To amend the Harmonized Tariff Schedule of the United States to clarify the tariff rate for certain mechanics' gloves.

Madam Speaker, pursuant to House Resolution 96, I call up the Senate bill (S. 5) to amend the procedures that apply to consideration of interstate class actions to assure fairer outcomes for class members and defendants, and for other purposes, and ask for its immediate consideration.

Madam Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on S. 5.

Madam Speaker, I yield myself such time as I may consume.

Madam Speaker, I rise in strong support of S. 5, the Class Action Fairness Act of 2005. Today marks the culmination of nearly a decade of legislative efforts to end systematic abuse of our Nation's class action system. We stand on the cusp of sending landmark legislation on civil-justice reform to the President that has been approved by increasing majorities each time it has been considered by the House in each of the last three Congresses and which passed the other body last week with an overwhelming majority of 72 votes.

Since these reforms were first proposed, the magnitude of the class action crisis, the need to address it has become more and more urgent. The crisis now threatens the integrity of our civil justice system and undermines the economic vitality upon which job creation depends.

A major element of the worsening crisis is the exponential increase in State class action cases in a handful of ``magnet'' or ``magic'' jurisdictions, many of which deal with national issues in classes. In the last 10 years, State court class actions filings nationwide have increased over 1,315 percent. The infamous handful of magnet courts known for certifying even the most speculative class action suits, the increase in filings now exceeds 5,000 percent. The only explanation for this phenomenon is aggressive forum shopping by trial lawyers to find courts and judges who will act as willing accomplices in a judicial power grab, hearing nationwide cases and setting policy for the entire country.

A second major feature of the present class action crisis is a system producing outrageous settlements that benefit only lawyers and trample the rights of class members. Class actions were originally created to efficiently address a large number of similar claims by people suffering small harms. Today they are too often used to efficiently transfer the large fees to a small number of trial lawyers, with little benefit to the plaintiffs.

The present rules encourage a race to any available State courthouse in the hopes of a rubber-stamped nationwide settlement that produces millions in attorney's fees for the winning plaintiff's attorney. The race to settle produces outcomes that favor expediency and profits for lawyers over justice and fairness for consumers. The losers in this race are the victims who often gain little or nothing through the settlement, yet are bound by it in perpetuity. And all Americans bear the cost of these settlements through increased prices for goods and services.

The bill before the House today offers commonsense procedural changes that will end the most serious abuses by allowing more interstate class actions to be heard in Federal courts while keeping truly local cases in State courts. Its core provisions are similar to those passed by this body in the last three Congresses. S. 5 also implements a consumer bill of rights that will keep class members from being used by the lawyers they never hired to engage in litigation they do not know about or to extort money they will never see.

Madam Speaker, when the House considered this important reform in the last Congress, I remarked that, ``The class action judicial system has become a joke, and no one is laughing except the trial lawyers . . . all the way to the bank.''

I imagine that laughter turned to nervous chuckles when S. 5 emerged unscathed from the gauntlet in the other body with 72 votes last week. Today, as the House prepares to pass this bill, I suspect you could hear a pin drop in the halls of infamous courthouses located in Madison County, Illinois and Jefferson County, Texas, where for so long the good times have rolled for forum-shopping plaintiffs' attorneys and the judges who enable them. And when this legislation is signed by the President one day soon, those same halls may echo with sobs and curses because this time justice and fairness and the American people will have the last laugh.

Madam Speaker, after years of toil, the moment has arrived. The opportunity to restore common sense, rationality, and dignity to our class action system is now before us, and the need for reform has never been more certain. I urge my colleagues to support the Class Action Fairness Act of 2005.

Madam Speaker, I reserve the balance of my time.

(Mr. CONYERS asked and was given permission to revise and extend his remarks.)

Madam Speaker, I yield 3 minutes to the gentleman from Virginia (Mr. Boucher) to show the breadth of the bipartisan support of this legislation.

(Mr. BOUCHER asked and was given permission to revise and extend his remarks.)

Madam Speaker, I yield myself such time as I may consume.

(Mr. SENSENBRENNER asked and was given permission to revise and extend his remarks.)

Madam Speaker, first, I have a lengthy additional statement explaining how this bill is to work. We do not have the time in general debate for me to give this statement on the floor, so I will insert the statement relative to the intent of the managers of the bill in the Record at this point.

Madam Speaker, I would like to provide a brief summary of the provisions in Sections 4 and 5 of S. 5, the Class Action Fairness Act of 2005. Section 4 gives Federal courts jurisdiction over class action lawsuits in which the aggregate amount in controversy exceeds $5 million, and at least one plaintiff and one defendant are diverse. Overall, new section 1332(d) is intended to expand substantially Federal court jurisdiction over class actions. Its provisions should be read broadly, with a strong preference that interstate class actions should be heard in a Federal court if removed by any defendant. If a purported class action is removed under these jurisdictional provisions, the named plaintiff(s) should bear the burden of demonstrating that the removal was improper. And if a Federal court is uncertain about whether the $5 million threshold is satisfied, the court should err in favor of exercising jurisdiction over the case.

The Sponsors intend that in a case seeking injunctive relief, a matter be subject to Federal jurisdiction under this provision if the value of the matter in litigation exceeds $5 million either from the viewpoint of the plaintiff or the defendant, and regardless of the type of relief sought (e.g., damages, injunctive relief, or declaratory relief). Similarly, in assessing the jurisdictional amount in declaratory relief cases, the Federal court should include in its assessment the value of all relief and benefits that would logically flow from granting the declaratory relief sought by the claimants. For example, a declaration that a defendant's conduct is unlawful or fraudulent will carry certain consequences, such as the need to cease and desist from that conduct, that will often ``cost''

the defendant in excess of $5 million. In addition, the law is clear that, once a Federal court properly has jurisdiction over a case removed to Federal court, subsequent events cannot ``oust'' the Federal court of jurisdiction. While plaintiffs can seek to avoid Federal jurisdiction by defining a proposed class in particular ways, they lose that power once the case was properly removed.

New subsections 1332( d)(3) and (d)(4)(B) address the jurisdictional principles that will apply to class actions filed against a defendant in its home State, dividing such cases into three categories. First, for cases in which two-thirds or more of the members of the plaintiff class and the primary defendants are citizens of the State in which the suit was filed, subsection 1332(d)(4)(B) states that such cases will remain in State court. Second, cases in which more than two-thirds of the members of the plaintiff class or one or more of the primary defendants are not citizens of the forum State will be subject to Federal jurisdiction since such cases are predominantly interstate in nature. Finally, there is a middle category of class actions in which more than one-third but fewer than two-thirds of the members of the plaintiff class and the primary defendants are all citizens of the State in which the action was filed. In such cases, the numbers alone may not always confirm that the litigation is more fairly characterized as predominantly interstate in character. New subsection 1332(d)(3) therefore gives Federal courts discretion, in the ``interests of justice,'' to decline to exercise jurisdiction over such cases based on the consideration of five factors.

First, the court should consider whether the claims asserted are of ``significant national or interstate interest.'' Under this factor, if a case presents issues of national or interstate significance, that argues in favor of the matter being handled in Federal court. Second, the court should consider whether the claims asserted will be governed by laws other than those of the forum State. Under this factor, if the Federal court determines that multiple State laws will apply to aspects of the class action, that determination would favor having the matter heard in the Federal court system, which has a record of being more respectful of the laws of the various States in the class action context. The third factor is whether the class action has been pleaded in a manner that seeks to avoid Federal jurisdiction. The purpose of this inquiry is to determine whether the plaintiffs have proposed a ``natural'' class that encompasses all of the people and claims that one would expect to include in a class action, as opposed to proposing a class that appears to be gerrymandered solely to avoid Federal jurisdiction by leaving out certain potential class members or claims. If the Federal court concludes evasive pleading is involved, that factor would favor the exercise of Federal jurisdiction. The fourth factor considers whether there is a ``distinct'' nexus between: (a) The forum where the action was brought, and (b) the class members, the alleged harm, or the defendants. This factor is intended to take account of a major concern that led to this legislation--the filing of lawsuits in out-of-the-way ``magnet'' State courts that have no real relationship to the controversy at hand. Thus, for example, if the majority of proposed class members and the defendant reside in the county where the suit is brought, the court might find a distinct nexus exists.

The fifth factor asks whether the number of citizens of the forum State in the proposed plaintiff class(es) is substantially larger than the number of citizens from any other State, and the citizenship of the other members of the proposed class(es) is dispersed among a substantial number of States. If all of the class members who do not reside in the State where the action was filed are widely dispersed among many other States, that point would suggest that the interests of the forum State in litigating the controversy are preeminent. However, if a court finds that the citizenship of the other class members is not widely dispersed, the opposite balance would be indicated and a Federal forum would be favored. Finally, the sixth factor is whether one or more class actions asserting the same or similar claims on behalf of the same or other persons have been filed in the last three years. The purpose of this factor is efficiency and fairness: To determine whether a matter should be subject to Federal jurisdiction so that it can be coordinated with other overlapping or parallel class actions. If other class actions on the same subject have been (or are likely to be) filed elsewhere, the Sponsors intend that this consideration would strongly favor the exercise of Federal jurisdiction. It is the Sponsors' intention that this factor be interpreted liberally and that plaintiffs not be able to plead around it with creative legal theories. If a plaintiff brings a product liability suit alleging consumer fraud or unjust enrichment, and another suit was previously brought against some of the same defendants alleging negligence with regard to the same product, this factor would favor the exercise of Federal jurisdiction over the later-filed claim.

New subsection 1332(d)(4)(A) is the ``Local Controversy Exception.'' This subsection prohibits Federal courts from exercising diversity jurisdiction over a class action under the foregoing provisions if the plaintiffs clearly demonstrate that each and every one of the following criteria are satisfied in the case at issue. First, more than two- thirds of class members are citizens of the forum State. Second, there is at least one in-State defendant from whom significant relief is sought by members of the class and whose conduct forms a significant basis of plaintiffs' claims. Third, the principal injuries resulting from the alleged conduct, or related conduct, of each defendant were incurred in the State where the action was originally filed. And fourth, no other class action asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons has been filed during the preceding three years.

This provision is intended to respond to concerns that class actions with a truly local focus should not be moved to Federal court under this legislation because State courts have a strong interest in adjudicating such disputes. At the same time, this is a narrow exception that was carefully drafted to ensure that it does not become a jurisdictional loophole. Thus, in assessing whether each of these criteria is satisfied by a particular case, a Federal court should bear in mind that the purpose of each of these criteria is to identify a truly local controversy--a controversy that uniquely affects a particular locality to the exclusion of all others. For example, under the second criterion, there must be at least one real local defendant. By that, the Sponsors intend that the local defendant must be a primary focus of the plaintiffs' claims--not just a peripheral defendant. The local defendant must be a target from whom significant relief is sought by the class (as opposed to just a subset of the class membership), as well as being a defendant whose alleged conduct forms a significant basis for the claims asserted by the class. Similarly, the third criterion is that the principal injuries resulting from the actions of all the defendants must have occurred in the State where the suit was filed. By this criterion, the Sponsors mean that all or almost all of the damage caused by defendants' alleged conduct occurred in the State where the suit was brought. The purpose of this criterion is to ensure that this exception is used only where the impact of the misconduct alleged by the purported class is localized. For example, a class action in which local residents seek compensation for property damage resulting from a chemical leak at a manufacturing plant in that community would fit this criterion, provided that the property damage was limited to residents in the vicinity of the plant. However, if the defendants engaged in conduct that could be alleged to have injured consumers throughout the country or broadly throughout several States (such as an insurance or product case), the case would not qualify for this exception, even if it were brought only as a single-State class action.

The fourth and final criterion is that no other class action involving similar allegations has been filed against any of the defendants over the last three years on behalf of the same or other persons. Once again, the Sponsors wish to stress that the inquiry under this criterion should not be whether identical (or nearly identical) class actions have been filed. Rather, the inquiry is whether similar factual allegations have been made against the defendant in multiple class actions, regardless of whether the same causes of actions were asserted or whether the purported plaintiff classes were the same (or even overlapped in significant respects).

New subsections 1332(d)(5)(A) and (B) specify that S. 5 does not extend Federal diversity jurisdiction to class actions in which (a) the primary defendants are States, State officials, or other governmental entities against whom the district court may be foreclosed from ordering relief, or (b) the number of members of all proposed plaintiff classes in the aggregate is fewer than 100 class members. The purpose of the ``State action'' cases provision is to prevent States, State officials, or other governmental entities from dodging legitimate claims by removing class actions to Federal court and then arguing that the Federal courts are constitutionally prohibited from granting the requested relief. However, Federal courts should proceed cautiously before declining Federal jurisdiction under the ``State action'' case exception, and do so only when it is clear that the primary defendants are indeed States, State officials, or other governmental entities against whom the ``court may be foreclosed from ordering relief.'' The Sponsors wish to stress that this provision should not become a subterfuge for avoiding Federal jurisdiction. In particular, plaintiffs should not be permitted to name State entities as defendants as a mechanism to avoid Federal jurisdiction over class actions that largely target non-governmental defendants. The Sponsors intend that ``primary defendants'' be interpreted

to reach those defendants who are the real ``targets'' of the lawsuit-- i.e., the defendants that would be expected to incur most of the loss if liability is found. It is the Sponsors' intention with regard to each of these exceptions that the party opposing Federal jurisdiction shall have the burden of demonstrating the applicability of an exemption.

The Sponsors understand that in assessing the various criteria established in all of these new jurisdictional provisions, a Federal court may have to engage in some fact-finding, not unlike what is necessitated by the existing jurisdictional statutes. The Sponsors further understand that in some instances, limited discovery may be necessary to make these determinations. However, the Sponsors caution that these jurisdictional determinations should be made largely on the basis of readily available information. Allowing substantial, burdensome discovery on jurisdictional issues would be contrary to the intent of these provisions to encourage the exercise of Federal jurisdiction over class actions.

Under new subsection 1332(d)(9), the Act excludes from its jurisdictional provisions class actions that solely involve claims that relate to matters of corporate governance arising out of State law. The purpose of this provision is to avoid disturbing in any way the Federal vs. State court jurisdictional lines already drawn in the securities litigation class action context by the enactment of the Securities Litigation Uniform Standards Act of 1998. The Sponsors intend that this exemption be narrowly construed. By corporate governance litigation, the Sponsors mean only litigation based solely on (a) State statutory law regulating the organization and governance of business enterprises such as corporations, partnerships, limited partnerships, limited liability companies, limited liability partnerships, and business trusts; (b) State common law regarding the duties owed between and among owners and managers of business enterprises; and (c) the rights arising out of the terms of the securities issued by business enterprises.

