Social Security Right to Know Act

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

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

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

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

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

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

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

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

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

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

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

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

Madam Speaker, I reserve the balance of my time.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I yield to the gentleman from Virginia.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I yield to the gentleman from Virginia.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. President, today is going to be an important day for the American public because the Senate will adopt legislation that takes a significant step forward in improving our Nation's civil justice system. I commend my colleagues on both sides of the aisle for coming together on this very important bipartisan bill. Our work in this body bodes well for the Senate's ability to tackle important issues in the 109th Congress.

Let me now take a couple of minutes to address the pending amendment, Senator Feingold's amendment, that would add a provision to S. 5 requiring Federal courts to consider remand motions in class actions within a specified period. This amendment is based on the questionable premise that Federal courts move too slowly and consumer claims will stall while plaintiffs are waiting for courts to rule on jurisdictional issues.

In fact, in many cases, Federal courts move more quickly than the State courts. Resolving remand motions is always their first course of business, and we are moving these cases to Federal courts.

The amendment also fails to recognize the important considerations a judge must make as part of a remand decision. Like other amendments that have been offered, this proposal would result in a less workable bill, not a better one. This amendment should be rejected.

The fact is, the Federal courts do not drag their feet in dealing with remand motions. Federal courts always consider jurisdictional issues first, as they must, before allowing discovery or other substantive motions. The Supreme Court has repeatedly held that jurisdiction is a threshold matter that must be decided prior to other substantive issues in a case. Courts take up jurisdiction as the first course of business already. The amendment is, therefore, unnecessary.

I also want to correct the misunderstanding that Federal courts drag their feet in dealing with class actions generally. This is not the case. In fact, Federal courts generally move more quickly than State courts when it comes to class actions. A recent 2004 study by the Federal Judicial Center found that State courts are far more likely than Federal courts to let class actions linger without ruling on class certification. Moreover, the median time for final disposition of a civil claim filed in Federal court throughout this country is 9.3 months; the median time to trial in a civil matter in State court is 22.5 months. Let me repeat that: 9.3 months in Federal courts versus 22.5 months in State courts for civil claims to be disposed. The dates showing the Federal courts act more than twice as fast as State courts come from the nonpartisan Administrative Office of the United States Courts. There is simply no evidence that States proceed more quickly. Thus, the alleged problem that this amendment would fix is nonexistent. It does not exist.

Take, for example, the case cited by Senator Feingold yesterday, Lizana v. DuPont. It did take a year to rule on the motion to remand, but it is my understanding that the court's docket reveals at the time the court was considering the motion, there were numerous briefings and motions on both sides and numerous hearings to determine whether to remand. The court was hardly sitting on its hands. If anything, this case shows that the courts may require more than 180 days to make a correct decision. They were moving, and moving ahead, and moving ahead with dispatch. But it was a complicated case and it took a little longer. It may very well take more than 180 days, and in some cases, it certainly will.

Another case cited in support of the amendment was Gipson v. Sprint. But when you look at the facts, the facts do not show much support for the amendment at all. Again, it is my understanding the docket reveals that the court was very busy on the case before the ruling on the motion to remand was even handed down. In fact, one of the motions the court was contending with was a motion for continuance filed by, you guessed it, plaintiffs' counsel. This means it was the plaintiffs who wanted the court to delay its ruling. How can anyone complain about the time it takes for a district court not to rule on a remand motion when there are scores of docket entries in a single year and the plaintiffs themselves were seeking delays?

Some opposed to this amendment suggested that defendants will use removal as a delay tactic, but Federal law already penalizes defendants who engage in such tactics. The Federal law governing removal gives judges discretion to make a defendant pay the plaintiff's attorney's fees if remand is granted. In addition, rule 11 of the Federal Rules of Civil Procedure gives Federal judges the authority to levy sanctions for frivolous filings. Thus, the law already addresses concerns about improvident removals.

The bottom line is that this amendment will make it unnecessarily difficult for judges to issue fair rulings in these more complicated cases. And class actions generally are more complicated cases. By forcing judges to decide remand motions by a certain date, as the Feingold amendment would do, that amendment fails to recognize that in some cases the jurisdictional issues will be complex, requiring discovery, substantial briefing, and hearings before the judge.

