this section 
is not precluded from hearing and determining any claim in such 
civil action because the State court from which such civil 
action is removed did not have jurisdiction over that claim.

           *       *       *       *       *       *       *


                           PART V--PROCEDURE

           *       *       *       *       *       *       *


                          CHAPTER 113--PROCESS

Sec.
1691. Seal and teste of process.
     * * * * * * *
1697. Service in multiparty, multiforum actions.

           *       *       *       *       *       *       *


Sec. 1697. Service in multiparty, multiforum actions

    When the jurisdiction of the district court is based in 
whole or in part upon section 1369 of this title, process, 
other than subpoenas, may be served at any place within the 
United States, or anywhere outside the United States if 
otherwise permitted by law.

           *       *       *       *       *       *       *


                   CHAPTER 117--EVIDENCE; DEPOSITIONS

Sec.
1781. Transmittal of letter rogatory or request.
     * * * * * * *
1785. Subpoenas in multiparty, multiforum actions.

           *       *       *       *       *       *       *


Sec. 1785. Subpoenas in multiparty, multiforum actions

    When the jurisdiction of the district court is based in 
whole or in part upon section 1369 of this title, a subpoena 
for attendance at a hearing or trial may, if authorized by the 
court upon motion for good cause shown, and upon such terms and 
conditions as the court may impose, be served at any place 
within the United States, or anywhere outside the United States 
if otherwise permitted by law.

           *       *       *       *       *       *       *




                            BUSINESS MEETING

                        THURSDAY, MARCH 8, 2001

                          House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10 a.m., in Room 
2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner (chairman of the committee) presiding.
    Now, pursuant to notice, I call up the bill H.R. 860, the 
Multidistrict, Multiparty, Multiforum Trial Jurisdiction Act of 
2001, for purpose of markup, and move its favorable 
recommendation to the House.
    [H.R. 860 follows:]
    