New subsection 1332(d)(11) expands Federal jurisdiction over mass actions--suits that are brought on behalf of numerous named plaintiffs who claim that their suits present common questions of law or fact that should be tried together even though they do not seek class certification status. Mass action cases function very much like class actions and are subject to many of the same abuses. Under subsection 1332(d)(11), any civil action in which 100 or more named parties seek to try their claims for monetary relief together will be treated as a class action for jurisdictional purposes. The Sponsors wish to stress that a complaint in which 100 or more plaintiffs are named fits the criteria of seeking to try their claims together, because there would be no other apparent reason to include all of those claimants in a single action unless the intent was to secure a joint trial of the claims asserted in the action. The Sponsors also wish to stress that this provision is intended to mean a situation in which it is proposed or ordered that claims be tried jointly in any respect--that is, if only certain issues are to be tried jointly and the case otherwise meets the criteria set forth in this provision, the matter will be subject to Federal jurisdiction. However, it also should be noted that a mass action would not be eligible for Federal jurisdiction under this provision if any of several criteria are satisfied by the action, including (1) when all the claims asserted in the action arise out of an event or occurrence in the State where, the suit is filed and the injuries were incurred in that State and contiguous States (e.g., a toxic spill case) and (2) when the claims are asserted on behalf of the general public (and not on behalf of individual claimants or members of a purported class) pursuant to a State statute specifically authorizing such an action.

The first exception would apply only to a truly local single event with no substantial interstate effects. The purpose of this exception is to allow cases involving environmental torts such as a chemical spill to remain in State court if both the event and the injuries were truly local, even though there are some out-of-State defendants. By contrast, this exception would not apply to a product liability or insurance case. The second exception also addresses a very narrow situation, specifically a law like the California Unfair Competition Law, which allows individuals to bring a suit on behalf of the general public.

Subsection 1332(d)(11)(B)(i) includes a statement indicating that jurisdiction exists only over those plaintiffs whose claims in a mass action satisfy the jurisdictional amount requirements under section 1332(a). It is the Sponsors' intent that although remands of individual claims not meeting the section 1332 jurisdictional amount requirement may take the action below the 100-plaintiff jurisdictional threshold or the $5 million jurisdictional amount requirement, those subsequent remands should not extinguish Federal diversity jurisdiction over the action as long as the mass action met the various jurisdictional requirements at the time of removal.

Under subsection 1332(d)(11)(C), a mass action removed to a Federal court under this provision may not be transferred to another Federal court under the MDL statute (28 U.S.C. Sec. 1407) unless a majority of the plaintiffs request such a transfer. The Sponsors wish to make clear that this restriction on MDL transfers applies only to mass actions as defined in subsection 1332(d)(11); the legislation does not more broadly restrict the authority of the Judicial Panel on Multidistrict Litigation to transfer class actions removed to Federal court under this legislation. Under subsection 1332(d)(11)(D), the statute of limitations for any claims that are part of a mass action will be tolled while the mass action is pending in Federal court.

The removal provisions in Section 5 of the legislation are self- explanatory and attempt to put an end to the type of gaming engaged in by plaintiffs' lawyers to keep cases in State court. They should thus be interpreted with this intent in mind. In addition, new subsection 1453(c) provides that an order remanding a class action to State court is reviewable by appeal at the discretion of the reviewing court. The Sponsors note that the current prohibition on remand order review was added to section 1447 after the Federal diversity jurisdictional statutes and the related removal statutes had been subject to appellate review for many years and were the subject of considerable appellate level interpretive law. The Sponsors believe it is important to create a similar body of clear and consistent guidance for district courts that will be interpreting this legislation and would particularly encourage appellate courts to review cases that raise jurisdictional issues likely to arise in future cases.

Thank you, Madam Speaker, for allowing me to provide an explanation of these jurisdictional provisions.

Madam Speaker, for purposes of engaging in a colloquy with the two gentlemen from Virginia (Mr. Goodlatte) and (Mr. Boucher), I yield to the gentleman from Virginia (Mr. Goodlatte).

Madam Speaker, reclaiming my time, I appreciate the gentleman's question.

Section 4 of the bill gives Federal courts jurisdiction over class action lawsuits in which the matter in controversy exceeds the sum or value of $5 million, excluding interests and costs and at least one proposed class member and one defendant are citizens of different States or countries.

For purposes of the citizenship element of this analysis, S. 5 does not alter current law. Thus, a corporation will continue to be deemed a citizen of any State by which it has been incorporated and of the State where it has its principal place of business. However, the bill provides that for purposes of this new section, and section 1453 of title 28, an unincorporated association shall be deemed to be a citizen of the State where it has its principal place of business and the State under whose laws it organized. This provision is added to ensure that unincorporated associations receive the same treatment as corporations for purposes of diversity jurisdiction. New subsection 1332(d)(10) corrects this anomaly.

I yield to the gentleman from Virginia.

Madam Speaker, reclaiming my time, under new subsection 1332(d)(6), the claims of the individual class members in any class action shall be aggregated to determine whether the amount in controversy exceeds the sum or value of $5 million. The sponsors intend this subsection to be interpreted broadly, and if a purported class action is removed under this provision, the plaintiff shall bear the burden of demonstrating that the $5 million threshold is not satisfied. By the same token, if a Federal court is uncertain about whether a case puts $5 million or more in controversy, the court should favor exercising jurisdiction over the case.

This principle applies to class actions seeking injunctive relief as well. The sponsors intend that a matter be subject to Federal jurisdiction under this provision if the value of the matter in litigation exceeds the $5 million, either from the viewpoint of the plaintiff or the viewpoint of the defendant, regardless of the type of relief sought, such as damages, injunctive relief or declaratory relief.

The sponsors are aware that some courts, especially in the class action context, have declined to exercise Federal jurisdiction over cases on the grounds that the amount in controversy in those cases exceeded the jurisdictional threshold only when assessed from the viewpoint of the defendant.

For example, a class action seeking injunctive relief that would require a defendant to restructure its business in some fundamental way might cost a defendant well in excess of $75,000 under current law, but might have substantially less value to each plaintiff or even to the class of plaintiffs as a whole. Because S. 5 explicitly allows aggregation for the purposes of determining the amount of controversy in class actions, that concern is no longer relevant.

To the extent plaintiffs seek to avoid this rule by framing their cases as individual actions for injunctive relief, most Federal courts have properly held that in an individual case the cost of injunctive relief is viewed from the defendant's perspective. This legislation extends that principle to class actions as well.

The same approach would apply in a case involving declaratory relief. In determining how much money a declaratory relief case puts in controversy, the Federal court should include in its assessment the value of all relief and benefits that would logically flow from the granting of the declaratory relief sought by the plaintiffs.

For example, a declaration that a defendant's conduct is unlawful or fraudulent will carry certain consequences, such as the need to cease and desist from that conduct that will often cost the defendant in excess of $5 million; or a declaration that a standardized product sold throughout the Nation is defective might well put a case over the $5 million threshold, even if the class complaint did not affirmatively seek a determination that each class member was injured by the product.

The bottom line is that new section 1332(d) is intended to substantially expand Federal court jurisdiction over class actions, not to create loopholes. This provision should be read broadly, with a strong preference that interstate class actions should be heard in a Federal court if properly removed by a defendant.

Reclaiming my time, Madam Speaker, I am pleased to answer the gentleman.

The first factor is whether the claims asserted are of significant national or interstate interest. Under this factor, if a case presents issues of national or interstate significance that argues in favor of the matter being handled in Federal Court, for example, if a class action alleges a nationally distributed pharmaceutical product caused side effects, those cases presumably should be heard in Federal court because of the nationwide ramifications of the dispute and the potential interface with Federal drug laws.

Under this factor, the Federal court should inquire whether the case does present issues of national or interstate significance of this sort. If such issues are identified, that point favors the exercise of the Federal jurisdiction.

The second factor is whether the claims asserted will be governed by laws other than those of the forum State. The sponsors believe that one of the significant problems posed by multistate class actions in State court is the tendency of some State courts to be less than respectful of the laws of other jurisdictions, applying the law of one State to an entire nationwide controversy and thereby ignoring the distinct and varying State laws that should apply to various claims included in the class, depending upon where they arose.

Under this factor, if the Federal court determines that multiple State laws will apply to aspects of the class action, the determination would favor having the matter handled in the Federal court system, which has a record of being more respectful of the laws of various States in the class action controversy. Conversely, if the court concludes that the laws of the State to which the action was filed will apply to the entire controversy, that factor will favor keeping the case in State court.

The third factor is whether the class action has been pleaded in a manner that seeks to avoid Federal jurisdiction. The purpose of this inquiry is to determine whether the plaintiffs have proposed a natural class, a class that encompasses all the people and claims that one would expect to include in a class action, as opposed to proposing a class that appears to be gerrymandered solely to avoid Federal jurisdiction by leaving out certain potential class members or claims.

If the Federal court concludes that evasive pleading is involved, that factor would favor the exercise of Federal jurisdiction. On the other hand, if the class definition and claims appear to follow a natural pattern, that consideration would favor allowing the matter to be handled by a State court.

The fourth factor is whether there is a distinct nexus between, A, the forum where the action was brought, and, B, the class members, the alleged harm or the defendants. This factor is intended to take account of a major concern that led to this legislation, the filing of lawsuits in the out-of-the-way magnet State courts that have no real relationship to the controversy at hand.

Thus, if a majority of the proposed class action members and the defendants reside in the county where the suit is brought, the court might find a distinct nexus exists. The key to this factor is the notion of there being a distinct nexus. If the allegedly injured parties live in many other localities, the nexus is not distinct, and this factor would weigh heavily in favor of the exercise of Federal jurisdiction over the matter.

The fifth factor is whether the number of citizens in the forum State in the proposed plaintiff class is substantially larger than the number of citizens from any other State, and the citizens of the other members of the proposed class is dispersed among a substantial number of States.

This factor is intended to look at the geographic distribution of class members in an effort to determine the forum State's interest in handling the litigation. If all of the out-of-State class members are widely dispersed among many other States, that point would suggest that the interest of the forum State in litigating the controversy are preeminent.

The sponsors intend that such a conclusion would favor allowing the State court in which the action was originally filed to handle the litigation. However, if a court finds that the citizenship of the other class members is not widely dispersed, then a Federal forum would be more appropriate because several States other than the forum State would have a strong interest in the controversy.

The final factor is whether one or more class actions asserting the same or similar claims on behalf of the same or other persons have been filed in the last 3 years. The purpose of this factor is to determine whether a matter should be subject to Federal jurisdiction so that it can be coordinated with other overlapping or parallel class actions.

If the other class actions on the same subject have been or are likely to be filed elsewhere, the sponsors intend that this consideration would strongly favor the exercise of Federal jurisdiction. It is the sponsors' intention that this factor be broadly interpreted and that plaintiffs not be able to plead around it with creative legal theories.

If a plaintiff brings a product liability suit alleging consumer fraud or unjust enrichment, and another suit was previously brought against some of the same defendants alleging negligence with regard to the same product, this factor would favor the exercise of Federal jurisdiction over the later-filed claim.

Madam Speaker, I now yield to my colleague, the gentleman from Virginia (Mr. Boucher), to provide some examples that illustrate how these six factors would work in litigation.

I yield to the other gentleman from Virginia (Mr. Goodlatte).

Madam Speaker, reclaiming my time, yes, this provision is intended to respond to concerns that class actions with a truly local focus should not be moved to Federal court under this legislation because State courts have a strong interest in adjudicating such disputes. At the same time, this is a narrow exception that was carefully drafted to ensure that it does not become a jurisdictional loophole. Thus, each of the criteria is intended to identify a truly local class action.

First, there must be a primarily local class. Secondly, there must be at least one real local defendant. And by that the drafters meant that the local defendant must be a primary focus of the plaintiffs' claims, not just a retailer or other peripheral defendant. The defendant must be a target from whom significant relief is sought by the class, as opposed to just a subset of the class membership, as well as being a defendant whose alleged conduct forms a significant basis for the claims asserted by the class.

For example, in a consumer fraud case, alleging that an insurance company incorporated and based in another State misrepresented its policies, the local agent of the company named as a defendant presumably would not fit this criteria. He or she probably would have had contact with only some of the purported class members and, thus, would not be a person from whom significant relief would be sought by the plaintiff class viewed as a whole. And, from a relief standpoint, the real demand of the full class in terms of seeking significant relief would be on the insurance company itself.

Third, the principal injuries resulting from the actions of all the defendants must have occurred in the State where the suit was filed. This criterion means that all or almost all of the damage caused by the defendants' conduct occurred in the State where the suit was brought. If defendants engaged in conduct that allegedly injured consumers throughout the country, the case would not qualify for the local controversy exception, even if it was only brought as a single State class action.

And, fourth, no other class action involving similar allegations has been filed against any of the defendants over the last 3 years. In other words, if we are talking about a situation that results in multiple class actions, those are not the types of cases that this exception is intended to address. I would like to stress that the inquiry under this criterion should not be whether identical or nearly identical class actions have been filed. Rather, the inquiry is whether similar factual allegations have been made against the defendant in multiple class actions, regardless of whether the same causes of action were asserted or whether the proposed plaintiff classes in the prior case was the same.

Madam Speaker, I yield to the gentleman from Virginia (Mr. Goodlatte).

I yield to the gentleman from Virginia (Mr. Boucher).

Mr. Speaker, reclaiming my time, I will be happy to explain.

The mass action provision was included in the bill because mass actions are really class actions in disguise. They involve an element of people who want their claims adjudicated together, and they often result in the same abuses as class actions. In fact, sometimes the abuses are even worse because the lawyers seek to join claims that have little to do with each other and confuse a jury into awarding millions of dollars to individuals who have suffered no real injury.

Here is how the mass action provision and the current amount-in- controversy provision would work in tandem: suppose 200 people file a mass action in Mississippi against a New Jersey drug manufacturer and also name a local drug store. Three of them assert claims for a million dollars apiece, and the rest assert claims of $20,000.

The Federal Court would have jurisdiction over the mass action because there are more than 100 plaintiffs, there is minimal diversity, and the total amount of controversy exceeds $5 million, and a product liability case does not qualify for the local occurrence exception in the provision.

Then the question becomes, which claims would, in the mass action, the Federal judge keep in Federal Court, and which would be remanded? At this point the judge would have to look at each of the claims very carefully and determine whether or not they meet the $75,000 minimum.

In this regard, I would note that the plaintiffs often seek to minimize what they are seeking in the complaint so that they can stay in State court. For example, sometimes plaintiffs leave their claim for punitive damages off the original complaint to make it seem like their claims are smaller than they really are.

It is our expectation that a Federal judge would read a complaint very carefully and only remand claims that clearly do not meet the $75,000 threshold. If it is likely that a plaintiff is going to turn around in a month and add an additional claim for punitive damages, the Federal court should obviously assert jurisdiction over that individual's claims.

Finally, I would like to stress that this provision in no way is intended to abrogate 8 United States Code 3867 to narrow current jurisdictional rules. Thus, if a Federal court believed it to be appropriate, the court could apply supplemental jurisdiction in the mass action context as well.

With regard to the exceptions, it is our intent that they be interpreted strictly by a court so that they do not become loopholes for an important jurisdictional provision. Thus, the first exception would apply only in a situation where we are talking about a truly local single event with no substantial interstate effects.

The purpose of this exception is to allow cases involving environmental torts, such as a chemical spill, to remain in State court if both the event and the injuries were truly local, even though there are some out-of-state defendants.

By contrast, this exception would not apply to a product liability or insurance case. The sale of a product to different people does not qualify as an event, and the alleged injuries in such a case would be spread out over more than one State or contiguous States even if all of the plaintiffs in a particular case came from one single State.

