[House Report 108-416]
[From the U.S. Government Publishing Office]



108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     108-416

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



 
            MULTIDISTRICT LITIGATION RESTORATION ACT OF 2003

                                _______
                                

 February 10, 2004.--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

                        [To accompany H.R. 1768]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 1768) 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 for other 
purposes, having considered the same, reports favorably thereon 
with an amendment and recommends that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     1
Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     3
Hearings.........................................................     5
Committee Consideration..........................................     5
Vote of the Committee............................................     5
Committee Oversight Findings.....................................     6
New Budget Authority and Tax Expenditures........................     6
Congressional Budget Office Cost Estimate........................     6
Performance Goals and Objectives.................................     7
Constitutional Authority Statement...............................     7
Section-by-Section Analysis and Discussion.......................     7
Changes in Existing Law Made by the Bill, as Reported............     8
Markup Transcript................................................    10

                             The Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Multidistrict Litigation Restoration 
Act of 2004''.

SEC. 2. MULTIDISTRICT LITIGATION.

    Section 1407 of title 28, United States Code, is amended--
            (1) in the third sentence of subsection (a), by inserting 
        ``or ordered transferred to the transferee or other district 
        under subsection (i)'' after ``terminated''; and
            (2) by adding at the end the following new subsection:
    ``(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.''.

SEC. 3. TECHNICAL AMENDMENT TO MULTIPARTY, MULTIFORM TRIAL JURISDICTION 
                    ACT OF 2002.

    Section 1407 of title 28, United States Code, as amended by section 
2 of this Act, is further amended by adding at the end the following:
    ``(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.''.

SEC. 4. EFFECTIVE DATE.

    (a) Section 2.-- The amendments made by section 2 shall apply to 
any civil action pending on or brought on or after the date of the 
enactment of this Act.
    (b) Section 3.--The amendment made by section 3 shall be effective 
as if enacted in section 11020(b) of the Multiparty, Multiforum Trial 
Jurisdiction Act of 2002 (Public Law 107-273; 116 Stat. 1826 et seq.).

                          Purpose and Summary

    H.R. 1768 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. 
It also would function as a technical fix to a recently-enacted 
``disaster'' litigation statute from the 107th Congress. The 
bill would save litigants time and money, but would not 
interfere with jury verdicts or compensation rates for 
attorneys.
---------------------------------------------------------------------------
    \1\ 28 U.S.C. Sec. 1407.
---------------------------------------------------------------------------

                Background and Need for the Legislation

        SECTION 2: MULTIDISTRICT LITIGATION/THE LEXECON DECISION

    H.R. 1768 would reverse the effects of a 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., 523 
U.S.26 (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 positioned to adjudicate 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 
general venue statute 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 
Administrative Office of the U.S. Courts and 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 that could compel all parties to settle when 
appropriate.
    The Lexecon decision altered the Sec. 1407 landscape. 
Lexecon was a 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 in 
the original case, which the MDLP transferred to the District 
of Arizona. Before the pretrial proceedings were concluded, 
Lexecon reached a resolution with the plaintiffs in the 
original action, and the claims against it 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\
---------------------------------------------------------------------------
    \3\ 102 F. 3rd 1524 (9th Cir. 1996).
---------------------------------------------------------------------------
    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 back 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 that existed before Lexecon.
---------------------------------------------------------------------------
    \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 settle complex Federal litigation.

SECTION 3: TECHNICAL AMENDMENTS TO MULTIPARTY, MULTIFORUM JURISDICTION 
               OF DISTRICT COURTS/``DISASTER'' LITIGATION

