[House Report 109-7]
[From the U.S. Government Publishing Office]



109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                      109-7

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



 
 PROVIDING FOR CONSIDERATION OF S. 5, CLASS ACTION FAIRNESS ACT OF 2005

                                _______
                                

 February 15, 2005.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

   Mr. Gingrey, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 96]

    The Committee on Rules, having had under consideration 
House Resolution 96, by a nonrecord vote, report the same to 
the House with the recommendation that the resolution be 
adopted.

                SUMMARY OF PROVISIONS OF THE RESOLUTION

    The resolution provides for the consideration of S. 5, the 
Class Action Fairness Act of 2005, under a structured rule. The 
rule provides 90 minutes of debate in the House equally divided 
and controlled by the chairman and ranking minority member of 
the Committee on the Judiciary. The rule waives all points of 
order against consideration of the bill.
    The rule makes in order the amendment in the nature of a 
substitute printed in this report, if offered by Representative 
Conyers of Michigan or his designee, which shall be considered 
as read, and which shall be debatable for 40 minutes equally 
divided and controlled by the proponent and an opponent. The 
rule waives all points of order against the amendment in the 
nature of a substitute printed in this report.
    Finally, the rule provides one motion to commit with or 
without instructions.

                   SUMMARY OF AMENDMENT MADE IN ORDER

    (Summary derived from information provided by the amendment 
sponsor.)
    Conyers (MI)/Nadler (NY)/Jackson-Lee (TX): Amendment in the 
Nature of a Substitute.
    Attorney General Carve-Out. Clarifies that cases brought by 
state attorneys general are excluded from the provisions of the 
class action bill and are not forced into federal court.
    Protecting the Integrity of the Courts. Would limit the 
court's ability to seal or make subject to a protective order, 
records unless it is necessary to protect trade confidentiality 
and is consistent with the protection of public health and 
safety or the disclosure of the information is clearly 
outweighed by a specific and substantial interest in 
maintaining the confidentiality of the information.
    Civil Rights Carve-Out. Would carve out State civil rights 
claims in order to make sure that civil rights plaintiffs, 
especially those seeking immediate injunctive relief, can have 
their grievances addressed in a timely manner.
    Wage and Hour Carve-Out. Would carve out State civil rights 
claims to allow wage and hour class action members to have 
their grievances addressed in a timely manner.
    Prohibits Tax Traitor Benefits. Prohibits domestic 
corporations that reincorporate abroad in order to avoid U.S. 
taxes and legal liability from benefitting from the new class 
action rules. Such corporations will retain the citizenship 
they had prior to their reincorporation.
    Exclude Non-Class Action Cases Involving Physical Injuries. 
Removes the mass torts language.
    Federal Court Certification. Prohibits a federal judge from 
denying certification on the basis that more than one state law 
applies. (40 minutes).

                    TEXT OF AMENDMENT MADE IN ORDER

  Strike all after the enacting clause and insert the 
following:

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

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

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

SEC. 2. FINDINGS AND PURPOSES.

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

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

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

                      ``CHAPTER 114--CLASS ACTIONS

``Sec.
``1711. Definitions.
``1712. Coupon settlements.
``1713. Protection against loss by class members.
``1714. Protection against discrimination based on geographic location.
``1715. Notifications to appropriate Federal and State officials.
``1716. Sunshine in court records.

