Class Action Fairness Act of 2003-Motion to Proceed

CLASS ACTION FAIRNESS ACT OF 2003—MOTION TO PROCEED

Mr. DURBIN. Madam President, I commend the Senator from Virginia. There are times when he and I have come together and I think good things have happened. I think this may be such a moment. I hope it is. I came to the floor to address this issue involving General Boykin, fully cognizant of the great contribution which he has made to this country in his military capacity over many years, risking his life and serving our Nation well, but feeling at this moment in time important questions need to be asked and answered about the things he said and did. I believe the Senator from Virginia—I do not want to mischaracterize his remarks—has suggested he be detailed to another position while these important questions are asked and considered and answers are brought forward. Am I correct in that conclusion?

Mr. WARNER. Madam President, the Senator is correct, to simply give full and complete opportunity and have him temporarily detailed elsewhere. I think until such time as this thing is resolved factually—what did happen, what didn't happen—as the Secretary of Defense said, he didn't fully have all the facts at his command at this point in time and was asked a question. Although I must say I have read press accounts where the general was trying to explain what he did say, you and I know from experience in public life, when you try to explain what you tried to say, you need time out to do a little study.

Mr. DURBIN. I thank the Senator from Virginia. I do say that is a very judicious and thoughtful approach. We want to be fair to this man who served his country well, but we also understand his remarks were viewed by many in a very negative light at a very critical moment in our history. I think what we should ask of everyone in the service of our country is what the President has asked, and that is to keep it very clear ours is a war against terrorism and not a war against the Islamic faith or people who adhere to it. We could no more expect General Boykin to embrace the Islamic faith and its principles than we would expect someone of the Islamic faith to accept Christian principles or Jewish principles and values. But we can expect every member of our Government to be tolerant and sensitive of other people's values and principles. I think that is a standard we should all live by in public life, whether appointed or elected.

I think what the Senator from Virginia has done today is an important step forward. I would say his extraordinary service to this country in the military and as Secretary of the Navy and in the Senate I think means his recommendation will be understood as a heartfelt recommendation and taken seriously by the administration. I hope they do. I hope they follow his counsel and follow it quickly. The sooner we can defuse this matter the better for all, including the general, and I think the sooner it will be that we can bring some stability and perhaps some coherence to our position so we can fight this war on terrorism in terms all Americans, including the President, agree with.

I thank the Senator from Virginia.

Mr. WARNER. I thank my colleague.

Muslims and Christians and people of other faiths all over this world are united in this fight against terrorism. We must make it very clear of our mutual respect for one another's faith.

 I yield the floor.

 Mr. DURBIN. I yield the floor.

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Mr. DURBIN. Mr. President, this is an important debate. The average person listening to it may wonder why. First you have to understand what a class action lawsuit is. I will try to define it in the simplest of terms. It is when not just one person but a group of people believe that they have been wronged, either financially or otherwise, and go to court and bring a lawsuit against a corporation, for example. So you have a large group of plaintiffs bringing the lawsuit, usually suing one defendant, a corporation. And oftentimes, this large group of people who have been harmed don't live in the same State.
They may be from across the Nation. And so they have to decide where they are going to file the lawsuit. And that is what this comes down to.

You say to yourself: Why is it so important to understand where you are going to file a lawsuit? Well, when I explain it from my point of view, perhaps you will understand why so much time and so much lobbying is going on behind this whole question about where you can file your lawsuit.

First understand this: In my State of Illinois and virtually every other State in the Union, if you are a business and you want to do business in Tennessee or Illinois or Alabama or South Carolina, you can't just start up your business. The laws of your State will require you to register in that State that you are going to do business in. In my State of Illinois you register so they know you are there, who you are, what your home headquarters happens to be, and where it is located.
Then you also have to do something in my State and most other States: You have to say where you can be served process.
In other words, if you are sued by someone in the State of Illinois, and you are a registered corporation, you have already told the State of Illinois where they can find you.

Why is that? Because the understanding is, if you want to have the advantage of selling your product in Illinois to Illinois citizens, you also have to submit yourself to the jurisdiction of Illinois law. That law will govern your business in the State of Illinois.

It is very basic. If, in fact, someone believes that your product is defective, or you have done something wrong, they have to know where to find you. You don't want a situation where the corporation is unidentifiable, unapproachable. So every company—major companies in particular—understands the rules. If you want to do business in Illinois, you submit yourself to the jurisdiction of Illinois law.