    The legislative history of section 3 of H.R. 1768 is 
intertwined with that of section 3 of H.R. 860 from the 107th 
Congress.
    As passed by the House on March 14, 2001, H.R. 860, the 
``Multidistrict, Multiparty, Multiforum Trial Jurisdiction Act 
of 2001,'' contained the following core provisions:
    (1) Section 2 (Lexecon). Section 2 of the bill would have 
enacted a ``straight'' Lexecon fix identical to that of H.R. 
1768.
    (2) Section 3 (``disaster'' litigation). Section 3 of H.R. 
860 conferred original jurisdiction on U.S. district courts to 
adjudicate any civil action arising out of a single accident in 
which at least 25 persons are either killed or injured. Damages 
for each person must exceed $150,000, and minimal diversity 
rules apply (i.e., jurisdiction will lie if any one plaintiff 
and any one defendant are from different states), with one 
exception: the ``substantial majority'' of all plaintiffs and 
the ``primary'' defendants are citizens of the same state, and 
the claims will be ``primarily'' governed by the laws of that 
state (i.e., state courts would hear these ``exception'' 
cases). If the base requirements of Section 3 are otherwise 
satisfied, the court may determine liability and punitive 
damages, but would remand to state courts for determination of 
compensatory damages.\6\
---------------------------------------------------------------------------
    \6\ See H. Rept. No. 106-276, 106th Cong., 1st Sess. (1999) and H. 
Rept. No. 107-14, 107th Cong., 1st Sess. (2001) for a detailed 
explanation of why ``disaster'' litigation redress was needed.
---------------------------------------------------------------------------
    The Senate Committee on the Judiciary took no action on 
H.R. 860, but the matter was resurrected during House-Senate 
conference deliberations on what became the ``21st Century 
Department of Justice Appropriations Authorization Act.'' \7\ 
Pursuant to negotiations, the conferees agreed to take ``half'' 
of H.R. 860--section 3, or the ``disaster'' litigation portion. 
It is codified as section 11020 of the Department of Justice 
authorization statute. In addition, one of the threshold 
criteria triggering its application was changed in conference. 
Specifically, and in addition to the other criteria, a U.S. 
district court may only retain jurisdiction over such cases if 
at least 75 persons (not 25) have been killed or injured.
---------------------------------------------------------------------------
    \7\ H.R. 2215, Pub. L. No. 107-273.
---------------------------------------------------------------------------
    The Committee believes that a straight Lexecon fix is 
meritorious in its own right, promoting as it does judicial 
efficiency. But there is another problem in light of the 
legislative history of H.R. 860.
    The disaster litigation portion of H.R. 860 now set forth 
in the Department of Justice authorization statute contemplates 
that the Lexecon problem is solved. In other words, the new 
disaster litigation law only creates original jurisdiction for 
a U.S. district court to accept these cases and qualify as a 
transferee court under the multidistrict litigation statute. 
But the transferee court still cannot retain the consolidated 
cases for determination of liability and punitive damages, 
which effectively guts the statute. In this sense, then, the 
Lexecon fix--its freestanding merits aside--also functions as a 
technical correction to the recently-enacted disaster 
litigation measure.

                                Hearings

    There were no hearings on H.R. 1768 in the Committee on the 
Judiciary.

                        Committee Consideration

    On July 22, 2003, the Subcommittee on Courts, the Internet, 
and Intellectual Property met in open session and ordered 
favorably reported the bill H.R. 1768 by voice vote, a quorum 
being present. On January 28, 2004, the Committee met in open 
session and ordered favorably reported the bill H.R. 1768 with 
an amendment by voice vote, a quorum being present.

                         Vote of the Committee

    In compliance with clause 3(b) of Rule XIII of the Rules of 
the House of Representatives, the Committee notes that there 
were no recorded votes during consideration of H.R. 1768.

                      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.

               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. 1768, 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, February 9, 2004.
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. 1768, the 
``Multidistrict Litigation Restoration Act of 2003.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Lanette J. 
Walker, who can be reached at 226-2860.
            Sincerely,
                                       Douglas Holtz-Eakin.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member
H.R. 1768--Multidistrict Litigation Restoration Act of 2003.
    CBO estimates that implementing H.R. 1768 would have no 
significant impact on the Federal budget and would not affect 
direct spending or receipts. H.R. 1768 contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act and would have no significant 
effects on the budgets of State, local, or tribal governments.
    Enacting H.R. 1768 would remove existing impediments to the 
consolidation of certain lawsuits within the Federal judicial 
system. The bill would permit a Federal judge to consolidate 
such cases for trial on the common issues of liability and 
punitive damages if those cases were consolidated for pretrial 
proceedings. The bill also would allow Federal judges to 
determine compensatory damages in such consolidated cases under 
certain conditions. 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 must now be remanded for trial 
back to the judicial district where it originated.
    CBO expects that enacting this bill would result in a more 
efficient use of Federal judicial resources. Any savings 
realized by the Federal court system would be negligible, CBO 
estimates, 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 
implementing H.R. 1768 would result in no significant impact on 
the Federal budget.
    The CBO staff contact for this estimate is Lanette J. 
Walker, who can be reached at 226-2860. This estimate was 
approved by Robert A. Sunshine, Assistant Director for Budget 
Analysis.

                    Performance Goals and Objectives

    H.R. 1768 does not authorize funding. Therefore, clause 
3(c)(4) of Rule XIII of the Rules of the House of 
Representatives is inapplicable.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of Rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8 and article III, 
section 1, of the Constitution.

