House passes class action reform

On June 12, by a vote of 253 to 170, the House easily passed a bill known as the Class Action Fairness Act (H.R. 1115). The tort reform bill, generally supported by Republicans and opposed by Democrats, calls for, among other things, reasonable limits on attorneys' fees in class action lawsuits.

The bill, originally introduced on March 6, was drawn up in an attempt to do away with some of the much-ridiculed class action lawsuits that have infected the United States legal system in recent years. The lawsuits have compromised the integrity of the nation's civil justice system and have put a drain on the economy that will long last. In the past 10 years, state court class action filings nationwide have increased over 1,000%.

Class actions were originally created to efficiently address a large number of similar claims by people suffering small harms. Today they are more often used to efficiently transfer large fees to a small number of trial lawyers doing great harm.

A nearly identical bill was passed in the House two years ago but failed in the Democrat-controlled Senate.

Almost all Republicans supported the bill, while Democrats were in thrall to some of their party's most ardent financial supporters-the lawyers who collect millions and millions of dollars each year in attorneys' fees, often for cases in which plaintiffs get little or nothing. One classic example is a recent settlement with Blockbuster Video over late fees that produced $9.25 million in lawyer fees but resulted in dollar coupons for the consumers represented.

"Clearly, the trial lawyers are winners, but the losers in this race are the victims who often gain little or nothing through the settlement, yet are bound by it in perpetuity," Rep. Jim Sensenbrenner (R.-Wis.) said.

Rep. John Conyers (D.-Mich.) answered Sensenbrenner with the oft-heard argument that trial lawyers also help the rich: "I notice that Enron, Worldcom and Adelphia all have pretty good trial lawyers. These are all Republican supporters. Why cannot people with class action suits have trial lawyers [who] are doing a good job get compensated for it?"

Conyers went on to say that the bill "represents a major rewrite of the class action rules that would bar most forms of state class actions and massively tilt the playing field in favor of corporate defendants."

Countered Sensenbrenner, "I would be happy to invite [you] to my district to explain to my constituents why giving a consumer a coupon for 75 cents off a product that was manufactured by the company that injured that consumer, while giving a lawyer hundreds of thousands or millions of dollars worth of legal fees, puts consumers in charge rather than lawyers."

Rep. Bob Goodlatte (R.-Va.) further backed the conservative argument, citing a lawsuit with Chase Manhattan Bank in which the attorneys collected $4 million while the plaintiffs got 33 cents worth of compensation. "There is a little catch though," said Goodlatte, "because you had to use a 34-cent stamp in order to send in the acceptance to get the 33 cents. That does not sound like a good deal for me."

A "yes" vote was a vote in favor of the Class Action Fairness Act, to try to cut down on predatory practices by trial lawyers. A "no" vote was a vote against the bill.

Copyright Human Events Publishing, Inc. Jul 28, 2003
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