``Sec. 1711. Definitions

  ``In this chapter:
          ``(1) Class.--The term `class' means all of the class 
        members in a class action.
          ``(2) Class action.--The term `class action' means 
        any civil action filed in a district court of the 
        United States under rule 23 of the Federal Rules of 
        Civil Procedure or any civil action that is removed to 
        a district court of the United States that was 
        originally filed under a State statute or rule of 
        judicial procedure authorizing an action to be brought 
        by 1 or more representatives as a class action. The 
        term `class action' does not include any civil action 
        brought by, or on behalf of, any State attorney general 
        or the chief prosecuting or civil attorney of any 
        county or city within a State.
          ``(3) Class counsel.--The term `class counsel' means 
        the persons who serve as the attorneys for the class 
        members in a proposed or certified class action.
          ``(4) Class members.--The term `class members' means 
        the persons (named or unnamed) who fall within the 
        definition of the proposed or certified class in a 
        class action.
          ``(5) Plaintiff class action.--The term `plaintiff 
        class action' means a class action in which class 
        members are plaintiffs.
          ``(6) Proposed settlement.--The term `proposed 
        settlement' means an agreement regarding a class action 
        that is subject to court approval and that, if 
        approved, would be binding on some or all class 
        members.
          ``(7) State.--The term `State' means each of the 
        several States of the United States, the District of 
        Columbia, the Commonwealth of Puerto Rico, the 
        Commonwealth of the Northern Mariana Islands, and any 
        territory or possessions of the United States.
          ``(8) State attorney general.--The term `State 
        attorney general' means the chief legal officer of a 
        State.

``Sec. 1712. Coupon settlements

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

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

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

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

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

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

  ``(a) Definitions.--
          ``(1) Appropriate federal official.--In this section, 
        the term `appropriate Federal official' means--
                  ``(A) the Attorney General of the United 
                States; or
                  ``(B) in any case in which the defendant is a 
                Federal depository institution, a State 
                depository institution, a depository 
                institution holding company, a foreign bank, or 
                a nondepository institution subsidiary of the 
                foregoing (as such terms are defined in section 
                3 of the Federal Deposit Insurance Act (12 
                U.S.C. 1813)), the person who has the primary 
                Federal regulatory or supervisory 
                responsibility with respect to the defendant, 
                if some or all of the matters alleged in the 
                class action are subject to regulation or 
                supervision by that person.
          ``(2) Appropriate state official.--In this section, 
        the term `appropriate State official' means the person 
        in the State who has the primary regulatory or 
        supervisory responsibility with respect to the 
        defendant, or who licenses or otherwise authorizes the 
        defendant to conduct business in the State, if some or 
        all of the matters alleged in the class action are 
        subject to regulation by that person. If there is no 
        primary regulator, supervisor, or licensing authority, 
        or the matters alleged in the class action are not 
        subject to regulation or supervision by that person, 
        then the appropriate State official shall be the State 
        attorney general.
  ``(b) In General.--Not later than 10 days after a proposed 
settlement of a class action is filed in court, each defendant 
that is participating in the proposed settlement shall serve 
upon the appropriate State official of each State in which a 
class member resides and the appropriate Federal official, a 
notice of the proposed settlement consisting of--
          ``(1) a copy of the complaint and any materials filed 
        with the complaint and any amended complaints (except 
        such materials shall not be required to be served if 
