House Passes Class Action Reform Bill

21 February 2005 00:01  [Source: ICB Americas]

The US House of Representatives on Thursday overwhelmingly approved legislation to overhaul the class-action lawsuit system, sending the industry-supported measure to the White House, where President George W. Bush is expected to sign it into law shortly.

The bipartisan bill, passed by a vote of 279-149, will shift most large, multi-state class action lawsuits to federal courts. The Senate approved the legislation one week earlier, 72-26.

“This is a major victory for litigation fairness,” says Don Evans, deputy general counsel for the American Chemistry Council (ACC). “It also is an historic victory for the chemical industry and the entire business community, which overcame fierce opposition from trial lawyers and their friends, who had blocked the measure for three successive Congresses.”

Business leaders have pushed for the legislation for almost six years, arguing the measure is needed because lawyers have taken advantage of the current system by filing frivolous lawsuits in small, state courts where they know they can win multimillion-dollar verdicts.

“Some unscrupulous personal injury lawyers have exploited our legal system for years,” says Mr. Evans. “These lawyers file spurious class-action lawsuits before friendly state judges that are known to be sympathetic to their point of view. Then these lawyers reap the rewards, lining their own pockets with millions of dollars in legal fees while paying little attention to the interests of the consumers they represent.”

These “abusive practices are about to end,” says Mr. Evans, who maintains the legislation will ensure that defendants named in a class-action lawsuit get a fair hearing before an impartial judge. At the same time, he says, the bill will help protect consumers and ensure that they, and not the lawyers, receive the benefits when real harm can be shown.

Critics of the bill, which include trial lawyers and consumer activists, contend the legislation would make it more difficult to hold corporate wrongdoers accountable, and could overwhelm federal courts with new filings.

“Every American’s legal rights are diminished by this anticonsumer legislation, which establishes greater procedural hurdles for consumers, workers, homeowners and shareholders,” says Todd Smith, president of the Association of Trial Lawyers of America.

During the House floor debate today, Judiciary Committee Chairman James Sensenbrenner (R-Wis.) said class-action filings in state courts have increased 1,000 percent over the past 10 years. “Trial lawyers shop for courts and judges willing to act as accomplices in a judicial power grab by hearing nationwide cases, and thus setting national policy in a handful of local courts,” he said.

But Representative John Conyers of Michigan, ranking Democrat on the Judiciary Committee, said Republicans want to make it harder for class-action lawsuits against large companies to proceed by sending many state-filed cases to federal courts, which already have a heavy workload. “The end result is that it will be far more burdensome, expensive and time-consuming for groups of injured persons to obtain access to justice,” he charged.

By a vote of 247-178, the House rejected an amendment offered by Representative Conyers that would have exempted several types of lawsuits from the legislation, including antidiscrimination cases and those filed by state attorneys general.

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