To authorize the Secretary of the Interior to study the suitability and feasibility of designating the Wolf House, located in Norfolk, Arkansas, as a unit of the National Park System, and for other purposes.

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.

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 96 and ask for its immediate consideration.

Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Massachusetts (Mr. McGovern), pending which I yield myself such time as I may consume. During consideration of this resolution, all time yielded is for the purpose of debate only.

Mr. Speaker, House Resolution 96 is a structured rule providing 90 minutes of debate for consideration of S. 5, the Class Action Fairness Act of 2005. The rule waives all points of order against consideration of the bill, makes in order one amendment in the nature of a substitute, it waives all points of order against this amendment, and it provides one motion to recommit with or without instructions.

Mr. Speaker, I urge support for the rule because we have before us a fair rule. I could say an excellent rule. The previous gentleman from Massachusetts was rating these rules. But this is fair in both senses of that term, a fair rule that gives Members on both sides of the aisle a chance to discuss their ideas on class action reform. I believe there is a general consensus that our system for class action litigation is flawed.

As demonstrated by the other body, there is bipartisan support for the measure that will be coming before us. In fact, the other body passed this measure by a vote of 72 to 26 with strong bipartisan support. Even with that bipartisan support, however, there are differences of opinion on how to reform our class action system. This bill through granting consideration of a substitute amendment will allow us to openly discuss these opinions and ideas.

Mr. Speaker, our general tort system costs American businesses $129 billion each and every year. Even our smallest companies pay collectively about $33 billion a year, or 26 percent of the overall tort costs to businesses borne by our smallest companies. Class action reform is a first step in litigation reform aimed at providing relief for these small businesses. I am pleased that we are finally seeing the light at the end of the tunnel. This Chamber has passed class action litigation reform on four previous occasions. It is about time that we sent a reform package to the President's desk for his signature.

The underlying bill will make several key reforms including expanding Federal jurisdiction over large interstate class actions as originally intended by our Founding Fathers, create exceptions that keep truly local disputes in State courts, provide an end to the harassment of local businesses as part of this forum shopping game, and create a consumer class action bill of rights.

Mr. Speaker, I would like to again urge my colleagues to support this rule which passed out of the Committee on Rules without objection and to vote in favor of the underlying bill which will provide this much needed reform.

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

Mr. Speaker, I yield 2 minutes to the gentlewoman from West Virginia (Mrs. Capito), my colleague on the Committee on Rules.

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

Mr. Speaker, in response to some of the comments that were made by the gentleman from Massachusetts, I want to share with my colleagues some facts.

The Class Action Fairness Act contains several provisions specifically designed to ensure that class members, not their attorneys, class members, not their attorneys, are the primary beneficiaries of the class-action process.

For example, the act, number one, requires that judges carefully review all coupon settlements and limit attorney's fees paid in such settlements to the value actually received by the class members.

Second, it requires careful scrutiny of ``net loss'' settlements in which the class members end up losing money.

Thirdly, it bans settlements that award some class members a larger recovery just because they live closer to the court.

Lastly, it allows Federal courts to maximize the benefits of class- action settlements by requiring that unclaimed coupons or settlement funds be donated to charitable organizations.

In addition, the bill would require that notice of proposed settlements be provided to appropriate State and Federal officials, such as State Attorneys General.

Let me also address one other issue raised, and I think this is very important.

This myth is being circulated that the Class Action Fairness Act would move all or virtually all class actions to Federal courts, overwhelming Federal judges and denying State courts the ability to resolve local disputes. Well, a recent study examined class actions in the State courts of Connecticut, Delaware, Maine, Massachusetts, New York and Rhode Island, to determine what effect the bill would have on the class actions filed in those respective States.

Here is what they found in regard to the State of Massachusetts. Sixty-one percent, 30 out of 49 of the reported class actions, would have presumedly remained in State court. At least 10 of the 19 Massachusetts cases that would be affected by this bill, the Class Action Fairness Act, involved nationwide classes, cases primarily involving citizens living in other states.

Mr. Speaker, I am proud to yield 2 minutes to the gentlewoman from Tennessee (Mrs. Blackburn) a former member of the Committee on the Judiciary and an original cosponsor of this bill in the 108th Congress.

