The "Class Action Fairness Act of 2003" will help people understand their rights in class action lawsuits and will protect them from unfair settlements.
"The class action system is full of problems. We need to protect the rights of consumers and not allow attorneys to gain huge fees when their clients are left with little. Our bill works to curb class action lawsuit abuses while preserving them as an important tool in our judicial system that brings representation to the unrepresented," Grassley said.
"Right now, people across the country can be dragged into class action lawsuits unaware of their rights and unarmed on the legal battlefield. What our bill does is give back to people their rights and representation while protecting legitimate class action suits," Kohl said.
"Class action suits today have become 'Jackpot Justice,' with attorneys collecting the windfall and clients left with worthless coupons. This bill is a modest effort to make the system serve those it was designed to ? the truly injured ? and I urge my colleagues to support it," Hatch said.
Class action suits are brought on behalf of a group of individuals who all have the same complaint. The Grassley/Kohl/Hatch bill is similar to legislation approved by the Senate Judiciary Committee -- on which the three Senators serve -- two years ago.
Examples of abuses in the class action system are rampant. One witness testified at a judiciary subcommittee hearing that she was a member of a plaintiff class where some plaintiffs received under $10 each in compensation for their injuries, yet were docked from $75 to $90 for attorneys fees. Attorneys representing these plaintiffs' best interests agreed to a settlement that cost some clients more than they received for being wronged.
To curb class action lawsuit abuses, the Grassley/Kohl/Hatch bill would establish the following:
The principle of "plain English"
The bill would require that all class notices and notice of proposed settlements in all class actions be written in easily understood terms and include the amount and source of attorneys' fees, along with all other material information.
Notice to State Attorneys General
The bill would require that state attorneys general be notified of any proposed class settlement that would affect residents of their states. The notice would give state attorneys general the opportunity to object if the settlement terms are unfair.
Judicial Scrutiny of Settlements
The bill would require that courts scrutinize class action attorneys' fees in settlements where the plaintiff's get non-cash relief to ensure that the settlements are fair to plaintiffs. Courts would still be able to approve non-cash settlements, like those righting discriminatory hiring practices.
Elimination of Bounties and Geographic Discrimination
The bill would prohibit the payment by lawyers of bounties to plaintiffs, which would eliminate skewed incentives. It would also stop the practice of paying some class members more than others just because they live near the courthouse. This geographic discrimination also leads to skewed incentives, particularly in jurisdictions where judges are elected.
Removal of Multistate Class Actions to Federal Court
The bill would allow class action lawsuits to be removed from state court to federal court by a defendant or an unnamed class member if the total damages exceed $2,000,000 and parties include citizens from multiple states. Currently, class lawyers can avoid removal if individual claims are for just less than $75,000 -- even if hundreds of millions of dollars in total are at stake -- or if just one class member is from the same state as a defendant.
Report on class action settlements
The bill would also require the judicial conference to advise the Congress on best practices to further ensure fairness in the class action system.