Class Action Reform Wins Senate Approval

Legislation to reform the class action litigation system finally won passage in the Senate late last week, after failing in the chamber several times in the past few years.

At press time, it was expected that the measure, known as S. 5, would be moved swiftly through the House, and that it would almost certainly be signed into law. The measure would give federal courts sole jurisdiction over large, multistate class actions and increase judicial oversight of settlement agreements.

House Judiciary Committee Chairman F. James Sensenbrenner, R-Wisc., and Majority Leader Tom Delay, R-Texas, said late last week that the bill passed by the Senate would be brought to the House floor and could be presented to President Bush by the end of the week. (Go to NUs Online News Service at www.NationalUnderwriter.com for updates.)

The Senate approved the bill by a vote of 72-26 after two days of debate in which several major amendments were rejected. Among those amendments rejected was a proposal by Sen. Edward Kennedy, D-Mass., to exclude civil rights class actions and cases involving wage laborers from the bill. Another rejected amendment, proposed by Sen. Russ Feingold, D-Wisc., would have required federal courts to rule on motions seeking to remand a case to state court within 180 days.

During the debate, opponents decried that the bill would limit the rights of those seeking justice, and noted that a deal between some Democrats and Republicans meant the outcome of the eventual vote for passage was never in doubt.

“Anybody who's been watching the debate can see that, apparently, the fix was in,” said Sen. Patrick Leahy, D-Vt.

Sen. Leahy had said the state court system has been among the few options for regular people, without any political or financial influence, to seek justice, and that, “now we're going to close that door.”

Proponents of the bill, however, argued that the bill would simply restore a degree of fairness to the system by keeping attorneys from “forum shopping” for plaintiff-friendly courts. Proponents said the bill also would prevent abusive settlements, involving cases in which class members received coupons as attorneys were given millions in fees, or in which settlement funds were unevenly divided among class members.

“They may end up in state court rather than federal court, but no citizen will lose his or her right to bring an action in court,” said Majority Leader Bill Frist, R-Tenn.

Sen. Thomas Carper, D-Del., said that the bipartisan process to build support for the bill could be a template for other issues, including energy policy and asbestos litigation reform. This sentiment was shared by the insurance industry.

“The Class Action Fairness Act is a model of legislative compromise,” said Carl Parks, Property Casualty Insurers Association of America Senior Vice President of Government Affairs. “It should serve as a framework for future reforms and give hope to businesses and consumers across the country who have been saddled by the extraordinary costs of our American tort system.”

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, February 11, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.