Class Action Fairness Act Of 2005
Mr. President, for the past 2 days the Senate has been debating the so-called Class Action Fairness Act of 2005. I want to spend a few minutes today talking about this bill. Despite its title, the bill is not about fairness at all, in my…
Mr. President, for the past 2 days the Senate has been debating the so-called Class Action Fairness Act of 2005. I want to spend a few minutes today talking about this bill.
Despite its title, the bill is not about fairness at all, in my opinion. It is about depriving consumers of access to the courts and letting corporate wrongdoers off the hook.
People ask, what are these cases all about? These cases are about things dealing with fairness. Class actions fall in a number of different categories: environmental pollution, insurance practices, wage-and-hour employment disputes, consumer fraud, dangerous drugs, products that kill, and consumer protection. In those categories we have had, in recent years, some very successful pieces of litigation that have made our society a better place. However if this bill had been law, those cases would have been removed to federal court where they would have likely been dismissed. It is important for states to continue to have the opportunity to protect their own citizens in their own courts.
For example, there was a case in New Hampshire dealing with environmental pollution brought by the State of New Hampshire against 22 oil and chemical companies responsible for polluting the State's waterways with methyl tertiary butyl ether. We refer to that as MTBE. These companies were accused of violating state consumer protection and state environmental laws. They were negligent. They produced a defective product and created a public nuisance. In this case, New Hampshire is seeking compensation for the cost of the cleanup as well as penalties, both monetary and punitive in nature. Under this bill, because the named defendant is a citizen of another state, the State of New Hampshire would have to have their case heard in federal court instead of their own state court.
In Louisiana there was a pesticide there that had decimated the crawfish population. At one time, they were bringing in about 41 million pounds of crawfish. After this chemical was put into the waterways, that dropped to about 16 million pounds. Crawfish farmers were going broke. The plaintiffs were all from Louisiana and the harm occurred there. They filed a class action in state court, and a Louisiana state court judge recently granted final approval on a settlement agreement. This case is a clear example of a state court having the opportunity to interpret its own state law, yet if S. 5 were already enacted, it would have had to be removed to federal court.
There was a chemical plant leak that occurred in Richmond, California that caused a dangerous cloud to form over the town. Over 24,000 people sought medical treatment in the days immediately following the leak. The residents sued as a class, and the chemical company had to settle. While only California residents were harmed in California, under S. 5 this case would have been removed to federal court because the defendant is based in New Jersey.
Insurance practices: In one case, a Missouri state judge gave preliminary approval to a settlement agreement in a class action brought by Missouri plaintiffs, where a pharmacist diluted prescriptions for thousands of patients, including chemotherapy patients. Because the defendant is based in Iowa, although they sell policies in Missouri, the case could be removable to federal court under this bill.
Equitable Life Insurance was accused of misleading and cheating customers. This was a situation of the so-called vanishing premium cases in the 1980s. They sold policies when interest rates were high. They told customers as soon as the interest rates went down their premiums would be lower. That was not true. Class action lawsuits were filed in Pennsylvania and Arizona state courts, and Equitable settled the suits for $20 million helping over 130,000 people. However, because the insurance company was based in another state, under this legislation, the case would have been removed to federal court and these people harmed between 1984-1996 would still be waiting for justice.
Wage-and-hour employment disputes: In California, Wal-Mart employees have been denied pay for actual time worked. A California state judge certified a class action brought by California plaintiffs. The harm occurred in California, nonetheless, under the proposed legislation the case would be removed to federal court.
Consumer fraud: Roto-Rooter overcharged approximately two million customers $10 each by adding charges to invoices violating state consumer protection laws. A class action was brought in Ohio where many of the class members live and where Roto-Rooter is based. Under S. 5, the case could be removed to federal court.
AOL, a Virginia based company, charged the credit card of their customers for services even after those customers had canceled their AOL subscriptions. The lead plaintiff in a class action case was a California citizen. AOL wanted to litigate the case in federal court under Virginia law. The California Court of Appeals held that the proper venue was in state court because Virginia law did not allow consumer class actions and the available remedies were more limited than under California law. This would undermine
California's strong consumer protection laws. Under this bill we are considering, California would be powerless to protect their own public policy. What's fair about that?
