Bob's Weekly Report - Tightening the Reins on Class Action Lawsuits Abuses
DATE: February 18, 2005
Last week Congress passed the Class Action Fairness Act, legislation I introduced in the 106th, 107th, 108th and 109th Congresses. My bill had passed the House in the three previous Congresses, but had failed to get through the Senate. Finally, this important legislation was signed into law by the President, clarifying the rights of consumers and helping restore confidence in America's civil justice system.
In recent years, we've seen the growing abuse of class action lawsuits by aggressive trial lawyers who are often the only ones getting paid. A classic example of this abuse is a suit filed in Texas against Blockbuster over late fees. The plantiffs' lawyers will receive $9.25 million in fees and expenses while the class members will receive two coupons for movie rentals and one $1.00 off coupon. The lawyers made off with enough money to make their own movie while Blockbuster customers took home a mere $10 worth of coupons.
This important legislation will correct a serious flaw in our federal statutes. At present, those statutes forbid federal courts from hearing most interstate class actions - the lawsuits that involve more money and touch more Americans than virtually any other litigation pending in the American legal system. This legislation puts these suits in the federal courts where they belong, making it easier for those involved to transfer suits from the state courts to the federal courts. This will reduce strain on overburdened state courts, provide a uniform standard for class action suits involving residents of different states, and will avoid the problems that can occur when one state court dictates the laws of 49 other states.
The Class Action Fairness Act would establish federal jurisdiction in multi-state cases involving citizens from different states, as long as the aggregate amount at issue exceeds $5 million. At the same time, the bill contains exceptions ensuring that class actions involving purely local or intrastate matters will remain in state court.
In addition, the Class Action Fairness Act contains the Consumer Class Action Bill of Rights, including a requirement to ensure that plaintiffs who have won their suits do not suffer a net loss because legal costs are billed back to the class members. The bill also includes provisions that protect consumers from being disadvantaged for living far from the courthouse. These additional consumer protections will ensure that class action lawsuits benefit the consumers they are intended to compensate.
This legislation will curb the widespread abuse of class action lawsuits, while preserving the rights of citizens to file legitimate suits.