        such materials are made electronically available 
        through the Internet and such service includes notice 
        of how to electronically access such material);
          ``(2) notice of any scheduled judicial hearing in the 
        class action;
          ``(3) any proposed or final notification to class 
        members of--
                  ``(A)(i) the members' rights to request 
                exclusion from the class action; or
                  ``(ii) if no right to request exclusion 
                exists, a statement that no such right exists; 
                and
                  ``(B) a proposed settlement of a class 
                action;
          ``(4) any proposed or final class action settlement;
          ``(5) any settlement or other agreement 
        contemporaneously made between class counsel and 
        counsel for the defendants;
          ``(6) any final judgment or notice of dismissal;
          ``(7)(A) if feasible, the names of class members who 
        reside in each State and the estimated proportionate 
        share of the claims of such members to the entire 
        settlement to that State's appropriate State official; 
        or
          ``(B) if the provision of information under 
        subparagraph (A) is not feasible, a reasonable estimate 
        of the number of class members residing in each State 
        and the estimated proportionate share of the claims of 
        such members to the entire settlement; and
          ``(8) any written judicial opinion relating to the 
        materials described under subparagraphs (3) through 
        (6).
  ``(c) Depository Institutions Notification.--
          ``(1) Federal and other depository institutions.--In 
        any case in which the defendant is a Federal depository 
        institution, a depository institution holding company, 
        a foreign bank, or a non-depository institution 
        subsidiary of the foregoing, the notice requirements of 
        this section are satisfied by serving the notice 
        required under subsection (b) upon the person who has 
        the primary Federal regulatory or supervisory 
        responsibility with respect to the defendant, if some 
        or all of the matters alleged in the class action are 
        subject to regulation or supervision by that person.
          ``(2) State depository institutions.--In any case in 
        which the defendant is a State depository institution 
        (as that term is defined in section 3 of the Federal 
        Deposit Insurance Act (12 U.S.C. 1813)), the notice 
        requirements of this section are satisfied by serving 
        the notice required under subsection (b) upon the State 
        bank supervisor (as that term is defined in section 3 
        of the Federal Deposit Insurance Act (12 U.S.C. 1813)) 
        of the State in which the defendant is incorporated or 
        chartered, if some or all of the matters alleged in the 
        class action are subject to regulation or supervision 
        by that person, and upon the appropriate Federal 
        official.
  ``(d) Final Approval.--An order giving final approval of a 
proposed settlement may not be issued earlier than 90 days 
after the later of the dates on which the appropriate Federal 
official and the appropriate State official are served with the 
notice required under subsection (b).
  ``(e) Noncompliance if Notice Not Provided.--
          ``(1) In general.--A class member may refuse to 
        comply with and may choose not to be bound by a 
        settlement agreement or consent decree in a class 
        action if the class member demonstrates that the notice 
        required under subsection (b) has not been provided.
          ``(2) Limitation.--A class member may not refuse to 
        comply with or to be bound by a settlement agreement or 
        consent decree under paragraph (1) if the notice 
        required under subsection (b) was directed to the 
        appropriate Federal official and to either the State 
        attorney general or the person that has primary 
        regulatory, supervisory, or licensing authority over 
        the defendant.
          ``(3) Application of rights.--The rights created by 
        this subsection shall apply only to class members or 
        any person acting on a class member's behalf, and shall 
        not be construed to limit any other rights affecting a 
        class member's participation in the settlement.
  ``(f) Rule of Construction.--Nothing in this section shall be 
construed to expand the authority of, or impose any 
obligations, duties, or responsibilities upon, Federal or State 
officials.

