House Acts to Stop Class Action Lawsuit Abuse
HOUSE ACTS TO STOP CLASS ACTION LAWSUIT ABUSE
Washington, DC - The House of Representatives, today, voted 279 to 149 to pass S. 5, The Class Action Fairness Act, which will end the practice of trial lawyers bringing large, multi-state, class action lawsuits to state courts with histories of large payouts.
"All too often the primary beneficiaries of class action lawsuits have been trial lawyers, not the consumers they claim to represent," said Rep. Darrell Issa who voted in favor of the measure. "This legislation will close the loopholes that self-serving trial lawyers have used to keep cases in state courts with histories of large payouts instead of the federal courts where they belong."
The past few years have witnessed an explosion of interstate class actions being filed in state court, particularly in certain "magnet" jurisdictions. These "magnet" courts are rife with class action abuses. They routinely: (1) Approve settlements in which the lawyers receive large fee awards and the class members receive virtually nothing, (2) Decide the claims of other states' citizens under their own law, and (3) employ litigation models that deny both consumers' and defendants' due process rights.
The Class Action Fairness Act addresses these problems by allowing larger interstate class action cases to be heard in federal courts. Because of an anomaly in the way the law has been interpreted, class action cases involving parties from many states and millions of dollars have been excluded from this rule. The result has been a proliferation of large class actions in "magnet" state courts that cannot be transferred to federal court. The Class Action Fairness Act closes this loophole by creating federal jurisdiction over large multi-state class action cases.
The Class Action Fairness Act:
Contains several provisions specifically designed to ensure that class members - not their attorneys - are the primary beneficiaries of the class actions process.
Requires judges to review settlements and limit attorneys' fees when the value of the settlement received by class members is minor in comparison or when there is a "net loss" settlement in which the class members end up losing money.
Bans settlements that award some class members a larger recovery because they live closer to the court.
Requires that unclaimed settlement funds be donated to charitable organizations.
S.5 was passed by the U.S. Senate on Feb. 10 by a vote of 72-26. The measure now heads to the desk of President George W. Bush who has already indicated his support for the measure.
http://www.issa.house.gov/newsroom_press_detail.asp?serial=154&page=newsroom