CLASS ACTION FAIRNESS ACT OF 2005
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Mr. GRAHAM. Mr. President, in light of the unanimous consent agreement that will bring this bill to closure, there is something I needed to get on the record. I appreciate getting a few minutes. I intend to vote for the bill. Everything the Senator said about the bill is very much true. The Senator from Utah has been working as chairman for years. The legal abuse that the Senator described is real. This bill really brings it to an end.
I found Federal court to be a fair place to try cases. The Senator is also right about the scope of class action lawsuits. They involve many people from different places throughout the country. We have a good balance in the bill of when you can be removed. Every class action is not going to go to Federal court. If the formula is right, and if it has enough national impact, Federal court will be the place to go because of the abuses described.
Those of us who practiced law for a living before we got here understand that the legal system can be reformed. I admire what the Senator from Utah and Senators SPECTER and GRASSLEY have done to bring about reform. But we find ourselves in a unique political dynamic with this bill. Our friends in the House say they want it like we have it. We all agree there are amendments that could make the bill better that we would vote for, but the political moment will not allow that to happen. I regret not offering in committee the amendment I am going to speak about. I learned from my mistakes there.
One of the things we have done by federalizing certain class action lawsuits is we have taken the abuse out of the system, and we have gone to Federal court to have a more fair way of doing business when the formula is right and when there is a national impact to stop home cooking.
The reason the diversity clause exists to begin with is that when you have two people from different States, you want to pick a neutral sight. You do not want to do home cooking. Really, the whole goal of this bill is to get it in a neutral site where people can have their fair day in court. I certainly appreciate that.
But there is another component to class actions that is missing in this bill. Class actions, by their very nature, as Senator Hatch described, involve a lot of people from different places and usually a lot is at stake. Sometimes it is money. Sometimes it is a business practice that does not have a lot of economic effect on one person, but when you add up the economic effect, it is bad for the country. People are cheating. People are nickel and diming folks, getting rich at the expense of the elderly or the infirm, by taking a few dollars here, and it adds up to be a very bad situation for the country. Those type cases lend themselves to class action.
There is another group of cases that could lend themselves to class action, too. That is when products are not designed right. They are consumer cases where consumers throughout the country are affected by the particular behavior in question.
Most States have a procedure, when such cases exist affecting the public at large, where the judge is able to determine what is fair in terms of sealing documents relating to settlements. I had an amendment that was modeled after a South Carolina statute--and over 20 States have a similar statute--that says in cases where the public's interest is present, where there is a consumer case that affects the health or well-being of the community at large, settlements can be sealed, documents can be made secret to protect business interests, but only if the judge determines that the public interest is also being met.
The amendment I proposed would have received well over 50 votes in this body, and I think Senator Hatch would have been friendly to it. But I understand the effect it would have on the bill.
The current chairman, Senator Specter, and I will have a colloquy for the record. This is the point of my seeking recognition.
This bill will leave the Senate and go to the House in a way to solve abuse, but I think it is lacking in consumer protections. The reason I am speaking today is this colloquy for the record with Senator Specter recognizes the value of this amendment and a commitment on his part and the committee's part to allow this amendment to move forward at another date, another time, in another place.
The reason I am agreeing to that is enough of my colleagues who are sympathetic to the amendment do not want to vote for anything that would derail the bill. I very much appreciate that because that is the way politics is, and there is nothing wrong with that as long as we do not lose sight of the goal. And the goal is to have a balance, to take care of abuses, but at the same time protect the public when the public needs to be protected.
What I am trying to say is I will not put my colleagues in a bad spot of having to vote down an amendment with which they agree because I do not have 50 votes. I am mature enough to know when you can win and when you cannot. Sometimes it is OK to lose. Losing is not bad as long as you feel good about what you are doing.
I do not want to offer the amendment, have colleagues vote against it, and create problems unnecessarily, but I do want my colleagues to know--and this colloquy will express this--that this bill needs to be amended and this problem needs to be addressed. We need to have a provision that is married up with the bill that is about to leave the Senate and go to the House that will allow a judge, upon motion of the parties, to determine in a situation where there is a request to keep the settlement secret and seal the documents from public review, to have a judge to determine what documents should be sealed in secret and what documents should be released to the public, balancing the needs of business and the right of the public to know what they should know about their health and their safety.
There were class action cases with the sunshine statute, about which I am talking, in effect. Without that statute, deadly lighters, exploding tires, defective drugs, toxic chemicals, and faulty automobile designs would not have been known if it were not for a procedure for the judge to release certain documents because the request was: We will give you money, but you cannot tell anybody about the underlying problem.