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

I want to address the remarks of the gentlewoman from Texas. I want to remind her that the Committee on Rules voted unanimously in favor of this rule and granted an amendment in order in the form of a substitute that includes each and every one of the provisions that she just spoke of. I also would like to remind my colleagues that each and every one of those amendments were also proffered in the other body, and each and every one of those amendments were voted down in a strong bipartisan vote.

So to suggest, Mr. Speaker, that this is something that had not been looked at and we have not talked about, I would remind my colleague that it was addressed in the 105th Congress, in the 106th Congress, in the 107th Congress, in the 108th Congress, and finally we are here, and we are going to get this rule passed and this bill passed and on to the President for his signature.

Mr. Speaker, I yield 3 minutes to the gentleman from Oklahoma (Mr. Cole), my colleague on the Committee on Rules.

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

In response to the gentlewoman from Texas, the Committee on Rules has jurisdiction, and anybody that knows the history of this body knows and understands that the Committee on Rules certainly has jurisdiction.

Let me just give a little history for my colleagues and particularly for the gentlewoman from Texas in regard to this bill. Again, in the 105th Congress, Senate bill 2083, the Class Action Fairness Act, Senate held hearing, reported by subcommittee. House Resolution 3789, Class Action Jurisdiction Act of 1998, committee hearing and markup held, reported from the House Committee on the Judiciary, 17 to 12.

Mr. Speaker, in the 106th Congress, H.R. 1875, Interstate Class Action Jurisdiction Act of 1999. Committee hearing and markup held, passed floor 222 to 207.

In the 107th Congress, H.R. 2341, Class Action Fairness Act of 2001. Committee hearing and markup held; passed floor, 233 to 190.

In the 108th Congress, H.R. 1115, Class Action Fairness Act of 2003, committee hearing and markup held, passed floor, 253 to 170.

No hearings? Indeed.

Mr. Speaker, I yield 3 minutes to the gentleman from Florida (Mr. Keller).

Mr. Speaker, I yield 2 minutes to the gentleman from Georgia (Mr. Westmoreland), the former minority leader of the Georgia House of Representatives.

Mr. Speaker, how much time do I have remaining?

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

Mr. Speaker, the gentleman from Massachusetts (Mr. McGovern) presented that case; and I want to present the real crux of this problem, and let me read a suit, Shields, et al v. Bridgestone/ Firestone, Incorporated in Texas, a suit in Texas.

This suit involves customers who had Firestone tires that were among those that the National Highway Traffic Safety Administration investigated or recalled but who did not suffer any personal injury or property damage. After a Federal appeals court rejected class certification, plaintiffs' counsel and Firestone negotiated a settlement which has now been approved by a Texas State court. Under the settlement, the company has agreed to redesign certain tires, a move that was already underway irrespective of the suit, and to develop a 3-year consumer education and awareness campaign, but the members of the class received nothing. The lawyers, they got $19 million.

Mr. Speaker, I yield 2 minutes to the gentlewoman from Pennsylvania (Ms. Hart), a former member for 4 years of the Committee on the Judiciary and an original co-sponsor of H.R. 1115.

(Ms. HART asked and was given permission to revise and extend her remarks.)

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

Mr. Speaker, this is a fair rule for legislation that will help restore fairness and common sense to the current class action system.

Like H.R. 1115, which overwhelmingly passed the House last Congress, S. 5 expands Federal diversity jurisdiction over interstate class actions in a manner consistent with the framers' constitutional intent that Federal court preside over controversies between citizens of different States. S. 5 also protects consumers from these bogus coupon settlements that reward trial lawyers with millions in windfall fees while clients who never hired them get coupons in the mail.

Mr. Speaker, I want to call attention to this slide before me. This is from the Washington Post, November of 2002. The Washington Post is not exactly the most conservative newspaper in the country: ``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.''

The Senate's overwhelming passage of S. 5 by a vote of 72 to 26 just last week reflects a strong bipartisan consensus in favor of reforming a class-action system that is prone to systematic abuse. Of those 26, 18 were Democrats, and each one of those provisions in that amendment in the nature of a substitute were offered in the Senate, and each one of them were voted down in a bipartisan fashion.

