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Regulation and Compliance > Federal Regulation

Senators Introduce Class-Action Reform Bill

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NU Online News Service, Feb. 6, 3:11 p.m. — Washington

The fight to enact class-action legal reform, a top insurance industry legislative objective, resumed yesterday with the introduction of a bipartisan bill that would have major class-action lawsuits heard in federal, rather than state, courts.

The bill, the Class Action Fairness Act of 2003, was introduced by Sens. Chuck Grassley, R-Iowa, Herb Kohl, D-Wisc., and Orrin Hatch, R-Utah, the chairman of the Senate Judiciary Committee.

The bill number was not available at press time.

Grassley says the bill is necessary to help people understand their rights in class-action lawsuits and protect them from unfair settlements.

“The class-action system is full of problems,” Grassley says. “We need to protect the rights of consumers and not allow attorneys to gain huge fees when their clients are left with little.”

“Right now,” Kohl adds, “people across the country can be dragged into class-action lawsuits unaware of their rights and unarmed on the legal battlefield.”

The class-action bill would permit class actions, which normally are heard in state courts, to be heard in federal courts if total damages exceed $2 million and the parties include citizens from more than one state.

Advocates of class-action legal reform say a move toward federal jurisdiction is necessary because some state courts are biased against defendants. In some instances, reform advocates say, federal court jurisdiction is necessary to ensure fairness.

In addition, the class-action bill calls for judicial scrutiny of settlements to assure fairness to plaintiffs, and “plain English” notification to plaintiffs of the fact the class action has been filed and of any proposed settlements.

Jack Dolan, a representative of the American Council of Life Insurers, Washington, praises the bill, saying that common sense needs to be restored to the civil justice system.

“This bill moves in the right direction,” Dolan says.


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