    
    Chairman Sensenbrenner. Without objection, the bill will be 
considered as read and open for amendment at any point. I yield 
myself 5 minutes.
    I am the author of this bill. It has a long legislative 
life, having been considered by this committee, in one form or 
another, since the 101st Congress. This legislation addresses 
two important issues in the world of complex multidistrict 
litigation.
    Section 2 of the bill would reverse the effects of the 1998 
Supreme Court decision in the so-called Lexicon case. It would 
simply amend the multidistrict litigation statute by explicitly 
allowing a transferee court to retain jurisdiction over 
referred cases for trial for purposes of determining liability 
and punitive damages or refer them to other districts as it 
sees fit. In fact, section 2 only codifies what had constituted 
an ongoing judicial practice for nearly 30 years prior to 
Lexicon.
    Section 3 addresses a particular species of complex 
litigation, the so-called disaster cases, such as those 
involving airline accidents. The language set forth in my bill 
is a revised version of a concept which, beginning in the 101st 
Congress, has been supported by the Department of Justice, the 
Administrative Office of U.S. Courts, two previous Democratic 
Congresses and one previous Republican Congress.
    Section 3 will help reduce litigation costs, as well as the 
likelihood of forum shopping in single-accident mass tort 
cases. All plaintiffs in these cases will ordinarily be 
situated identically, making the case for consolidation of 
their actions especially compelling. These types of disasters, 
with their hundreds or thousands of plaintiffs and numerous 
defendants, have the potential to impair the orderly 
administration of justice in Federal courts for an extended 
period of time.
    This committee and the full House unanimously passed the 
precursor to H.R. 860 in the last term. During eleventh-hour 
negotiations with the other body, I offered to make three 
changes, in an effort to show--generate greater support for the 
bill. As a show of good faith, I incorporate those changes in 
the bill that is before us today. They consist of the 
following:
    One, the plaintiff must allege at least $150,000 of 
damages, which is up from $75,000, to file in U.S. District 
Court.
    Two, an exception to the minimum diversity rule is created. 
A U.S. District Court may not hear any case in which a 
substantial majority of plaintiffs and the primary defendants 
are citizens of the same State and in which claims asserted are 
governed primarily by laws of that same State. In other words, 
only State courts may hear those cases.
    The Choice of Law section will be stricken. On further 
reflection, I believe it confers too much discretionary 
authority on a Federal judge to select the relevant law that 
will apply in a given case.
    In sum, this legislation speaks to process, fairness and 
judicial efficiency. It will not interfere with jury verdicts 
or compensation rates for litigators. I, therefore, urge my 
colleagues to join me in a bipartisan effort to support this 
bill and yield back the balance of my time.
    The gentleman from Michigan?
    Mr. Conyers. I ask--I strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Conyers. This has given me as much concern as anything 
on the agenda today. And I think we've negotiated a bit on it, 
and I'm--I have no problems and support the descriptions you've 
given in all of the sections.
    Section 3 is the one that I would like to draw the members' 
attention to because, from trial lawyers' point of view, it may 
be the most controversial--the minimum diversity for single 
accidents involving 25 people.
    Now I've traditionally opposed having Federal courts decide 
State tort issues, naturally, and disfavor the expansion of 
jurisdiction of the already overloaded district courts. Unlike 
the class action bill, though, this bill would only expand 
Federal court jurisdiction in a much narrower class of actions, 
with the objective of judicial expedience.
    So I support the section, with the understanding that it 
would only apply to a narrowly defined category of cases and 
does not, in any way, serve as a precedent for broader 
expansion of diversity jurisdiction. And I'm hoping that the 
author and those that support this bill will join with me in 
these feelings that I have.
    Chairman Sensenbrenner. Will the gentleman yield?
    Mr. Conyers. Yes, I will.
    Chairman Sensenbrenner. The gentleman has my assurances 
that this will not serve as a precedent for other types of 
litigation reform legislation which we may consider later on 
during this Congress. This is designed for a specific type of 
litigation, the airline crash litigation.
    And I think it is important to note that the Clinton 
administration supported last year's version of the bill, which 
was much more broadly drafted, as does the Administrative 
Office of the Courts, in that it will provide greater judicial 
efficiency and thus save money without diminishing anybody's 
right to sue, any compensation that may be given to a plaintiff 
that wins their case or any counsel's ability for--to negotiate 
out compensation for representing their client.
    Mr. Conyers. I'm glad to hear the chairman say that because 
we don't--I don't want this to serve as the legislative foot in 
the door or nose under the camel's tent.
    It's also my understanding here that mass tort injuries 
that involve the same injury over and over again, such as 
asbestos, and breast implants, and the like, would be excluded, 
and that----
    Chairman Sensenbrenner. Would the gentleman yield?
    Mr. Conyers. Of course.
    Chairman Sensenbrenner. This does not deal with cases like 
the asbestos case. This is a single-accident case, again, such 
as a plane crash or a train wreck.
    Mr. Conyers. Right. And so the types of cases that would be 
included would be plane, trains, bus, boat accidents, 
environmental spills, which many of which at least can already 
be brought in the Federal court.
    So, with that distinction being made and the chairman's 
additional comments, I--I feel that I can urge my colleagues on 
the committee to support this measure.
    Chairman Sensenbrenner. Are there amendments?
    The gentleman from California, Mr. Berman?
    Mr. Berman. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Berman. Just a couple of points.
    As you had indicated, section 2 is totally 
noncontroversial.
    Section 3 has some concerns. I do want to point out that 
the chairman agreed, in the last Congress, as the sponsor of 
the legislation, to include a presumption that cases which are 
combined in a single district for purposes of judicial 
efficiency to decide liability and punitive damage issues and 
