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CLASS ACTION BILL GOES TO SENATE FLOOR THIS WEEK.

Senate Majority Leader Bill Frist (R-TN) plans to bring a bill to the floor this week making it easier to move class action lawsuits from state to federal courts.

A vote to close debate on the proposed Class Action Fairness Act, S 274, is likely after the Senate finishes the appropriations bill for the Departments of Education, Labor and Health and Human Services for the year starting Oct. 1. If the motion fails, the Senate will return to appropriations measures.

Supporters say they have 57 votes for cloture and may get the three more they need from undecided senators.

The bill - backed by corporations that are frequent defendants in state class actions and opposed by plaintiffs' lawyers - would allow class actions to be removed to federal courts when at least $5 million is at stake and when fewer than two-thirds of class members live in the same state as the defendant.

A similar measure, H.R. 1115, passed the House in June (Liability & Insurance Week, June 16).

Class actions now are commonly brought in state courts, often in jurisdictions perceived to be friendly to plaintiffs.

But while corporate defendants are able to remove other types of lawsuits against them to federal courts because of diversity jurisdiction, which applies to citizens of different states, they haven't been able to do so in many class actions.

For one thing, the cases generally don't reach the $75,000 threshold Congress set for the amount in controversy because it's been interpreted as applying to each plaintiff, not the corporate defendant's aggregate liability.

Nor is there "complete diversity," requiring all plaintiffs to be diverse to all defendants.

S. 274 would grant federal courts original jurisdiction to hear interstate class action cases when any member of the proposed class is a citizen of a different state from any defendant and when the total amount in controversy is $5 million.

In addition, it includes a "consumer bill of rights" calling for judges to scrutinize settlements in which plaintiffs get coupons or other benefits besides cash and certify that they benefit the class members; requiring plaintiffs' attorneys to provide copies of their complaints to federal and state authorities for their review; and requiring class members to be notified about the terms of settlements and the fees their attorneys will receive.

Finally, it would direct the Judicial Conference of the United States to review class action settlements and fees and make recommendations to Congress.
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Publication:Liability & Insurance Week
Date:Sep 8, 2003
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