               Section-by-Section Analysis and Discussion

    Section 1. Short Title. The Act may be cited as the 
``Multidistrict Litigation Restoration Act of 2003.'' The 
Committee adopted a technical amendment changing the date to 
2004.
    Section 2. Multidistrict Litigation. Section 2 affirms the 
authority of a transferee court to retain jurisdiction under 
the general multidistrict litigation statute over district and 
state actions initially referred to it for trial purposes, ``in 
the interest of justice and for the convenience of the parties 
and witnesses.'' Similarly, Section 2 also specifies that a 
transferee court which retains jurisdiction over referred 
actions for trial may only make determinations regarding 
compensatory damages if it is convenient to the parties and 
witnesses and promotes the interest of justice.
    Section 3. Technical Amendments to Multiparty, Multiforum 
Trial Jurisdiction Act of 2002. Section 3 clarifies that 
transferred actions brought under the disaster litigation 
statute (enacted as part of the ``21st Century Department of 
Justice Appropriations Authorization Act'') may be retained by 
the transferee court for determinations of liability and 
punitive damages. The determination of non-punitive (i.e., 
compensatory) damages may be retained by the transferee court 
only if it is convenient to the parties and witnesses and 
promotes the interest of justice.
    At the Committee's markup, Chairman Sensenbrenner offered a 
perfecting amendment. H.R. 1768 as originally drafted changed 
one of the threshold criteria for the now-codified disaster 
litigation provision to take effect. Under current law, at 
least 75 persons must be killed in an accident to trigger the 
statute's application. H.R. 1768, as introduced, lowered the 
number to 25.
    The Sensenbrenner amendment, which passed by voice vote, 
simply makes the disaster litigation references in section 3 of 
H.R. 1768 compatible with the statute. The threshold will be at 
least 75 persons--not 25.
    Section 3 also prescribes the terms by which a 
determination governing liability, choice of law, and punitive 
damages may be appealed.
    Section 4. Effective Date. H.R. 1768 applies two effective 
dates to different provisions of the bill.
    The provisions of Section 2 will apply to any civil action 
pending on or brought on or after the date of the enactment of 
H.R. 1768.
    Section 3 applies to ``disaster'' cases that are addressed 
by section 11020 of the Department of Justice authorization 
statute from the 107th Congress. The provision is therefore 
deemed to take effect as though it were a part of section 
11020. This means that Section 3 of the bill applies to any 
relevant civil action if the accident giving rise to the cause 
of action occurred on or after the 90th day after the date of 
the enactment of the ``21st Century Department of Justice 
Appropriations Authorization Act,'' which was November 2, 2002.

         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 (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

              SECTION 1407 OF TITLE 28, UNITED STATES CODE

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.

                           Markup Transcript



                            BUSINESS MEETING

                      WEDNESDAY, JANUARY 28, 2004

                  House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:04 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner, Jr. [Chairman of the Committee] presiding.
    [Intervening business.]
    Chairman Sensenbrenner. The next item on the agenda is the 
adoption of H.R. 1768, the ``Multi-District Litigation 
Restoration Act of 2003.'' The Chair recognizes the gentleman 
from Texas, Mr. Smith, the Chairman of the Subcommittee on 
Courts, the Internet, and Intellectual Property.
    Mr. Smith. Thank you, Mr. Chairman. The Subcommittee on 
Courts, the Internet, and Intellectual Property reports 
favorably the bill H.R. 1768, and moves its favorable 
recommendation to the full House.
    Chairman Sensenbrenner. Without objection, the bill will be 
considered as read, and open for amendment at any point. The 
Chair recognizes himself to explain the bill.
    [The bill, H.R. 1768, follows:]
      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


    Chairman Sensenbrenner. This bill reverses the effect of a 
1998 Supreme Court case, commonly referred to as Lexecon that 
has hampered the Federal court system from adjudicating complex 
multi-district cases that are related by a common-fact 
situation. And the bill also functions as a technical 
correction to a related disaster litigation provision that was 
incorporated in the DOJ Authorization Act late last year.
    A little background is in order. In the last Congress, I 
authored legislation to address this issue and disaster 
litigation problems. This bill was passed by the House under 
suspension, and its operative part relating to this bill would 
reversed the effect of the Lexecon case. And pursuant to the 
Lexecon decision, the transferee court can retain Federal and 
State cases for pretrial matters but not the actual trials 
themselves. The second part of the bill that passed in the last 
Congress was the common disaster provision, and that was taken 
care of in a modified version in the DOJ authorization bill. 
But the DOJ authorization bill did not deal with the Lexecon 
decision at all.
    What this bill does is it enacts a straight Lexecon fix 
before us. The gentleman from California, Mr. Berman, has 
correctly noted that, as introduced, this bill did not raise 
the threshold for the invocation of the disaster litigation 
statute from 25 to 75 victims. When we get to the point for 
amendments, I will offer an amendment, which Mr. Berman has 
agreed to, to make this fix in order.
    Before recognizing the gentleman from California, Mr. 
Berman, I would like to ask unanimous consent to include in the 
record a letter from the judicial conference of the United 
States supporting this legislation. And without objection, the 
letter is included. And the gentleman from California, Mr. 
Berman, is recognized.
    [The material referred to follows:]
    
