GOODLATTE COMMENDS SENATE PASSAGE OF CLASS ACTION REFORM LEGISLATION
DATE: February 10, 2005
Washington, DC: For six years Congressman Bob Goodlatte has been working to reform abuses in case action lawsuits. The Class Action Fairness Act is a bipartisan, sensible piece of legislation that will clarify the rights of consumers and restore confidence in America's civil justice system.
"I applaud the Senate for overwhelmingly passing the Class Action Fairness Act, legislation that I have introduced and has passed the House of Representatives in the last 3 Congresses," Congressman Goodlatte said. "With the Senate finally passing this critical legislation we move one step closer to streamlining the ability of the courts to deal with class action lawsuits."
The Class Action Fairness Act will streamline the ability of the courts to deal with class action lawsuits by making it easier for those involved in the case to transfer suits from the state courts to the federal courts. This legislation stems from the abuse of what was meant to be a procedural device of last resort where people with identical claims, such as train crash victims, could bring their case to court.
"This bill will help end the forum shopping abuses and resultant extortionate settlements that plague class action litigation today," Congressman Goodlatte said. "Presently, the only winners are the lawyers who may get a half-billion dollar payday. The Class Action Fairness Act will help ensure that real plaintiffs with real grievances are protected against settlements that give the lawyers millions and mere coupons to the consumers."
In recent years the courts have been flooded with thousands of frivolous lawsuits. The number of state court class actions is growing every day, with state courts continuing to approve settlements that give all of the money to lawyers. This ultimately hurts consumers.
A perfect example of the system gone awry is a class action suit against Thomson Television over their warranty package. Lawyers were paid nearly $22 million in fees while consumers in the lawsuit were left with their broken televisions and a coupon for $50 off their next $100 purchase of a Thomson television.
The Class Action Fairness Act corrects these types of problems by allowing larger interstate class actions to be heard in federal court. At present, current law forbids federal courts from hearing interstate class action lawsuits. Federal courts may only hear a class action lawsuit if every plaintiff is a citizen of a different state than every defendant, and if every plaintiff is seeking damages in excess of $75,000. Under this rule, it is usually impossible for national class actions to be heard in federal court because such suits involve plaintiff class members from every state.
To move the largest and most complex interstate class actions to federal court, 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.
The Class Action Fairness Act passed the Senate by a vote of 72-26 and will now be referred to the House of Representatives.