I think we all, in both the Senate and the House, and both Republicans and Democrats, we want to do the right thing here, and we want to make sure that, as the Washington Post says, that we eliminate this extortion racket and bring some fairness to this class-action system. After all, it is the injured person, it is the plaintiff that deserves a fair and just settlement, and it should not be just a lottery windfall for lawyers who venue shop, looking for places like, and we have heard it during this hour's discussion, Madison County, Illinois, the epicenter of this class-action lawsuit abuse. What happens in Madison County, Illinois, affects the whole country.

So I encourage my colleagues to vote for the rule, vote for S. 5 tomorrow.

Mr. Speaker, I yield back the remaining portion of my time.

Mr. Speaker, I am always amazed to hear the remarks of my colleagues, and I welcome those remarks, because it is well-known that free and open debate lies at the very heart of the democratic process. But I wonder if we rephrased the terminology ``greedy lawyers'' and made the American people truly understand what the give and take of the judicial process is all about.

I wonder, if we said the lawyers that represented the 9/11 families could be considered greedy lawyers, thousands who lost loved ones, and their engagement in seeking to have redress of their grievances done in a class-action manner, is that evidence of greedy lawyers? Or maybe the thalidomide families, babies who were born deformed in the 1950s and class actions were utilized, is that a signal of greedy lawyers?

Frankly, Mr. Speaker, what we have here is a complete abuse of the democratic process. Why do we not think about a situation where you are a college student enrolled in a world history class, you enter the first day and the professor says, welcome, it is now time to take the final exam. No discussion, no notes, no teaching, no nothing. This is what this rule represents. It is to walk on this floor and take the final exam. It is to close the door of the opportunity for the American people to go into the courthouse and to have a jury of their peers decide whether or not, as a collective class, they have been injured.

If my friends would tell the truth, they would know that plaintiffs prevail in such a small percentage of times all over America that this is ridiculous and ludicrous legislation. They would also refer you to the Cato Institute in 1983 when they talked about attacking liberal legal opportunities, or liberal bills. They said, this is guerilla warfare. We are going after tort litigation, we are going after Social Security, we are going after Medicare. Guerilla warfare.

The reason why this is guerilla warfare is because we have a process, Mr. Speaker. These actions come to our committee, the Committee on the Judiciary and a number of other committees; we have opportunity for amendment, give and take, hearings. This legislation has seen no light of day in any committee. It did not see the light of day on the Senate side, no hearings, no markup; it did not see the light of day on the House side, no hearings, no markup. So the American people are being fooled by the fact that they think we are doing business as the Constitution would want us to do, that we are open to the rules of this House, that we understand that we must have the oversight of this House. And frankly, Mr. Speaker, shame on us, for we are shaming the process, and the American people should rightly be ashamed of this and of us.

I ask my Republicans, we know you have the overwhelming majority, you have the two-thirds, in essence, you have the bully pulpit, and you use it. But the bad thing about it is that you are using it to overwhelm the rules of this House. Mr. Speaker, you are literally ignoring the Rules of the House. And some people would say to me, Congresswoman Jackson-Lee, this is inside the ball game, inside the ballpark, inside the Beltway. The American people are not interested in process. I believe they are. Because the American people know about school boards and process, they know about the parent-teacher meetings and process, they know about their places of faith and process, and they know that process is to be respected. Here in this House we are not respecting process.

I argue that the one amendment that we have as the manager's amendment should be the amendment that should be accepted, and that is the one that includes the idea of protecting civil rights and wage-and- hour carve-outs and prohibits those companies that have formulated their companies in another country, United States companies incorporated elsewhere, in order to be able to participate in this abusive process.

Let me read what the New York Times said. ``Instead of narrowly focusing on real abuses of the system, the measure that is before us today reconfigures the civil justice system to achieve a significant rollback of corporate accountability and people's rights. The main impact of the bill, which has a sort of propagandistic title normally assigned to such laws as the Class Action Fairness Act will be to funnel nearly all major class-action lawsuits out of State courts and into all overburdened Federal courts. That will inevitably make it harder for Americans to pursue legitimate claims successfully against companies that violate State consumer, health, civil rights, and environmental protection laws.''