pretrial motions, will be--or there will be a presumption that 
allows those cases to go back to the district in which the 
action which was originally filed, for the purposes of 
determining compensatory damages, so that----
    Chairman Sensenbrenner. Will the gentleman yield?
    Mr. Berman. Yes.
    Chairman Sensenbrenner. That's correct, as well.
    Mr. Berman. And I support this bill, and agree both with 
the chairman, and particularly with the comments of my ranking 
member of the full committee, that no one should construe my 
support for this as support for an effort to limit or eliminate 
the ability of State courts to consider class action cases.
    Chairman Sensenbrenner. The gentleman from North Carolina?
    Mr. Watt. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman from North Carolina 
is recognized for 5 minutes.
    Mr. Watt. Thank you, Mr. Chairman.
    If this is a good idea, and I, on balance, don't think it 
is at this point, this is the exact point I was trying to raise 
before. I think this is a bill that should have gone to the 
subcommittee, particularly if you are making substantial 
changes to it.
    Mr. Berman. Would the gentleman yield?
    Mr. Watt. I'd be happy to yield to the gentleman.
    Mr. Berman. This bill has been through the court----
    Mr. Watt. This bill has been substantially revised since 
any subcommittee dealt with it, but clearly this bill should 
have gone through the subcommittee. And I can understand the 
chairman, it's his bill. He wants to move the bill along. He 
thinks it's not controversial. I think it's a lot more 
controversial than anybody is making it out to be.
    For those of us who have been strong advocates for States' 
rights, I think this is a radical departure. When you start 
telling to a plaintiff who lives in a State, who is suing a 
defendant who lives in the same State, and you are going to 
apply that State's laws that that case has to be liti--for that 
plaintiff, he has to go into the U.S. District Court, the 
Federal court, to litigate his claim, I think that is a radical 
departure from where we are at this point.
    And all of us who claim to be advocates of States' rights, 
ought to be concerned about that. And that's what this bill 
does. Don't underestimate what it does. It says, if there are 
25 defendants, one of those defendants lives inside the State 
the--25 people injured, one of the plaintiffs lives in the 
State the defendant lives--is resident of that State, you've 
still got to go into Federal court--that's what the bill says--
and even if you're applying State law. That is a radical 
departure from anything that our law has ever said. And that's 
way, way removed. There's no diversity there at all between 
those parties.
    Now let me just tell you that every small-town person on 
this committee ought to be alarmed by this, because in small 
towns there are not U.S. District Courts. There are, in every 
county, State courts where individual plaintiffs can walk right 
down the street, file a lawsuit, and get their claim litigated. 
You all make it sound like the whole purpose for the court 
system is for the convenience of the courts. That is not the 
purpose of the court system. The purpose of the court system is 
for the convenience of litigants, and that's the way it's 
always been in this country.
    So don't tell me that this is some kind of minor bill that 
is, you know, business as usual. Yes, you all have gotten 
together and decided that this is a good idea----
    Mr. Issa. Mr. Chairman, point of order.
    Mr. Watt. But this is a major piece of litigation, should 
have gone through the--I mean of legislation, should have gone 
through the subcommittee, should have been subjected to the 
scrutiny of the full process.
    Mr. Issa. Will the gentleman yield?
    Mr. Watt. I'd be happy to yield to the gentleman.
    Mr. Issa. Thank you.
    Mr. Watt. Whoever is asking me to yield.
    Mr. Issa. Thank you.
    Mr. Watt. And I would, just before I yield to you, I would 
say----
    Mr. Issa. My yield is very short. Could we have the audio 
turned down to where it is a normal level.
    Mr. Watt. Just before I yield to you, perhaps----
    Mr. Issa. Would the gentleman, please, could we just have 
the audio turned down to a level that is more pleasant for all 
of us available? I think it is--I want to listen to the 
gentleman, but it is so loud it is difficult to do so.
    Mr. Watt. Do you want to turn down the audio, Mr. Chairman? 
I don't have any control over the audio.
    Chairman Sensenbrenner. The only button I have up here is 
one that would turn you off. You don't want me to push that, do 
you?
    [Laughter.]
    Mr. Watt. Well, Mr. Chairman, I move that this bill be sent 
to the subcommittee that has jurisdiction over it.
    Mr. Berman. Is that a debatable motion, Mr. Chairman?
    Chairman Sensenbrenner. Is the gentleman's motion in 
writing?
    Mr. Watt. It is not, but I will put it in writing. I ask 
unanimous consent that the bill be recommitted to the 
subcommittee on Commercial and Administrative----
    Mr. Gallegly. Objection.
    Chairman Sensenbrenner. An objection is heard.
    The gentleman from California? His hand was up first.
    Mr. Berman. Oh, well, we don't have a motion before us or--
it's being written, so I just--my point of parliamentary 
inquiry was is this a debatable motion?
    Chairman Sensenbrenner. The answer is, yes, it is 
debatable.
    Mr. Berman. When the motion is made, I'd like to be 
recognized to speak against the motion.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from New York seek recognition?
    Mr. Nadler. Parliamentary inquiry. Was that necessary to 
have unanimous consent or can we do that by motion?
    Chairman Sensenbrenner. Unanimous consent was objected to.
    Mr. Nadler. It has to be in writing?
    Chairman Sensenbrenner. Yeah.
    Mr. Nadler. Thank you.
    Chairman Sensenbrenner. Would the gentleman----
    Mr. Watt. Mr. Chairman, I ask unanimous consent for 30 
additional seconds just to finish my statement. I'll try to 
modulate down.
    Chairman Sensenbrenner. Without objection, the gentleman is 
recognized for 30 modulated seconds.
    Mr. Watt. I wanted to point out to the freshmen on this 
committee, further, that when you all don't--when we just rush 
bills through here, basically, you all are deprived of what you 
were sent here to do. And if you want to be deprived of it, I 
mean, you go ahead, but basically you are missing the 
opportunity to do what your responsibilities are on this 
committee.
    So, having said that, I've given you my arguments. I think 
you're making a mistake, but I'm not going to prolong this. 
I'll yield back.
    Chairman Sensenbrenner. The question occurs on the motion 