In Florida a person sold funeral plots that didn't exist and desecrated some of the graves that were there. The issues raised in this case are state issues and the coffins desecrated were only those in Florida, yet under S. 5 the case would be removed to federal court because the parent company of the funeral home is based in another state.
Products that kill: Lead paint has poisoned thousands of children since 1993. Ford sold police cruisers that are prone to fire. This bill would seek to remove these cases to our already overburdened federal courts where they would experience extreme delays and possible dismissal.
Consumer protection: Cases against Monsanto, Jack-in-the-Box, and Nestle would all be removed to federal court possibly denying the members in the class the protection of their own state laws.
I believe it has been good for our country to have these lawsuits because if you didn't have these lawsuits and you had the law that is now sought in this legislation, these cases, most of them, wouldn't have been brought.
I am not saying there is no room to improve the rules governing class action lawsuits. There is. There are abuses. Coupon settlement cases, I believe, are not good. Consumers get no meaningful relief, and the lawyers get everything. That isn't fair. If this bill simply addressed the coupon problem, all 100 Senators would vote for it. But this pending proposal goes much further. It effectively closes the courthouse doors to a wide range of injured plaintiffs. I have mentioned some of them. At the same time, the bill turns federalism on its head. It denies State courts the opportunity to hear State law claims brought by residents of that State.
My friends on the majority side, the Republicans, say they favor States rights. They should be embarrassed to support this bill, which is one of the most profound assaults on States rights to come before Congress in many years. Most disturbingly, this bill limits corporate accountability at a time when corporate scandals have proliferated.
As we began debate on this bill, the majority leader and I received a letter signed by attorneys general of New York, Oklahoma, California, Illinois, Iowa, Kentucky, Maine, Massachusetts, Maryland, Minnesota, New Mexico, Oregon, Vermont, and West Virginia. These attorneys general whose sworn duty is to protect the public and enforce State laws oppose the bill now before the Senate. They say that despite improvements since the bill was first introduced a number of years ago, that:
S. 5 still unduly limits the rights of individuals to seek
redress for corporate wrongdoing in their State courts. We
therefore strongly recommend that this legislation not be
enacted in its present form.
They warn us further:
S. 5 would effect a sweeping reordering of our Nation's
system of justice that will disenfranchise individual
citizens from obtaining redress for harm, and thereby impede
efforts against egregious corporate wrongdoing.
This bill would ``reorder'' our justice system, as the attorneys general have warned us.
Several amendments we are going to offer are important.
First, S. 5 will allow corporate defendants to remove many multi- state class actions from State court to Federal court. But under current law and practice, the Federal courts can refuse to certify these cases as class actions on the ground that there are too many State laws involved. Prior to the passage of S. 5, the Federal courts' failure to certify would allow consumers to re-file their cases in State court, but this bill would preclude plaintiffs turned away in Federal court from going back to State court. If this problem isn't corrected, consumers will have lost their only means of redress when they have been cheated by a corporation in a matter too small to file an individual case. Plaintiffs in cases like the Roto-Rooter example would have no remedy, and the corporation could continue to take advantage of them.
Senator Bingaman will offer an amendment. It is my understanding that he and Senator Feinstein are working on a compromise. Senator Feinstein has been an early supporter of S. 5. She understands that this is a problem. I am confident she will work with Senator Bingaman to come up with some way to resolve this important issue.
Second, the bill will literally make a Federal case out of what has always been State personal injury cases. Sometimes such cases are consolidated by State courts for efficiency. They are not ``class actions'' at all. But the pending bill would include them under a newly invented term, ``mass actions,'' and allow them to be removed to Federal court.
For example, when a large number of people are injured by the same dangerous pharmaceutical drug, their claims may be consolidated by State court rules. Now those consolidated individual claims would be removed to Federal court where they will be subject to extensive delays or even dismissal if the laws of more than one State are involved. These mass torts often involve hundreds of plaintiffs who have been physically injured by drugs, medical devices, tobacco, lead paint, or ground water contamination.
S. 5 should be required to have a big label on it: ``Warning: This legislation may be dangerous to the health of all Americans''-- especially healthy American consumers.
Senator Durbin has already offered an amendment to deal with this ``mass torts'' issue. I hope that the chairman of the committee, Senator Specter, will work with him to see if this matter can be resolved.
These two things I have mentioned--the Bingaman amendment and the Durbin amendment--are issues of basic fairness.
