Class Actions and Legislative Proposals in the 108th Congress: Class Action Fairness Acts of 2003 and 2004

Publication Date: March 2004

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area:

Type:

Abstract:

The House has passed H.R. 1115 and the Senate Judiciary Committee has reported out S. 274 (both styled the Class Action Fairness Act of 2003). Each (1) creates a consumer class action bill of rights, and (2) allows the federal courts to try a greater number of large class action law suits (100 plaintiffs or more) arising out of state law where the parties come from diverse states. Current law requires that each plaintiff have suffered $75,000 in damages and that there be complete diversity before a state lawsuit may be filed in or removed to federal court, that is to say all of the plaintiffs must be citizens residing in different states than all of the defendants. The bills ease the complete diversity requirement and eliminate the requirement of individual damages of $75,000 as long as the damages suffered by the class as a whole is $5 million or more.

The consumer class action bill of rights in each proposal contains safeguards which provide for judicial scrutiny of coupon and other noncash settlements, protection against a proposed settlement that would result in a net loss to a class member, protection against discrimination based upon geographic location, and prohibition on a class representative receiving a greater share of the award.

S. 274/S. 1751 alone includes within its bill of rights explicit provisions for "plain English" settlement notices and settlement notifications for state and federal authorities. H.R. 1115 instead defers to the notice reforms recommended in the amendments to Rule 23 of the Federal Rules of Civil Procedure forwarded to Congress by the Supreme Court on March 27, 2003. H.R. 1115 alone permits pretrial review of a lower federal court's grant or denial of class certification and makes its provisions retroactively applicable to suits filed before the date of enactment (but prior to class certification).

On October 21, 2003, Senator John Breaux introduced S. 1769 as an alternative bill which is considered to be much broader than S. 1751.

On December 15, 2003, Senator Dodd proposed Senate Amendment 2232 to S. 274, introduced in the Senate on January 20, 2004, by Senator Grassley. Most of these amendments are also incorporated into S. 2062 (the Class Action Fairness Act of 2004) which was introduced by Senator Grassley in the Senate on February 10, 2004.