to report the bill H.R. 860 favorably.
    The gentleman from California?
    Mr. Berman. I think one point needs to be made, if I might 
be recognized.
    Chairman Sensenbrenner. The gentleman, without objection, 
the gentleman is recognized a second time.
    Mr. Berman. Thank you.
    There were three changes made to this bill between the time 
it went through subcommittee and passed in the last Congress 
and now. The three changes all made it a better bill, from my 
point of view. And in the context of the gentleman from North 
Carolina's comments, while he still may not like the bill, it 
would be better from his point of view.
    The three changes were to raise the damage level from 
$75,000 to $150,000. Each plaintiff must allege at least 
$150,000 of damage; secondly, there's an exception created to 
the minimum diversity rule. A U.S. District Court may not hear 
any case in which a substantial majority of the plaintiffs and 
the primary defendants are all citizens of the same State and 
in which the claims asserted are governed primarily by the laws 
of that same State. Only State courts may hear those kinds of 
cases. This is a change from the bill that passed the 
subcommittee unanimously last year and the House, and was sent 
to the Senate; and the third change--I will yield in 1 second--
and the third change is the Choice of Law section will be--is 
stricken. This allows the transferor court, not the transferee 
court, to make the Choice of Law decision.
    So I just wanted to put that those are the only changes in 
the bill. All of them from people who have--the concerns 
expressed by the gentleman from North Carolina may still be 
there, but to that degree, they are lessened by these changes.
    Mr. Watt. Will the gentleman yield?
    Mr. Berman. I'd be happy to.
    Mr. Watt. I just want to point out that you may be right 
that this is better than it was, but this could be a much, much 
better and could really honor the rights of States and 
individuals who we're supposed to be honoring if we took some 
time to address the issues that I'm talking about. The issues 
that you have just described still don't address what I said 
was the case. An individual in my county who gets injured by a 
defendant in my county, whose case is governed by the laws of 
my State, still must find his way to Federal court if there 
were 25 or more people injured, and I'm telling you that that 
is unfair to that individual claimant. That is unfair, and it 
is unprecedented.
    And I understand the expediency of the court, but the 
courts were not built for the expediency of the court, the 
courts were built for the expediency of the people for whom 
they are designed to serve.
    So what you have said, you are absolutely right. It was 
better than it was. The question is will we take the time to 
make it to address the real issues that this bill still 
presents to us, and particularly those of us who profess to be 
strong advocates of States' rights.
    Ms. Jackson Lee. Would the gentleman yield?
    Chairman Sensenbrenner. The time belongs to the gentleman 
from California.
    Ms. Jackson Lee. Mr. Berman, would you yield? Your light is 
still on.
    Mr. Berman. Yes, I would be happy to yield.
    Ms. Jackson Lee. Let me I just simply want to add a 
statement that I have to the record, and I guess I come down on 
the issue in two manners: One, I want to open the courts to as 
many people as possible who have been aggrieved and certainly 
support the gentleman from North Carolina's motion. I do think 
this legislation is good legislation and answers many of the 
concerns that I have, and I submit my total statement into the 
record.
    Thank you very much for yielding.
    Chairman Sensenbrenner. Without objection.
    [The prepared statement of Ms. Jackson Lee follows:]
  Prepared Statement of Hon. Sheila Jackson Lee, a Representative in 
                    Congress from the State of Texas
    I want to thank Chairman Sensenbrenner and Ranking Member Conyers 
for convening this markup regarding H.R. 860, the ``Multidistrict, 
Multiparty, Multiforum Jurisdiction Act of 1999.''
    Clearly, consideration of H.R. 860 comes at a time where court 
dockets continue to rise yet pay salaries for federal judges appear 
inadequate to deal with the important questions that confront 
Americans. H.R. 860 is intended to improve the ability of federal 
courts to handle complex multidistrict litigation arising from a common 
set of facts. Last Congress the House passed a virtually identical 
bill, H.R. 2112, by voice vote under suspension of the rules; however, 
it stalled in the Senate.
    There are a few parts of the legislation which merit attention. One 
provision of the bill allows a transferee court in multidistrict 
litigation to retain jurisdiction over all of the consolidated cases 
which the presumption that compensatory damages will be remanded to the 
transferor court. It also expands federal court jurisdiction by 
requiring only minimal diversity (as opposed to complete diversity) for 
mass torts arising from a single incident. Lastly, the bill establishes 
new federal procedures in these narrowly defined cases for the 
selection of venue, service of process and issuance of subpoenas.
    Under the bill, I am supportive of the expansion of jurisdiction 
over civil actions arising out of a single accident that result in the 
death or injury of 25 or more persons, if the damages exceed $150,000 
per claim and minimal diversity exists. While the bill contains a 
number of details, I am reassured that this bill would not apply to 
mass tort injuries that involve the same injury over and over again, 
such as, asbestos or breast implants.
    In this sense, H.R. 860 is a sharp distinction from the 
``Interstate Class Action Jurisdiction Act of 1999.'' Unlike H.R. 860, 
the class action bill requires only minimal diversity for all civil 
actions brought as class actions in federal court, regardless of the 
individual amounts in controversy, the number of separate incidents or 
injuries that may give rise to a class action, or the state-based 
nature of the claim. Rather than providing a reasonable, limited 
modification to diversity jurisdiction, the class action bill--which I 
strongly oppose--represents a radical rewrite of the class action rules 
and would ban most forms of state class actions.
    Mr. Chairman, I hope that whatever form of H.R. 860 is reported by 
the Committee today reflects a genuine commitment to providing 
meaningful access to our courts. Access to our courts is simply 
essential.
    Thank you.
                               __________
                           Motion of Mr. Watt
    I move that the bill, H.R. 860, be referred to its subcommittee of 
jurisdiction for consideration.