``Sec. 1716. Sunshine in court records

  ``No order, opinion, or record of the court in the 
adjudication of a class action, including a record obtained 
through discovery, whether or not formally filed with the 
court, may be sealed or subjected to a protective order unless 
the court makes a finding of fact--
          ``(1) that the sealing or protective order is 
        narrowly tailored, consistent with the protection of 
        public health and safety, and is in the public 
        interest; and
          ``(2) if the action by the court would prevent the 
        disclosure of information, that disclosing the 
        information is clearly outweighed by a specific and 
        substantial interest in maintaining the confidentiality 
        of such information.''.
  (b) Technical and Conforming Amendment.--The table of 
chapters for part V is amended by inserting after the item 
relating to chapter 113 the following:

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

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

  (a) Application of Federal Diversity Jurisdiction.--Section 
1332 is amended--
          (1) by redesignating subsection (d) as subsection 
        (e), and amending the subsection to read as follows:
  ``(e) As used in this section--
          ``(1) the term `State' means each of the several 
        States of the United States, the District of Columbia, 
        the Commonwealth of Puerto Rico, the Commonwealth of 
        the Northern Mariana Islands, and any territory or 
        possessions of the United States; and
          ``(2) the term `State attorney general' means the 
        chief legal officer of a State.''; and
          (2) by inserting after subsection (c) the following:
  ``(d)(1) In this subsection--
          ``(A) the term `class' means all of the class members 
        in a class action;
          ``(B) the term `class action'--
                  ``(i) means any civil action filed under rule 
                23 of the Federal Rules of Civil Procedure or 
                similar State statute or rule of judicial 
                procedure authorizing an action to be brought 
                by 1 or more representative persons as a class 
                action; and
                  ``(ii) does not include--
                          ``(I) any civil action brought by, or 
                        on behalf of, any State attorney 
                        general or the chief prosecuting or 
                        civil attorney of any county or city 
                        within a State;
                          ``(II) any class action brought under 
                        a State or local law prohibiting 
                        discrimination on the basis of race, 
                        color religion, sex, national origin, 
                        age, disability, or other 
                        classification specified in that law; 
                        or
                          ``(III) any class action or 
                        collective action brought to obtain 
                        relief under a State or local law for 
                        failure to pay the minimum wage, 
                        overtime pay, or wages for all time 
                        worked, failure to provide rest or meal 
                        breaks, or unlawful use of child labor;
          ``(C) the term `class certification order' means an 
        order issued by a court approving the treatment of some 
        or all aspects of a civil action as a class action; and
          ``(D) the term `class members' means the persons 
        (named or unnamed) who fall within the definition of 
        the proposed or certified class in a class action.
  ``(2) The district courts shall have original jurisdiction of 
any civil action in which the matter in controversy exceeds the 
sum or value of $5,000,000, exclusive of interest and costs, 
and is a class action in which--
          ``(A) any member of a class of plaintiffs is a 
        citizen of a State different from any defendant;
          ``(B) any member of a class of plaintiffs is a 
        foreign state or a citizen or subject of a foreign 
        state and any defendant is a citizen of a State; or
          ``(C) any member of a class of plaintiffs is a 
        citizen of a State and any defendant is a foreign state 
        or a citizen or subject of a foreign state.
  ``(3) A district court may, in the interests of justice and 
looking at the totality of the circumstances, decline to 
exercise jurisdiction under paragraph (2) over a class action 
in which greater than one-third but less than two-thirds of the 
members of all proposed plaintiff classes in the aggregate and 
the primary defendants are citizens of the State in which the 
action was originally filed based on consideration of--
          ``(A) whether the claims asserted involve matters of 
        national or interstate interest;
          ``(B) whether the claims asserted will be governed by 
        laws of the State in which the action was originally 
        filed or by the laws of other States;
          ``(C) whether the class action has been pleaded in a 
        manner that seeks to avoid Federal jurisdiction;
          ``(D) whether the action was brought in a forum with 
        a distinct nexus with the class members, the alleged 
        harm, or the defendants;
          ``(E) whether the number of citizens of the State in 
        which the action was originally filed in all proposed 
        plaintiff classes in the aggregate is substantially 
        larger than the number of citizens from any other 
        State, and the citizenship of the other members of the 
        proposed class is dispersed among a substantial number 
        of States; and
          ``(F) whether, during the 3-year period preceding the 
        filing of that class action, 1 or more other class 
        actions asserting the same or similar claims on behalf 
        of the same or other persons have been filed.
  ``(4) A district court shall decline to exercise jurisdiction 
under paragraph (2)--
          ``(A)(i) over a class action in which--
                  ``(I) greater than two-thirds of the members 
                of all proposed plaintiff classes in the 
                aggregate are citizens of the State in which 