The third exception addresses a very narrow situation, specifically a law like the California Unfair Competition Law, which allows individuals to bring a suit on behalf of the general public. Such a suit would not qualify as a mass action. However, the vast majority of cases brought under other States' consumer fraud laws which do not have a parallel provision could qualify as removable class actions.

I yield to the gentleman from Virginia.

Mr. Speaker, reclaiming my time, once again, critics of the legislation have it backwards. This legislation will streamline jurisdictional inquiries by putting an end to all of the gaming that takes place under the current system, and the so-called delay refers to procedural rules that already exist under the current system.

Under existing law, diversity of citizenship between the parties must exist, both at the time a complaint is filed and at the time a complaint is removed to Federal court. However, if the plaintiff files an amended complaint in State court that creates jurisdiction,

or if subsequent events create jurisdiction, the defendant can then remove the case to Federal court.

Current law is also clear that once a complaint is properly removed to Federal court, the Federal court's jurisdiction cannot be ousted by later events. Thus, for example, changes in the amount of controversy after the complaint has been removed would not subject a lawsuit to be remanded to State court.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I always thought that Federal judges protected the rights of everybody.

Mr. Speaker, I yield 3 minutes to the gentleman from Utah (Mr. Cannon).

Mr. Speaker, I yield 2 minutes to the gentleman from Florida (Mr. Keller).

Mr. Speaker, I yield myself the balance of the time.

Mr. Speaker, notwithstanding what we have heard from opponents of this legislation, its passage would not extinguish the legal right of any injured party, whether it be a class action, a mass action, or an individual lawsuit from proceeding in a court of competent jurisdiction in the United States. What the bill does do is it puts some sense into the class action system so that the members of the plaintiff's class will be fairly and adequately compensated rather than seeing all of their gains go to attorneys and them just getting coupon settlements from the people who have allegedly done them wrong.

I was particularly perturbed listening to the gentleman from Massachusetts (Mr. Markey), who said that the kids who start smoking at 13 and 14 years old are going to be denied their day in court, and that the tobacco companies are going to end up cashing in on a big bonanza.

Well, I had my staff, while this was going on, look at what has happened to Altria, the parent company of Philip Morris. Since the other body passed this bill, Altria stock has gone down by at least $1.50, or 2 percent. And today, the Reuters story that came out less than an hour ago says that the Dow has been dragged down by Altria.

Now, if this was the bonanza to investors in Altria, the stock would not be going down. It is not. That is a fallacious argument. Reject the substitute and pass the bill.

Mr. Speaker, pursuant to the rule, I claim the time in opposition.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in opposition to the Democratic substitute amendment and urge my colleagues to reject it. The new math behind the substitute amendment rests on the following arithmetic: if you add a number of amendments rejected by large bipartisan majorities in the other body last week and combine them with the amendment ideas overwhelmingly rejected on the House floor by a bipartisan vote last year, the sum will somehow equal a credible solution. Funny math.

Mr. Speaker, this formula simply does not add up. The American consumers and businesses will be left with change in their pockets if the amendment passes. The Democratic substitute is less than the sum of its parts and represents a quotient that renders Senate Bill 5's core reform elements meaningless.

The individual elements of this proposal deserve some comment and explanation. First, I note with some amusement that the substitute totally recycles the findings of S. 5. The pages of findings discuss abusive class action windfall settlements for trial attorneys, forum shopping, and the need for more of these large interstate class action cases to be in Federal court.

While the minority substitute reargues the compelling case for reform of the class action system, it is followed by text that will only perpetuate the crisis the findings identify. Their admitting you have a problem is the first step to recovery, and we appreciate that admission; but the minority sponsors clearly are not ready for step two.

One element of the substitute amendment is the State attorney general provision allowing any class action to be brought by or on behalf of the State attorney general to be in State court. This provision is unnecessary because when State attorneys general sue on behalf of their citizens, those actions are almost always ``parens patriae'' actions, and not class actions; and the former will be in no way affected by this bill.

Also, the provision could produce troubling associations between attorneys general and plaintiffs' lawyers. For these reasons, the Pryor amendment in the other body that this provision copies verbatim failed to garner even 40 votes on the Senate floor last week.

A second element of the substitute is the ``choice of law'' provision. This provision would not only eviscerate the bill, but also would overturn 70 years of established Supreme Court precedent and would export to Federal courts a primary expedient of class action abuse we seek to remedy: the reckless application by local courts of the law of one State to the entire Nation in large interstate cases.

This provision is reprinted from a Senate amendment by Senator Feinstein and Senator Bingaman. It was also soundly defeated.

The third element of the substitute is the so-called labor and civility rights carveout. This provision seeks to keep all class actions involving alleged civil rights and labor law violations in State court, despite the fact that the most generous racial discrimination and employment class action settlements in recent years have been in the Federal courts. The language was also offered in the other body and rejected.

Other major elements of the substitute include one our colleagues might remember as the Jackson-Lee House floor amendment to the bill in the last Congress. That amendment makes companies that incorporate abroad for tax purposes a citizen of a State and punishes them by keeping them out of Federal court. This is at least an admission that going into certain State courts as a defendant is indeed punishment, and that amendment was defeated in this House by the last Congress by a vote of 183 to 238. There is also a loophole creating a provision on mass actions and a completely unnecessary public disclosure provision, both based on Senate amendments in the other body that were offered and withdrawn.

What the minority has chosen as a substitute package certainly belies any grumblings about the lack of regular order this year. Since there is not a single original idea among the provisions that has not already been debated and defeated either in this House or the other body, it is hard to give credence to such complaints. This is a package of oldies but not goodies; oldies that have been rejected and should not be resurrected.

Finally, Mr. Speaker, a vote on this substitute is clearly just a vote to further deny or delay meaningful class action reform, and a vote on the substitute could not in any way be construed as reform of any kind but, rather, support for the trial-lawyer-dominated status quo.

I urge my colleagues to reject this recycled package of recycled amendments. The time for reform of a class action system which is out of control is now.

I urge my colleague to vote ``no'' on the substitute, and ``yes'' on

Mr. Speaker, I yield 4 minutes to the gentleman from Missouri (Mr. Blunt), the distinguished majority Whip.

Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Texas (Mr. Smith).

Mr. Speaker, I yield 5 minutes to the gentleman from Virginia (Mr. Goodlatte), the author of the bill.

Mr. Speaker, I yield 2 minutes to the gentleman from Virginia (Mr. Goodlatte).

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, the amendment in the nature of a substitute completely guts this bill. Every crippling amendment that was rejected either in this House or the other body in this Congress or the previous Congress is incorporated in this amendment. They do not have any new ideas over there. They just repackage and try to regurgitate the old ideas that have been found lacking.

The issue in this bill is very clear, and that is that we have to restore some sanity to the civil justice system by dealing with the abuses that a small group of lawyers have turned the class action system into.

When the framers of the Constitution wrote that inspired document, they gave Congress the power to regulate interstate Congress. What has happened as a result of the abuse of the class action system is that judges in small out-of-the-way counties, like Madison County, Illinois and Jefferson County, Texas end up being the ultimate arbiters of interstate commerce.

This bill puts some balance back into the system. The amendment perpetuates the existing system. Vote ``no'' on the amendments, vote ``no'' on the motion to recommit, and pass the bill.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, with the leave of the Speaker, we have the opportunity for the next hour to talk about major and historic legislation that will come before the Congress tomorrow.

The Senate has already passed legislation reforming class action lawsuit abuses, and now the House of Representatives will take it up and pass it and send it to the President of the United States.

Why is this such a historic occasion? Because abuses in class actions have been going on for many years. In fact, this House has worked for over 6 years to reform this difficulty and get to the point where we are today.

This legislation has passed the House of Representatives in each of the last three Congresses, but each time it was stymied in the United States Senate. The fact of the matter is that as the legislation progressed through the House, it got more and more votes, more and more bipartisan support, but never could get the threshold needed to pass in the other body. That has now changed. The Senate has passed legislation. It is a little different from what the House has passed in the past, but it holds the same core principle of reforming the abuses that are taking place today all across the country with class action lawsuits.

Some of these abuses are absolutely startling. In a nationwide class action lawsuit filed in Alabama against the Bank of Boston over mortgage escrow accounts, the class members won the case, but actually lost money. Under the settlement agreement, the 700,000 class members received small payments of just a couple of dollars or no money at all. About a year later they found out that anywhere from $90 to $140 had been deducted from their escrow accounts to pay their lawyers' legal feels of $8.5 million. In other words, they had to pay more than they have received in settlement in order to satisfy multi-million dollar attorneys' fees.

When some of those class members sued their class action lawyers for malpractice, the lawyers countersued them for $25 million saying their former clients were trying to harass them.

In another classic case, in the settlement of a class action lawsuit in Madison County, Illinois, against Thompson Consumer Electronics over alleged faulty television sets, consumers were eligible for rebates on future purchases ranging in value from $25 to $50 if you spent more than $100 on a Thompson Electronics product. So in other words, your settlements was a coupon to buy more of what was alleged to being defective in the first place.

How did the attorneys do? Well, the attorneys pocketed $22 million in attorneys' fees. Some consumers reportedly walked away from the settlement altogether because the form was so complicated and the attorneys' fees were so high.

Recently, President Bush had down at the Commerce Department a forum to discuss these abuses, and one of these plaintiffs in this Thompson Electronics case was there. And after explaining what she had been through and the frustration of having a television set that did not work and being represented in a class action that did not work and winding up with a coupon to buy something she did not want to buy and seeing the attorneys get $22 million in attorneys' fees, she said, Where is the justice in that?

The fact of the matter is there is no justice in our current class action system and it is, in effect, a racket.

How did we get to this point? Well, it has to do with a problem with our Federal laws. When our Founding Fathers wrote our Constitution, they very wisely provided for a Federal judiciary, a judiciary that could hear cases from different people in different States so that if in the founding of our country and ever since people felt that they might not be treated as fairly in a foreign jurisdiction in a court across the country somewhere far from where they have lived, they could have the opportunity to remove it to the Federal courts where they would in theory get more impartial treatment. This has persisted for the entire history of our country.

However, our Founding Fathers never heard of class action lawsuits. They are a 20th-century development and they are not without their merit. Class actions afford efficiencies to our courts because if people have an identical claim against one or more defendants, they can be consolidated into a class and brought before the court in an efficient manner and sometimes these cases involve hundreds of thousands or even millions of plaintiffs.

This legislation does nothing to affect the right of people to bring their class action lawsuits in State courts or Federal courts. But under the original establishment of our Federal courts, this diversity jurisdiction of the courts where you had parties from different States disputing each other, had to set a minimum amount before you could bring the case into courts; and over the years that number has risen to $75,000 per plaintiff.

So in other words, if a person who lives in my State of Virginia has an injury in the State of Maryland across the Potomac River and they bring a lawsuit in the State court, if that case involves more than $75,000 in damages, the case can be removed to the Federal courts. However, when you apply that rule to class actions, it is the same. It is $75,000, but it is per plaintiff. So if you have a million plaintiffs in a case, you have to multiply by one million times $75,000 or show a $75 billion case in order to get into Federal court. That is wrong, that a $75,000 simple case that can easily be handled in the State courts would be entitled to the Federal courts and a $75 billion case or say a $70 billion case, less than the $75 billion threshold there, cannot get into the Federal courts. It is wrong. It should be corrected, and this legislation does it in a very simple fashion.

Instead of $75,000 per plaintiff, it is $5 million, but 5 million for the entire class, all the claims added together. And this will mean that no longer will you have what is called ``forum shopping'' taking place where the plaintiffs' attorneys can choose the jurisdiction they want to bring the case in and keep it there.

Why is that significant? Because we have over 4,000 jurisdictions across the country, 4,000 different State jurisdictions, sometimes simple county governments, sometimes a collection of counties within a State, but 4,000 different places where you can bring a lawsuit. The plaintiffs attorneys, and there are only a small number of plaintiffs attorneys who handle these big class action lawsuits, the plaintiffs attorneys know which of those 4,000 jurisdictions, maybe a dozen, maybe two dozen of them, are overwhelmingly biased and favorable to the plaintiffs in a class action.

There was one State court county in Alabama a few years ago where more nationwide class action lawsuits were considered in that one county than the entire Federal judiciary of more than 600 district court judges combined. That is an abuse. Today the same thing takes place in other jurisdictions around the country, and this legislation would correct that. More importantly, it would treat all the parties fairly because not only could the defendants remove a case to Federal courts, but any or all of the plaintiffs in the case would also have the right to remove that case to Federal court under appropriate circumstances. The judge would have discretion, if the case looked like it really did principally involve people in one State, it would be kept in that State. But if it clearly is a nationwide class action lawsuit, it can be moved to Federal court where it will get more even-handed treatment and a more standard application of the law then these select jurisdictions that are getting all the class action cases today. That is what the problem is.

In addition to changing the jurisdictional requirements, there are also other things that will make it easier for plaintiffs to be treated fairly and defendants to be treated fairly as well. The Washington Post is one of more

than 100 newspapers around the country that have endorsed this legislation. And they said it so wisely a few years ago. They have been supporting this for a long time. We do not often on our side of the aisle cite The Washington Post, but this gives you an idea of how serious this problem is and how widespread the support for this problem is: ``The clients get token payments while the lawyers get enormous fees. This is not justice. It is an extortion racket that only Congress can fix.''

I say to my fellow Members of Congress, tomorrow we are going to do just that, and send a bill identical to the bill with the Senate to the President of the United States for signing into law to once and for all change this abusive extortion racket.

At this time it is my pleasure to recognize some other Members who have come down to speak on this issue. The first one is a new Member of the Congress who campaigned for election on legal reforms and who has identified this legislation as something that has great merit and we thank him for his early support, that is, the gentleman from the State of Kentucky (Mr. Davis).

Mr. Speaker, I thank the gentleman. We are also joined by another leader for legal reforms, the gentleman from Florida (Mr. Keller), who has been very supportive of this class-action legislation for several years now, and we thank him for his leadership on the issue and I am pleased to yield to him.

Mr. Speaker, I thank the gentleman.

One of the issues that the critics of this legislation argue is that it would undermine federalism principles by removing to Federal courts cases that should be decided by the State courts. Well, that is exactly the opposite of what is going on here. These critics are wrong.

The Class Action Fairness Act restores, rather than undermines, federalism principles. Why is that? Because, as I noted earlier, the fact of the matter is that these cases involve plaintiffs from often all 50 jurisdictions, and when the case is brought in one State court, in one county in that State, and that judge then makes a decision, that judge is deciding the law, not just for the State of Illinois, if you happen to be in Madison County, but he or she is deciding that case for all 50 States, and that is something that our Constitution intends be available to people to have decided not in one particular State court jurisdiction but in our Federal courts. That is one of the principal reasons why our Federal courts were established, and it is in those courts that these types of cases should be heard, but under the current rules they cannot be.

So what happens in Madison County, Illinois, as this chart shows, affects the whole country. The overwhelming majority of class actions filed in Madison County are nationwide lawsuits in which 99 percent of the class members live outside of the county. As a result, decisions reached in Madison County's courts affect consumers all over the country, and the county's elected judges effectively set national policies on important commercial issues.

