Class action lawsuits play an important role in holding companies that injure or otherwise endanger a broad group of people accountable. When the damage to an individual isn’t substantial enough to justify the cost of one person bringing a lawsuit, class actions allow a group of people similarly injured to bring a case together.
Unfortunately, the current class action system is broken. Opportunistic lawyers have perverted the system so that it many times primarily benefits the attorneys at the cost of victims.
I have worked over the last number of years to reach agreement between republicans and democrats in Congress on a number common sense reforms that will address the most egregious shortcomings of the current system. This year my bill passed both the Senate and the House of Representatives, and President Bush recently signed it into law.
While working on this issue I heard from class members who won a lawsuit but received nothing more than pocket change or a coupon from the company that injured them in the first place.
In some cases the class members lost money even though they won the case. One of the people that lost money by 'winning' a class action lawsuit is Martha Preston from Wisconsin Dells, Wisconsin. She joined a class action against her mortgage company. Her class won and her share was about $4. But, $95 was taken out of her escrow account to pay the $8.5 million in legal fees to the attorneys 'representing' her.
This case is a clear example of some of the problems with the current system that this new law will address.
My bill created a consumer class action 'Bill of Rights' to make sure class members are aware of their rights and are the primary beneficiary of the class action process.
The Class Action Bill of Rights requires that judges carefully review settlements where class members only get a coupon. It requires that attorneys’ fees in these cases be based on the value of coupons actually redeemed or the time lawyers spent working on the case.
This law also requires close judicial review of settlements in cases where, like Ms. Preston’s, class members end up losing money.
One of the reasons for many of these abuses is the fact that until now, trial attorneys could bring the case in nearly any state court across the nation. This resulted in many class action cases being brought in sympathetic 'magnet' state courts, even if the alleged wrongdoing did not take place there.
While allowing truly local controversies to remain in state courts, this law will move cases with nationwide impact into federal courts, where they belong.
The common sense reforms that this bipartisan law makes will addresses the most serious problems with the current class action system. Now Congress needs to enact additional legal reforms so that we can take our court system back from the abusive personal injury trial lawyers and put it back to work for average Americans.