    
    I am going to speak about H.R. 1768 in the context of the 
amendment that I understand and you have indicated that you 
will offer. And if your amendment is adopted, I intend to 
support the bill, and ask for my colleagues to do the same.
    As you mentioned, this Committee has approved legislation 
containing the provisions of H.R. 1768 in each of the last two 
Congresses, both times, I believe, by voice vote. We have had 
to keep passing legislation like H.R. 1768 because the Senate 
keeps killing it. Some of our colleagues in the other House 
appear to have strong reservations about this legislation. 
While it will not guarantee Senate adoption, I think we can 
increase the chances for enactment this time around by adopting 
the amendment the Chairman will offer. As part of the DOJ 
reauthorization legislation enacted in 2002, Congress created 
minimal diversity jurisdiction in Federal court for certain 
actions involving large-scale single accidents. Among other 
things, that legislation, which had been part of the 
predecessor to H.R. 1768, created Federal diversity 
jurisdiction for such accidents only where at least 75 people 
had been killed or injured. The agreement between the House and 
the Senate conferees to set the bar at 75 people represented a 
significant departure from the House-passed legislation which 
only required a 25-person threshold.
    As introduced, H.R. 1768 would, among other things, upset 
that by instituting a 25-person threshold. Since the Senate had 
insisted on a 75-person threshold as the price for supporting 
enactment of the single accident provisions, there is every 
reason to believe it will object to lowering this threshold. I 
understand that some Members of this Committee would also 
register strong objections to lowering the 75 percent 
threshold.
    So I applaud the Chairman's decision to offer an amendment 
that will leave that threshold in place. As so amended, I 
believe this legislation will be unobjectionable and 
reasonable. It will have the very narrow purpose and effect; it 
would simply overturn the 1998 Lexecon decision of the Supreme 
Court, which held that a multi-district litigation transferred 
to a Federal court for pretrial proceedings cannot be retained 
by that court for trial purposes. In so doing, the Lexecon 
decision upsets decades of practice by the multi-district 
litigation panel and Federal district courts. The Lexecon 
decision also increases the cost and complexity of such multi-
district litigations by requiring courts other than the 
transferee court, which has overseen discovery and other 
pretrial proceedings to conduct the trial.
    This bill overturns the Lexecon decision in a carefully 
calibrated manner. While the bill allows a transferee court to 
retain a case for trial on liability issues and, when 
appropriate, on punitive damages, it creates a presumption that 
the trial of compensatory damages will be transferred--will be 
remanded to the transferor court.
    In so doing, the bill is careful to overturn the Lexecon 
decision without expanding the power previously exercised by 
transferee courts. More importantly, the presumption regarding 
the trial of compensatory damages ensures that plaintiffs will 
not be unduly burdened in pursuit of their claims. The bill's 
narrow breadth should be contrasted with broader and, in my 
mind, more troubling legislation to expand Federal court 
jurisdiction such as the alleged class-action reform. I just 
want to make sure everybody understands that support for H.R. 
1768 does not imply by many of us support for any of the 
various class-action bills. Because the bills are so vastly 
different in scope and effect, my support for this bill 
shouldn't be read as support for a class-action bill. And I ask 
my colleagues to vote for the Chairman's amendment to H.R. 1768 
and then for the bill as amended. I yield back.
    Chairman Sensenbrenner. Without objection, all Members may 
insert opening statements into the record at this point. Are 
there amendments? And the Chair has an amendment at the desk.
    The Clerk. Amendment to H.R. 1768 offer by Chairman 
Sensenbrenner.
    [The amendment follows:]
    
    
    Chairman Sensenbrenner. I ask unanimous consent that the 
amendment be considered as read, and recognize myself briefly.
    This is the amendment that was referred to both in my 
opening remarks and that of the gentleman from California which 
keeps the threshold at 75, and I urge the adoption of the 
amendment. The question is on the adoption of the amendment. 
Those in favor say aye. Those opposed no. The ayes appear to 
have it. The ayes have it. The amendment is agreed to.
    Are there further amendments? If there are no further 
amendments, the Chair notes that a reporting quorum is not 
present. Without objection, the previous question is ordered on 
the motion to report the bill as amended favorably.

           *       *       *       *       *       *       *

    A reporting quorum being present, the question now is on 
the motion to report favorably the bill H.R. 1768 as amended. 
Those in favor will say aye. Opposed, no. The ayes appear to 
have it. The ayes have it. And the motion to report favorably 
as amended is agreed to. Without objection, the short title 
will be amended by striking the number 2003 and including 2004. 
Without objection, this bill will be reported at the House in 
the form of a single amendment in the nature of a substitute 
incorporating the amendment adopted here today.
    Without objection, the Chair is authorized to move to go to 
conference pursuant to House rules. Without objection, the 
staff is directed to make any technical and conforming changes. 
And all Members will be given 2 days as provided by House rules 
in which to submit additional, supplemental, dissenting or 
minority views.

                                
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