Mr. and Mrs. America, let me tell you something. When this legislation passes on the Republican clock, I am going to tell you that the doors of the courthouse will be closed to you; and if you have Johnny Jones, the country lawyer, trying to bring justice to rural America, Johnny Jones will have to take his small-time practice and mortgage his house to get into the Federal court. And not only that, you might get there 50 years from the time that action occurs.

This is the greatest abomination and insult to justice that I have ever seen. It is an outrage, and I ask my colleagues to vote down the rule, vote for the Democratic substitute, and put this terrible bill where it needs to go, packing out of the door.

Mr. Speaker, free and open debate lies at the heart of the democratic process. Without it, true democracy will surely wither away to nothing. It is in this light that I rise to support H. Res. 96--only insofar as it allows consideration of the Democratic substitute that was ruled in order by the Committee on Rules and offered by the distinguished Ranking Member of the Judiciary Committee, Mr. Conyers. We should have an open rule on this important issue, however.

For real and honest debate to take place on such an important issue as defining diversity jurisdiction in the Federal courts for class actions, we must have available an alternate option to S. 5, the legislation that is before the committee of the whole House. The Democratic substitute creates that option. I congratulate the Rules committee for their foresight in enabling this open debate.

This bill, despite its name, is not fair to all complainants who come to the courts for relief. In addition, it fails to render accountability to parties who are in the best financial position. One issue that I planned to address by way of amendment was that of punishing fraudulent parties to class action proceedings by preventing them from removing the matter to Federal court.

I am a co-sponsor of the amendment in nature of a substitute that will be offered by my colleagues. With the provisions that it contains, requirements for Federal diversity jurisdiction will not be watered down resulting in the removal of nearly all class actions to Federal court. A wholesale stripping of jurisdiction from the State courts should not be supported by this body. Therefore, it needs to be made more stringent as to all parties and it needs to contain provisions to protect all claimants and their right to bring suit.

Contained within the amendment in nature of a substitute is a section that I proposed in the context of the Terrorist Penalties Enhancement Act that was included in the bill passed into law. This section relates to holding ``Benedict Arnold corporations'' accountable for their terrorist acts. With respect to S. 5, the right to seek removal to Federal courts will be precluded for Benedict Arnold corporations.

The ``Benedict Arnold corporation'' refers to a company that, in bad faith, takes advantage of loopholes in our tax code to establish bank accounts or to ship jobs abroad for the main purpose of tax avoidance. A tax-exempt group that monitors corporate influence called ``Citizen Works'' has compiled a list of 25 Fortune

500 Corporations that have the most offshore tax-haven subsidiaries. The percentage of increase in the number of tax havens held by these corporations since 1997 ranges between 85.7 percent and 9,650 percent.

This significant increase in the number of corporate tax havens is no coincidence when we look at the benefits that can be found in doing sham business transactions. Some of these corporations are ``Benedict Arnolds'' because they have given up their American citizenship; however, they still conduct a substantial amount of their business in the United States and enjoy tax deductions of domestic corporations.

The provision in the substitute amendment will preclude these corporations from enjoying the benefit of removing State class actions to Federal court. Forcing these corporate entities to defend themselves in State courts will ensure that these class action claims will be fairly and fully litigated.

I support the amendment in nature of a substitute.

Mr. Speaker, it is interesting to hear the distinguished gentleman from Georgia mention the Committee on Rules, and I respect the power of the Committee on Rules. The Committee on Rules is not a jurisdictional committee. This bill did not go through the committee process on the Senate side or on the House side.

I might also say when we talk about coupons and the amount of dollars that lawyers may receive, might I remind the body that we are talking about thousands upon thousands of plaintiffs in a class action who would never have their grievances addressed and the corporate culprit would have never been punished had it not been for this class action. So to manipulate it to suggest that it is abused is manipulation, just that.

This did not go through the committee process. We are avoiding the committee process. Therefore, we are stamping on democracy and this rule and this bill should be voted down enthusiastically.

I thank the gentleman from Virginia (Mr. Goodlatte) for allowing me to participate in this hour to discuss something of such tremendous import to the people of this country and to the small business men and women who are suffering so much because of class action and lawsuit abuse.

The President was so clear in his recent State of the Union address in talking about the need to reform the civil justice system. He talked about it being kind of a three-legged stool. And class action is an extremely important part of that reform; asbestos litigation and how we deal with a trust fund for people that have been possibly exposed to, and more serious, if they actually have health problems related to asbestos. We need to make sure that that is done in a fair way so that those who are truly hurt are the ones that benefit from any awards that are given or, in the case of asbestos, from a trust fund that is set up.