At times, courts consider several remand motions jointly in order to conserve judicial resources, such as in multidistrict litigation, or MDL, as it is called, and this may, in a limited number of complex cases, result in a slightly longer time period for resolution as well. Forcing judges to rush these issues in all cases regardless of their complexity could result in a denial of due process in these cases where the judge cannot fully comprehend and resolve the issue, or issues, in the time allotted by the Feingold amendment.

The reality is that most remand motions will be decided in less time than the amendment requires, but in some cases they will require more time. We should not create rules of law that force judges to decide issues without full and fair consideration. And that is exactly what the Feingold amendment would do.

Finally, there is a reason the time limits make sense for remand appeals and not for initial rulings on remand motions. In contrast to district courts, which often must develop a factual record to address remand issues, an appeals court that is asked to review a remand order will be provided with a full record from which to reach a decision. Often, the appeals court's decision will be based simply on a reading of the law, and it will, thus, be less time-consuming than the district court's decision.

Even a 180-day time limit may be too stringent in some circumstances. Extending it to district court judges will make it more difficult for them, in some cases, to do their jobs in a fair and efficient fashion.

So I hope our colleagues will vote down the Feingold amendment. Frankly, it is another poison pill amendment that would probably scuttle this bill for another year. We have already been on this bill for 6 solid years. We have a consensus in this body to pass it. We know if we pass it in the form that it is in, the House will take it. We know it will become law because the President will sign it into law. Frankly, I hope this amendment will be voted down for all of those reasons.

Mr. President, I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I would like to talk more generally about the Class Action Fairness Act because it responds to a serious abuse of the class action system that is on the rise; namely, the filing of copycat or duplicative lawsuits in State courts.

Over the past several years, we have seen a rise in the number of class action lawsuits filed in a few State courts known for tilting the playing field in favor of the plaintiffs' bar; in other words, dishonestly, basically, getting the courts to not do justice. These courts, referred to as ``magnet courts'' for their attractive qualities to enterprising plaintiffs' lawyers, certify class

actions with little regard to defendants' due process rights. They award substantial attorneys' fees as part of class settlements, and they approve coupon settlements to the class members that are sometimes worth little more than the paper on which they are printed.

It has not taken the plaintiffs' lawyers long to figure out which courts are good for their bank accounts. There was an 82-percent increase in the number of class actions filed in Jefferson County, TX, between the years of 1998 and 2000. During the same time span, Palm Beach County, FL, saw a 35-percent increase. The most dramatic increase, however, has occurred in Madison County, IL. Madison County has seen an astonishing 5,000-percent increase in the number of class action filings since 1998.

Let me just refer to this bar chart. It shows that the number of class actions filed in State courts has skyrocketed under current law: Palm Beach County, 35 percent in just 2 years or 3 years; Jefferson County, 82 percent in the same 2 or 3 years; and Madison County, over 5,000 percent. And then this chart shows the overall increase in State courts: 1,315-percent growth.

Now, in their effort to gain a financial windfall in class action cases, some aggressive plaintiffs' lawyers file copycat class action lawsuits. This tactic helps explain the dramatic increase in filings in these magnet courts. Here is how the copycat class action strategy works: Competing groups of plaintiffs' lawyers, and sometimes even the same lawyers, file nearly identical class action lawsuits asserting similar claims on behalf of essentially the same class in State courts around the country. Some lawyers file duplicative actions in an effort to take a potentially lucrative role in an action. Other times, these duplicative actions are the product of forum shopping by the original lawyers who file similar actions in different State courts around the country, perhaps with the sole purpose of finding a friendly judge willing to certify the class.

Because these duplicative actions are filed in State courts of different jurisdictions, there is no way to consolidate or coordinate these cases. As a result of the separate, redundant litigation of copycat lawsuits, our already overburdened State courts can become clogged with complicated class actions that potentially affect the rights and recoveries of class members throughout the entire country.

There is not a single magnet State court in this country that has not encountered the copycat phenomenon. For example, it is my understanding that in Shields v. Allstate County Mutual Insurance Company, filed in Jefferson County, TX, in the year 2000, three named plaintiffs sought certification of a nationwide class comprised of members who were insured by three insurance companies. At the very same time this action was brought in Jefferson County, no fewer than nine similar actions, representing a similarly situated class and alleging the identical claims, were pending in Madison County, IL, against the same insurance companies.