So, in terms of restoring States rights, that is exactly what this legislation does. It makes sure that the rights of all 50 States are protected in the judicial proceedings related to class-action lawsuits and that one State does not have the opportunity to establish policy that directly affects other States.

Let me give my colleagues another example of that. Several years ago, State Farm Insurance Company was sued because they were requiring their adjusters in automobile cases to calculate the adjustments using what are called after-market parts. After-market parts are not used parts. They are new parts, but made by companies other than the original manufacturer of the automobile. There is nothing wrong with the quality of the parts, but they are often less expensive because they are manufactured in a competitive environment where anybody can make these parts. Therefore, the price is generally lower. And the reason why State Farm was doing that was in part because it is good policy to save money for your insureds and keep your insureds premiums low, but also because many of the insurance commissioners of the 50 States also encouraged or, as in the case of Massachusetts, even required the use of after-market parts wherever possible.

Well, this suit was brought, alleging that that was wrong, and State Farm was put in a position of being in a court in Illinois in which they were going to have the decisions of the 50 State insurance commissioners, none of whom had any problem with this policy, overturned by one court judge who was not even experienced in terms of handling insurance policies like the insurance commissioners are that do it day in and day out every day, but one judge could overturn the policies of the other 50 States. So that, indeed, is a reason for concern.

What happened? State Farm decided to go to court, to go to trial in that case and they lost. That jury and that judge found a $1.3 billion liability for something that 50 State insurance commissioners said was a perfectly legitimate thing to do, that was actually saving consumers money, but now, because they could not remove the case to Federal court, they got stuck with a $1.3 billion judgment.

Can my colleagues imagine the effect that has on the company's ability to borrow money on the value of the stock of the shareholders of a company? It has a devastating impact. That case is still under appeal.

Other companies see that and they know that when they get into these particular hand-picked jurisdictions where the judges and juries are known to be biased in favor of the plaintiff, in virtually every instance they know that when you get brought into those courts and you cannot remove the case to Federal court, where they will get fairer treatment, they better settle up. That is why we get some of these abusive cases like this one I want to bring to my colleagues' attention.

This one involved Chase Manhattan Bank. Chase Manhattan Bank was sued, and they settled the case rather than go to court and risk that. Well, what do you suppose the plaintiffs got in that settlement? This is an actual copy of one of those settlements. Thirty cents. That is what each plaintiff got in the case. What did the plaintiffs' attorneys get? They got $4 million in attorneys' fees. But the people they represented got 33 cents each.

There was a catch, though. That was back when postage cost 34 cents and you had to use a 34 cent postage stamp to mail in your acceptance of the 33 cent settlement, for a net loss of one cent. How ridiculous can you get.

It has an impact on other insurance companies, too. A few years ago, I found I had been made a plaintiff in a case brought in Santa Fe, New Mexico, against Massachusetts Mutual Life Insurance Company. What was it alleged Massachusetts Mutual had done wrong? Well, when you get your premium, your bill, from Massachusetts Mutual, you can pay it on a monthly, quarterly, or annual basis. If you pay it on a monthly basis, you pay a little more than on a quarterly basis, and that is a little bit more than on an annual basis. Why? Because if you pay on an annual basis, it costs them a lot less money to send out one bill than to send out 12 bills a year, and they have the opportunity to get that money sooner invested. So it is a little less expensive to them, and they pass that savings along to the consumer.

The plaintiff in this case and their attorney said they should have to spell out exactly what the difference in savings is rather than simply look at the bill and see that these payments are 12 times what there is and that that is a little more. They said they had to make a disclosure under laws that are not even supposed to apply to insurance companies.

Well, they went ahead and settled that case. Why? I asked them. They said because they did not want to get in the same situation that State Farm Insurance Company found itself in with a $1.3 million lawsuit. What was the agreed-upon settlement they sent to the judge in that Santa Fe, New Mexico, court? Well, it provided for $13 million in attorneys' fees, $5 million up front, $5 million over a period of time, and a nice $3 million universal life insurance policy for the plaintiffs' attorneys. Is that not nice?

Now, what did the plaintiffs get? The plaintiffs, all the plaintiffs got a promise that Massachusetts Mutual would not do this again. Now there is a new settlement proposed because that one actually was withdrawn when they realized how embarrassing it was for the plaintiffs' attorneys to get $13 million in fees and the plaintiffs would simply get a promise for nothing. Now they have changed it so the plaintiffs might get as much as $50 off on their policy. The plaintiffs' attorneys would still get the massive 8-digit settlement amount in the multimillions of dollars.

That is wrong. And it is just one more clear example of evidence why this is an extortion racket. Here are some more of what we call the class action wheel of fortune.

If you are a company, or if you work for a company that gets caught up in the class action wheel of fortune, watch out, because it can affect your job, it can affect the success of your company and get you tied up in these multimillion dollar cases where there really is little or no damage; or, even if there is, like there was in the Thompson Electronics case, where the television sets were not working, the attorneys got $22 million and the plaintiffs got a coupon, a $50 coupon or a $25 coupon to buy more of the same thing

they were not happy about in the first place.

Now, let us look at the class action wheel of fortune. Kay Bee Toys. The lawyers spin the wheel and get $1 million. The consumers get 30 percent off on selected products for 1 week. One week to go to the store and use your coupon to buy certain selected products. Maybe if you are unhappy with Kay Bee Toys in the first place you do not want to go back to settle with them. But that is okay, that is what you get, and the lawyers get a million.

Poland Spring Water, $1.35 million for the lawyers, and the consumers got a coupon for more water.

Ameritech, $16 million for the lawyers. The consumers? A $5 phone card.

Premier Cruise Lines, the lawyers got $887,000. The consumers, $30 to $40 cruise coupons. If you were not happy with your cruise and were part of this lawsuit, the lawyers got almost $1 million and you got a $30 to $40 coupon for future use on a cruise.

How about computer monitor litigation involving several companies. The lawyers got $6 million and the consumers got a $13 rebate on future product purchases.

Register.com, the lawyers got $642,500 and the consumers $5 coupons.

This kind of abuse is what this legislation is designed to correct. It is time to end the class action wheel of fortune and benefit all consumers in America who do not seek companies treated in this fashion and lawyers lining their pockets with excessive attorneys' fees because they have an extortion situation or the defendant in the case knows that if they do not pay those big attorneys' fees and get away with giving a coupon or something to the plaintiffs themselves, they could go to court and wind up with a much larger judgment because they are in an unfair, hostile court, just like State Farm found itself in.

We are going to change that so that people, when they see this situation, both the plaintiffs who find themselves made a party to a case and the defendants, can remove that case to Federal court. They will still have a right to bring the class action, but it will be examined and dealt with under more standard rules and in a fairer and more impartial judiciary.

We have more examples. This is the apple juice example. As this chart shows, in the settlement of a class action lawsuit alleging that Coca Cola improperly added sweeteners to apple juice, it was the lawyers who got a sweet deal: $1.5 million in fees and costs. Unfortunately, class members came up empty again, receiving 50-cent coupons but no cash.

Crayola Crayons. Another favorite American brand. In the settlement of a class action lawsuit over alleged improper manufacturing of Crayola Crayons, consumers received 75-cent coupons to buy more of the crayons, while their lawyers pocketed $600,000 in attorneys' fees.

Then we have the famous golf ball case. In the settlement of a class action lawsuit over the terms of a promotion for Pinnacle golf balls, the manufacturer paid $100,000 in attorneys' fees and no cash to class members, who received three free golf balls.

Well, thankfully, people are beginning to recognize this abuse. Newspapers all across the country, newspapers whose editorial boards reflect widely different ideological viewpoints on many issues have found common ground on the need to adopt the Class Action Fairness Act. More than 100 editorials so far support the legislation.

I earlier cited The Washington Post. They also had this to say about it: ``No area of U.S. civil justice cries out more urgently for reform than the high-stakes extortion racket of class actions, in which truly crazy rules permit trial lawyers to cash in at the expense of businesses. Passing this bill would be an important start to rationalizing a system that is out of control.''

The Chicago Tribune said that the Class Action Fairness Act would ``substantially end the practice of forum shopping, stop seeking a home in State courts that are deemed most likely to produce juicy settlements. This would go a long way to halt the worst class action abuses. It should be the law.'' And very soon after tomorrow, it will be the law.

News Day, a Long Island newspaper, said: ``In a deal that should cement class action lawsuit reform, three Democratic Senators have now signaled support for a bill. The tweaks they won made a good bill better. Class action lawsuits are ripe for reform. The Senate bill would curtail abuses by moving the largest nationwide class actions into Federal courts and toughening judicial scrutiny of settlements. The changes Democrats won will help ensure that largely local cases remain in State courts. Congress should enact this needed reform.''

The Orlando Sentinel said: ``The Senate's proposal is worthy of becoming law.''

The Providence Journal, from Rhode Island: ``The Senate should pass a long overdue reform to curb abuses in class action lawsuits. Class action suits involving interstate commerce, which is implied by having plaintiffs in more than one State, clearly belong in Federal court. The consumers should no longer have to bear the onerous costs of the practice of venue shopping.''

Spokesman Review, from Washington State: ``The Class Action Fairness Act would restore common sense to a valid and needed legal procedure.''

The Hartford Courant: ``After 5 years of trying, Congress appears ready to curtail the worst abuses. Legislators have debated the issue long enough. There is no good reason to wait another year to adopt this important reform.''

They said that last August. They had to wait another year. Let us hope they do not have to wait any longer than tomorrow when we will have a big bipartisan vote in support of this reform.

Earlier, I think one of my colleagues mentioned the Blockbuster case. That is the deal where in the settlement of a class action lawsuit filed in Texas against Blockbuster Video over late fees, currently on appeal to the Texas Supreme Court, the plaintiffs' lawyers will receive $9.25 million in fees and expenses and the class members will receive two coupons for movie rentals and a $1-off coupon.

While the lawyers made enough money to produce their own movie, Blockbuster customers could not even use their coupons to buy a bag of popcorn, because their coupons only covered nonfood items. The settlement allows Blockbuster to continue its practice of charging customers for a new rental period when they return a tape late. Blockbuster later changed that policy, but they should not be put in a position of being in a hostile court where attorneys get a $9.25 million settlement, and all they do is antagonize their consumers by giving them coupons.

In State court class actions, the lawyers take the money. The Bank of Boston case. The lawyers, $8.5 million. The plaintiffs actually lost money. The Blockbuster case. The lawyers, $9.25 million. The plaintiffs, $1 off the next movie. The Coca Cola case. The lawyers, $1.5 million and the plaintiffs, 50-cent coupons.

And how about Cheerios? A honey of a deal if you are an attorney. As part of a settlement of a class action lawsuit in Cook County, Illinois, against the manufacturer of Cheerios, the company put coupons for a free box of cereal in the newspapers, but it was the plaintiffs' lawyers who got the prize at the bottom of the cereal box. They milked the company for $2 million in fees, an estimated $1,200 per hour for their legal services. For these class action attorneys, Cheerios truly proved to be a ``honey of an O.''

In the case involving a lawsuit filed in California, more than 50 well-known computer manufacturers and distributors were accused of misrepresenting the screen size of their computer monitors. The nationwide class of an estimated 40 million consumers received an offer of a $13 rebate on new computers. That is great. You have a computer screen that probably does not bother most people that the size of the computer screen was a little different than was represented to them, but if they want to go out and buy a whole new computer, get a new screen, the size they might want, they get a $13 rebate. How do you suppose the attorneys did? Well, they got $6 million in legal fees.

In a recent class action lawsuit in Cane County, Illinois, against Poland Spring, the class members claimed that the company's bottled water was not pure and was not from a spring. Under the settlement, the consumers received coupons for a discount. On

what? More Poland Spring water. Poland Spring admitted no wrongdoing, and it is not changing anything about the way it bottles or markets its waters. So what was that worth to all those plaintiffs, who were represented by the attorneys in that case, who got the opportunity to get a coupon for more water? Well, those lawyers who did that good work, they got $1.3 million in attorneys' fees.

How about this one, where the lawyers sail away with fees and the consumers get coupons. In a class action lawsuit filed in Florida against Premier Cruise Lines, consumers allege they were charged for port charges higher than Premier actually paid. Under the settlement, the class members received coupons for a $30 to $40 discount on another cruise line, because Premier had since gone out of business.

Imagine that. A many-thousands-of-dollars cruise, and you can get a $30 or $40 discount if you use this coupon. What do you suppose the lawyers got? They got nearly $900,000 in attorneys' fees. While the lawyers made off with all the money, another cruise line gained a promotional opportunity.

The lawyers receive $1 million and sell out their class in the Cook County, Illinois, case against Kay Bee Toys over alleged deceptive pricing practices. The toy company paid attorneys and fees costing $1 million, but no cash to the class members. As part of the settlement, the store held a 1-week, unadvertised 30-percent-off sale on selected products.

My colleagues, this is indeed an abuse.

In addition, we want to mention something that helps these consumers in these cases. These coupon settlements will get much closer scrutiny after this law takes effect.

The bill provides a number of new protections for plaintiff class members, what you might call a consumer bill of rights, including greater judicial scrutiny for settlements that provide class members only coupons as relief for their injuries. The bill also bars the approval of settlements in which class members suffer a net loss. In addition, the bill includes provisions that protect consumers from being disadvantaged by living far away from the courthouse.

These additional consumer protections will ensure that class-action lawsuits benefit the consumers they are intended to compensate. This legislation does not limit the ability of anyone to file a class-action lawsuit. It does not change anyone's right to recovery. It simply closes the loophole allowing Federal courts to hear big lawsuits involving truly interstate cases, while ensuring that purely local controversies remain in State courts.

This is exactly what the framers of the Constitution had in mind when they established Federal diversity jurisdiction. It has taken us more than 200 years but it is now time to make clear that these devices that the framers of the Constitution did not know about, but, certainly if they did, would be very concerned about, now would be entitled to be heard in the court best suited to decide these complicated, multistate, multiplaintiff, sometimes millions of plaintiff cases, sometimes many defendants in the case.

Mr. Speaker, there are more abuses of class-action lawsuits. I think we have covered a great many of them. I think we have made plain that this is a situation deserving of repair by the Congress. In fact, I have been working on this legislation for over 6 years and it is long overdue. These abuses keep piling up. Each time we bring the legislation up, we have more and more of these examples.

It is long overdue that we finally have the opportunity to correct this problem. It is one that has a very simple correction. End the abusive forum shopping by a handful of lawyers who specialize in these cases and know the handful of jurisdictions where they are going to get this kind of spectacular treatment on one side and unfair treatment on the other side, and let us go to what our judicial system is supposed to be all about; and that is fair treatment, equal application of the laws and standards that are imposed to make sure that these kinds of abusive cases are heard in fair courts, so that businesses do not feel like they are forced to deal with a situation where they have to settle the case because they know they are in a jurisdiction that is going to be unfair to them and do not want to wind up in the same situation that State Farm Insurance Company found itself in several years ago, and is still in, because of the slow time it takes to handle an appeal through the courts.

In recent years State courts have been flooded with class actions. As a result of the adoption of different class-action certification standards in the various States, the same class might be certifiable in one State and not another, or certifiable in State court but not in Federal court. This creates the potential for abuse of the class-action device, particularly when the case involves parties from multiple States or requires the application of the laws of many States.