Class-action reform is something that we have been trying to do in this Congress for a long time. Our friends on the other side of the aisle like to say that this is a bill that has not been marked up, that we just bring this before the House and it does not go through the committee and it does not go through the hearings and the markup of that sort of thing.

Senate bill 5, which we are dealing with now, which we will have an opportunity to debate tomorrow and pass in this Chamber, is almost the exact same bill, I think it is H.R. 1115, that passed this body in the 108th Congress and passed with really strong bipartisan support.

So these arguments from the other side suggesting that we are rushing something through, nothing could be further from the truth. In fact, in the Rules Committee, of which I am a member, we agreed to make in order a rule, an amendment in the nature of a substitute from our friends on the other side of the aisle. In that amendment essentially is every amendment, maybe except for one, but almost every amendment that was offered to this bill, Senate bill 5, in the other body that was thoroughly discussed and debated and defeated in a bipartisan fashion.

We are going to give those on the other side of the aisle an opportunity for one more bite at the apple tomorrow in the abundance of fairness, to give them an opportunity to argue those points once again. I think that it is time. Over 10 years we have been working on this bill, long before I got to the Congress.

Let me just, if I might, go through a little bit of chronology in regard to this bill. The 105th Congress, that is four Congresses ago, 8 years ago, almost 10 years ago, the Senate had a bill, 2083, Class Action Fairness Act. The Senate hearing held, reported by the Senate subcommittee. H.R. 3789, Class Action Jurisdiction Act of 1998, committee hearing, markup held, reported from the House Judiciary Committee, 17-12.

106th Congress, H.R. 1875, Interstate Class Action Jurisdiction Act of 1999. Committee hearing, markup held. Passed the floor of this body 222-207.

107th Congress, H.R. 2341, Class Action Fairness Act, committee hearing, markup held, passed floor 233-190. And on and on and on. So those who would suggest, Mr. Speaker, that this has not had a fair hearing, nothing could be further from the truth.

I want to ask my colleagues to look at this slide here to my left and the title of the slide, ``Who Wins?'' This is pretty clear. This would be a typical class-action abuse case. Maybe it was in Madison County, Illinois, where so many of these cases are filed in State court. I do not know if this particular one was there but we know lots of cases have been filed there in Madison County. Class members. Coupons for crayons, a video rental, apple juice, popcorn, golf balls. And what do the plaintiffs' attorneys get? $11.45 million. That is the problem.

Let me just give you an example of another case, this one from Texas, Jefferson County State Court. Shields et al. v. Bridgestone. The suit involves customers who had Firestone tires that were among those that the National Highway Traffic Safety Administration investigated or recalled, but who did not suffer any personal injury or property damage. After a Federal appeals court rejected class certification, the plaintiffs' counsel and Firestone negotiated a settlement which has now been approved by the Texas State court. Under the settlement, the company has agreed to redesign certain tires, in fact, a move that already was underway irrespective of this lawsuit, and also to develop a 3-year consumer education and awareness campaign. But the members of the class received nada. Nothing. The lawyers? They got $19 million.

This, Mr. Speaker, is why I am here and grateful to the chairman for letting me participate in this Special Order to make sure that we all understand that when people are injured, when people need a redress of their grievances, they do not need to be getting coupons that are worthless unless they take the trouble of redeeming them, and then they are worth very little and all the money goes to plaintiffs' attorneys. This is just about leveling the playing field.

We will be talking about the other two legs of the stool. I mentioned asbestos and, of course, civil justice reform in regard to medical liability, the Health Act of 2003, so-called tort reform. That is the other leg of the stool that we need to address, because the unintended consequences of not doing anything is if you put small businessmen and -women totally out of business because of the cost of defending these frivolous cases in the health care field, people do not have access to health care in a timely fashion.

Then doctors who practice in a high-risk specialty, such as emergency room care or obstetrics or neurosurgery, hang up their stethoscopes and white coats and pick up a fishing rod or a set of golf clubs at the prime of their career.

So that is why we are here. There is why this is so important. I thank the gentleman for yielding.