Now let's go back to the earlier example. This group of plaintiffs, this class, decides they are going to sue XYZ Corporation for something wrong. Where will they sue them? The corporation has already said, by virtue of doing business in Illinois, that we are prepared to be served process. We are prepared to submit ourselves to Illinois laws. We are prepared to go
before Illinois courts. That is a pretty simple outcome. If you do your business in Illinois, you submit to that jurisdiction.
You submit to those courts. And if people want to sue you, they know exactly where to find you to bring you into an Illinois court and let the court decide whether the plaintiff recovers or doesn't recover.

Now, that is the simplest explanation of jurisdiction that I can remember from law school so many years ago and how it applies to States. In Federal courts it is a little different. If you have a defendant from one State and a plaintiff from another State, if you have a certain amount in controversy—I think it is $75,000—you have diversity of jurisdiction, so you can go into the Federal courts.

In this case, this whole bill is about in which court you can file a class action lawsuit. You say to yourself, why does it make any difference if you are going to go into a State court in Illinois or into the Federal court in Illinois for your class action lawsuit? Why would it make any difference? The substantive law is supposed to be the same Illinois law. Why do you want to go to Federal court?

Therein lies the reason for the bill. The people who are pushing this legislation understand that Federal courts are more conservative, less likely to let people have a lawsuit, to certify a class. When it comes to liability, Federal courts are more restrictive in liability than State courts.

Don't take my word for that. I will tell you about several cases. This one is Birchler v. Gehl. Federal law discourages
Federal judges from providing remedies for violation of State law. The Seventh Circuit—where Illinois sits—stated:

When we are faced with opposing plausible interpretations of State law, we generally choose the narrower interpretation which restricts liability, rather than the more expansive interpretation which creates substantially more liability.

That was a 1996 case. Go to Federal court and it is less likely your class will be certified and you will receive any damages.

Another case is Accord Werwinski v. Ford Motor Company, a 2002 case. A class action was brought by purchasers of Ford vehicles. The cars Ford sold had defective transmissions that cracked prematurely and inadequately lubricated gears that caused numerous car failures such as sudden acceleration or shifts into reverse. Plaintiffs who bought the cars presented evidence that Ford knew about this defect long before it was corrected but continued selling the cars. The case was originally filed in State court, but Ford Motor Company removed it to Federal court which dismissed the claims of the people who bought the Fords. In affirming the court's decision to dismiss the class action, the Third Circuit stated that when faced with two competing interpretations of State law, a Federal court "should opt for the interpretation that restricts liability, rather than expands it. .    .    ."

Those are two cases in the Federal law that explain why we are here today. The idea is to move the cases out of State court in the hopes that the defendant corporation that has been sued will have the case dismissed or, if there are damages, they will be reduced. It is not a question of whether they are liable or guilty; it is a question of where they are going to get the best deal.

So the bill before us is an effort on behalf of the corporation defendants across America to push these cases into the Federal court. So for all the good reasons given for this class action reform, the real reason is that defendant corporations don't want to be held responsible for their misconduct. If held responsible, they want to pay less money. That is what it comes down to. That is what this is all about. They want to protect themselves and limit their liability.

Under current law, Federal diversity jurisdiction for a class action doesn't exist unless every member of the class is a citizen of a different State from every defendant, and every member of the class is seeking damages in excess of $75,000.

This bill would create a "minimal diversity" standard in two ways. In other words, you can get into Federal court. First, the amount-in-controversy requirement is met if the total amount of the damages at stake exceeds $5 million, notwithstanding the amount of damage suffered by each individual plaintiff.

Second, diversity can be achieved one of three ways: any member of a class of plaintiffs is a citizen of a State different from any defendant; two, any member of a class of plaintiffs is a foreign state or a citizen or a subject of a foreign state and any defendant is a citizen of a State; three, any member of a class of plaintiffs is a citizen of a State and any defendant is a foreign state or a citizen or subject of a foreign state.

This is what it gets down to. We are trying to find, through this bill, ways to move more cases into Federal court. So what does the Federal court system think of this idea?

Well, the man who is at the top of the Federal court system, Chief Justice William Rehnquist, in a rare, rare occurrence, sent a letter to Congress saying: Don't do this; don't push these cases into Federal court. We don't have the expertise, the judges, or the time to consider the class action cases coming out of State courts into Federal court. It is understandable.

The Federal court's first responsibility is in criminal cases, such as on the war on terrorism, and all the concerns we have about criminal procedure and criminal prosecution. That is their first responsibility.

Then they have their own civil docket, where you have individuals suing one another, and companies suing one another.
Chief Justice Rehnquist says: Do me no favors, U.S. Senate; don't push all these class action cases into the Federal courts; we cannot handle them.