Another example of copycat lawsuits is Flanagan v. Bridgestone/ Firestone, filed in Palm Beach County, FL. Now, this lawsuit was but one of the approximately 100 identical class actions filed in State courts throughout the country in the wake of the Ford/Firestone tire recall in the year 2000.

One of the most obvious problems with copycat lawsuits is that they place new burdens on an already stressed State court system. Class actions are large, complex lawsuits with potential ramifications in jurisdictions across the country. Our State courts are courts of general jurisdiction that deal with issues ranging from domestic disputes to routine traffic offenses. They are simply not the best entity to handle the growing number of these complex lawsuits being filed across the country where multiple parties and multiple issues are involved.

S. 5 will mitigate the growing burden on our State courts by providing a means through which truly national class actions will be resolved in the most appropriate forum; that is, the Federal courts.

Over the past several months, I have heard some opponents of this bill argue that the Class Action Fairness Act will somehow result in a delay or even a denial of justice to consumers. They have argued that State courts resolve claims more quickly, and that removing these actions will result in the overburdening of our Federal courts. I have yet to see or hear a single shred of persuasive evidence to support these claims. In fact, according to the data, a strong case in the opposite direction can be made. According to two separate examinations of the State and Federal court systems conducted by the Court Statistics Project and Administrative Office of the U.S. Courts, the average State court judge is assigned nearly three times--nearly three times--as many cases as a Federal court judge. The increase of State court class actions further compounds this burden and interferes with the ability of the State court judges to provide justice to their citizens.

In fact, the Illinois Supreme Court has repeatedly criticized its own Madison County, IL, State court for its horrible backlog. The backlog is the result of the local court's willingness to take on cases that have nothing to do with Madison County, the county in which they sit. In fact, one Madison County State court judge expressed his willingness to take on cases that have little or no connection to Madison County, or even Illinois, for that matter, when he stated:

I am going to expand the concept that all courts in the

United States are for all citizens of the United States. . .

.

The fact is, when cases are accepted that have nothing to do with the State in which they are filed, it is difficult to see how justice is served. When the cases are forced to remain in State court because some plaintiff's lawyers have exploited the system by engineering the composition of the class and the defendants, both the class members and the defendants can easily be deprived of justice. In some cases, it appears that the interests disproportionately served are those of the class counsel who stand to receive millions in attorney's fees upon the swift approval of a proposed settlement while their clients receive next to nothing.

Despite claims to the contrary, S. 5 will not flood or remove all class actions to Federal court. Instead the bill acts to decrease the number currently falling in State court dockets. Most of the cases that would be removed to the Federal courts under the bill are precisely the type of cases that should be heard by such courts in the first place; namely, large national class actions affecting citizens in and around the country, including the very copycat lawsuits I have discussed today.

Class actions generally have three things in common. No. 1, they involve the most people. No. 2, they involve the most money. And No. 3, they involve the most interstate commerce issues. Taken as a whole, the national implications of class actions are far greater than many of the cases filed and heard by the Federal courts today. With this in mind, one is left to wonder how anyone could argue that these actions are not deserving of the attention of our Federal courts.

As Chief Justice Marshall noted:

However true the fact may be, that the tribunals of the

States will administer justice as impartially as to those of

the nation, to parties of every description, it is not less

true that the Constitution itself either entertains

apprehensions on this subject, or views with such indulgence

the possible fears and apprehensions of suitors, that it has

established national tribunals for the decision of

controversies between aliens and citizens, or between

citizens of different States.

When the Framers of the Constitution created the Federal courts in article 3 of the Constitution, they gave them jurisdiction over cases involving large interstate disputes, cases such as class actions. Contrary to the claims of opponents of this bill, article 3 does not require complete diversity amongst parties to a claim.

The Class Action Fairness Act will also help protect the interests of consumer class members from copycat lawsuits. When duplicative lawsuits are pending in different States, a settlement or judgment in any one case has the potential to make every other pending case moot. This winner-takes-all scenario acts as an incentive for plaintiffs' lawyers with multiple class actions to seek a quick settlement in the case, even if the settlement does no more than make the lawyers involved rich. The bona fide claims of the plaintiffs to the other class actions are wiped out by the settlement. That is not fair, but that is what is happening.

