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Critics Woo Democrats on Class-Action Bill

As a bill to send more class-action lawsuits to federal court approaches Senate floor action, consumer groups and trial lawyers are warning the measure’s Democratic supporters that the current language could have more far-reaching consequences than its backers realize.

At issue is a growing trend among federal courts to refuse to hear class-action cases that involve consumer protection laws in multiple states. Consumer groups contend that business groups who support the bill want to send class-action cases to federal court precisely because they are more likely to be thrown out based on that technicality.

“It’s a total Catch-22 for class members,” said Pamela Gilbert, a lobbyist for the National Association of Shareholder and Consumer Attorneys. “This puts the cases in federal court, knowing they’re not being heard.”

Gilbert said the solution would be to adopt an amendment sponsored by Sen. Jeff Bingaman (D-N.M.) that would allow federal judges to apply one state’s law to the entire class of plaintiffs and bar judges from throwing out cases based on the fact that multiple state laws are involved.

But because many of the Democrats who support the bill negotiated changes to the measure last fall in exchange for giving Senate Majority Leader Bill Frist (R-Tenn.) the 60 votes he needs to overcome an expected filibuster attempt, they feel duty-bound to oppose any and all amendments to the bipartisan negotiated bill.

So far, only Sen. Mary Landrieu (D-La.) has signed onto the amendment, but she said she would still vote for the overall bill if Bingaman’s proposal were not adopted.

“The proponents of the bill mistakenly believe that this amendment will gut the bill,” said Landrieu. “It preserves the core agreement, but improves it.”

Sponsors of the class-action bill sought to prevent trial lawyers from “forum shopping” — bringing cases in state jurisdictions that are seen as likely to produce large monetary awards for plaintiffs. Federal courts have traditionally been less generous in awarding class-action damages.

But Gilbert contends that even if the Bingaman amendment is adopted, the bill would “still take away the ability of plaintiffs to forum shop.”

Bingaman said he would press for adoption of his amendment when the bill comes up for floor consideration. Frist has vowed to bring up the class-action measure immediately following the Senate’s current debate on a Defense Department authorization bill.

Gilbert, along with a coalition of consumer groups known as the Coalition to Preserve Access to Justice, have been trying to drum up support for Bingaman’s amendment among the handful of Democratic supporters of the bill.

But aside from Landrieu, no key Democratic supporter of the bill has signed on yet.

“As we study this amendment, we’re concerned that it might allow the law in one single state to apply to people of many other states,” said Sen. Tom Carper (D-Del.), a longtime supporter of the Senate class action bill.

Sen. Chris Dodd (D-Conn.) also said he would be likely to oppose the amendment.

“Pretty much a deal’s a deal, and if you start going back on that, you’ll never have deals around here,” Dodd said. “You’d have to go a long way to get me to vote for it.”

Republican assessments were even harsher. Bingaman’s amendment “basically guts our bill,” said Sen. Chuck Grassley (R-Iowa), the measure’s author. “It’s a last gasp from the trial lawyers, working through their counterparts the consumer groups, to keep their pockets lined.”

Senate Judiciary Chairman Orrin Hatch (R-Utah) also rejects the Bingaman proposal.

“The bill’s so watered down already,” Hatch said. “We’re not willing to make any more concessions, especially to people who won’t support the bill anyway.”

Because there is no federal consumer protection statute, almost all class actions involving faulty products or breach of warranty have to be decided under state consumer laws.

But under arcane federal judicial rules, judges must decide whether to certify a class of plaintiffs based on the commonalities among the individuals in the class — which could include consumers in all 50 states who bought or used a product or service.

More and more, federal courts are denying class certification because they say myriad state laws cause the prospective class members to have less in common than the alleged wrong they have in common, according to a National Association of Shareholder and Consumer Attorneys survey of recent court actions.

The survey showed that six federal circuit courts have begun adopting the precedent of refusing to certify multiple state class actions.

Gilbert acknowledged that those courts do occasionally certify class actions, but she said that the “overwhelming trend” is toward non-certification.

And it doesn’t help, she said, that attorneys for defendant companies, with help from the U.S. Chamber of Commerce, are actively pushing federal courts to adopt the precedent.

In fact, the U.S. Chamber of Commerce wrote a friend-of-the-court brief in a class-action case in June 2003, saying, “It is nearly a truism that nationwide class actions in which the claims are subject to varying state law cannot be certified because they are simply unmanageable.”

Matthew Webb, vice president of legal reform policy at the chamber’s Institute for Legal Reform, said the Chamber has argued against certification of classes, but added that each case is different.

“That’s not to say that we’re opposed to having certain other classes certified,” Webb said.

Webb noted that Bingaman’s amendment could “run into constitutional problems” because it would affect the due-process rights of class members whose state laws were not being applied to the case.

The Chamber of Commerce is opposing the Bingaman amendment, along with all other amendments to the bill, because they want to preserve the fragile bipartisan compromise on the bill, Webb said.