Class Action Fairness Act of 2003-Motion to Proceed

CLASS ACTION FAIRNESS ACT OF 2003—MOTION TO PROCEED

Mr. KYL. Mr. President, I rise today to address the Class Action Fairness Act of 2003. This legislation first was introduced and reported by a Judiciary subcommittee 5 years ago, during the 105th Congress. It is time to enact this legislation into law.

There is no need to recount the parade of horribles that makes the need for this legislation manifest. Suffice to say that even the liberal Washington Post has noted that "national class actions can be filed just about anywhere and are disproportionately brought in a handful of State courts whose judges get elected with lawyers' money." And as one study has noted, "[v]irtually every sector of the United States economy is on trial in Madison County [Illinois], Palm Beach County [Florida], and Jefferson County [Texas]."

The problem has grown much worse in recent years. Over the course of the 1990s, class-action filings increased by over 1,300 percent. What this suggests is that class-action litigation has become unhinged from actual events. These lawsuits are not being filed because businesses are injuring consumers 13 times more frequently than they did at the beginning of the last decade. Rather, these numbers reflect a breakdown in the litigation system itself. That system no longer bars frivolous suits that are brought purely for attorneys' own gain.

I would like to address several points about this year's bill. First, there has been much argument from the opponents of this bill that its sponsors are doing something sneaky by employing rule XIV to bring a modified bill to the floor. The bill that we currently are considering includes a restored, modified version of the original bill's provision governing mass actions—which provision had been stripped out of the bill by a last-minute amendment in the Judiciary Committee. Bill opponents seem to suggest that whatever damage was done by that amendment they secured fair and square, and that bill supporters have no business undoing the damage on the Senate floor.

It is true that the committee amendment stripping the mass-action provision damaged the bill. The State of Mississippi, among others, entertains actions that are class actions in all but name—these suits technically are not class actions, but they function as their equivalent. And as any lawyer who has observed patterns of class-action litigation can tell you, a reform bill that did not apply in Mississippi would hardly be much of a reform at all.

If anything is improper about the way that the mass-action provision has been handled, it is the way that the original provision was stripped from the bill in the Judiciary Committee. I know, because I was there when it happened and saw it all. The stripping amendment was not circulated to Judiciary members in advance of the Committee's executive session—in contravention of the Committee's own self-imposed rules governing additional amendments to the bill. Most of us had not even had an opportunity to read the amendment. Chairman HATCH already had shown great indulgence toward bill opponents by allowing an additional day's markup of the bill, when he could have insisted on a final vote earlier. An additional amendment nevertheless was allowed, and was adopted once it was clear that it had the support of swing voters on the Committee—as well as the support of all Members who are hostile to the bill. The rest of us who support the underlying bill were forced to accept the amendment, without an opportunity to even learn what it would do.

By contrast to the way that the original amendment was handled, everyone has been afforded ample notice of the modified mass-action provision included in the current bill. This modified provision was negotiated among the bipartisan group of supporters of the original bill—including those whose support led to the adoption of the original amendment. When a compromise finally was reached, it was announced during an executive session of the Judiciary Committee and reported in the newspapers. And if that was not adequate notice, Chairman HATCH provided a detailed description of the modified provision in the committee report for this bill, which was published last July. Yet to hear bill opponents tell the story, you would think that the modified proposal had been hidden from all members until this bill was introduced. This is simply absurd—a stealth amendment is not one that is announced months beforehand in a committee report.

I would also note today—speaking about the bill more generally—that it is hardly a radical reform. As two Democratic cosponsors of the bill recently emphasized in a letter to all Senators, the current bill "does not contain any tort reform whatsoever. There are no caps on damages or attorney's fees, no limits on joint and several liability, and no new pleading requirements." These Senators also point out that as a result of a Democratic amendment added to the bill in the Judiciary Committee, "federal jurisdiction does not extend to cases in which the claims involved less than $5 million or in which two-thirds or more of the plaintiffs are from the same state as the defendant."

This last provision substantially dilutes the bill. The plaintiffs' lawyers who routinely file these class actions are among the wiliest members of the profession—I expect that they will have little difficulty structuring their plaintiff class such that more than two-thirds of plaintiffs are from the state in which the principal defendants are located and the action is filed. If this loophole is exploited to the extent that I fear that it will be, the principal effect of today's bill will be not to remove cases to federal court, but rather to keep them in the courts of the state where the defendants and most plaintiffs are located. Of course, such a reform would not be without its advantages. At the very least, those states that tolerate predatory class actions in their courts would be forced to bear the consequences of such litigation, because the suits would be directed at local businesses. This change might yet alleviate the collective-action problems and indulgence of regional prejudice that underlie much of the current class-action crisis.

Finally, in closing I would remark on the strange new federalism that this bill appears to have evoked in some of its opponents. In a statement of additional views in the committee report for this bill, all seven Judiciary Committee members who voted against the bill have denounced it as a violation of the high principle of States' rights. They describe the bill as raising "serious constitutional issues" by "undermin[ing] James Madison's vision of a Federal government 'limited to certain enumerated objects, which concern all the members of the republic.' " These opponents even invoke the U.S. Supreme Court's decision in United States v. Morrison (2000), which struck down as beyond Congress's power a Federal law regulating violent crime that is unrelated to commercial activity. As bill opponents remind us, Morrison requires Congress to respect the distinction between what is truly national and what is truly local.

What may strike the casual observer as unusual is that the very members who invoke Morrison against this bill recently have denounced that very decision—and any judicial nominee suspected of harboring views in line with the Supreme Court majority in that case—in the course of the judicial-confirmation process. On this very day, the Judiciary Committee will hold a hearing for one of the President's nominees to the U.S. Court of Appeals for the District of Columbia. I would not be surprised to learn that the same Judiciary Committee members denouncing this bill on the Senate floor today will then proceed down the Capitol elevators, take the shuttle to the large Judiciary hearing room, and denounce the President's nominee as a secret supporter of United States v. Morrison.

To conclude, I would simply note that it is beyond argument that the interstate commerce clause and Article III's authorization for diversity jurisdiction were included in the Constitution in order to empower Congress to protect both interstate commerce and out-of-State defendants from local prejudice. Nothing could be a more appropriate application of these congressional powers than the legislation that we are considering today. Yet to listen to this bill's opponents, one might come away with the impression that the interstate commerce clause was designed to allow Congress to regulate all violent crime, and any other subject that touches Congress's fancy and that happens to poll well—any subject, that is, except for interstate commerce. The opponents of this bill can play at either John Paul Stevens or John Calhoun. They cannot play at both—or at the very least, they ought not do so on the same day.

I look forward to Congress's enactment of the important legislation before us today.