Sometimes they file multiple suits so they can force a settlement with a simple settlement demand. And what company wouldn't pay the defense costs to get out of this type of abusive jurisdiction of the various courts throughout the country.

What this means is that while one injured consumer in one court of the country recovers for their injuries, an identically injured consumer in another part of the country may get nothing. The quick settlement of a copycat lawsuit may essentially steal the ability for similarly situated plaintiffs to fully or fairly recover for their injuries, especially if the forum-shopped court is going to pull this kind of stuff and favor certain attorneys over others and certain clients over others rather than do what is just under the law.

Under S. 5, many of these copycat lawsuits would be removed to Federal court and consolidated to ensure that all similarly situated plaintiffs received the same recovery under any settlement. Unlike State courts, Federal courts are equipped with a mechanism for consolidating similar claims. In the Federal court system, a judge may consolidate multiple identical lawsuits found in various jurisdictions into one proceeding before a single Federal court known as the multidistrict litigation panel or MDL. The MDL panel has proven to be a valuable tool for preventing abuse, judicial waste, and disparate outcomes in Federal courts.

Under this system, much of the time-consuming pretrial activity in the lawsuit is heard by a single court. This serves to help protect against the plaintiffs' lawyer from making a separate deal for some plaintiffs that is not in the best interests of all class members. And by the way, for those who argue that consumers are being hurt by this bill, guess how many consumers are hurt by a collusion between plaintiffs' counsel and a particular corporation to settle in one State that wipes out everybody else throughout the country.

That happens. It happens because we have not solved these problems. This bill goes a long way toward solving some of these problems.

S. 5 solves this very problem by ensuring that a plaintiff's claim is not extinguished by the settlement of the duplicative action in another part of the country. This bill protects consumers in areas where they are not protected under current law.

Before I close, I want to stress that this bill does not change substantive law. The Class Action Fairness Act does not make it any harder or easier to file or win a lawsuit unless, of course, winning is unjustly based upon an uneven playing field. In other words, courts who homer the cases because they want to help certain attorneys who have supported them for their election to those State court positions.

This bill is one that is long overdue. As Chief Justice Rehnquist stated:

We can no longer afford the luxury of State and Federal

courts that work at cross-purposes or irrationally duplicate

one another.

This bill is a procedural bill that applies common sense to streamline the court system. The underlying substantive law is the same for class actions whether they are in Federal or in State court. This bill is a balanced, modest approach to solving some of the most abusive problems in our current civil justice system. Members on both sides of the aisle have worked long and hard to formulate a bipartisan bill, and we are succeeding in this bipartisan effort on behalf of the American people.

I steadfastly support the Class Action Fairness Act and urge my colleagues to do so as well, because it is the right thing to do. It is the right thing to do for the legal profession and for the plaintiffs who deserve compensation.

I have been in some pretty tough cases in my day, but I have never seen a case I could not win if the case was the right thing to bring. I would not bring it if it were not the right thing to bring. I loved being in Federal court, time I could get there. I also loved being in State court. I never wanted a judge to lean my way or the other way. I wanted the judge to be down the middle, and if that is the case, I thought I stood a good chance of winning the case.

We are talking about unfair advantage here in these magnet courts, these forum-shopped areas. Madison County has become the ``poster child'' for magnet courts. It deserves its reputation.

This is an important bill. This is a bill that makes sense. This bill does not deprive anybody of rights. This is a bill that will resolve a lot of these conflicts and problems, and it is a bill that I think will help all within the legal community to live within certain legal and moral constraints.

Mr. President, I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that at 12:30, the Senate resume debate on the Feingold amendment, and that the time be equally divided in the usual form; provided that at 12:40, 10 minutes later, the Senate proceed to a vote in relation to the Feingold amendment, with no intervening action or debate and no amendments in order to the amendment prior to the vote. I further ask consent that following that vote, debate be equally divided between the two leaders or their designees until the hour of 3 p.m.; provided further that the time between 2:20 and 2:40 be equally divided between Senator Specter and Senator Leahy; and that at 2:40, the final 20 minutes be reserved, with the Democratic leader in control of 10 minutes, to be followed by the majority leader for the final 10 minutes; provided further that at 3 o'clock, the Senate proceed to a vote in relation to the Durbin amendment, with no amendment in order to the amendment prior to the vote. I further ask unanimous consent that following that vote the bill be read the third time and the Senate proceed to a vote on passage of the bill, with no intervening action or debate. Finally, I ask that no other amendments be in order other than the two above-mentioned amendments.

