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Congress, Illinois draft bills to decide when class action cases go to fed court
By KERRY L. SMITH

   The question of whether class action lawsuits should remain in state courts or be propelled to the federal court system is a topic the 108th Congress is preparing to debate.

   Introduced by the U.S. Senate in June 2003, the Class Action Fairness Act, approved in the U.S. House as HR 1115 three months earlier, never made it past the Senate Rules Committee.

   The U.S. Chamber of Commerce's Institute for Legal Reform is hoping that will change, once Congress passes its U.S. Department of Defense spending authorization legislation and reexamines a compromise version of the federal Class Action Fairness Act, now known as SB 2062.

   The essence of the legislation is this: A national class action lawsuit would be required to move from state court to federal court if the case itself exceeds $5 million and if a "substantial percentage" of the plaintiffs - 25 percent to 75 percent - live in other states than the one in which the case is currently certified.

   In addition, the bill establishes the foundation for reform, advocates say, by outlining the following: 1) the class action case must be communicated in "plain English;" 2) notices must be made to any state attorneys general of any proposed settlement affecting individual states; 3) heightened scrutiny of some settlements; 4) strengthening the coupon settlement provisions; and 5) providing federal courts with greater discretion to exercise jurisdiction in cases where between one-third to two-thirds of the class members are from the same U.S. state.

   The federal fairness bill does not apply retroactively to cases already filed.

   At press time, Matthew Webb, vice president of legal reform policy at the Institute for Legal Reform in Washington D.C., said he hoped federal legislators would have restarted discussions of the bill, but that the defense authorization bill took longer than anticipated; Congress plans to discuss SB 2062 following its July 4th recess. "SB 2062 got worked out in late November 2003," Webb said. "We're very much in favor of this legislation. We co-chaired a coalition that is actively engaged in seeing this become law."

   Advocates of SB 2062 say it is an important step in addressing "judicial hellholes" and moving state-to-state class action cases to the federal courts, based on the number of plaintiffs who reside out of state.

   Webb said the act would take care of a lot of the problems in the judicial system itself.

   "We feel that the federal courts should have an increased role in handling and deciding class action cases," he said. "We believe there are 62 U.S. Senators who are in support of SB 2062, but that the trial bar (American Trial Lawyers Association) is engaged in vigorous opposition of the bill."

   Various forms of class action fairness legislation have been traveling through Congress over the past five to seven years, according to Webb.

   "There have been several attempts at getting substantive legislation drafted, but SB 2062 is one of the few pieces of legislation that is soundly bipartisan."

   The bill's chief sponsor in the Senate is Republican Charles Grassley of Iowa; the other Republican sponsor is Sen. Orrin Hatch of Utah, who also serves as the chairman of the U.S. Senate Judiciary Committee. SB 2062's Democratic sponsors are Senators Herb Kohl of Wisconsin and Thomas Carper of Delaware.

   Webb said once senators come to an agreement, the next step will be to reconcile the Senate bill with HR 1115, its companion bill.

   American Tort Reform Association President Sherman Joyce said SB 2062 would help solve the problem of national policy-making cases setting precedents on a local level.

   "When national class action lawsuits are concentrated in a handful of state courts, local judges are allowed to set national policies," he said. "Those policies can conflict with the laws of other states and subject companies to being held liable for conduct that is not only permissible, but, in some instances, required by state law or regulation."

   Ed Murnane, president of the Illinois Civil Justice League, stands in solid support of the Class Action Fairness Act.

   "The finger is pointing squarely at Madison County when the subject of class actions surfaces," Murnane said. "We definitely are very supportive of the federal bill, but we are even more interested in the Illinois Class Action Bill, SB 1158, that was introduced in 2003."

   Like its federal counterpart bill, SB 1158, according to Murnane, has been log-jammed in the Illinois Senate Rules Committee since it was introduced last session in Springfield.

   "Don't expect this bill to come back in the veto session," he said.

   What is significant about the state of Illinois' own class action fairness legislation, according to Murnane, is that there are venue issues that are included as a means of regulating which class action lawsuits can be filed in a specific jurisdiction, such as Madison County.

   First, under SB 1158, the case must qualify under one of the following three conditions: 1) that the incident or wrongdoing took place in Illinois; 2) that the defendant's principal place of business is located in that jurisdiction or 3) that the plurality of plaintiffs - not the majority, but rather the largest group of plaintiffs or class members - must dwell in that jurisdiction. If any one of these three points are met, Murnane said, the class action lawsuit could be filed in that specific jurisdiction.

   "The real benefit to this type of class action fairness legislation," Murnane said, "is that it would end the venue shopping privilege that trial lawyers currently have. The benefit of this (state) bill is that it doesn't keep anyone from being a member of a class."

   From a cost-of-doing-business perspective, he said, Illinois-based residents and business owners, both of whom indirectly pay for the upkeep of the state and local courts infrastructure through their property taxes, should support the fairness bills.

   "The Illinois courts are paid for by Illinois citizens," Murnane said. "Our courts shouldn't be used by trial lawyers from other states. It's already a crowded agenda here."

   Mounting a firm opposition to the federal Class Action Fairness Act is the American Trial Lawyers Association. Vice president and media relations director Carlton Carl said the organization's opinion is that SB 2062 would place many state judges in a terrible dilemma.

   "If they (state courts) consolidate these personal actions to speed up deposition, they will cede control of these cases to federal court," Carl said. "But if they elect to keep these cases by foregoing consolidation, they have increased their workload exponentially and made their state court system extremely inefficient. Congress should not ride roughshod over state court procedures."

   The legislation would also pave the way for federal appellate courts to be swamped with appellate review of remand orders, Carl said, orders which may not be appealed.

   "ATLA believes there is simply no justification for expanding the scope of federal appellate review in class action cases," he said. "This provision would be used as a delay tactic to stall proceedings at the expense of injured consumers."

   Stephen Tillery of the law firm Korein Tillery is also not a proponent of the Class Action Fairness Act.

   "Calling the current legislation (SB 2062) the Class Action 'Fairness' Act is like calling cancer a kind and sensible disease," said Tillery. "It eliminates consumer class actions by and large in the United States."

   The federal judiciary is "grossly overworked" now, said Tillery, and would have no room on their plate to handle these cases.

   "They have all kinds of other issues to deal with," he said. "Their own organization, including their representative from the Chief Justice of the U.S. Supreme Court, has come out solidly against this legislation."

   MDL or Multi-District Litigation would receive the state cases that the Class Action Fairness Act would bump into federal court, according to Tillery, assigning them to different locations across the country.

   "Historically, being sent to MDL has caused these kinds of cases to languish for years and basically die," he said. "Big corporations are interested in this legislation because it saves them money."