For example, some State courts routinely certify classes before the defendant is even served with a complaint and given a chance to defend itself. Other State courts employ very lax class-action treatment certification criteria, rendering virtually any controversy subject to class-action treatment.

There are instances where a State court in order to certify a class has determined that the law of that State applies to all claims, including those of purported class members who live in other States. This has the effect of making the law of that State applicable nationwide. Where is the State's rights in that? Where are the principles of federalism in that, where one State court judge can tell the other 49 States what the law should be in their States? That is not what is intended and that is why our Founding Fathers intended to have Federal courts handle cases just like these.

The existence of State courts that broadly apply class certification rules encourages plaintiffs to forum shop for the court that is most likely to certify a purported class. Believe me, they do just that. Because most State courts are going to do a good job handling class actions, but because the system is designed the way it is, those attorneys will bring those cases to just a handful, a dozen or two dozen jurisdictions around the country, and that is what creates the unfairness and that is why the Federal courts need to be available as a forum to decide these cases if any of the parties choose to seek to remove the case to those courts.

In addition to forum shopping, parties frequently exploit major loopholes in Federal jurisdiction statutes to block the removal of class actions that belong in Federal court. For example, plaintiffs' counsel may name parties that are not really relevant to the class claims in an effort to destroy diversity. How fair is that? Somebody gets sued and added to a lawsuit not because they have done anything wrong, but because by adding them into the case they can prevent the case from being removed to Federal court. That abuse is also corrected.

In other cases, counsel may waive Federal law claims. In other words, not fully represent their clients, the plaintiffs, in some of the measures that may be available to them under Federal laws, simply ignore those rights, ignore those laws, and bring the case in State court so that it cannot be removed to the Federal court. It will remain in the State court.

Another problem created by the ability of State courts to certify class actions which adjudicate the rights of citizens of many States is that oftentimes more than one case involving the same class is certified at the same time; in other words, in two different States or in two different counties of the same State. Under the Federal rules, that problem is solved.

In the Federal court system, those cases involving common questions of fact may be transferred to one district for coordinated or consolidated pretrial proceedings. When these class actions are pending in State courts, however, there is no corresponding mechanism for consolidating the competing suits. It is inefficient, it is wasteful, and it results in unfair and differing results when you have two different State courts deciding the same thing for the same nationwide group of plaintiffs. There is no corresponding mechanism for consolidating the competing suits in State courts. Instead, a settlement or judgment in any of the cases makes

the other class actions moot. This creates an incentive for each class counsel to obtain a quick settlement of the case, to be the first one to settle, and an opportunity for the defendant to play the various class counsels against each other and drive the settlement value down.

The loser in this system is always the class members, the plaintiffs, the people who are getting these coupons and so on, while they watch their attorneys get multimillion-dollar settlements. The loser in the system is the class member whose claim is extinguished by the settlement at the expense of counsel seeking to be the one entitled to recovery of fees.

This bill is designed to prevent these abuses by allowing large interstate class-action cases to be heard in Federal court. It would expand the statutory diversity jurisdiction of the Federal courts to allow class-action cases to be brought in or removed to Federal court.

Mr. Speaker, I yield to the gentleman from Georgia (Mr. Gingrey), another Member of the House who has been a major contributor to our effort to reform class-action lawsuit abuse, someone who has championed legal reform and has done an outstanding job representing his constituents.

I thank the gentleman for his support of this legislation and his very cogent reasoning about why it is needed.

I have one last chart I want to show before we close, and that is this poll taken in USA Today about the opinions of the public on class action lawsuits.

As I said at the outset, this bill does not take away the right of anybody to bring a class action lawsuit, and class action lawsuits have their place in our legal system.

But the American public knows what is going on. When they were asked who benefits most from class action lawsuits? Lawyers for the plaintiffs, by far the number one answer. Forty-seven percent.

The second answer, lawyers for the companies. They get paid too, 20 percent. The companies being sued 7 percent. Remember they get to give out those products promoting their products. They get out of what could be a worse situation. And the buyers of the products, 5 percent. And the plaintiffs 9 percent.

The overwhelming majority of the public, more than 70 percent, know

that class action lawsuits are not serving the people that they are supposed to serve. The lawyers get the cash, the plaintiffs get the coupons, the consumers pay higher prices for goods and services, and it is an abuse.

Tomorrow we have the opportunity to correct it once and for all, to pass a bill that will be identical to the bill passed by the Senate and send it to the President of the United States for his signature. He has been a champion on this issue. He has indicated his willingness to sign that legislation.

I urge my colleagues to get the job done, to pass this legislation and reform the abuses in our class action lawsuit industry that have taken place, and let us return it to class action justice for plaintiffs who deserve it.

Mr. Speaker, I yield myself such time as I may consume,

and I thank the gentleman from Georgia (Mr. Gingrey) for yielding me the customary 30 minutes.

Mr. Speaker, for years the Republican majority proposed so-called ``reforms'' to class action lawsuits. Time after time, the House would pass legislation limiting class action plaintiffs only to see their attempts to dismantle the class action system die either with Senate inaction or in conference.

Mr. Speaker, it looks as though the Republican leadership has finally gamed the system to the point where it appears that they will succeed in severely limiting the rights of many of the most vulnerable citizens in this country.

Dismantling the class action lawsuit system has long been a big priority for big business groups. Last year, for instance, the Chamber spent $50 million in lobbying. Now they are getting what they paid for, because this bill obliterating the class action system is one of the first bills to be considered in this Congress.

Mr. Speaker, it is clear to me that despite the McCain-Feingold Campaign Finance Reform law, we still have a pay-to-play system. The other body considered this bill first. The plan was that the House take up the Senate bill if the other body could pass a clean bill without any amendments. The Senate succeeded in passing a bad bill and the House is now following suit.

Let me be clear. Despite the rhetoric on the other side, this is still a bad bill. Today, the other side will tell scary stories about greedy trial lawyers and how awful and unfair their practices are, but the Republican leadership will not talk about how this bill limits the rights of low-wage workers to seek justice from employers who have cheated them out of their wages or have discriminated against them. They will not talk about how they are limiting workers' rights and, with the passage of this bill, are encouraging the bad apples in the big business community to continue cheating their employees out of their hard-earned wages and rights.

In most cases, State laws provide greater civil rights protections than Federal law. Every State has passed a law prohibiting discrimination on the basis of disability. Some States have laws that go beyond the Federal Americans with Disabilities Act.

The same is true with age discrimination. There are also States that provide protections that are not covered by Federal law. These Federal laws are intended to be floors, not ceilings. We should commend States that extend further rights to their citizens, not punish them.

This bill federalizes class action and mass torts, moving these cases from State to Federal courts. If the bill is signed into law, hard- working Americans will be denied the right to use their own State courts to bring class actions against corporations that violate laws that are unique to their State.

Consider, for example, a class action lawsuit brought against a national corporation by employees of a store in Massachusetts because that store discriminates on the basis of ancestry, place of birth, or citizenship status. Massachusetts provides protections afforded by State law, but not by Federal law. Under this bill, except in very rare instances, that case would be sent to a Federal court instead of State court, even though the case is based on a violation of State law.

A class action lawsuit against Wal-Mart was recently filed in Massachusetts. The suit alleges that Wal-Mart failed to pay employees for the time worked and did not give them proper meal and rest breaks. These are serious charges. If the Class Action Fairness Act is signed into law, future cases like this would not be tried in Massachusetts court, but instead would be transferred to Federal court.

Mr. Speaker, we know that the Federal courts are already over burdened, but we also know that the Federal courts are less likely to certify classes or provide relief for violations of State law. In effect, this bill is rigging the system on behalf of the corporations and against the interests of workers.

We often hear a lot of lofty rhetoric on the other side about States rights. Apparently the other side only supports the rights of States if they agree with the laws of those States.

Mr. Speaker, this bill is opposed by the Leadership Conference of Civil Rights; the Alliance for Justice; the National Conference of State Legislatures; 14 State Attorneys General; AFSCME; and environmental groups like Friends of the Earth, Greenpeace, the Sierra Club, and the National Environmental Trust. These are just a few of the groups who oppose this bill, and none of them represent the trial lawyers. They oppose this bill because it will limit fairness, it will limit justice, and it will ultimately hurt everyday Americans.

Mr. Speaker, this is not about trial lawyers; it is about average citizens. The opponents of this bill are committed to fairness. We are committed to justice. And this bill robs the American people of their rights to fairness and justice in the judicial system. It closes the courthouse door in the face of people who need and deserve help.

I oppose this bill, and I urge my colleagues to support the Conyers substitute.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I include for the Record a letter signed by 14 Attorneys General, including Darrell McGraw, the Attorney General of the State of West Virginia, in opposition to this bill.

State of New York,

Office of the Attorney General,

Albany, NY, February 7, 2005.

Hon. Bill Frist,

Majority Leader, U.S. Senate, Dirksen Senate Office Building,

Washington, DC.

Hon. Harry Reid,

Minority Leader, U.S. Senate, Hart Senate Office Building,

Washington, DC.

Dear Mr. Majority Leader and Mr. Minority Leader: On behalf

of the Attorneys General of California, Illinois, Iowa,

Kentucky, Maine, Maryland, Massachusetts, Minnesota, New

Jersey, New Mexico, New York, Oklahoma, Oregon, Vermont and

West Virginia, we are writing in opposition to S. 5, the so-

called ``Class Action Fairness Act,'' which will be debated

today and is scheduled to be voted on this week. Despite

improvements over similar legislation considered in prior

years, we believe S. 5 still unduly limits the right of

individuals to seek redress for corporate wrongdoing in their

state courts. We therefore strongly recommend that this

legislation not be enacted in its present form.

As you know, under S. 5, almost all class actions brought

by private individuals in state court based on state law

claims would be removed to federal court, and, as explained

below, many of these cases may not be able to continue as

class actions. We are concerned with such a limitation on the

availability of the class action device because, particularly

in these times of tightening state budgets, class actions

provide an important ``private attorney general'' supplement

to the efforts of state Attorneys General to prosecute

violations of state consumer protection, civil rights, labor,

public health and environmental laws.

We recognize that some class action lawsuits in both state

and federal courts have resulted in only minimal benefits to

class members, despite the award of substantial attorneys'

fees. While we support targeted efforts to prevent such

abuses and preserve the integrity of the class action

mechanism, we believe S. 5 goes too far. By fundamentally

altering the basic principles of federalism, S. 5, if enacted

in its present form, would result in far greater harm than

good. It therefore is not surprising that organizations such

as AARP, AFL-CIO, Consumer Federation of America, Consumers

Union, Leadership Conference on Civil Rights, NAACP and

Public Citizen all oppose this legislation in its present

form.

1. class actions should not be ``federalized''

S. 5 would vastly expand federal diversity jurisdiction,

and thereby would result in most class actions being filed in

or removed to federal court. This transfer of jurisdiction in

cases raising questions of state law will inappropriately

usurp the primary role of state courts in developing their

own state tort and contract laws, and will impair their

ability to establish consistent interpretations of those

laws. There is no compelling need or empirical support for

such a sweeping change in our long-established system for

adjudicating state law issues. In fact, by transferring most

state court class actions to an already overburdened federal

court system, this bill will delay (if not deny) justice to

substantial numbers of injured citizens. Moreover, S. 5 is

fundamentally flawed because under this legislation, most

class actions brought against a defendant who is not a

``citizen'' of the state will be removed to federal court, no

matter how substantial a presence the defendant has in the

state or how much harm the defendant has caused in the state.

2. clarification is needed that s. 5 does not apply to state attorney

general actions

State Attorneys General frequently investigate and bring

actions against defendants who have caused harm to our

citizens, usually pursuant to the Attorney General's parens

patriae authority under our respective state consumer

protection and antitrust statutes. In some instances, such

actions have been brought with the Attorney General acting as

the class representative for the consumers of the state. We

are concerned that certain provisions of S. 5 might be

misinterpreted to impede the ability of the Attorneys General

to bring such actions, thereby interfering with one means of

protecting our citizens from unlawful activity and its

resulting harm. That Attorney General enforcement actions

should proceed unimpeded is important to all our

constituents, but most significantly to our senior citizens

living on fixed incomes and the working poor. S. 5 therefore

should be amended to clarify that it does not apply to

actions brought by any State Attorney General on behalf of

his or her respective state or its citizens. We understand

that Senator Pryor will be offering an amendment on this

issue, and we urge that it be adopted.

3. many multi-state class actions cannot be brought in federal court

Another significant problem with S. 5 is that many federal

courts have refused to certify multi-state class actions

because the court would be required to apply the laws of

different jurisdictions to different plaintiffs--even if the

laws of those jurisdictions are very similar. Thus, cases

commenced as state class actions and then removed to federal

court may not be able to be continued as class actions in

federal court.

In theory, injured plaintiffs in each state could bring a

separate class action lawsuit in federal court, but that

defeats one of the main purposes of class actions, which is

to conserve judicial resources. Moreover, while the

population of some states may be large enough to warrant a

separate class action involving only residents of those

states, it is very unlikely tbat similar lawsuits will be

brought on behalf of the residents of many smaller states.

This problem should be addressed by allowing federal courts

to certify nationwide class actions to the full extent of

their constitutional power--either by applying one state's

law with sufficient ties to the underlying claims in the

case, or by ensuring that a federal judge does not deny

certification on the sole ground that the laws of more than

one state would apply to the action. We understand that

Senator Jeff Bingaman will be proposing an amendment to

address this problem, and that amendment should be adopted.

4. civil rights and labor cases should be exempted

Proponents of S. 5 point to allegedly ``collusive''

consumer class action settlements in which plaintiffs'

attorneys received substantial fee awards, while the class

members merely received ``coupons'' towards the purchase of

other goods sold by defendants. Accordingly, this ``reform''

should apply only to consumer class actions. Class action

treatment provides a particularly important mechanism for

adjudicating the claims of low-wage workers and victims of

discrimination, and there is no apparent need to place

limitations on these types of actions. Senator Kennedy

reportedly will offer an amendment on this issue, which also

should be adopted.

5. the notification provisions are misguided

S. 5 requires that federal and state regulators, and in

many cases state Attorneys General, be notified of proposed

class action settlements, and be provided with copies of the

complaint, class notice, proposed settlement and other

materials. Apparently this provision is intended to protect

against ``collusive'' settlements between defendants and

plaintiffs' counsel, but those materials would be unlikely to

reveal evidence of collusion, and thus would provide little

or no basis for objecting to the settlement. Without clear

authority in the legislation to more closely examine

defendants on issues bearing on the fairness of the proposed

settlement (particularly out-of-state defendants over whom

subpoena authority may in some circumstances be limited), the

notification provision lacks meaning. Class members could be

misled into believing that their interests are being

protected by their government representatives, simply because

the notice was sent to the Attorney General of the United

States, State Attorneys General and other federal and state

regulators.

Equal access to the American system of justice is a

foundation of our democracy. S. 5 would effect a sweeping

reordering of our nation's system of justice that will

disenfranchise individual citizens from obtaining redress for

harm, and thereby impede efforts against egregious corporate

wrongdoing. Although we ful1y support the goal of preventing

abusive class action settlements, and would be willing to

provide assistance in your effort to implement necessary

reforms, we are likewise committed to maintaining our federal

system of justice and safeguarding the interests of the

public. For these reasons, we oppose S. 5 in its present

form.