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

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

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

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

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

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

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

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

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

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

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

Madam Speaker, I reserve the balance of my time.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Washington, DC, February 15, 2005.

Dear Representative: On behalf of the undersigned civil

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

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

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

Senate, we pushed for an amendment offered by Senator Kennedy

that would have exempted civil rights and wage and hour state

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

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

Fairness Act does not adversely impact the workplace and

civil rights of ordinary Americans by making it extremely

difficult to enforce civil rights and labor rights.

During Congress' extensive examination into the merits of

class action lawsuits, nowhere has a case been made that

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

action litigation. By allowing dozens of employees to bring

one lawsuit together, the class-action device is frequently

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

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

actions also are often the only means to effectively change a

policy of discrimination. These suits level the playing field

between individuals and those with more power and resources,

and permit courts to decide cases more efficiently.

Wage and hour class actions are most often brought in state

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

The reason is that state wage and hour laws typically provide

more complete remedies for victims of wage and hour

violations than the federal wage and hour statute. For

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

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

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

exceeds the federal minimum wage. However, many states have

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

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

federal law provides no remedy for part-time workers who

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

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

territories, however, including California and Alaska,

require payment of overtime after a prescribed number of

hours are worked in a single day.

Likewise, state laws increasingly provide greater civil

rights protection than federal law. For example, every state

has passed a law prohibiting discrimination on the basis of

disability. Some of these state statutes provide a broader

definition of disability and a greater range of protection in

comparison to the federal Americans with Disabilities Act

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

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

state has enacted a law prohibiting age discrimination in

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

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

contain provisions affording greater protection to older

workers than comparable provisions of the federal Age

Discrimination in Employment Act (ADEA).

In addition, many state laws provide protections to

classifications not covered by federal law. For example, the

following states provide protection for marital status:

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

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

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

Virginia, Washington, and Wisconsin. Moreover, several states

have expanded Title VII's ban on national origin

discrimination to prohibit discrimination on the basis of

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

states include Arkansas, California, Colorado, Connecticut,

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

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

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

Virgin Islands.

Finally, 31 states have enacted legislation prohibiting

genetic discrimination in the workplace--an important

protection given the rapid increase in the ability to gather

this type of information. The 31 states are Arizona,

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

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

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

Jersey, New York, North

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

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

addition, Florida and Illinois have enacted more limited

protections against genetic discrimination.

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

state courts to bring class actions against corporations that

violate these state wage and hour and state civil rights

laws, even where that corporation has hundreds of employees

in that state. Moving these state law cases into federal

court will delay and likely deny justice for working men and

women and victims of discrimination. The federal courts are

already overburdened. Additionally, federal courts are less

likely to certify classes or provide relief for violations of

state law.

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

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

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

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

support any amendment that, like the Kennedy amendment and

others offered in the Senate, preserves the right of

individuals to bring class actions in an effective, efficient

manner.

If you have any questions, or need further information,

please call Nancy Zirkin, Deputy Director of the Leadership

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

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

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

Sincerely,

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

Discrimination Committee; American Association of People with

Disabilities; American Association of University Women;

American Civil Liberties Union; American Federation for the

Blind; American Federation of Government Employees; American

Federation of School Administrators; American Federation of

State, County & Municipal Employees; American Federation of

Teachers; American Jewish Committee; Americans for Democratic

Action.

The Arc of the United States; Association of Flight

Attendants; Bazelon Center for Mental Health Law; Center for

Justice and Democracy; Coalition of Black Trade Unionists;

Communications Workers of America; Consortium for Citizens

with Disabilities Civil Rights Task Force; Department for

Professional Employees, AFL-CIO; Disability Rights Education

and Defense Fund; Epilepsy Foundation; Federally Employed

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

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

Rights Campaign.