    Mr. Watt. Mr. Chairman, I have a motion at the desk.
    Chairman Sensenbrenner. The clerk will report the motion.
    The Clerk. Mr. Watt moves that H.R. 860 be referred to the 
appropriate Subcommittee.
    Chairman Sensenbrenner. The question is on the motion.
    Those in favor will signify by saying aye.
    Opposed, no.
    The noes appear to have it. The noes----
    Mr. Watt. Mr. Chairman, I ask for a recorded vote.
    Chairman Sensenbrenner. The question is on the motion to 
refer the bill to subcommittee.
    Those in favor will, as your names are called, answer aye; 
those opposed, no, and the clerk will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no. Mr. Coble?
    Mr. Coble. No.
    The Clerk. Mr. Coble, no. Mr. Smith?
    Mr. Smith. No.
    The Clerk. Mr. Smith, no. Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Chabot?
    [No response.]
    The Clerk. Mr. Barr?
    Mr. Barr. No.
    The Clerk. Mr. Barr, no. Mr. Jenkins?
    Mr. Jenkins. No.
    The Clerk. Mr. Jenkins, no. Mr. Hutchinson?
    [No response.]
    The Clerk. Mr. Cannon?
    Mr. Cannon. No.
    The Clerk. Mr. Cannon, no. Mr. Graham?
    [No response.]
    The Clerk. Mr. Bachus?
    Mr. Bachus. No.
    The Clerk. Mr. Bachus, no. Mr. Scarborough?
    [No response.]
    The Clerk. Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no. Mr. Green?
    Mr. Green. No.
    The Clerk. Mr. Green, no. Mr. Keller?
    [No response.]
    The Clerk. Mr. Issa?
    Mr. Issa. No.
    The Clerk. Mr. Issa, no. Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no. Mr. Flake?
    Mr. Flake. No.
    The Clerk. Mr. Flake, no. Mr. Conyers?
    Mr. Conyers. No.
    The Clerk. Mr. Conyers, no. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    Mr. Berman. No.
    The Clerk. Mr. Berman, no. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    Mr. Nadler. Aye.
    The Clerk. Mr. Nadler, aye. Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye. Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye. Ms. Lofgren?
    Ms. Lofgren. No.
    The Clerk. Ms. Lofgren, no. Ms. Jackson Lee?
    Ms. Jackson Lee. Aye.
    The Clerk. Ms. Jackson Lee, aye. Ms. Waters?
    [No response.]
    The Clerk. Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. No.
    The Clerk. Ms. Baldwin, no. Mr. Weiner?
    Mr. Weiner. Yes.
    The Clerk. Mr. Weiner, aye. Mr. Schiff?
    Mr. Schiff. No.
    The Clerk. Mr. Schiff, no. Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Are there additional members in the 
chamber who wish to cast their votes or change their votes?
    The gentleman from Virginia?
    Mr. Goodlatte. No.
    The Clerk. Mr. Goodlatte, no.
    Chairman Sensenbrenner. The gentleman from South Carolina?
    Mr. Graham. No.
    Chairman Sensenbrenner. The gentleman from Arkansas?
    Mr. Hutchinson. No.
    Chairman Sensenbrenner. The gentleman from Ohio?
    Mr. Chabot. No.
    Chairman Sensenbrenner. Anybody else wish to--the gentleman 
from Massachusetts?
    Mr. Delahunt. May I have a moment?
    [Laughter.]
    Chairman Sensenbrenner. Of course.
    The Clerk. Mr. Delahunt?
    Mr. Delahunt. Yes.
    The Clerk. Mr. Delahunt, aye.
    Chairman Sensenbrenner. The clerk will--the gentleman from 
California, Mr. Gallegly.
    Mr. Gallegly. Votes no.
    The Clerk. Mr. Gallegly, no.
    Chairman Sensenbrenner. The clerk will try again to report.
    The Clerk. Mr. Chairman, there are six ayes and 23 nays.
    Chairman Sensenbrenner. And the motion is not agreed to.
    The question now occurs on the motion to report the bill, 
H.R. 860 favorably. All those in favor will signify by saying 
aye.
    Opposed no.
    The ayes appear to have it. The ayes have it, and the 
motion is agreed to.
    Without objection, the Chairman is authorized to move to go 
to conference pursuant to House rules.
    Without objection, the staff is directed to make any 
technical and confirming changes, and all members will be given 
2 days, as provided by House rules, in which to submit 
additional dissenting, supplemental or minority views.