Sometimes that is very much unfair. I have case after case of sunshine statutes allowing the judge to determine what was in the public interest, to inform the public of deadly events, and peoples lives were saved and their health was protected.
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Mr. GRAHAM. Mr. President, I appreciate Chairman Specter taking the time to join me in discussing a concern I have regarding S. 5, the class action bill. I am still prepared to seek a vote on my amendment, but based on my conversations with a number of senators this week, including Chairman Specter, and in a desire to see this bill pass as soon as possible, I have decided not to offer my amendment.
I agreed to support this bill some time ago because I believe we are long overdue for reform in the class action area. Over the last few years, I have worked to support this bill in both the Judiciary Committee and on the senate floor.
While I have fully supported this reform, I have also noticed some areas where the bill could be improved. I had hoped to offer an amendment on the floor regarding protective orders during discovery. I am confident that the amendment that I had hoped to introduce with Senator Prior of Arkansas would have made a significant improvement in the area of class action discovery.
Our amendment is very simple. It is based on the local rule in South Carolina Federal Courts for obtaining protective orders for documents. All it says is, if you want a protective order, you must make a motion at the beginning of trial, explain why it is necessary for the court to seal your documents, and provide public notice of the motion and a description of the documents. that's it.
At least 20 states have taken action to limit secrecy agreements. This type of scrutiny should be extended throughout the nation, especially where we are removing parties from the protections afforded them by their States.
And let me be clear. This is not an onerous burden to place on those seeking protective orders. It is not that far a departure from the current discovery rules. We could have gone a lot further; with higher standards, a presumption against sealing, and other controversial discovery reforms. However, we are not seeking to tilt the playing field to one side or the other, just make sure some reasonable, well-thought out ground rules are applied to everyone.
My amendment creates a presumption of openness--it would require the parties in class action lawsuits to justify their requests for secrecy, followed by a medical review of the information they want the court to keep under seal.
They would have to identify the documents or information they want sealed--and most importantly the reasons why it's necessary to keep them secret.
They also would have to explain why a protective order approach is necessary and justify the request based on controlling case law.
The public would be notified of the information that was being put under seal--and a descriptive non-confidential index of the secret documents would be provided.
In the end, however, it is still up to the judge's discretion, albeit with a slightly higher standard than currently exist under the Federal rules of civil procedure.
I am doing this because I am convinced Federal Judges will come down on the side of consumer protection where it's in the public interest and come down on the side of secrecy where merited. In short, while the burden here is on any party that wants to keep something secret, it is not an onerous task, nor impossible.
Valid trade secrets and proprietary information--sensitive information that goes to the heart of a company being able to compete in the market place should and will be protected. There must be safeguards for businesses--they have a right to protect valid trade secrets--patents and other proprietary information. But this isn't something that can just go on automatic pilot--there has to be some judicial review and I am confident the procedures protect all the parties in a class action lawsuit.
So again, we have merely tried to find a way to balance the legitimate interests of companies, who we want to remain strong competitors in the marketplace, with the public's interest in disclosing potentially harmful products or practices.
Our amendment strikes the right balance because it raises the bar only slightly for companies to justify why they need to impose secrecy, using our courts to do so, but does not force them to open up their companies to every passerby simply because they are defending a lawsuit.
Now there are critics who warn that an amendment like this is going to create a number of problems in the judicial system, making discovery more difficult and deterring settlements.
I do not agree. Take a look at Florida, which has one of the most stringent sunshine laws. I don't think anyone can tell you Florida is a magnet for class actions. In fact, the most recent studies in the 20 States that have sunshine laws show that limiting court secrecy has not led to more litigation or curtailed the number of case that are settled.
In fact I do not believe there is any evidence that supports the proposition that more cases will go to trial and fewer settlements will be reached if some procedural safeguards are put in place.
Also, you have to remember that our amendment only applied to court-ordered secrecy. Parties would still have been free to privately agree upon secrecy between them.
In closing Mr. President, I must say I have been a bit taken aback by all the turmoil this amendment has caused. I am pretty sure we can all agree that ours was a fairly benign procedural amendment, one that serves both the public and those before our courts.
Toward that end, I very much appreciate the understanding I and Senator Pryor have been able to reach with Chairman Specter regarding the substance of our amendment. The chairman has graciously agreed to assist us with this amendment in the Judiciary Committee. I thank the chairman and look forward to working with him to address this issue in the near future.
Mr. SPECTER. I appreciate Senator Graham's willingness to help us move forward on this bill. He and I have agreed that, due to the procedural posture of this particular bill, we should address the substance of his amendment in committee in the future.
Mr. GRAHAM. I thank my chairman for his future assistance.