Senate Judiciary Comm. Passes Class Action Reform

The Senate Judiciary Committee on Friday passed S. 274, the
Class Action Fairness Act of 2003, legislation that would reportedly help rein in out-of-control class action awards by limiting the practice of “venue shopping” and allowing many cases to be moved from state to federal courts.

“The National Association of Independent Insurers (NAII) commends Senate Judiciary Committee Chairman Orrin Hatch (R-Utah) and lead co-sponsors Sen. Chuck Grassley (R-Iowa) and Sen. Herb Kohl (D-Wis.) on their leadership efforts to secure passage of this important bill by the committee,” said Carl Parks, senior vice president, government relations. “When enacted, the bill will help the business community receive more equitable treatment in the courtroom that will ultimately benefit the economy.”

S. 274 will reportedly help curtail forum shopping and allow defendants to move large national class action cases to federal courts. Current federal law allows attorneys to “game the system” by having cases with national implications heard in plaintiff-friendly state courts instead of federal court. This reportedly results in obscure county or state courts dictating public policy on general business as
well as insurance regulatory issues for all 50 states.

Under the current system, lawyers can file class action lawsuits and receive millions in legal fees, while the consumers they are supposed to represent often end up with coupons or other items of little value. In one case, consumers actually had their accounts debited to pay legal fees.

“The current class action system violates basic principles of fairness and ignores the original concept of federal diversity jurisdiction as envisioned in the U.S. Constitution. Today’s action has been long awaited and we hope the Senate and the House will approve the measure before Memorial Day,” added Parks.