You would think, would you not, that some of the Members of the Senate, when coaxed by the Chief Justice of the Supreme Court not to push all these cases into Federal court, might stop. But they will not. The reason they are pushing this bill is they have their eye on the prize. The prize is that the corporate defendants found guilty and liable want to be protected from liability or want their liability reduced. They don't care what the Chief Justice has to say. They certainly don't care what the consumers have to say.

I have some examples of class action cases so you can understand for a minute why these cases should be of concern to everybody. These are not cases that involve large corporations alone; they involve a lot of ordinary citizens.

To give you an example, do you remember the Jack-in-the-Box restaurant scandal a few years back? In that scandal, it was found that Jack-in-the-Box restaurants were selling products which had been undercooked and, because of this, they were adulterated, dangerous, and there were children dying as a result. So a class action lawsuit was brought against the company that owned Jack-in-the-Box, Foodmaker, Inc., on behalf of some 500 victims—mainly children who had been to Jack-in-the-Box and got sick. Those 500 victims came together to hold Jack-in-the-Box, a Washington State corporation, liable. The court decided, yes, it should be held liable to the tune of $14 million for 500 plaintiffs.

Now, what this bill tries to do is to move that case out of the State court in Washington and into a Federal court so the amount of the verdict—if there was one—would be considerably less. That is good for the bottom line of that corporation.
Is it fair to the families who went to the Jack-in-the-Box restaurants in States across America and thought they were going to get a wholesome product, safe for their children to eat, and then the parents watched their children die from E. coli, and not have their day in State court, where Jack-in-the-Box said they were submitting to the jurisdiction? I don't think so.

There was a class action lawsuit in California against Beech-Nut Corporation and its parent company, Nestle. They were
guilty of selling something they called apple juice which, after being examined, turned out to be nothing more than sugar water. Parents were buying what they thought was nutritious apple juice for their infants, and the company was selling them fraudulently a product marked apple juice but was literally sugar water and a little coloration. Blame went back and forth between companies and suppliers, and the court ultimately decided these two companies, Beech-Nut and Nestle, were liable to the tune of $3.5 million to be reimbursed to consumers across America.

What companies such as Nestle are trying to do with this bill is reduce their liability and make it even more difficult for parents, each of which may have been out only $10 or $20, but each had given a product to their children that was misrepresented and fraudulently labeled. This is designed to help those powerful special interest groups and corporations at the expense of consumers such as those parents whose children were receiving this adulterated product.

Ford Motor Company had a class action to replace defective ignition systems in millions of cars that stalled often on the highways.

Mobil Corporation entered into a $14 million settlement agreement in a class action suit because a fire at a refinery in New Orleans resulted in sending volatile and hazardous compounds into the air and it caused great health damage to the people living around them.

Blue Cross and Blue Shield paid a $14.6 million settlement in a class action suit because they fraudulently billed individuals and failed to pass on savings to consumers. They ended up paying for it.
American Airlines breached a contract with frequent fliers when it retroactively changed rules for redeeming mileage awards.

The point is that each and every one of these lawsuits, for each plaintiff, may seem small. But compounded, they represent a large amount of liability for the corporation and they represent, in fact, a large number of people, each with a small recovery.

Frankly, I think there are things we can and should do to make class action suits better in this country. John Breaux of Louisiana, who has been a friend of business and has worked with them over the years, has a good substitute bill. Many who have called me from the business community say I urge you, for goodness' sake, to take a look at the Breaux substitute. It is a sensible bill. It will clean up some of the worst abuses in class action lawsuits. But it is not going to get into this game-playing that is suggested in this bill that allows defendant corporations to literally pick the Federal court they want to go into in the hopes they will have reduced liability or no liability. That is what it comes down to.

I think this debate before us is a lot more important than some lead to believe. Some suggest we are merely modifying and reforming tort law in America. It is much more. It is a question of whether the courthouse door is open for the average citizen. It is a question of whether those people, wronged by giant corporations, have an opportunity for a day in court.
Those who back this bill want to close that courthouse door and make it difficult to open. They want these plaintiffs to end up in a Federal court where they are less likely to succeed, and if they do succeed, they will have less in compensation.
That to me is unjust and that is the reason we should oppose this legislation.

I hope my colleagues will think long and hard before they sign on to this bill thinking it has no impact. It has a great impact on a lot of innocent people who deserve a day in court. Justice is at stake here. I urge my colleagues not to accept the easy argument that this is a simple reform. It goes to the heart of justice in this country, and it does not affect the real abuses in the system which I believe the Breaux bill does.

I yield the floor.