                             Minority Views

    H.R. 860 is intended to improve the ability of federal 
courts to handle complex multidistrict litigation arising from 
a common set of facts. This bill represents a means by which to 
improve the manageability of complex litigation. In this narrow 
circumstance, we are willing to support this expansion of 
federal court jurisdiction.
    There are two operative sections of this legislation. 
Section 2 of the bill allows a transferee court in 
multidistrict litigation to retain jurisdiction over all of the 
consolidated cases with the presumption that compensatory 
damages will be remanded to the transferor court. We strongly 
support this provision, which we believe works well as a matter 
of judicial expedience when cases are transferred to one 
federal district court by a Multidistrict Litigation Panel.
    Section 3 expands federal court jurisdiction by requiring 
only minimal diversity (as opposed to complete diversity) for 
mass torts arising from a single incident; provides for the 
consolidation of these cases into a single district; and 
establishes new federal procedures in these narrowly defined 
cases for the selection of venue, service of process and 
issuance of subpoenas. We can support section 3 as a matter of 
judicial efficiency, but with the understanding that it does 
not in any way serve as a precedent for the broader expansion 
of diversity jurisdiction.
    It is important to note that three positive changes were 
made to the disaster litigation section of the bill as 
introduced this Congress: the amount in controversy requirement 
for a plaintiff to file in U.S. District Court is raised from 
$75,000 to $150,000; an exception to the minimum diversity rule 
is created providing that a U.S. District Court may not hear 
any case in which a ``substantial majority'' of plaintiffs and 
the ``primary'' defendants are all citizens of the same state 
and in which the claims asserted are governed ``primarily'' by 
the laws of that same state; and the choice-of-law section is 
stricken as it is believed to confer too much discretionary 
authority to a U.S. District Court judge to select the relevant 
law that applies in a given case. We consider these changes to 
be improvements in that they provide additional safeguards to 
the limited expansion of federal court jurisdiction allowed 
under the bill.
    The following views clarify the reasoning behind our 
support of both sections of H.R. 860:
Section 2--Overturns Lexecon v. Milberg
    Section 2 of H.R. 860 reflects an intention to overturn the 
decision of the United States Supreme Court in Lexecon v. 
Milberg Weiss Bershad Hynes & Lerach,\1\ interpreting 28 U.S.C. 
section 1407, the federal multidistrict litigation statute. In 
Lexecon, the Supreme Court held that a transferee court (a 
district court assigned to hear pretrial matters by a 
multidistrict litigation panel in multidistrict litigation 
cases) must remand all cases back for trial to the districts in 
which they were originally filed, regardless of the views of 
the parties.
---------------------------------------------------------------------------
    \1\ 118 S.Ct. 956 (1998).
---------------------------------------------------------------------------
    While a hearing was not held on the bill this Congress, 
during the 106th Congress, the Courts and Intellectual Property 
Subcommittee did hold a hearing on this issue.\2\ Experts 
testified that for some 30 years the transferee court often 
retained jurisdiction over all of the suits by invoking a venue 
provision of Title 28, allowing a district court to transfer a 
civil action to any other district where it may have been 
brought. In effect, the transferee court simply transferred all 
of the cases to itself. The Judicial Conference testified that 
this process has worked well because the transferee judge 
becomes the expert on the case as a result of supervising the 
day-to-day pretrial proceedings.
---------------------------------------------------------------------------
    \2\ The Multiparty, Multiforum Jurisdiction Act of 1999 and the 
Federal Courts Improvement Act of 1999: Hearing on H.R. 2112 and H.R. 
1752 Before the Subcomm. on Courts and Intellectual Property of the 
House Comm. on the Judiciary, 106th Cong. (1999).
---------------------------------------------------------------------------
    Criticism had been heard at the Subcommittee hearing, 
however, that the text was arguably more expansive than what 
was necessary to overturn Lexecon. It was argued that section 2 
went far beyond simply permitting a multidistrict litigation 
transferee court to conduct a liability trial, and instead, 
allowed the court to also determine compensatory and punitive 
damages. The absence of the presumption that compensatory 
damages would be remanded to the transferor court, it was 
asserted, would work an unfairness on victims in personal 
injury cases by making it more difficult for them to prove the 
damages for which they are seeking to be compensated. Many 
contended that the difficulty and added expense incurred by 
plaintiffs and their witnesses by having to testify in the 
transferee as opposed to the original local court posed an 
unfair burden.
    As a result of discussions between the minority and 
majority, Rep. Berman successfully offered a bipartisan 
amendment to section 2 of the bill addressing this concern at 
the Full Committee markup, which was included this year in the 
original language of the bill. The provision provides that to 
the extent a case is tried outside of the transferor forum, it 