International Association of Machinists and Aerospace

Workers; International Brotherhood of Boilermakers, Iron Ship

Builders, Blacksmiths, Forgers and Helpers; International

Brotherhood of Electrlcal Workers; International Brotherhood

of Teamsters; International Federation of Professional &

Technical Engineers; International Union of Bricklayers and

Allied Craftworkers; International Union of Painters and

Allied Trades of the United States and Canada; International

Union, United Automobile, Aerospace & Agricultural Workers of

America; Jewish Labor Committee; Lawyers' Committee for Civil

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

San Francisco Bay Area; Leadership Conference on Civil

Rights; Legal Momentum; Mexican American Legal Defense and

Educational Fund.

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

National Alliance of Postal and Federal Employees; National

Asian Pacific American Legal Consortium; National Association

for Equal Opportunity in Higher Education; National

Association of Protection and Advocacy Systems; National

Association of Social Workers; National Employment Lawyers

Association; National Fair Housing Alliance; National

Organization for Women; National Partnership for Women and

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

Industrial, Chemical and Energy Workers International Union;

Paralyzed Veterans of America.

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

Service Employees International Union; Transport Workers

Union of America; Transportation Communications International

Union; UAW; Unitarian Universalist Association of

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

Commercial Workers International Union; United Steelworkers

of America; Utility Worker Union of America; and Women

Employed.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Madam Speaker, will the gentleman yield?

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

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

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

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

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

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

Madam Speaker, if the chairman would continue to yield.

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

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

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

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

I thank the chairman for yielding once again.

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

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

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

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

I thank the gentleman for yielding.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I urge my colleagues to pass the bill.

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Speaker, I do not yield.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Parliamentary Inquiry

Mr. President, I thank my colleague from Pennsylvania. One of the great pleasures over the past 24 years has been to serve with Arlen Specter in this body.

We are nearing the end of consideration of this bill.

I would like to spend just a few minutes to offer some thoughts on it.

First, a brief word about the process by which this bill has been considered by the Senate. I don't think it is an overstatement to say that--aside from the details of the legislation itself--the most important factor in its expected passage is the unanimous consent agreement that was put into place at the onset of the Senate's deliberations on the bill.

In that respect, the two leaders--Senator Frist and Senator Reid--are to be greatly commended. Either one could have refused to enter into such an agreement--which would have made the prospects for passage of this legislation far less certain.

As I said yesterday, a determined minority of even one Senator can impede or block consideration of legislation in this body. Either Leader, by declining to enter into a consent agreement, could have paved the way for others to employ dilatory, delaying, and distracting tactics.

However, both Senators Reid and Frist agreed that only relevant amendments to the bill would be in order. No doubt, that agreement displeased some members in both caucuses. However, it helped ensure that the debate we have had on this bill has been substantive, orderly, and deliberate. And it minimized the risk that this bill would be derailed by contentious issues wholly unrelated to the substance of the bill itself.

So the cooperation shown by the two leaders on this legislation cannot be overemphasized. Senator Reid is to be particularly commended in this regard, given that a majority of the members of his caucus do not appear to support the bill.

The consent agreement that he entered into with the majority leader demonstrates his commitment to working in as cooperative a manner as possible for the good of the Senate.

Allow me to spend a few moments talking about the substance of this legislation. We have heard a lot of characterizations over the past few days to describe the bill and the problems it seeks to correct. I am among those who believe that our class action system is in need of reform. There are clear abuses and shortcomings that have not served the interests of the parties or the interests of justice. And this bill takes a number of significant steps to remedy those abuses and shortcomings.

To those who say that this legislation will have dire consequences on the quality of justice in our Nation, I must respectfully disagree. And I do so for a number of reasons.

First, it is important to view this legislation in a larger perspective. According to one estimate, .92 percent of all cases filed in Federal courts over the past three decades have been class actions. This point deserves special emphasis: from 1972 to 2002, less than one percent of all cases filed in the Federal courts of our Nation have been class actions.

Not all states compile similar data, so there are no comparable statistics for class actions as a percentage of all cases filed in State courts. However, there is every reason to believe that the percentage of class actions filed in state courts is at least as minuscule as the percentage filed in state courts. My point is simply this: that this legislation will affect only a very small percentage of all cases filed in our courts--less than 1 percent.

