President Pushes to Limit Class-Action Suits

President Bush pressured Congress on Wednesday to act swiftly to pass legislation restricting class-action lawsuits, arguing that “frivolous” claims harmed economic prosperity.

On Capitol Hill, senators debated and defeated a number of suggested amendments to the bill, known as the Class Action Fairness Act. The measure would move a significant number of consumer-protection suits and other class actions from state to federal courts, which are considered friendlier to business.

The bill, which came close to passing Congress last year, is on a fast track for Senate approval by the end of the week.

It is the first of as many as five legal overhaul measures scheduled for action in Congress in coming months, as the administration and congressional Republicans move to limit the influence of trial lawyers, who are major financial backers of Democrats.

“A litigious society is one that makes it difficult for capital to flow freely,” Bush said in an event at the Commerce Department.

Business groups, including the U.S. Chamber of Commerce, strongly support the class-action legislation, which they claim will help prevent settlements in which lawyers collect huge fees while consumers get little or nothing.

They also argue that some lawyers pick and chose local or state courts for their lawsuits, targeting those known for being favorable to class-action plaintiffs. And judgments by those courts sometimes have far-reaching effects.

“We sometimes have a state court judge making law for the entire country,” said Walter Dellinger, a law professor at Duke University, who shared the stage with Bush in the Commerce Department’s grand foyer. “People in Texas and North Carolina don’t vote for who’s the state court judge in Illinois.”

Opponents say the bill would make it harder for ordinary citizens with limited resources to take on corporations with unfair business practices.

“In its current form, this bill is just another example of the administration’s misguided priorities -- putting the interests of big companies ahead of America’s working families,” said Sen. Edward M. Kennedy (D-Mass.), who offered an amendment, which was defeated, that would have allowed civil rights and labor lawsuits to stay in state court.

“Why should Congress protect companies that violate state laws by engaging in discrimination or exploiting low-wage workers, while making it harder for victims of those practices to get relief in court?” Kennedy said.

The bill has support from about a dozen Senate Democrats, and is expected to pass the chamber as early as today.

House leaders have warned that any amendments attached by the Senate would hinder its chances of passing in the House.

“The Senate has got to pass the bill on the floor without amendment,” Bush said in his remarks, billed as a “conversation” on class-action lawsuits. “They need to pass a clean bill, one that makes sense for the American people.”

The Senate rebuffed three proposed amendments Wednesday, including one co-written by Sen. Dianne Feinstein (D-Calif.) that would have set benchmarks for federal judges to use in deciding whether a lawsuit was best heard in state or federal court.

On the Senate floor, Feinstein -- a strong supporter of the main bill -- argued that the amendment was necessary to protect residents of states such as California, which have strong consumer-protection laws, from having their claims judged under the laws of other states that might be less favorable to consumers. Under the main bill, federal judges would have the discretion to apply the state laws of any of the claimants to determine the merits of the class-action lawsuit.

Feinstein also argued that without the amendment’s guidelines, federal judges might reject suits based on contradictory state laws, which would leave the claim in legal limbo -- ineligible for state court, but rejected by federal court.

“What this [amendment] ensures is that national class actions will be heard. They will be certified. And plaintiffs in those cases will be more likely to receive the benefit of his or her own state’s law,” Feinstein said.

But with Senate GOP leaders heeding Bush’s call to reject changes to the bill, Feinstein’s amendment was defeated, 61 to 38.

The amendment offered by Kennedy was rejected, 59 to 40. A third amendment, which would have exempted lawsuits brought by state attorneys general and was proposed by Sen. Mark Pryor (D-Ark.), also was rebuffed, 60 to 39.

“We have to keep amendments off this measure. They could possibly derail the whole bill,” said Sen. John Cornyn (R-Texas).

Consumer groups denounced the bill, as well as the defeat of the Democrat-proposed amendments.

“The Senate made it exceedingly clear that its allegiance lies with banks, credit card companies, drug manufacturers, big insurance companies and other major corporations that fund campaigns and don’t want to be held accountable for wrongdoing,” said Joan Claybrook, president of Public Citizen, the consumer group founded by Ralph Nader.

“The result of this legislation, if enacted into law, will be more abuse and deception of consumers by unscrupulous businesses, because consumers will be locked out of the courthouse,” Claybrook added.