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For Third Time, House OKs Reforming Class-Action Suits

The effort to move cases from state to federal courts sparks fierce debate before the vote. Democrats threaten a filibuster in the Senate.

June 13, 2003|Justin Gest | Times Staff Writer

WASHINGTON — The House on Thursday approved legislation that would shift class-action lawsuits from state to federal courts, moving corporate and commercial interests one step closer to what they consider to be a more neutral legal system but angering consumer advocates and trial lawyers, who argue that their rights are being abrogated.

The bill, which passed 253 to 170, would revise what House Judiciary Committee Chairman F. James Sensenbrenner Jr. (R-Wis.) called "aggressive shopping by lawyers for [state] courts with judges who will act as accomplices."

He and other Republicans argued that under the current class-action system, plaintiffs' lawyers can choose to file cases in jurisdictions considered sympathetic and can accumulate excessive fees, while Democrats accused the bill's proponents of favoring big corporations over victimized consumers.

Class-action lawsuits seek compensation for individuals who feel they have been financially or physically harmed by a defendant's action and band together to file suit. The cases are often taken by lawyers on contingency, meaning that the attorneys get a percentage of any monetary award -- so the greater the number of plaintiffs, the larger the award.

The bill would order class-action lawsuits to federal court if the claims totaled at least $5 million and if the primary defendant and fewer than one-third of the plaintiffs were from different states. Federal courts are generally considered less inclined to favor plaintiffs in class-action cases. The topic evoked passionate debate inside and outside the House. Public Citizen, a liberal public-interest organization founded by Ralph Nader, estimated that about 500 lobbyists for businesses and industry associations converged on Capitol Hill, urging support for the bill.

While House approval was not surprising, the road to President Bush's desk could be bumpier. To override an expected Democratic filibuster in the Senate, Republicans would need 60 votes, meaning that -- assuming no GOP defections -- nine Democrats would have to cross the aisle.

Sen. Dianne Feinstein (D-Calif.) has already pledged her support, as have at least four others. One Democrat known to be wavering is moderate Sen. Ben Nelson of Nebraska.

Nelson's spokesman, David DiMartino, said Thursday that his boss "will support the bill if he's convinced that legitimate lawsuits will be protected, and if it maintains the consumer-protection provisions."

This is the third time in five years that class-action reform legislation has passed the House, and House Democrats can only wait to see whether the bill will be stymied in the Senate, as it was in 1999 and 2002.

"I am depending on the Senate to stop this," Rep. Maxine Waters (D-Los Angeles) said emphatically. "They've done this before, and they must do it again.

"Not only do we have strong laws in the state of California, our judges know the law, and they are able to hear these cases and make good decisions. All [Republicans] are doing is slowing the process down ... frustrating community groups and poor people."

Democrats say that the bill would protect scandal-ridden companies such as Enron and WorldCom by allowing recently decided cases to be reopened for appeal. They also contend that corporations would be able to delay cases by taking advantage of a provision allowing appeals of class-status certification -- the decision by a judge that a class action is justified.

Both sides agree that moving class actions to federal courts would lessen the likelihood that the cases would be "certified" anyway -- and if a case were certified, they say, federal judges would be less inclined to adopt state consumer protections, which generally favor plaintiffs.

"It helps restore a level of fairness to the class-action system

Sensenbrenner, who practiced law before being elected to the House in 1978, said revisions are necessary "so that the consumers and the plaintiffs benefit, rather than the lawyers." During the debate, bill sponsor Rep. Bob Goodlatte (R-Va.) highlighted several cases in which lawyers' fees were millions of dollars but individuals received only coupons for products.

This ignited a heated exchange, during which Rep. Anthony D. Weiner (D-N.Y.) yelled at Republicans that the reason plaintiffs received coupons was "because there are millions and millions of victims."

Carlton Carl, spokesman for the Assn. of Trial Lawyers of America, agreed. "The only rationale for this legislation is to help corporations which have destroyed the life savings of hundreds of thousands of Americans," he said. "There is no other rationale than corporate welfare at the expense of American families."

After 20 more House members voted for the bill Thursday than did last year, Carl noted: "It was fundamentally a partisan vote. The action always was going to be in the Senate."

Of the California delegation, all Republicans but one -- John T. Doolittle of Rocklin -- voted in favor of the bill. They were joined by two Democrats, Calvin Dooley of Hanford and Jane Harman of Venice. All other Democrats voted against, except for Anna G. Eshoo of Atherton and Diane E. Watson of Los Angeles, who did not vote.

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