Sincerely,

Eliot Spitzer, Attorney General of the State of New York;

W.A. Drew Edmondson, Attorney General of the State of

Oklahoma; Bill Lockyer, Attorney General of the State

of California; Lisa Madigan, Attorney General of the

State of Illinois; Tom Miller, Attorney General of the

State of Iowa; Gregory D. Stumbo, Attorney General of

the State of Kentucky; G. Steven Rowe, Attorney General

of the State of Maine; J. Joseph Curran, Attorney

General of the State of Maryland; Tom Reilly, Attorney

General of the State of Massachusetts; Mike Hatch,

Attorney General of the State of Minnesota; Patricia A.

Madrid, Attorney General of the State of New Mexico;

Hardy Myers, Attorney General of the State of Oregon;

William H. Sorrell, Attorney General of the State of

Vermont; Darrell McGraw, Attorney General of the State

of West Virginia.

Mr. Speaker, I yield 7 minutes to the gentleman from Massachusetts (Mr. Markey), the dean of our delegation.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, my colleague from Georgia had kind of quoted from a study implying that most of these class-action cases would remain in States, that the whole purpose of this bill is to try to move them to Federal courts.

Let me quote from a CBO cost estimate which says that under this bill, most class-action lawsuits would be heard in Federal District Court, rather than in the State court.

Mr. Speaker, I yield 5 minutes to the gentlewoman from Texas (Ms. Jackson-Lee).

(Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)

Mr. Speaker, I yield 1 minute to the gentlewoman from Texas (Ms. Jackson-Lee).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I guess it is politically popular to attack lawyers and judges, but what I am concerned about is what this bill will do to average people who are seeking remedies for being mistreated.

I want to read an excerpt from the Leadership Conference on Civil Rights, AFL/CIO, and the Alliance for Justice statement. One of things they point out is that nowhere has a case been made that abuses exist in anti-discrimination and wage and hour class action litigation.

They point out by allowing dozens of employees to bring one lawsuit together, the class action device is frequently the only means for low- wage workers who have been denied mere dollars a day to recover their lost wages. Moreover, class actions are also often the only means to effectively change a policy of discrimination.

Wage and hour class actions are most often brought in States under the law of the State in which the claim arises. The reason is that State wage and hour laws typically provide more complete remedies for victims of wage and hour violations than the Federal wage and hour statute. For instance, the Federal Fair Labor Standards Act offers no protection, no protection for a worker who works 30 hours and is paid for 20, so long as the worker's total pay for the 30 hours worked exceeds the Federal minimum wage. However, many States have payment of wage laws that would require that the workers be fully paid for those additional 10 hours of work.

Also, Federal law provides no remedy for part-time workers who often work 10- to 16-hour days, yet earn no overtime because they work less than 40 hours per week. At least six States and territories, however, including California and Alaska, require payment of overtime after a prescribed number of hours of work in a single day. Likewise, State laws increasingly provide greater civil rights protections than Federal laws. For example, every State has passed a law prohibiting discrimination on the basis of disability. Some of these State statutes provide a broader definition of disability and a greater range of protection in comparison to the Federal Americans with Disabilities Act, including California, Minnesota, New Jersey, New York, Rhode Island, Washington, and West Virginia.

In addition, every State has enacted a law prohibiting age discrimination in employment. Some of these State laws, including those in California, Michigan, Ohio and the District of Columbia, contain provisions affording greater protection to older workers than comparable provisions of the Federal Age Discrimination and Employment Act. In addition, many State laws provide protections to classifications not covered by Federal law. For example, many States provide expanded benefits based on marital status, and I could go on and on and on.

The point of the matter here is that this legislation is basically denying people the rights and the protections that many of them have fought so hard to earn in their States, and it leads to more injustice and more unfairness.

Leadership Conference on Civil Rights, Alliance for

Justice, AFL-CIO,

Washington, DC, February 2, 2005.

Exempt Civil Rights and Wage and Hour Cases From S. 5

Dear Senators, On behalf of the undersigned civil rights

and labor organizations, we write to urge you to support an

amendment being offered by Senators Kennedy and Cantwell to

the Class Action Fairness Act (S. 5), which would exempt

civil rights and wage and hour state law cases. The amendment

is necessary in order to ensure that S. 5 does not adversely

impact the workplace and civil rights of ordinary Americans

by making it extremely difficult to enforce civil rights and

labor rights.

During Congress' extensive examination of the merits of

class action lawsuits, nowhere has a case been made that

abuses exist in anti-discrimination and wage and hour class-

action litigation. By allowing dozens of employees to bring

one lawsuit together, the class-action device is frequently

the only means for low wage workers who have been denied mere

dollars a day to recover their lost wages. Moreover, class

actions also are often the only means to effectively change a

policy of discrimination. These suits level the playing field

between individuals and those with more power and resources,

and permit courts to decide cases more efficiently.

Wage and hour class actions are most often brought in state

courts under the law of the state in which the claims arise.

The reason is that state wage and hour laws typically provide

more complete remedies for victims of wage and hour

violations than the federal wage and hour statute. For

instance, the federal Fair Labor Standards Act (FLSA) offers

no protection for a worker who works 30 hours and is paid for

20, so long as the worker's total pay for the 30 hours worked

exceeds the federal minimum wage. However, many states have

``payment of wage'' laws that would require that the worker

be fully paid for those additional 10 hours of work. Also,

federal law provides no remedy for part-time workers who

often work 10-16 hour days, yet earn no overtime because they

work less than 40 hours per week. At least six states and

territories, however, including California and Alaska,

require payment of overtime after a prescribed number of

hours are worked in a single day.

Likewise, state laws increasingly provide greater civil

rights protection than federal law. For example, every state

has passed a law prohibiting discrimination on the basis of

disability. Some of these states statutes provide a broader

definition of disability and a greater range of protection in

comparison to the federal Americans with Disabilities Act,

including California, Minnesota, New Jersey, New York, Rhode

Island, Washington, and West Virginia. In addition, every

state has enacted a law prohibiting age discrimination in

employment, and some of these state laws--including those of

California, Michigan, Ohio and the District of Columbia--

contain provisions affording greater protection to older

workers than comparable provisions of the federal Age

Discrimination in Employment Act (ADEA).

In addition, many state laws provide protections to

classifications not covered by federal law. For example, the

following states provide protection for marital status:

Alaska, California, Connecticut, Delaware, Florida, Hawaii,

Illinois, Maryland, Michigan, Minnesota, Montana, Nebraska,

New Hampshire, New Jersey, New York, North Dakota, Oregon,

Virginia, Washington, and Wisconsin. Moreover, several states

have expanded Title VII's ban on national origin

discrimination to prohibit discrimination on the basis of

ancestry, or place of birth, or citizenship status. These

states include Arkansas, California, Colorado, Connecticut,

Hawaii, Illinois, Indiana, Kansas, Maine, Massachusetts,

Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, South

Dakota, Vermont, West Virginia, Wisconsin, Wyoming, and the

Virgin Islands.

Finally, 31 states have enacted legislation prohibiting

genetic discrimination in the workplace--an important

protection given the rapid increase in the ability to gather

this type of information. The 31 states are Arizona,

Arkansas, California, Connecticut, Delaware, Hawaii, Iowa,

Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan,

Minnesota, Missouri, Nebraska, Nevada, New Hampshire, New

Jersey, New York, North Carolina, Oklahoma, Oregon, Rhode

Island, South Dakota, Texas, Utah, Vermont, Virginia,

Washington, and Wisconsin. In addition, Florida and Illinois

have enacted more limited protections against genetic

discrimination.

Under S. 5, citizens are denied the right to use their own

state courts to bring class actions against corporations that

violate these state wage and hour and state civil rights

laws, even where that corporation has hundreds of employees

in that state. Moving these state law cases into federal

court will delay and likely deny justice for working men and

women and victims of discrimination. The federal courts are

already overburdened. Additionally, federal courts are less

likely to certify classes or provide relief for violations of

state law.

In light of the lack of any compelling need to sweep state

wage and hour and civil rights claims into the scope of the

bill, we urge you to support an amendment to exempt

these claims from the provisions of S. 5. If you have any

questions, or need further information, please call Nancy

Zirkin, Deputy Director of the Leadership Conference on

Civil Rights (202-263-2880); Sandy Brantley, Legislative

Counsel, Alliance for Justice (202-822-6070); or Bill

Samuel, Legislative Director, AFL-CIO (202-637-5320).

Sincerely,

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I would like to read a couple of cases here.

Mrs. Higgins of Tennessee was a 39-year-old woman who died of a sudden heart attack after taking Vioxx. She was the mother of a 9-year- old son. When she was diagnosed with the early onset of rheumatoid arthritis, Vioxx was prescribed. She had no former cardiac problems or family history. According to her medical records, Mrs. Higgins was in otherwise excellent health; but on September 25, 2004, she died of a sudden heart attack, less than a month after she started taking Vioxx. She was buried on the very day in September that Merck took Vioxx off the market.

On October 28, 2004, her husband, Monty, filed a claim against Merck in the Superior Court of New Jersey, Atlantic City Division.

Why New Jersey? This couple is from Tennessee. Because that is the State where Merck is headquartered. In an interview on ``60 Minutes,'' Mr. Higgins said, ``I believe my wife would be here if Merck had decided to take Vioxx off the market just 1 month earlier.''

Then there is Richard ``Dickie'' Irvin of Florida who was a 53-year- old former football coach and president of the Athletic Booster Association. He had received his college football scholarship and was inducted into the school's football hall of fame. He went on to play in Canadian league football until suffering a career-ending injury. In addition to coaching, he worked at a family-owned seafood shop where he was constantly moving crates of seafood. He rarely went to see a doctor and had no major medical problems.

In April of 2001, Mr. Irvin was prescribed Vioxx for his football knee injury from years ago. Approximately 23 days after he began taking Vioxx, Mr. Irvin died from a sudden, unexpected heart attack. An autopsy revealed that his heart attack was caused by a sudden blood clot. This is the exact type of injury that has been associated with Vioxx use. Mr. Irvin and his wife of 31 years had four children and three grandchildren.

I could read more cases involving Vioxx, but most people in this House, Mr. Speaker, probably agree with me that Merck should be held accountable if they knew about the harmful effects of Vioxx.

The class action section of this bill, however, would allow Merck and other corporate defendants to delay their day of reckoning for years and years and years; and justice for these individuals' families would be delayed; and justice delayed is justice denied. Again, this bill should be defeated.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Let me close by saying, this bill is not about lawyers. It is about people, and it is about State governments and attorney generals being able to pass laws in their own States to better protect their people. And it is ironic and it is almost kind of laughable that the majority, which has made it a point to argue on behalf of States right, is basically turning its back on what States have done to protect their people.

The previous speaker talked about making sure that the plaintiffs got what they deserved. Well, we are concerned about making sure that the plaintiffs get their day in court. And under this bill it makes it more difficult, especially for low-wage workers, for people who are battling discrimination to be able to have their day in court.

The system clearly can be improved. Nobody is arguing that. What I am saying here is that the bill before us does not provide the justice and the fairness that I think is appropriate. So I would urge my colleagues to oppose this bill.

National Conference

of State Legislatures,

February 2, 2005.

U.S. Senate,

Washington, DC.

Dear Senator: On behalf of the National Conference of State

Legislatures (NCSL), I am urging you to oppose passage of S.

5, the ``Class Action Fairness Act of 2005.'' This

legislation will federalize class actions involving only

state law claims. S. 5 undermines our system of federalism,

disrespects our state court system, and clearly preempts

carefully crafted state judicial processes which have been in

place for decades regarding the treatment of class action

lawsuits. The overall tenor of S. 5 sends a disturbing

message to the American people that state court systems are

somehow inferior or untrustworthy.

S. 5 amends the Federal Rules of Civil Procedure to grant

federal district courts original diversity jurisdiction over

any class action lawsuit where the amount in controversy

exceeds $5,000,000 or where any plaintiff is a citizen of a

different state than any defendant, or in other words, any

class action lawsuit. The effect of S. 5 on state

legislatures is that state laws in the areas of consumer

protection and antitrust which were passed to protect the

citizens of a particular state against fraudulent or illegal

activities will almost never be heard in state courts.

Ironically, state courts, whose sole purpose is to interpret

state laws, will be bypassed and the federal judiciary will

be asked to render judgment in these cases. The impact of S.

5 is that state processes will be preempted by federal ones

which aren't necessarily better.

NCSL opposes the passage of federal legislation, such as S.

5 which preempts established state authority. State courts

have traditionally and correcdy been the repository for most

class action lawsuits because state laws, not federal ones,

are at issue. Congress should proceed cautiously before

permitting the federal government to interfere with the

authority of states to set their own laws and procedures in

their own courts.

NCSL urges Congress to remember that state policy choices

should not be overridden without a showing of compelling

national need. We should await evidence demonstrating that

states have broadly overreached or are unable to address the

problems themselves. There must be evidence of harm to

interests of national scope that require a federal response,

and even with such evidence, federal preemption should be

limited to remedying specific problems with tailored

solutions, something that S. 5 does not do.

I urge you to oppose this legislation. Please contact Susan

Parnas Frederick

at the National Conference of State

Legislatures at 202-624-3566 or

[email protected] for further information.

Sincerely,

Michael Blaboni,

New York State Senator; and Chair,

NCSL Law and Criminal Justice Committee.

Mr. Speaker, I yield back the balance of my time.

Madam Speaker, I yield myself such time as I may consume.

Madam Speaker, with the consideration of this legislation, the majority begins their assault on our Nation's civil justice system. Today we will attempt to preempt State class actions. Next month we will take up a bankruptcy bill that massively tilts the playing field in favor of credit card companies and against ordinary consumers and workers alike. On deck and pending are equally one-sided medical malpractice bills and asbestos bills that both cap damages and eliminate liability to protect some of the most egregious wrongdoers in America.

The majority's assault on victims and consumers is unprecedented in its scope and stunning in its breadth. Collectively, these measures will close the courthouse doors on millions of Americans harmed by intentional wrongdoing, negligence, and fraud. And so, long after the 109th Congress has forgotten, American consumers and workers will be paying the price for these special interest bills through needless injuries and uncompensated harm.

This legislation will remove class actions involving State law issues from State courts, the forum most convenient for victims of wrongdoing and with the judges most familiar with the substantive law, and this legislation will move it to the Federal courts where the case will take far longer to resolve and is far less likely to be certified.

Now, you do not need to take my word for it. Let us just ask big business itself. The Nation's largest bank, Citicorp admits ``the practical effect (of the bill will) be that many cases will never be heard. Federal judges facing overburdened dockets and ambiguities about applying State laws in a Federal court, often refuse to grant standing to class action plaintiffs.''

Forbes Magazine writes, ``The legislation will . . . make it more difficult for plaintiffs to prevail, since . . . federal courts are . . . less open to considering . . . class action claims.''

