House Passes Class-Action Bill; Next Stop Is Bushs Desk

Washington

The House overwhelmingly passed legislation on Feb. 17 that would take large multistate class-action lawsuits out of state courts and move them into federal courts. The 279-149 vote sends the first Republican priority legislation of this Congress to President Bush for his signature in relatively short order. The GOP-controlled Senate passed the bill a week ago by a 72-26 vote.

Republicans are expected to use the overwhelming vote and prompt passagethe bill was not expected to reach the Presidents desk before Easteras a springboard for passage of legislation reforming the asbestos and medical malpractice litigation systems, as one Democrat noted during debate on the House floor.

Efforts also are under way to pass a bankruptcy bill sought by large credit card banks, but it is unclear what will happen to that legislation.

Jack Dolan, a spokesman for the American Council of Life Insurers, said, “It looks like we finally crossed the goal line. It appears as if we will finally get sensible reform.”

Dolan said class-action changes have been needed for some time. “Life insurers applaud the House, Senate and the Bush administration for finally getting this bill through the Congress.”

Under the bill, class-action suits seeking $5 million or more would be heard in state court if the primary defendant and more than one-third of the plaintiffs are from the same state. But if fewer than one-third of the plaintiffs are from the same state as the primary defendant, the case would go to federal court.

The bill also would limit lawyers fees in so-called coupon settlementswhen plaintiffs get discounts on products instead of financial settlementsby linking the fees to the coupons redemption rate or the actual hours spent on a case.

The House acted on compromise legislation that first reached the floor of the Senate last year but was tied up by Democrats demands that non-germane amendments be added. The House acted on the Senate bill out of concern that any amendments to make it stronger would subject it to a Democratic filibuster in the Senate.

The bill passed after a two-hour debate and Democrats efforts to pass a substitute bill failed. In supporting passage, Republicans said on the floor of the House that restricting most large class-action lawsuits to federal court will stop lawyers from reaping huge profits from the system and lead to lower prices for consumers.

Democrats have argued that Republicans only interest is in hurting a big group of Democratic donors and helping big business escape multimillion-dollar verdicts from state courts.


Reproduced from National Underwriter Edition, February 18, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.