Senate Considers Class-Action Bill That Firms Favor
The Bush administration’s drive to curb what it considers excessive litigation against businesses faces a major test today as the Senate considers a bill to expand federal jurisdiction over class-action lawsuits.
The bill, backed by President Bush and an apparent majority of senators, would shift many such lawsuits from plaintiff-friendly state courts into a federal legal system considered more favorable to corporate defendants.
Similar legislation passed the Republican-led House in June by a comfortable margin. Passage in the GOP-controlled Senate would clear the highest remaining obstacle to enactment of a measure long sought by business groups.
Many Democrats, though, hope to do to the class-action bill what they did months ago to an administration-backed bill to cap liability awards for medical malpractice: stall it by filibuster. It takes 60 votes in the 100-member Senate to force final action on controversial legislation, a rule that often enables a bloc of Democrats to delay bills indefinitely despite the party’s minority status in the chamber.
On Tuesday, proponents and critics alike were predicting a tight vote on a motion to break an initial filibuster against the class-action bill. Several Democrats, including Sen. Dianne Feinstein of California, were expected to side with Republicans in voting to advance the bill. Critics of the legislation acknowledged that at least 57 senators were supporting or leaning toward the bill. With the margin so close, lobbyists on both sides were pressing a handful of uncommitted Democrats.
A class action is a lawsuit in which many people with similar legal claims join together to sue a person or organization, often over an allegation involving injury or discrimination.
Under the administration-backed bill, federal courts would assume jurisdiction over class-action cases in which the amount at stake exceeded $5 million, at least 100 class members were involved and residents from different states were on opposing sides.
A provision Feinstein helped insert into the bill would, however, give state courts jurisdiction over cases in which at least two-thirds of the class of plaintiffs come from the primary defendant’s home state. She said this would ensure that legitimate state-centered claims remained in state courts.
Experts said the bill would be a substantial revision to the rules governing class-action litigation.
Businesses complain they have been bombarded by frivolous class-action suits filed in state courts sympathetic to plaintiffs. Consumer advocates call class-action litigation a legitimate check on abuse by corporate wrongdoers. Both sides cite settlements and verdicts to support their dueling claims.
For instance, Sen. Orrin G. Hatch (R-Utah), a sponsor of the bill, told the Senate about a recent class-action suit against the makers of Cheerios over additives to the cereal. In a settlement, Hatch said, attorneys for the plaintiffs got $2 million in fees while the class members received only coupons for more Cheerios. Noting that he had nothing personal against the cereal, Hatch called the case “a class-action abuse -- something this bill would correct.”
But Sen. Richard Durbin (D-Ill.), an opponent, responded with his own example: a class-action case in Washington state involving Jack-in-the-Box restaurants. Five hundred people, Durbin said, recovered damages in a $14-million settlement of a case involving allegations of food poisoning from undercooked hamburgers. “Read these cases,” Durbin urged the Senate. “Understand that class-action lawsuits are not always frivolous ideas.”