Class-Action Lawsuit Reform Near but No Cigar Yet

Even with bipartisan support on Capitol Hill and the endorsement of over 80 newspapers across the country, supporters of class-action lawsuit reform (search) are waiting before they pop any champagne corks to celebrate victory.

The reform measure, which has been kicking around Capitol Hill in various forms for the past six years, has passed the House and is poised for a vote in the Senate after a compromise this week convinced some formerly opposed senators to back the bill. But even supporters acknowledge that the deal could come undone.

“Anything can happen in the Senate, but we’re pretty confident that we will have the votes we need when it comes to the floor,” said Matt Webb, vice president of legal reform policy for the U.S. Chamber of Commerce (search), one of the biggest advocates of the reforms.

“We believe we have a filibuster-proof (search) vote on the bill,” Webb said.

But proponents ought not to go around waving any flags yet, said Ed Mierzwinski, spokesman for U.S. Public Interest Research Group (search ), which is part of a large coalition of consumer and civil rights groups and corporate watchdogs that staunchly oppose the Class Action Fairness Act (search).

He called the proposal, which in part shifts lawsuits involving over 100 plaintiffs from different states and over $5 million in expected damages from state to federal courts, an “egregious piece of legislation” that opponents still hold out hope of defeating.

“They haven’t picked up the votes yet,” Mierzwinski said.

The bipartisan sponsors of the House and Senate bills said they have crafted reasonable reforms to the class-action system, which they complain has ballooned in the number of cases and rewards over the past 10 years. They said lawyers have purposely sought out plaintiffs and sympathetic judges to file national cases in states with barely a connection to the defendants in question.

Furthermore, they said millions of dollars have gone to attorneys, while in many cases the plaintiffs have made off with only a tiny share of the award -- sometimes as little as redeemable coupons.

“The class-action system in the states is being broadly abused in a handful of state courts around the nation where the judges have cozy relations with lawyers who represent plaintiffs in class-action suits,” said Rep. Rick Boucher, D-Va., sponsor of the bill that passed the House last year.

“The result is that the defendant is given a choice -- they can settle the suit or endure the cost of a trial for years,” he told “And these suits usually run in the millions of dollars, and these millions typically go to the plaintiffs’ lawyers.”

Victims would not be prevented from taking a corporation to task under the new remedies, but the largest of these cases would be handled in federal court so as to avoid judge shopping (search) and to allow judges to consolidate multiple class-action suits against one defendant, supporters said.

“I think consumer rights will actually be enhanced because consumers are actually paying the price of increased fees and services” and are often shortchanged in the settlements, said Boucher, who says he's not a typical tort reformer.

But Association of Trial Lawyers of America (search) spokesman Carlton Carl said consumer groups see right through this reasoning.

“Our system is filled with checks and balances and safeguards to ensure that it is fair to all parties, and it is,” said Carl, who added that for every newspaper editorial backing the reforms, there is another opposing them.

Carl pointed to a recent study by law professors Theodore Eisenberg of Cornell University and Geoffrey P. Miller of New York University, who said the number of large class-action suits and settlements have actually remained steady -- not exploding over the years as critics contend.

“The only proponents of the legislation are wrong-doing corporations, which expect they will be less likely held accountable if virtually every class-action were federalized,” said Carl.

Before passing out of the Senate Judiciary Committee last fall, the bill faced heavy opposition from a few Republicans, but mostly Democrats, who called it “one-sided” and nothing more than a “wholesale federal takeover of class-action litigation.”

But this week, a compromise was introduced by the bill's Senate sponsors and former opponents, who reportedly agreed to the changes. The turnaround gave supporters more reason to believe they were reaching passage.

Introduced in the Senate by several bipartisan senators, including Bill Frist, R-Tenn., the majority leader; Charles Grassley, R-Iowa; Christopher Dodd, D-Conn.;and Mary Landrieu, D-La., the deal would, among other changes, modify which cases would be shifted to federal court.

Though the current bill would make exceptions – for instance, allowing the state courts to handle the suit if two-thirds of the plaintiffs live in one state -- the new bill makes further changes.

“This is a delicate compromise, which addresses the shortcomings of current class-action practice while at the same time protecting the right of citizens to join with fellow citizens to seek the redress of grievances in the courts of our nation,” Dodd said on the Senate floor last Monday.

GOP leadership sources said Frist has talked about taking the bill up for a full Senate vote now that the massive highway bill is off the table. But some senators are still sitting on the fence.

A spokesman for North Carolina Sen. John Edwards, a trial lawyer and Democratic presidential candidate, told that Edwards had “serious problems” with the bill because it would force cases into federal court. He had no comment on the proposed deal.

Virginia Davis, a spokeswoman for Sen. Richard Shelby, R-Ala., said the senator was not impressed with the agreement.

"The current legislation must see significant improvements with respect to states' rights before the senator would consider supporting it," she said.

Opponents of the bill are hoping to exploit those divisions enough to let the clock run out on class-action reform once again.

"This legislation makes it easier for these corporations to get away with ripping off employees and with fraud, and in some cases killing and injuring American families," Carl said.