Class Action Fairness Act of 2005

CLASS ACTION FAIRNESS ACT OF 2005 -- (Senate - February 09, 2005)

Mr. CORNYN. Mr. President, I first want to say how much I respect and admire the author of this amendment, Senator Pryor. He and I served together as State attorneys general, he in Arkansas and I in Texas, for 4 years. Our careers overlapped. I agree with him about the important role that attorneys general play when it comes to protecting a State's citizens and a State's consumers. But I think where I part company with my friend Senator Pryor is, No. 1, this amendment is not necessary to preserve the authority of the State attorney general to protect the State's consumers, and, second, this amendment as worded-and I know this is not his intention-would create a potential loophole big enough to drive a truck through, that could cause substantial mischief that is intended to be prevented by this very bill.

Finally, as Senator Carper has said, this is a negotiated bill. There are amendments I would like to offer that I think would make it a better bill. But I think we all realize that after many Senators have labored long and hard to try to get us to the point today where we literally have bipartisan support for this compromise, to offer any amendments, and particularly one like this and others that have been filed but not yet called up, would threaten our chance of success. I think that would be a shame because we all agree that the class action abuses we see are very real and are something that do not benefit the American people or consumers in general.

We have seen that some of these egregious abuses of the class action procedure have been used to make certain entrepreneurial lawyers very wealthy when the consumers literally get a coupon worth pennies on the dollar.

I am not opposed to lawyers. Let me say up front I happen to be a lawyer. But I do think that all lawyers, all people, anybody with common sense-some may say that excludes lawyers-but I like to think anybody with common sense recognizes the very real abuses that have occurred in the class action system. We have heard a lot about that. I will not repeat all of that now. I think we all take that as a given.

First, let me allude to the letter signed by-the Senator from Arkansas said 46 State attorneys general from the National Association of Attorneys General, an organization of which I used to be a member and for which I have a lot of respect, both for the people who help run that organization as well as the attorneys general who make up its membership.

I point my colleagues to paragraph 2 in this letter, which I believe makes my initial point which is that this amendment is not necessary to preserve the authority of State attorneys general. Indeed, in the last sentence in the second paragraph these 46 attorneys general say:

It is our concern that certain provisions of S. 5 might be misinterpreted to hamper the ability of attorneys general to bring such actions, thereby impeding one means of protecting our citizens from unlawful activity and its resulting harm.

In other words, these 46 lawyers, the chief law enforcement officers of these States, make no claim that in fact this bill would impede their authority but, rather, that it might be misinterpreted.

I think it is fair to say that any law that has ever been written is capable of being misinterpreted. That is why we have the court system. But we certainly do not need an amendment like this to protect the States or the attorneys general against a potential misinterpretation of S. 5, the Class Action Reform bill. That is the function, that is the role of the courts. I think it is very plain that no power of the State attorney general is impeded by virtue of S. 5, or will be once it is signed into law.

Indeed, the Senator from Arkansas alluded to statutes that are typical of every State-deceptive trade practice acts and consumer protection statutes-which in my State and I believe in virtually every other State specifically authorize the attorney general to seek remedies on behalf of aggrieved consumers. This bill certainly would not encroach on that authority. Indeed, he also alluded to common law claims that are asserted by the attorneys general in pursuit of justice for their State's citizens.

We heard the Senator from Delaware talk about the parens patriae doctrine, which is generally recognized as providing the authority to the attorney general to sue on behalf of his State's citizens. I acknowledge, as he said, there are some variations in terms of the court's interpretation in each State about the scope of that doctrine and how much or what kinds of actions might be authorized. But clearly, when State law and the State Constitution specifically provide for the right of an attorney general, a State attorney general, to sue on behalf of his State's citizens, then this bill, when made a law, will not in any way impede that endeavor.

Finally, in terms of the lack of necessity of this bill, the Senator from Delaware pointed out that where a substantial number of a State's citizens are party to a class action and are located in one State, they are carved out by the very terms of this bill so that the case will remain in State court if that is where it was originally filed.