Passage of this legislation would be particularly devastating for civil rights cases and labor law cases. As the Lawyers Committee For Civil Rights Under The Law explained, ``The consequences of the legislation for civil rights class actions . . . will be astounding and, in our view, disastrous. Redirecting State law class actions to the Federal courts will choke Federal court dockets and delay or foreclose the timely and effective determination of Federal (civil rights) cases.''

Since the November election we have heard a lot of talk about values, and that is fine; but will someone during this discourse today tell me where the value is in denying senior citizens who suffered heart attacks because they took Vioxx for their arthritis? Where is the morality in preventing poor workers from joining together to obtain compensation when unscrupulous employers pay them slave-labor wages?

Where is the righteousness in telling victims of discrimination that they will have to wait years for a Federal court to consider violations of their own State laws?

If we have learned anything from the Enron, TYCO, Firestone, and other legal debacles, it is that our citizens need more protection against wrongdoers in our society, not less. And yet the class action bill before us takes us in precisely the opposite direction.

The House should reject this one-sided, anti-consumer and anti-civil rights legislation.

Madam Speaker, I reserve the balance of my time.

Madam Speaker, I yield myself as much time as I may consume.

The gentleman from Virginia (Mr. Boucher) is a dear friend of mine, and I merely want to take one observation that he made, that this is just a procedural process and that there is no substantive changes, but I say to him, if the legal system is rigged and the rules are stacked against you, you never have to get to the substance; you do not even get your day in court.

That is the problem with this bill. It is a procedural process that prevents people from bringing actions in State courts, and we are sending it to the Federal courts when both the Federal judiciary has spoken against this measure and the State judges have spoken against this measure as well. I think that that should be a very instructive criticism against this bill.

The proposal before us is opposed by both State and Federal judiciaries. It is opposed by the National Council of State Legislatures; consumers and public interest groups, including Public Citizen, the Consumers Federation of America, the Consumers Union, the United States PIRG; a coalition of environmental advocates; health advocates, including the Campaign for Tobacco Free Kids; civil rights groups such as the Alliance for Justice, the Leadership Conference on Civil Rights, the National Association for the Advancement of Colored People, and the Lawyers' Committee for Civil Rights and labor such as the American Federation of Labor-Congress of Industrial Organizations,

Mr. Speaker, I am pleased to yield 4 minutes to my good friend, the gentleman from Massachusetts (Mr. Markey) from the Committee on Energy and Commerce. He has worked with us on many of these issues.

Mr. Speaker, I yield 2\1/2\ minutes to the gentlewoman from California (Ms. Linda T. Sanchez).

(Ms. LINDA T. SANCHEZ and was given permission to revise and extend her remarks.)

Mr. Speaker, I yield 3 minutes to the distinguished gentleman from Virginia (Mr. Scott).

Mr. Speaker, I yield 4 minutes to the distinguished gentleman from North Carolina (Mr. Watt).

Mr. Speaker, I yield 3 minutes to the gentleman from Virginia (Mr. Moran).

Mr. Speaker, I yield myself 1 minute. I would like to respond to my good friend, the gentleman from Virginia (Mr. Moran).

First of all, I think the NAACP and the civil rights groups will be eager to find out that his wisdom is superior to their experience in the civil rights movement. What the gentleman was suggesting may have been correct a number of years ago, but I would point out to the gentleman that the Federal courts more recently have not been as desirable a forum for civil rights activities.

The Bank of Boston case, that was 10 years ago and an anomaly. There are not other examples of class actions where class members lost money. No other court has made the same mistake. I would urge that neither the gentleman nor any of us rewrite class action rules because of one mistake.

Mr. Speaker, I yield 3 minutes to the gentleman from Washington (Mr. Inslee).

(Mr. INSLEE asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I am pleased to yield 5 minutes to the distinguished gentlewoman from Texas (Ms. Jackson-Lee), a member of the Committee on the Judiciary and a ranking subcommittee member.

(Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks, and include extraneous material.)

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, we have listened carefully to the discussion here, and it is very clear that one thing is for sure: this is not a simple procedural fix to class actions in our courts.

Another thing, it is clear that all of the totally unsatisfactory provisions have not been removed.

First, the bill, as the gentlewoman from Texas has said, harms working Americans and victims of discrimination who are in no position to bring individual actions of wage-and-hour cases or civil rights discrimination claims. Moving the cases to Federal court will result in many never being ever heard at all.

Many State laws provide better protection than Federal statutes. For example, 20 States provide protection for marital status and Federal law does not. Twenty-one States extend Federal definitions of national origin discrimination by including ancestry, place of birth, and citizenship status; and 31 States prohibit genetic discrimination in the workplace, not provided under Federal law.

Secondly, this bill closes the door on victims of large-scale personal injury cases resulting from accidents, environmental disasters, or dangerous drugs that are widely sold. Although these cases are filed in State courts under State law, the bill will treat them as class actions and throw them willy-nilly into the Federal court.

While harming victims of personal injury, this provision greatly helps the companies, like Merck, the company that manufactured the deadly drug Vioxx. Since the discovery of the dangers of Vioxx, hundreds of cases from all over the country have been filed against Merck, and we can anticipate likely thousands more. However, under this proposal before us today, those who suffered harm from the drug will be denied their day in court and their ability to seek justice.

Finally, this bill makes it difficult for consumers to pursue claims against defendants who violated consumer protection laws. The bill will force many of these cases filed in State courts into the Federal system. But some Federal courts will not certify class actions involving the laws of multiple States because they deem the case too complex and unmanageable. Result: harmed consumers will never have their cases adjudicated in the courts.

It also makes it impossible for States to pursue actions against defendants who have caused harm to the State's citizens. State attorneys general often pursue these claims under State consumer protection statutes, antitrust laws, often with the attorney general acting as the class representative for the consumers of the State.

Under this bill, would we want these cases to be thrown into Federal court and severely impede the State's ability to enforce its own laws for its own citizens? That is what will happen. That is what will take place.

So I am very pleased to put in the Record the letter from the States attorneys general opposing this legislation, those attorneys general from California, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oklahoma, Oregon, Vermont, and West Virginia.

I would also like to add the letter from the environmental organizations which have made their case as to why this would be a very harmful measure. The signatories of this letter include the United States Public Interest Research Group, PIRG; the Wilderness Society; the Sierra Club; the National Environment Trust; Greenpeace; Friends of the Earth; and the National Audubon Society, and many others.

Finally, Mr. Speaker, I include in this debate from the Leadership Conference and the AFL-CIO, and the Alliance For Justice, all writing on one letter, and they plead with us in the House of Representatives to protect working men and women and civil rights litigants by opposing the measure that is before us.

Washington, DC, February 15, 2005.

Dear Representative: On behalf of the undersigned civil

rights and labor organizations, we write to urge you to vote

against the Class Action Fairness Act (S. 5), which passed

the Senate last week. While the bill was pending before the

Senate, we pushed for an amendment offered by Senator Kennedy

that would have exempted civil rights and wage and hour state

law cases. Because the amendment was not adopted, we ask you

to reject S. 5 in order to ensure that the Class Action

Fairness Act does not adversely impact the workplace and

civil rights of ordinary Americans by making it extremely

difficult to enforce civil rights and labor rights.

During Congress' extensive examination into the merits of

class action lawsuits, nowhere has a case been made that

abuses exist in anti-discrimination and wage and hour class-

action litigation. By allowing dozens of employees to bring

one lawsuit together, the class-action device is frequently

the only means for low wage workers who have been denied mere

dollars a day to recover their lost wages. Moreover, class

actions also are often the only means to effectively change a

policy of discrimination. These suits level the playing field

between individuals and those with more power and resources,

and permit courts to decide cases more efficiently.

Wage and hour class actions are most often brought in state

courts under the law of the state in which the claims arise.

The reason is that state wage and hour laws typically provide

more complete remedies for victims of wage and hour

violations than the federal wage and hour statute. For

instance, the federal Fair Labor Standards Act (FLSA) offers

no protection for a worker who works 30 hours and is paid for

20, so long as the worker's total pay for the 30 hours worked

exceeds the federal minimum wage. However, many states have

``payment of wage'' laws that would require that the worker

be fully paid for those additional 10 hours of work. Also,

federal law provides no remedy for part-time workers who

often work 10-16 hour days, yet earn no overtime because they

work less than 40 hours per week. At least six states and

territories, however, including California and Alaska,

require payment of overtime after a prescribed number of

hours are worked in a single day.

Likewise, state laws increasingly provide greater civil

rights protection than federal law. For example, every state

has passed a law prohibiting discrimination on the basis of

disability. Some of these state statutes provide a broader

definition of disability and a greater range of protection in

comparison to the federal Americans with Disabilities Act

including California, Minnesota, New Jersey, New York, Rhode

Island, Washington, and West Virginia. In addition, every

state has enacted a law prohibiting age discrimination in

employment, and some of these state laws--including those of

California, Michigan, Ohio and the District of Columbia--

contain provisions affording greater protection to older

workers than comparable provisions of the federal Age

Discrimination in Employment Act (ADEA).

In addition, many state laws provide protections to

classifications not covered by federal law. For example, the

following states provide protection for marital status:

Alaska, California, Connecticut, Delaware, Florida, Hawaii,

Illinois, Maryland, Michigan, Minnesota, Montana, Nebraska,

New Hampshire, New Jersey, New York, North Dakota, Oregon,

Virginia, Washington, and Wisconsin. Moreover, several states

have expanded Title VII's ban on national origin

discrimination to prohibit discrimination on the basis of

ancestry, or place of birth, or citizenship status. These

states include Arkansas, California, Colorado, Connecticut,

Hawaii, Illinois, Indiana, Kansas, Maine, Massachusetts,

Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, South

Dakota, Vermont, West Virginia, Wisconsin, Wyoming, and the

Virgin Islands.

Finally, 31 states have enacted legislation prohibiting

genetic discrimination in the workplace--an important

protection given the rapid increase in the ability to gather

this type of information. The 31 states are Arizona,

Arkansas, California, Connecticut, Delaware, Hawaii, Iowa,

Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan,

Minnesota, Missouri, Nebraska, Nevada, New Hampshire, New

Jersey, New York, North

Carolina, Oklahoma, Oregon, Rhode Island, South Dakota,

Texas, Utah, Vermont, Virginia, Washington, and Wisconsin. In

addition, Florida and Illinois have enacted more limited

protections against genetic discrimination.

Under S. 5, citizens are denied the right to use their own

state courts to bring class actions against corporations that

violate these state wage and hour and state civil rights

laws, even where that corporation has hundreds of employees

in that state. Moving these state law cases into federal

court will delay and likely deny justice for working men and

women and victims of discrimination. The federal courts are

already overburdened. Additionally, federal courts are less

likely to certify classes or provide relief for violations of

state law.

In light of the lack of any compelling need to sweep state

wage and hour and civil rights claims into the scope of the

bill, which is done in the current bill, we urge you to vote

against S. 5. In the event that amendments are offered, we

support any amendment that, like the Kennedy amendment and

others offered in the Senate, preserves the right of

individuals to bring class actions in an effective, efficient

manner.

If you have any questions, or need further information,

please call Nancy Zirkin, Deputy Director of the Leadership

Conference on Civil Rights (202-263-2880); Sandy Brantley,

Legislative Counsel, Alliance for Justice (202-822-6070); or

Bill Samuel, Legislative Director, AFL-CIO (202-637-5320).

Sincerely,

AARP; AFL-CIO; Alliance for Justice; American-Arab Anti-

Discrimination Committee; American Association of People with

Disabilities; American Association of University Women;

American Civil Liberties Union; American Federation for the

Blind; American Federation of Government Employees; American

Federation of School Administrators; American Federation of

State, County & Municipal Employees; American Federation of

Teachers; American Jewish Committee; Americans for Democratic

Action.

The Arc of the United States; Association of Flight

Attendants; Bazelon Center for Mental Health Law; Center for

Justice and Democracy; Coalition of Black Trade Unionists;

Communications Workers of America; Consortium for Citizens

with Disabilities Civil Rights Task Force; Department for

Professional Employees, AFL-CIO; Disability Rights Education

and Defense Fund; Epilepsy Foundation; Federally Employed

Women; Federally Employed Women's Legal & Education Fund,

Inc.; Food & Allied Service Trades Department, AFL-CIO; Human

Rights Campaign.

International Association of Machinists and Aerospace

Workers; International Brotherhood of Boilermakers, Iron Ship

Builders, Blacksmiths, Forgers and Helpers; International

Brotherhood of Electrlcal Workers; International Brotherhood

of Teamsters; International Federation of Professional &

Technical Engineers; International Union of Bricklayers and

Allied Craftworkers; International Union of Painters and

Allied Trades of the United States and Canada; International

Union, United Automobile, Aerospace & Agricultural Workers of

America; Jewish Labor Committee; Lawyers' Committee for Civil

Rights Under Law; Lawyers' Committee for Civil Rights of the

San Francisco Bay Area; Leadership Conference on Civil

Rights; Legal Momentum; Mexican American Legal Defense and

Educational Fund.

NAACP; NAACP Legal Defense & Educational Fund, Inc.;

National Alliance of Postal and Federal Employees; National

Asian Pacific American Legal Consortium; National Association

for Equal Opportunity in Higher Education; National

Association of Protection and Advocacy Systems; National

Association of Social Workers; National Employment Lawyers

Association; National Fair Housing Alliance; National

Organization for Women; National Partnership for Women and

Families; National Women's Law Center; Paper, Allied-

Industrial, Chemical and Energy Workers International Union;

Paralyzed Veterans of America.

People For the American Way; Pride At Work, AFL-CIO;

Service Employees International Union; Transport Workers

Union of America; Transportation Communications International

Union; UAW; Unitarian Universalist Association of

Congregations; UNITE!; United Cerebral Palsy; United Food and

Commercial Workers International Union; United Steelworkers

of America; Utility Worker Union of America; and Women

Employed.

Mr. Speaker, I offer an amendment in the nature of a substitute.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I would like to briefly describe why this substitute is the superior piece of legislation before us today. The substitute is much better for the following reasons: civil rights carve-out. The substitute would carve out State civil rights claims in order to make sure that civil rights plaintiffs, especially those seeking immediate injunctive relief, can have their grievances addressed in a timely manner.

Believe me, this is an issue of great moment to those of us who are still prosecuting for a fair day in our Nation and have civil rights laws to back us up, but we now are pleading to keep the proper forums. For example, every State in the Union has passed a law prohibiting discrimination on the basis of disability. The language does not affect the Federal jurisdiction over Federal claims.

The second consideration for this is the wage-and-hour carve-out. Wage-and-hour class actions are often brought in State courts because State wage-and-hour remedies are often, I am sorry to say, more complete than the Federal wage-and-hour statute; and we have examples of that.

The third reason: we exclude non-class action cases involving physical injuries. The measure before us applies not only to class actions, but also to mass torts. The Democratic substitute removes the mass tort language. And then, of course, the attorney general carve-out which clarifies cases brought by State attorneys general are excluded from the provisions of the class action bill and would not be forced into Federal court.

These are the major reasons why we encourage a supportive vote for the substitute to the measure that is being debated today.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 3 minutes to the gentleman from Virginia (Mr. Scott).

Mr. Speaker, I yield 1 minute to the gentlewoman from California (Ms. Pelosi), the minority leader of our caucus.