Third, the bill would apply to civil rights and wage-and-hour cases that have nothing to do with the coupon settlements the bill sponsors say they want to address. These cases would now be subject to the same delay and potential dismissal as the personal injury cases I just discussed.
Class actions are particularly important for low wage workers. There are now dozens of class action suits in State courts representing tens of thousands of low wage workers who have been forced to work extra hours without pay or who have been denied their wages for other reasons. Also, many States provide greater civil rights protections than are available under Federal law. Senator Kennedy will offer an amendment to carve out these cases from this bill. That is fair.
Fourth, as drafted, this bill even applies to cases brought by State attorneys general enforcing State laws on behalf of State consumers. Federalism has certainly taken a tumble around here when State courts are not permitted to hear cases brought by their own attorneys general to enforce State consumer fraud laws, environmental protection laws, and other vital State interests.
Separate from the letter I described earlier from Attorney General Spitzer and others, we have received a letter from the National Association of State Attorneys, the organization representing all 50 statewide prosecutors, Republicans and Democrats. Forty-six of them have signed it. They uniformly urge that the bill be clarified to include consumer class actions brought by State attorneys general. That is fair. Senator Pryor, one of several former attorneys general we have serving in this body, will offer an amendment to achieve this goal.
This bill is imbalanced in that it establishes a 60-day deadline for Federal appellate courts to decide appeals of a district court's decision to remand a class action lawsuit, but it lacks a parallel mechanism to ensure speedy consideration of the motion to remand in the district court. Senator Feingold will offer an amendment to correct this imbalance. If 60 days is not a good deadline, they can come up with another one. But unless the Feingold amendment is agreed to, these people can bring a case to court which will lay there forever.
None of these amendments we offer are killer amendments. All are modest improvements that would strengthen corporate accountability and ensure that vulnerable citizens get their day in court. I urge my colleagues to accept these amendments.
These amendments I have talked about to the underlying bill will be
helpful. However, even with these amendments, the underlying bill will still be a bad bill, but it would be better. They would certainly improve the bill.
There was a tremendously powerful article in Business Week last week entitled, ``A Phony Cure: Shifting class actions to federal courts is no reform.'' No one can say it is some liberal rag of the Democratic Party. In this article, even Chief Justice Rehnquist criticizes this legislation. The article emphasizes that Federal judges hate this legislation and it is more of a step towards chaos than reform. Justice Rehnquist says: Don't do this to us. Federal judges are too busy. Federal courts are already overburdened and it will make the case backlogs even longer. In addition to that, instead of helping Federal courts, the article states that it will cut back on those resources to our Federal court system, and it is going to leave these Federal judges in a real bind.
This month is Black History month, and this legislation brings to mind for many of us Brown vs. Board of Education. The distinguished majority leader, Senator Frist, talked today about the first sit-ins by these courageous young men and women in the South which brought about a number of things. But one reason that the Brown vs. Board of Education case was able to move forward was because it was a class action. It was a culmination of appeals from four class action cases--three from the Federal court decisions in Kansas, South Carolina, and Virginia, and one by the decision of the Supreme Court of Delaware. Only the state court, the Supreme Court of Delaware, made the correct decision by ruling in favor of the African-American plaintiffs. The State court held that the segregated schools in Delaware violated the 14th amendment, Delaware rejected separate and unequal schools.
Another example is a case brought last June. The U.S. Supreme Court decided to allow a state class action lawsuit against Daimler Chrysler to continue in Oklahoma. That was an important case because it affects up to 1 million owners of minivans that have front passenger seat air bags that deploy in low speed accidents, very low speeds, with tremendous force, potentially killing children and hurting small adult passengers. Oklahoma's Supreme Court ruled that the case could go forward in state court for this defect. A federal court, relying on the Federal Rules of Civil Procedure, would probably find the case unmanageable.
These cases I have mentioned should be allowed to proceed. This legislation would not allow that. That is too bad.
This legislation, especially if we don't get these amendments passed, is disrespectful to States rights and will result in many instances of injustice. I am going to vote against this bill. I hope my colleagues will do the same. But I certainly hope my colleagues will do something to improve this bad bill. We need to be alarmed at what it is doing to States rights. I am going to vote against this bill, but I hope people will work with us.
I apologize to my colleague for taking away from his morning business time. I ask unanimous consent that when the Chair announces morning business the full hour be extended with one-half hour on each side.