Some would argue that if even one just case in America were denied by this bill, that would be an unit result, and merit the defeat of this bill. I am not unsympathetic to that argument. Indeed, I agree wholeheartedly with it. Our system of justice is premised on the belief that equal justice under law is the right of each and every citizen.

Even one just cause unjustly denied offends our Nation's commitment to justice and fair play. Any legislation that would deny to even one citizen the right to equal justice deserves opposition, at least in this Senator's opinion.

But this bill does not deny such a right. It does not even come close. It will not close the courthouse door on a single citizen.

Moreover--unlike other legislation that has been considered by this body--it will not cap damages in a single case.

It will not cap attorney's fees for a single class action lawyer.

It will not extinguish or alter in any way a single pending class action.

Nor does it impose more rigorous pleading requirements or evidentiary standards of proof in a single class action.

In short, no citizen will in any way lose his or her right to go to court and seek the redress of grievances.

My colleagues might ask: if this bill will not do any of these things, then what will it do?

First and foremost, it will put an end to the kind of abusive forum- shopping that has grown in frequency and notoriety over the past few years.

Opponents of this bill claim that, by in any way altering the procedural rules governing class actions, substantive rights will be denied.

However, this argument is trumped by a little document called the U.S. Constitution.

Article III of that document extends Federal jurisdiction to suits between ``citizens of different States.'' The purpose of extending this ``diversity jurisdiction'' to citizens is to prevent the citizens of one State from being discriminated against by the courts of another State.

However, over the years, this purpose has been increasingly thwarted by clever pleading practices of enterprising class action attorneys.

By adding a plaintiff or a defendant to a lawsuit solely based on their citizenship, they have been able to defeat efforts to move cases to Federal court--even cases involving multiple parties from multiple States. Likewise, by alleging an amount in controversy that does not trigger the $75,000 threshold, they have thwarted Federal jurisdiction--even in cases alleging millions if not billions of dollars in damages.

In short, current pleading practice by the class action plaintiffs bar has very effectively denied Federal jurisdiction over cases that are predominantly interstate in nature. These are precisely the kinds of cases the Framers thought deserve to be heard in Federal courts.

All that this legislation does in this respect is bring pleading practice more into line with constitutional requirements. Cases that are primarily intra- rather than interstate in nature may continue to be heard in State courts.

But those that are clearly interstate in nature will now be more likely to be heard in Federal court, where they belong.

The notion that cases will be ``dismissed'' as a result of this and other changes created by this legislation is, in my view, patently absurd. No provision of this legislation requires a single case to be dismissed. Plaintiffs' attorneys may end up spending more time in

Federal court than State court. They may not be able to pick a class of plaintiffs that is as large as they can now, or that encompasses as many States. They may end up bringing cases in two or more courts that they might have preferred to bring in a single court. But they will not find their cases dismissed.

As my friend and colleague from Utah, Senator Hatch, said earlier, good lawyers will find a way to do well under this bill. Good lawyers will do well in Federal courts, as they have done well in State courts. In that sense, then, this bill is exceedingly modest.

We write our laws on paper. We do not etch them in stone. I am confident that the bill we have written here is a good one. I believe that, if and when it becomes law, it will withstand the test of time. Likewise, I am confident that if in the future any shortcomings emerge, we will have the good sense to fix them.

By way of analogy, I remind our colleagues of another reform bill that was considered several years ago. The Senator from New Mexico, Senator Domenici, and I wrote a bill to address frivolous securities lawsuits directed primarily at high-tech companies. The bill was on the floor of the Senate for about 2 weeks, if I recall correctly. A number of amendments were offered. It ultimately became law, despite a Presidential veto.

There were those who predicted dire consequences as a result of that bill's enactment. We were told that securities lawsuits would dry up, that harmed investors would have no recourse.

Well, here we are, about 9 years after enactment of that law, and there has been no appreciable drop-off in investor lawsuits and recoveries. In fact, some of the most vehement opponents of that law in the trial bar continue to be some of the most successful under the law.