Mr. Speaker, I am pleased to yield 3 minutes to the gentleman from New York (Mr. Nadler), a distinguished member of the Committee on the Judiciary.

Mr. Speaker, I am pleased to yield 4 minutes to the gentleman from New York (Mr. Weiner), a distinguished member of the Committee on the Judiciary.

Mr. Speaker, I yield 30 seconds to the gentleman from New York (Mr. Weiner).

Mr. Speaker, I am pleased to yield the balance of my time to the gentlewoman from Texas (Ms. Jackson-Lee), a cosponsor of the substitute amendment.

(Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)

Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Madam Speaker, I thank the chairman very much for yielding.

Madam Speaker, the general principles behind S. 5 and many of the provisions in the legislation are similar to those in H.R. 1115, which the House passed in 2003, and S. 274, which was voted out of committee in the Senate in 2003 but did not ultimately pass.

To the extent these provisions are the same, the House Committee on the Judiciary's report on H.R. 1115 and the Senate Committee on the Judiciary's report on S. 274 reflect the intent and understanding of the committee and the sponsors as to the import of these provisions. However, there are several new provisions in S. 5 regarding Federal jurisdiction over class actions that were not included in prior versions of the legislation.

I would like to ask my colleague, the chairman of the Committee on the Judiciary, to provide an overview of the jurisdictional provisions in the legislation, and I would like to discuss the various exceptions included in the legislation and the intent of the sponsors with regard to these exceptions.

Madam Speaker, will the gentleman yield?

Madam Speaker, I would also like to discuss the home State exception in the legislation.

New subsections 1332(d)(3) and (d)(4)(B) address the jurisdictional principles that will apply to class actions filed against the defendant in its home State, dividing such cases into three categories.

First, for cases in which two-thirds or more of the members of the plaintiff class and the primary defendants are citizens of the State in which the suit was filed, section 1332(d)(4)(B) states that Federal jurisdiction will not be extended by S. 5. Such cases will remain in State courts.

Second, cases in which more than two-thirds of the members of the plaintiff class are not citizens of the State in which the action was filed will be subject to Federal jurisdiction. Federal courts should be able to hear such lawsuits because they have a predominantly interstate component. They affect people in many jurisdictions, and the laws of many States will be at issue.

Finally, there is a middle category of class actions in which more than one-third, but fewer than two-thirds, of the members of the plaintiff class and the primary defendants are all citizens of the State in which the action was filed. In such cases, the numbers alone may not always confirm that the litigation is more fairly characterized as predominantly interstate in character. New subsection 1332(d)(3), therefore, gives Federal courts discretion in the interests of justice to decline to exercise jurisdiction over such cases based on the consideration of five factors.

Madam Speaker, I would ask the chairman to explain these factors.

Madam Speaker, if the chairman would continue to yield.

I thank the chairman for yielding to me. I think those examples really reflect the intent of the legislation.

Madam Speaker, the legislation also includes a local controversy exception which is intended to ensure that truly local class actions can remain in State court under the legislation. Under this provision, Federal courts are instructed not to exercise jurisdiction over cases that meet all of the following four criteria:

First, more than two-thirds of the class members must be the citizens of the State where the suit is brought; second, there must be at least one in-State defendant from whom significant relief is sought by members of the class and whose conduct forms a significant basis of plaintiffs' claims; third, the principal injuries resulting from the alleged conduct or related conduct of each defendant must have occurred in the State where the action was originally filed; and, fourth, no other class action has been filed during the preceding 3 years asserting the same or similar factual allegations against any of the defendants.

Madam Speaker, I would ask that the chairman elaborate on these criteria.

I thank the chairman for yielding once again.

Madam Speaker, in this regard I think it is important to note that the exceptions in this legislation are just that, exceptions, and they should not be interpreted in ways that turn them into loopholes. For example, the legislation excludes actions against States. Obviously, this does not mean that plaintiffs can simply name a State in every consumer class action and stay out of Federal court. To the contrary, Federal courts should proceed cautiously before declining Federal jurisdiction under the subsection 1332(d)(5)(a) ``state action'' case exception, and do so only when it is clear that the primary defendants are indeed States, State officials, or other governmental entities against whom the court may be foreclosed from ordering relief.

The sponsors intend that primary defendants be intended to reach those defendants who are the real targets of the lawsuit, i.e. the defendants who would be expected to incur most of the loss if liability is found. Thus, the term ``primary defendant'' should include any person who has substantial exposure to significant portions of the proposed class in the action, particularly any defendant that is allegedly liable to the vast majority of the members of the proposed classes, as opposed to simply a few individual class members.

It is the sponsors' intention with regard to each of these exceptions that the party opposing Federal jurisdiction shall have the burden of demonstrating the applicability of an exemption. Thus, if a plaintiff seeks to have a class action remanded on the ground that the primary defendants and two-thirds or more of the class members are citizens of the home State, that plaintiff has the burden of demonstrating that these criteria are met.

Similarly, if a plaintiff seeks to have a purported class action remanded because a primary defendant is a State, that plaintiff should have the burden of demonstrating that the exception should apply.

I thank the gentleman for yielding.

Finally, Mr. Speaker, some critics have complained that the legislation removal provisions will result in delay. Can the gentleman explain why that is simply not the case?

Mr. Speaker, I thank the gentleman for his leadership in moving this legislation forward and in working with the Senate to accomplish that as well.

I hope this colloquy will provide guidance on the very important jurisdictional provisions in S. 5 and the sponsor's intent.

Mr. Speaker, I thank the chairman for yielding me time and for his leadership in bringing this legislation to the floor and for working with the Senate to achieve the compromise that we need.

The gentlewoman from California (Ms. Pelosi), the minority leader, called this an extreme Republican measure. Apparently, she has not spoken to her own fellow San Franciscan and senior Senator from her State, Dianne Feinstein, who negotiated the compromise that has brought this legislation to the floor of the House, or to Senator Chuck Schumer, also a member of the Committee on the Judiciary on the Democratic side in the Senate, or 16 other Democratic Senators who voted for this legislation.

She also apparently has not spoken to members of her own Democratic Caucus, many of whom have voted for this legislation in each of the last three Congresses that have passed the House of Representatives and many more of whom will vote for the legislation today.

A number of the folks who have spoken on the other side of the aisle criticizing the legislation have cited total inaccuracies about what the legislation will do.

The gentleman from Massachusetts (Mr. Markey) would not yield to me, but he said that the Amerada Hess case in New Hampshire, with gasoline leaking into groundwater, would not be heard in the State court; but if you live in New Hampshire and you have gasoline leaking in your groundwater and virtually all of the plaintiffs are New Hampshire residents, the case, under this bill, would be heard in the State courts.

Some have mentioned the Vioxx case against Merck would be affected by this, and they have argued that Senate 5 should be rejected because it will hurt consumers bringing Vioxx cases against Merck. The truth, however, is that this legislation will have absolutely no effect on Vioxx suits. Here is why: the majority of personal injury cases brought against Merck are individual cases that would not be affected by the bill in any manner whatsoever. These include more than 400 personal injury cases that are part of a coordinated proceeding in New Jersey State court. None of these cases will be affected by the bill because they are neither class actions nor mass actions.

Now, what kind of cases would be affected by this legislation? Well, let me show my colleagues how a select number of class action trial lawyers play the class action wheel of fortune.

How about the Kay Bee Toys case where the lawyers got $1 million in attorneys fees and the consumers got 30 percent off selected products of an advertised sale at Kay Bee Toys for one week.

Or the Poland Spring Water case where the lawyers got $1.35 million in the wheel of fortune and the consumers got coupons to buy more of the water that the lawyers were alleging was defective.

How about the Ameritech case. The price goes up, $16 million for those lawyers; the consumers, $5 phone cards.

How about the Premier Cruise line case. The lawyers got nearly $900,000. The consumers got $30 to $40 off of their next thousand dollar cruise, with a coupon to buy more of the product the lawyers were alleging was defective.

Or the computer monitor litigation, $6 million in attorneys fees in a case alleging that the size of the computer screen was slightly off, and therefore, they were entitled to something. What did the consumers get? A $13 rebate to purchase their next purchase.

How about the register.com case, $642,500 to the lawyers. The consumers, $5-off coupons.

My favorite case, the case against Chase Manhattan Bank, the lawyers got $4 million in attorneys fees, but the plaintiffs that allegedly the opponents of this bill are protecting, they got 33 cents. Here is one of the actual checks. The catch was that at the time, to accept this 33-cent magnanimous check, they had to use a 34-cent postage stamp to send in the acceptance to get their 33-cent fee.

How about the case that President Bush cited last week when he highlighted problems with this of the woman who had a defective television set against Thompson Electronics, found she had been made a member of a class action seeking redress of her grievances and many others against Thompson Electronics. What did the lawyers get? $22 million in attorneys fees. What did she get? A coupon for $25 to $50 off her next purchase of exactly what she did not want, another Thompson Electronics television set.

Now, the gentlewoman from California, the minority leader, also cited the Washington Post. Let me tell my colleagues, the Washington Post has repeatedly endorsed this legislation, along with over a hundred other major newspapers, the Washington Post, the Wall Street Journal, the Financial Times, Christian Science Monitor, on and on the list goes. And here is what the Washington Post said, and that is why we need to pass this legislation today. The clients get token payments while the lawyers get enormous fees. This is not justice. It is an extortion racket that only Congress can fix.

I urge my colleagues to pass the bill.

Mr. Speaker, I thank the gentleman from Wisconsin for yielding me this time, and I thank the gentleman from New York (Mr. Weiner) for raising the points on those cases on the class action wheel of fortune because he makes a good point. In not one of those cases was there any wrongdoing found on the part of any of those defendants because all of those were settlements. They were extortionate settlements because they are in the jurisdiction of a court where they know they are facing a hanging judge and a hanging jury.

The gentleman also raised another good point, and we should not leave plaintiffs in the situation where they get a 33-cent check or a coupon for a box of Cheerios, like in another case, and that is what this bill does. It requires extra-special scrutiny for coupon settlement cases so the courts will no longer let the manufacturers' attorneys and the defendants' attorneys come in with a settlement that simply gets out of the case, that gives the plaintiffs' attorney a huge sum of money and everyone else walks away and the plaintiffs get left holding the bag.

Mr. Speaker, the gentleman ought to talk to his colleague, the senior Senator from New York, the predecessor of his seat, who supported this legislation.

In addition, when the gentleman talks about abuse of plaintiffs in these cases, take into consideration the nationwide class action lawsuit filed in Alabama against the Bank of Boston, headquartered in Massachusetts, over mortgage escrow accounts. The class members won the case but actually lost money. Amazing.

Under the settlement agreement, the 700,000 class members received small payments of just a couple of dollars or no money at all. About a year later, they found out that anywhere from $90 to $140 had been deducted from their escrow accounts. For what? To pay their lawyers' legal fees, of what? $8.5 million. And when some of those class members, some of those beleaguered plaintiffs, that I am glad the gentleman from New York is standing up for, sued their class action lawyers for malpractice, the lawyers countersued them for $25 million saying that their former clients were trying to harass them.

This is an extortionate practice. A small cartel of class action lawyers around the country are abusing the system and we need to change it.

Mr. Speaker, I rise in opposition to the motion to commit.

Mr. Speaker, first let me thank Chairman Sensenbrenner for his leadership in bringing us to this historic point. He and I have been working on this for over 6 years. It has passed the House of Representatives three times before.

Due to his good work, it has now passed the Senate and we have the opportunity to send it to the President. He is waiting to sign it and we shouldn't waste any more time.

Now the truth about class action fairness and Vioxx. Critics have been arguing in the press that S. 5 should be rejected because it will hurt consumers bringing Vioxx cases against Merck. The truth is, however, that this legislation will have absolutely no effect on Vioxx suits, and here is why. The majority of personal injury cases brought against Merck are individual cases that would not be affected by the bill in any manner whatsoever. These include more than 400 personal injury cases that are part of a coordinated proceeding in New Jersey State Court. None of these cases will be affected by the bill because they are neither class actions nor mass actions.

Merck has been named in more than 75 statewide and nationwide class actions involving Vioxx, but only a small percentage are personal injury class actions. To the extent these cases do involve personal injury, most were already brought in or removed to Federal Court because each potential class member's claims exceeds $75,000. Thus, these cases are removable to Federal Court under the old rules.

There are a few cases which plaintiffs have joined together in mass action-type cases against Merck. However, not a single Vioxx case has been brought against Merck in State court by more than 100 plaintiffs, one of the requirements for removal to Federal Court under the class action legislation. Thus, there is no reason to believe that the mass action provision would affect any Vioxx-related cases whatsoever.

Most of the class actions have been brought against Merck. Since the legislation is not retroactive, it would absolutely have no effect on the 75 class actions already filed against Merck in the wake of the Vioxx withdrawal.

Mr. Speaker, I do not yield.

Mr. Speaker, given the large number of suits already filed and the fact that every former Vioxx taker in America is already a proposed class member in numerous class actions, it is unlikely there will be many more class actions after the legislation is enacted.

It is bad legislation to have something pass that covers all class actions in the country for all time and name one specific product or one specific company in the legislation. It is irrelevant anyway.

Now, let me tell you the kinds of cases that are affected by this legislation. Take a look at the ``Class Action Wheel of Fortune'' on this chart. It will tell you what we are doing here today.

You have got the case against Ameritech. Ameritech, the attorneys for the plaintiffs got $16 million in attorneys fees. What did the plaintiffs they represent get? Five-dollar phone cards.

The Premier Cruise Line case, the lawyers got almost $1 million; the consumers got a $30- to $40-off coupon for their next cruise.

The computer monitor litigation case, the lawyers, $6 million in fees; the consumers, a $13 rebate against your next future purchase of the alleged defective product.

Register.com, $650,000 for the lawyers; $5 for the consumers.

KB Toys, $1 million for the lawyers; 30 percent off your selected product in a unadvertised 1-week sale at KB Toys.

Poland Spring Water, $1.35 million for the lawyers; a coupon for more of the allegedly defective water for the consumers.

My favorite case, however, is this one, the Chase Manhattan Bank case, where the lawyers got $4 million in attorneys fees; the plaintiffs, a check, we have got one right here, for 33 cents. But there was a catch, because if you wanted to accept the 33 cents, you had to use a 34-cent postage stamp to send in your acceptance notice. How is that for a bargain for you?

And how about the $22 million case that President Bush cited last week against Thompson Electronics? The lawyers got $22 million in attorneys fees; the plaintiffs, one of whom was there, got a $25- to $50-off coupon to buy more of what? The very television set that she was complaining was defective in the first place.

It is a racket, it is extortionate. The people of the country know it. When they are asked the question, who benefits from our class action industry today, 47 percent say it is the plaintiffs' lawyers; 20 percent say it is the lawyers for the companies; 67 percent of our public recognizes it is the lawyers who benefit from this system.

It is time we change it. This bill does just that. It protects American consumers and makes sure that they get justice by examining these ridiculous coupon settlements.

Mr. Speaker, I urge my colleagues to support this legislation, defeat the motion to commit, and send the bill to the President, and starting very soon, we will have justice for American consumers.

Mr. Speaker, I yield back the balance of my time.

Parliamentary Inquiry