Re: 2/18/05 - Washington Post: Victory For Bush On Suits; New Law to Limit Class-Action Cases
Victory For Bush On Suits
New Law to Limit Class-Action Cases
By John F. Harris
Washington Post Staff Writer
Friday, February 18, 2005; Page A01
President Bush this morning will sign legislation overhauling the rules for class-action lawsuits, a measure he has coveted for years and whose swift passage in the new Congress illustrates the expanded influence of Republicans and their business supporters.
The Class Action Fairness Act is designed to funnel most such lawsuits from state courts to the federal system -- a procedural change that could have substantive implications, because federal courts traditionally have been less sympathetic to class-action cases waged by plaintiffs claiming they have been victimized by fraud or negligence by corporations.
Bush's first legislative victory of his second term came after a lopsided vote yesterday in the House, where most Republicans and many Democrats approved the bill by 279 to 149.
The class-action bill -- the first part of a broader White House campaign to impose rules designed to limit what Bush asserts is a glut of meritless lawsuits seeking billions of dollars -- has been close to passage for several years. But it regularly fell just short, largely because of the success of Senate Democrats in throwing procedural roadblocks against a measure that had majority support.
Their inability to do that this year, both sides of the class-action debate agreed yesterday, showed how the addition of four more Republicans in the Senate -- combined with a determined public and behind-the-scenes lobbying effort by the White House -- can shift Washington's balance of power in decisive and potentially far-reaching ways.
House Speaker J. Dennis Hastert (R-Ill.) called the vote a "historic first step towards breaking one of the main shackles holding back our economy and America's workforce -- lawsuit abuse."
Reflecting the frustrations of many Democrats, who knew their arguments had no chance of carrying the day, House Minority Leader Nancy Pelosi (D-Calif.) scored the bill as a "payback for big business at the expense of consumers."' The legislation calls for federal courts to be the proper jurisdiction for most class-action cases in which defendants are from multiple states. Only in certain cases -- such as when two-thirds of the plaintiffs are from the same state and the defendant also has headquarters there -- would class-action cases remain in state courts.
Rep. John Conyers Jr. (D-Mich.), who led the opposition in the floor debate, warned: "This is not a simple procedural fix. Moving the cases to federal court will result in many cases never being heard."
Ultimately, however, the skepticism of many Democrats to this argument pushed the measure to passage. In the Senate, the new rules for class-action suits were supported by Democrats with generally liberal voting records such as Sens. Christopher J. Dodd (Conn.), Dianne Feinstein (Calif.) and Charles E. Schumer (N.Y.). They agreed with such advocates as the U.S. Chamber of Commerce that waging class-action lawsuits amid a patchwork of state laws produces irrational verdicts and invites abuse by plaintiffs' attorneys filing lawsuits in certain courts known to be sympathetic to the cases, no matter if there is any particular logic to hearing the case in that jurisdiction.
One of the most celebrated of these localities is Madison County, Ill., which Bush visited last month in his campaign to pass the legislation. A White House official last night said Madison County's record as a magnet for dubious class-action cases was one reason Bush was eager to sign the bill as quickly as possible this morning, before leaving for a European trip Sunday morning.
Just since the beginning of the year, the White House official said, there have been 23 class-action suits filed in Madison County -- 19 of them within the last week as lawyers recognized the imminent passage of the bill. The new legislation is not retroactive.
The new legislation removes the "tilt" against defendants by putting them into a federal system where there is a "clearer and more predictable body of law," said Robert C. Weber, a Cleveland lawyer who has defended such corporations as R.J. Reynolds Tobacco Co. against class actions as head of the product-liability practice at the firm of Jones Day. He said the existence of magnet courts such as Madison County's leads to "extortionate settlements" by companies who do not want to risk the unpredictability and expense of going to trial.
Opponents argued to no avail that federal courts are ill-equipped to handle class-action suits, which usually revolve around questions of state consumer protection laws. Federal judges, citing confusion about how laws from multiple states should be applied in cases, often refuse to "certify" a case for hearing in their courts.
Joan Claybrook, of the consumer group Public Citizen, said these procedural hurdles to class-action cases in the federal system is why business lobbying groups were so eager for the bill's passage. "Many, many class actions will not be brought" under the new rules, she predicted.
She said the largest class-action cases, involving the most expensive potential verdicts, will still find lawyers willing to pursue them, but as a practical matter class actions will no longer be a useful tool for victims seeking redress against credit card companies, insurers or other firms who commit "everyday frauds and deceptions that happen all the time."
Supporters of the measure, however, said that genuinely aggrieved consumers may fare better under the new legislation, which seeks to curb "coupon settlements." Under such settlements, trial lawyers have reaped big fees while consumers get low-value coupons that can be redeemed for more purchases. Under the new law, lawyers in a settlement get fees based only on the number of coupons that are redeemed -- typically a small percentage of the total.
Stanton D. Anderson, who led the Chamber of Commerce's effort to pass the bill, said the addition of Republicans in the Senate after the November elections "made a bigger difference atmospherically," beyond just four votes; opponents seemed to yield hopes for blocking the measure. In fact, the efforts of opponents in recent weeks have been not to defeat the bill but to amend what they regarded as its most objectionable provisions. But even these efforts failed -- largely after an unusual but effective tactical move by House Republican leaders. They announced that they would drop the House's version of the bill and accept the Senate's -- provided the Senate did not weaken the legislation with any amendments.
© 2005 The Washington Post Company
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