In sum, we have written a good bill here. It deserves to become law. I hope that it will. I want to acknowledge those of our colleagues who are most responsible for bringing us to this point: Senators Frist and Reid, as I have already mentioned; as well as Senators Grassley, Kohl, Hatch, Feinstein, Carper, and others. I also want to acknowledge the hard work of their staff, who in some cases have worked on this legislation for a number of years.

So, to briefly reiterate, I thank my leader, Senator Reid, and the majority leader, as well. We would not be in the position we are in, I have said on several occasions over the last 3 or 4 days, had the Democratic leader--particularly because the minority always has unique rights in this Senate to delay or stop legislation moving at all.

Even though my colleague from Nevada has strong reservations, which I am sure he will express shortly, about the substance of this bill, as a result of his willingness to let a product move forward, we are here today about to adopt a piece of legislation. When I hear some of the comments being made about whether Democrats are willing to work on issues, even ones they disagree with, that is belied by the fact that the minority leader made it possible for us to be here to deal with all relevant, germane amendments on this bill. I thank the Senator from Nevada for his efforts in allowing that to go forward.

There has been a lot of talk over the last several days. Classically, with a matter like this the opponents and proponents have a tendency to engage in, if I may say with all due respect, a little bit of hyperbole. But it's important to stick to the facts. And one important fact that should shape how we view this legislation is that less than 1 percent of all cases filed in the Federal courts since 1972 have been class action cases. I searched very tirelessly to find out the percentages in State courts. I could not come up with an exact number. I am told by those knowledgeable the number of class actions filed in State courts as a percentage of all State actions is not substantially different than the Federal courts, and is likely to be even smaller given the large number of State cases filed generally. What is beyond dispute is that a very small percentage of the cases filed in our court systems are class actions.

Obviously, if anyone is denied access to the courts in this country because of things we do here, then, obviously, justice is denied to someone who cannot make that case.

We have not done that. This system of class action is in need of reform.

This is about money. Unfortunately, it is not about the money that legitimate plaintiffs get; it is about the money that is either saved by a defendant or made by the plaintiffs' bar. That is what this is about, and forum shopping around the country, finding the venue that gets you the best possible result for your particular point of view-- not exactly what the Founders had in mind when they drafted the diversity provisions of article III of the Federal Constitution. If you want to change the Constitution and say that no longer should diversity apply, then you may try to do that. If that is what opponents of this legislation believe, then they can try to amend the Constitution to in effect keep all these cases in State courts. But since the founding of this Republic, the diversity clause of article III of the Constitution has been very clear.

Mr. President, I thank my colleague. I will go quickly.

The point is, this is about court reform more than tort reform. About fifteen months ago, as many of my colleagues recall, we worked out this bill. We struck an agreement, a good one. Unfortunately, the majority here, last year, decided not to bring this bill up. I believe they made a mistake in doing that. We could have wrapped this bill up in January of 2004 but did not do it. This agreement has been ready for the Senate's consideration for over a year. We have had good debate on some of these amendments, and we have drafted a pretty good bill. It is not written in marble; it is not written in granite; it is written on paper. And we think it is going to provide equal access to the courts. It is going to provide a fairness to plaintiffs and defendants, to see that they get a just decision regarding the matters that are brought before the courts.

So to my colleagues who are strong opponents of all of this, believe me, this bill is a simple matter of court reform. It will help ensure that victims of wrongdoing get fair compensation and relief, rather than a raw deal that lines the pockets of those who either allegedly represent them or those who are on the defendant side who want to avoid some of the payments they would otherwise have to make.

There are no caps in this bill. It does not impose any rigorous procedural requirements or evidentiary requirements of proof at all. In short, no citizen will in any way lose his or her right to go to court to seek redress for their grievances.

You get anecdotal stories, hearing of one case or another. This bill is about court reform, getting a system right. It is long overdue. It does not mean that every tort reform measure that comes before us ought to be supported, but on this one, those of us who worked on this believe we have done a good job. We were asked to make four improvements in this bill. We made 12 of them over a year ago.

I thank the Senator from Delaware, Mr. Carper, Senator Feinstein, Senator Schumer, Senator Landrieu, and other Members on the Democratic side who have worked on this issue to make this possible.

Again, my thanks--and it should be noted--to the distinguished Senator from Nevada, Mr. Reid, and Senator Frist, who struck a procedural agreement so the Senate could consider this bill.