NAMIC Advocates Class Action Reform, Supports Senate Legislation

February 7, 2003

NAMIC said it is pleased to announce that class action reform
legislation was introduced in the Senate earlier this week. This legislation reportedly allows for the removal of certain interstate class action lawsuits to federal court from state courts if requested by either plaintiffs or defendants.

“The Class Action Fairness Act of 2003,” S. 274, was introduced by Senators Charles Grassley, R-Iowa, Orrin Hatch, R-Utah, Herb Kohl, D-Wis., Tom Carper, D-Del., Lincoln Chafee, R-R.I., Arlen Specter, R-Pa., Richard Lugar, R-Ind., and Zell Miller, D-Ga.

“S. 274 would serve to restore balance to the class action system, reduce litigation expenses, curb frivolous class action suits, and provide additional protection to consumers,” Monte Ward, NAMIC’s federal affairs vice president, remarked.

“We are very optimistic that this legislation will be signed into law during this Congress,” Ward said. “During the 107th Congress, the U.S. House of Representatives approved its version of the bill (H.R. 2341), but the Senate version (S. 1712) was not voted out of committee.”

“Due to the dramatic increase in the filing of class action lawsuits in the United States in the last decade – many of which are frivolous – our member companies, as well as other businesses in other industries, have been forced to use more of their valuable resources to conduct their business,” Ward continued.

“Not only does the current system expose defendant corporations to the possible bias of a local jury against out-of-state corporations, it often results in contrived settlements that richly reward the named plaintiffs and their attorneys while leaving other class members with worthless coupons,” Ward said. “NAMIC is very hopeful that Congress will pass legislation this year to stop the current class action crisis and put interstate class actions in federal court.”

The Class Action Fairness Act would provide federal district courts with original jurisdiction of any civil action where the amount in controversy exceeds $2 million and the members of the class meet set requirements.

Additionally, the Act would establish a consumer class action bill of rights that would include provisions for judicial review of non-cash settlements, protection against loss by class members, and clearer settlement information.

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