would be solely for the purpose of a consolidated trial on 
liability, and if appropriate, punitive damages, and that the 
case must be remanded to the transferor court for the purposes 
of trial on compensatory damages, unless the court to which the 
action has been transferred for trial purposes also finds, for 
the convenience of the parties and witnesses and in the 
interests of justice, that the action should be retained for 
the determination of compensatory damages.
    We support this section in order to achieve the worthwhile 
objective of overturning the Lexecon decision for reasons of 
judicial efficiency.
Section 3--Minimal Diversity for Single Accidents Involving 25 People
    Section 3 of H.R. 860 expands federal court jurisdiction 
over civil actions arising out of a single accident that 
results in the death or injury of 25 or more persons, if the 
damages exceed $150,000 perclaim and minimal diversity of 
citizenship exists.\3\ A U.S. District Court, however, may not hear any 
case in which a ``substantial majority'' of plaintiffs and the 
``primary'' defendants are all citizens of the same state and in which 
the claims asserted are governed ``primarily'' by the laws of that same 
state. Section 3 also requires the district court to notify the 
Multidistrict Litigation Panel of the pendency of the action so that 
the Panel may assist in consolidating the lawsuits in a single district 
court. Additionally, section 3 establishes new federal procedures in 
this narrowly defined category of cases for the selection of venue, 
service of process and issuance of subpoenas. It is our understanding 
that, in effect, section 3 would only apply to a very narrowly defined 
category of cases, such as, plane, train, bus, boat accidents and 
environmental spills, many of which may already be brought in federal 
court. However, it would not apply to mass tort injuries that involve 
the same injury over and over again such as asbestos and breast 
implants.
---------------------------------------------------------------------------
    \3\ Under the bill, minimal diversity exists between adverse 
parties if any party is a citizen of a state and any adverse party is 
(1) a citizen of another state, (2) a citizen/subject of a foreign 
state, or (3) a foreign state.
---------------------------------------------------------------------------
    During the Subcommittee hearing last Congress, two broad 
concerns were raised regarding section 3 of the bill: (1) that 
section 3 is an incursion on the state courts' traditional 
jurisdiction--state courts are more than competent to handle 
personal-injury and wrongful death cases and (2) that section 3 
expands the jurisdiction of the already overloaded district 
courts which will result in victims having far slower access to 
justice.
    We share these concerns. We generally oppose having federal 
courts decide state tort issues where complete diversity is not 
present, and disfavor the expansion of the jurisdiction of the 
already-overloaded federal district courts. But we also believe 
that in the narrow circumstance of single accident injuries 
with multiple parties from different states, there may be 
legitimate reasons to consolidate cases concerning the same 
accident in one federal forum. Litigating the same liability 
question several times over in separate lawsuits may waste 
judicial resources and may be costly to both plaintiffs and 
defendants. We believe the consolidation of these cases in one 
federal forum could prove to be beneficial in reducing delays, 
litigation costs, and drains on court resources. Section 3 
would only expand federal court jurisdiction in a narrow class 
of actions with the objective of judicial efficiency. It is for 
this reasonable purpose, and in this narrow category of cases, 
that we are willing to support this legislation.
    In this respect, H.R. 860 can very easily be distinguished 
from the broader class action reform proposal which we 
unequivocally opposed during the 106th Congress.\4\ Unlike H.R. 
860, the class action bill requires only minimal diversity for 
all civil actions brought as class actions in federal court, 
regardless of the individual amounts in controversy, the number 
of separate incidents or injuries that may give rise to a class 
action, or the state-based nature of the claim. Rather than 
providing a reasonable, limited modification to diversity 
jurisdiction, the class action bill represents a radical 
rewrite of the class action rules and would ban most forms of 
state class actions. Thus, it would have a far more damaging 
impact on the federal courts than H.R. 860. It is imperative 
for us to note here that while the Judicial Conference 
supported the bill last year, they too opposed the broader 
class action bill, recognizing, among other things, its 
detrimental impact on the workload of the federal judiciary and 
traditional state court prerogatives.\5\

    \4\ See H.R. 1875, ``The Interstate Class Action Jurisdiction Act 
of 1999,'' 106th Cong. (1999).
    \5\ See Letter from Secretary Leonidas Ralph Mecham, Judicial 
Conference of the United States to Henry J. Hyde, Chairman, U.S. House 
Judiciary Committee (July 26, 1999) (on file with the Judiciary 
Committee Minority Staff) [hereinafter Judicial Conference Letter] and 
Department of Justice Class Action Testimony. The class action bill is 
also opposed by the Conference of State Chief Justices. See Letter from 
President David A. Brock, Conference of Chief Justices to Henry J. 
Hyde, Chairman, U.S. House Judiciary Committee (July 19, 1999) (on file 
with the Judiciary Committee Minority Staff).