But the real danger in this amendment-and here again I am not suggesting that anyone intended this, but I think it does show the potential for mischief with amendments that have not been the subject of long debate and negotiation-is the language that says:

..... does not include any civil action brought by or on behalf of the Attorney General of any State.

I am very sensitive to that particular phrase in the amendment because of a, frankly, very tragic experience I had as attorney general of my State. It is a fact that my predecessor as attorney general in the State of Texas is currently in the Federal penitentiary. He is in the Federal penitentiary because he was convicted, based on his own confession, of mail fraud and other violations of law primarily related to his attempt, almost successful, to backdate outside counsel contracts with an old buddy of his, that would potentially entitle his friend to $520 million out of the taxpayers' recovery in the Texas tobacco litigation.

I take no pleasure in bringing this up but merely make mention of it to point out the potential for mischief-not when cases are brought by an attorney general, somebody who is elected by the people, whose future, frankly, is dependent on their dutiful discharge of their obligations and faithful discharge of their duties-but when you carve out suits brought on behalf of the attorney general, which could include any lawyer who any attorney general might choose to hire as outside counsel and, of course, who is unelected and unaccountable to the people. Here, we see the potential for grave abuses.

As I have pointed out, this example was part of the Texas tobacco litigation that was part of a nationwide set of litigation, one which ultimately involved settlements on behalf of several individual States. I want to say, if my memory serves me, that Florida, Mississippi, and Texas filed their individual lawsuits and had individual judgments rendered. But the remainder of the States, including, I believe, the States of the Senator from Arkansas and the Senator from Colorado-they will correct me if I am wrong-they had a collective judgment rendered against the tobacco industry of almost $250 billion, a sum we would recognize, even here in Washington, as being significant.

The problems presented by outside counsel performing the duties of an attorney general under an exception like this just go on and on. My own experience is, again, where outside counsel of the State of Texas claimed the right to $3.3 billion out of the Texas tobacco lawsuit recovery, which by any reasonable measure was an extraordinary fee, one that, when calculated by the hours of work actually put into the lawsuit, has been described as scandalous and unconscionable. The ultimate concern must be the public interest. By accepting an amendment that would place outside the scope of this bill someone bringing a lawsuit on behalf of the attorney general, somebody unelected by the people, not accountable at the polls, we would be creating an environment ripe for fraud.

Let me tell you this: I recall that many of the States' attorneys general believed in good faith that the tobacco industry was responsible for contributing to the death and the illness of hundreds of thousands of Americans each year. Indeed, that is a fact. We lose 400,000 people each year in this country as a result of consuming tobacco products. But the lawsuits brought, which were ultimately settled by the tobacco industry, were brought under the guise of protecting children and protecting the American consumer. We now see that almost $300 billion was paid out but not a single tobacco company is out of business today. Indeed, they continue to make their product, not only in this country but worldwide. There has been no decrease in the number of people who get sick or die as a result of consuming tobacco products in this country each year.

I just have to ask whether it is wise-I suggest it is not-to create an exception, to place outside the protections of the bill not the attorneys general per se but those who seek to bring suits on the attorney general's behalf. I suggest to you the evidence in my State-and perhaps nationwide-indicates that the lack of accountability to the voters, the lack of concern for ultimate welfare of the consumer, and the potential presence of an immediate personal self-serving motive to maximize a huge attorney fee, creates enough opportunity for mischief under this well-intended amendment that it should be voted down on that basis, if no other.

Finally, let me say in conclusion that I know the Senator from Arkansas has filed this amendment in good faith and certainly does not intend any of the results I have suggested here today. But I reiterate what the Senator from Delaware has said, and what I have been told both privately and publicly. If I were to offer amendments which I believe would make this bill better, it would be a poison pill for this litigation. Indeed, I believe that no matter how well intended the amendment offered by the Senator from Arkansas is, it would have that same effect. I don't believe that is in anyone's interest.

I thank the Chair. I thank my colleagues.

I yield the floor.

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