Senate Passes Class Action Reforms

Congress is only days away from handing President Bush (search) and business groups a big victory by curbing multimillion-dollar class action lawsuits.

Despite complaints the legislation could hurt consumers, the Senate (search) overwhelmingly passed the bill 72-26 on Thursday. The House will take it up next week and send it to the president to sign into law.

"Our country depends on a fair legal system that protects people who have been harmed without encouraging junk lawsuits that undermine confidence in our courts while hurting our economy," Bush said in a statement.

Bush and others who have pushed for the legislation for almost six years say the measure is needed because greedy lawyers have taken advantage of the state system by filing frivolous lawsuits in state courts where they know they can win big dollar verdicts.

Senators who back the bill say lawyers make more money from such cases than do the actual victims, and that lawyers sometimes threaten companies with class action suits just to get quick financial settlements. Ordinary people will not lose their day in court, the bill's proponents say.

Opponents say the president and his allies on this issue are trying to help businesses escape proper judgments for their wrongdoing, and are going after the trial lawyers — including some major contributors to the Democrats — who litigate the cases.

"Are there bad lawyers that bring meritless cases? Sure there are, and we should crack down on them," said Senate Democratic leader Harry Reid (search) of Nevada, a former trial lawyer. "But this bill is not about punishing bad lawyers. It is about hurting consumers and helping corporations avoid liability for misconduct."

Eight Democrats were sponsors of the bill, leaving the rest with no way to block it.

The bill is intended "to make sure when companies are called on the carpet, when they are involved in a class action litigation, they're in a court, in a courthouse with a judge where the companies have a fair shake, where the odds, the decks aren't stacked against them," said Sen. Tom Carper, D-Del.

Changing the legal system — including class action suits, medical malpractice suits and asbestos injury suits — has been a priority for the president and corporate America.

"The reason why this bill is the highest priority of the Bush administration and the Republican leadership in Congress is because of one simple fact: Class action suits moved from state courts to federal court are less likely to go forward, to be tried, and they are less likely to reach a verdict where someone wins or loses," said Sen. Richard Durbin, D-Ill.

If the plaintiffs win, businesses are "less likely to pay a reasonable amount of money in federal court than in state court," he said.

Under a deal between the two GOP-controlled chambers, if the Senate passed the bill without any changes, the House would follow suit and send it to the White House.

"We look forward to this legislation coming to the House floor next week so we can send it to President Bush, who has made its enactment a top priority," according to a statement from House Majority Leader Tom DeLay, R-Texas, House Judiciary Committee Chairman James Sensenbrenner, R-Wis., and House Agriculture Committee Chairman Bob Goodlatte, R-Va.

Under the compromise, class action suits would be heard in state court if the primary defendant and more than one-third of the plaintiffs are from the same state. But if fewer than one-third of the plaintiffs are from the same state as the primary defendant, the case would go to federal court.

At least $5 million would have to be at stake for a federal court to hear a class-action suit.

The bill also would limit lawyers' fees in so-called coupon settlements — when plaintiffs get discounts on products instead of financial settlements — by linking the fees to the coupon's redemption rate or the actual hours spent working on a case.