                the action was originally filed;
                  ``(II) at least 1 defendant is a defendant--
                          ``(aa) from whom significant relief 
                        is sought by members of the plaintiff 
                        class;
                          ``(bb) whose alleged conduct forms a 
                        significant basis for the claims 
                        asserted by the proposed plaintiff 
                        class; and
                          ``(cc) who is a citizen of the State 
                        in which the action was originally 
                        filed; and
                  ``(III) principal injuries resulting from the 
                alleged conduct or any related conduct of each 
                defendant were incurred in the State in which 
                the action was originally filed; and
          ``(ii) during the 3-year period preceding the filing 
        of that class action, no other class action has been 
        filed asserting the same or similar factual allegations 
        against any of the defendants on behalf of the same or 
        other persons; or
          ``(B) two-thirds or more of the members of all 
        proposed plaintiff classes in the aggregate, and the 
        primary defendants, are citizens of the State in which 
        the action was originally filed.
  ``(5) Paragraphs (2) through (4) shall not apply to any class 
action in which--
          ``(A) the primary defendants are States, State 
        officials, or other governmental entities against whom 
        the district court may be foreclosed from ordering 
        relief; or
          ``(B) the number of members of all proposed plaintiff 
        classes in the aggregate is less than 100.
  ``(6) In any class action, the claims of the individual class 
members shall be aggregated to determine whether the matter in 
controversy exceeds the sum or value of $5,000,000, exclusive 
of interest and costs.
  ``(7) Citizenship of the members of the proposed plaintiff 
classes shall be determined for purposes of paragraphs (2) 
through (6) as of the date of filing of the complaint or 
amended complaint, or, if the case stated by the initial 
pleading is not subject to Federal jurisdiction, as of the date 
of service by plaintiffs of an amended pleading, motion, or 
other paper, indicating the existence of Federal jurisdiction.
  ``(8) This subsection shall apply to any class action before 
or after the entry of a class certification order by the court 
with respect to that action.
  ``(9) Paragraph (2) shall not apply to any class action that 
solely involves a claim--
          ``(A) concerning a covered security as defined under 
        16(f)(3) of the Securities Act of 1933 (15 U.S.C. 
        78p(f)(3)) and section 28(f)(5)(E) of the Securities 
        Exchange Act of 1934 (15 U.S.C. 78bb(f)(5)(E));
          ``(B) that relates to the internal affairs or 
        governance of a corporation or other form of business 
        enterprise and that arises under or by virtue of the 
        laws of the State in which such corporation or business 
        enterprise is incorporated or organized; or
          ``(C) that relates to the rights, duties (including 
        fiduciary duties), and obligations relating to or 
        created by or pursuant to any security (as defined 
        under section 2(a)(1) of the Securities Act of 1933 (15 
        U.S.C. 77b(a)(1)) and the regulations issued 
        thereunder).
  ``(10) For purposes of this subsection and section 1453, an 
unincorporated association shall be deemed to be a citizen of 
the State where it has its principal place of business and the 
State under whose laws it is organized.
  ``(11)(A) For purposes of this subsection and section 1453 of 
this title, a foreign corporation which acquires a domestic 
corporation in a corporate repatriation transaction shall be 
treated as being incorporated in the State under whose laws the 
acquired domestic corporation was organized.
  ``(B) In this paragraph, the term `corporate repatriation 
transaction' means any transaction in which--
          ``(i) a foreign corporation acquires substantially 
        all of the properties held by a domestic corporation;
          ``(ii) shareholders of the domestic corporation, upon 
        such acquisition, are the beneficial owners of 
        securities in the foreign corporation that are entitled 
        to 50 percent or more of the votes on any issue 
        requiring shareholder approval; and
          ``(iii) the foreign corporation does not have 
        substantial business activities (when compared to the 
        total business activities of the corporate affiliated 
        group) in the foreign country in which the foreign 
        corporation is organized.''.
  (b) Conforming Amendments.--
          (1) Section 1335(a)(1) is amended by inserting 
        ``subsection (a) or (d) of'' before ``section 1332''.
          (2) Section 1603(b)(3) is amended by striking ``(d)'' 
        and inserting ``(e)''.

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

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

``Sec. 1453. Removal of class actions

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

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

  (c) Choice of State Law in Interstate Class.--Notwithstanding 
any other choice of law rule, in any class action over which 
the United States district courts have jurisdiction and that 
asserts claims arising under State law concerning products or 
services marketed, sold, or provided in more than 1 State on 
behalf of a proposed class which includes citizens of more than 
1 such State, as to each such claim and any defense to such 
claim, the district court shall not deny class certification, 
in whole or in part, on the ground that the law of more than 1 
State will be applied.

SEC. 6. REPORT ON CLASS ACTION SETTLEMENTS.

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

SEC. 7. ENACTMENT OF JUDICIAL CONFERENCE RECOMMENDATIONS.

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

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

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

SEC. 9. EFFECTIVE DATE.

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

                                  
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