                                   John Conyers, Jr.
                                   Howard L. Berman.
                                   Zoe Lofgren.
                                   Sheila Jackson Lee.
                                   William D. Delahunt.
                                   Anthony D. Weiner.

                            Dissenting Views

    I opposed reporting H.R. 860, the ``Multidistrict, 
Multiparty, Multiforum Trial Jurisdiction Act,'' to the full 
House at the March 8, 2001 Judiciary Committee markup because I 
objected to the process under which the bill was considered and 
because I objected to certain substantive provisions of the 
bill.
    I objected to the process because this bill was marked up 
by the full Committee only 2 days after it was introduced and 
received no consideration at the Subcommittee level. Those who 
support the bill contend that the bill did not warrant hearings 
or a Subcommittee markup because the bill was the subject of a 
hearing by the Subcommittee on Courts and Intellectual Property 
in the 106th Congress. However, the version of the bill 
introduced in the 107th Congress has undergone substantial 
changes from its predecessor. At the hearing on this 
legislation during the 106th Congress the Subcommittee heard 
testimony from a witness who expressed serious concerns about 
the bill's expansion of Federal jurisdiction.\1\ I believe a 
hearing should have been held in this Congress to evaluate the 
revised bill and to determine whether the revisions addressed 
the serious federalism issues raised by this bill or made them 
worse. For this reason, I offered a motion at the Committee 
markup to refer this bill back to the Subcommittee for further 
consideration. Unfortunately, the motion was defeated and the 
bill was rushed through Committee.
---------------------------------------------------------------------------
    \1\ See Hearing on H.R. 2112 Before the House Subcommittee on 
Courts and Intellectual Property, 106th Cong. (1999) (statement of 
Brian Wolfman, Staff Attorney, Public Citizen).
---------------------------------------------------------------------------
    I also objected to certain substantive provisions of H.R. 
860 which would expand Federal court jurisdiction for civil 
actions arising out of a single accident \2\ because I believe 
this proposed expansion of Federal jurisdiction is 
inappropriate. The bill's expansion of Federal jurisdiction 
would infringe on the traditional jurisdiction of state courts 
which are better equipped to handle personal-injury and 
wrongful death cases. Expanding Federal jurisdiction would also 
add an additional burden to the Federal courts at a time when 
our Federal courts are already overcrowded and backlogged.\3\ 
The bill's impact on plaintiffs would also be substantial. 
Under the bill an injured victim who chose to file suit in a 
state court could have his case involuntarily removed to a 
Federal court that may be hundreds of miles from his home. 
While this may be justified where diversity jurisdiction 
currently provides access to the Federal court, I see 
absolutely no reason to force a victim into Federal court where 
the defendant resides or has a place of business in the state 
and where the applicable law is state law. While the bill may 
result in increased judicial efficiency for the Federal courts, 
it would do so by encroaching on the jurisdiction of state 
courts and states' rights and would do so at the expense of 
accident victims. I think we have lost sight of the fact that 
the courts are for the convenience of litigants, not judges and 
administrators.
---------------------------------------------------------------------------
    \2\ Section 3 of the bill would create Federal jurisdiction for 
civil actions arising out of a single accident that results in the 
death or injury of 25 or more persons, if the damages exceed $150,000 
per claim and minimal diversity exists. Under the bill minimal 
diversity exists between adverse parties if any party is a citizen of a 
state and any adverse party is (1) a citizen of another state (2) a 
citizen/subject of a foreign state, or (3) a foreign state.
    \3\ See Chief Justice William Rhenquist, An Address to the American 
Law Institute, Rehnquist: Is Federalism Dead? (May 11, 1998), in Legal 
Times (May 18, 1998)(criticizing Congress for enacting legislation 
which brings more and more cases into the Federal court system).
---------------------------------------------------------------------------
    While some may characterize this bill as a ``non-
controversial'' piece of legislation that should be quickly 
moved through the legislative process, I believe we failed to 
properly exercise our responsibility as members of the 
Judiciary Committee by not conducting a more extensive review 
of this bill. Consequently, while I favor some of the 
provisions of the bill I opposed reporting H.R. 860 to the full 
House.
                                                    Melvin L. Watt.

                                  
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