IIABA Hails House Passage of Class Action Reform Bill

June 16, 2003

Independent agents and brokers reportedly believe a class action reform bill approved late last week by the House of Representatives will help return a sense of normalcy to interstate class-status lawsuits and protect the rights of consumers and defendants, said the Independent Insurance Agents & Brokers of America (IIABA).

The House of Representatives approved the Class Action Fairness Act (H.R. 1115) by a bipartisan 253-170 vote on Thursday. The measure was introduced by Rep. Bob Goodlatte (R-Va.) and cosponsored by 50 members.

IIABA supports H.R. 1115 because it will help rein in a significant part of the country’s legal system that has gone awry and is fraught with abuse, IIABA senior vice president of Federal Government Affairs Maria Berthoud said.

“The Class Action Fairness Act is a common-sense measure that will ensure a balanced and fair review of interstate class action lawsuits by permitting them to be heard in federal district courts,” Berthoud asserted. “Federal courts are better equipped to deal with these complex cases. This measure also will bring an end to the practice of trial lawyers forum-shopping around the country looking for the most favorable venue to try a class action case.”

The Class Action Fairness Act would reportedly allow litigants—either the defendant or plaintiff—to move interstate class action suits into federal courts, which generally are more protective of consumer and defendant rights. It 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 the following requirements—any member of a class of plaintiffs is: a citizen of a state different from any defendant; a citizen of foreign country; or a citizen of a state and any defendant is a foreign citizen.

The measure also proposes the establishment of a consumer class action bill of rights that would include provisions for:

·judicial review of non-cash settlements, such as coupons;

·protection against loss by class members because of payments to class counsel;

·prohibition of court approval if larger payments are proposed to class members located in closer geographic proximity to the court;

·a ban on court approval of a greater share of a settlement being awarded to a representative serving on behalf of a class;

·standardized settlement notification information;

·specific requirements regarding proposed settlement notifications to federal and state officials.

“This bill would not impinge anybody’s right to sue. It would merely allow litigants to move large class action suits involving interstate issues into federal courts. It also would allow plaintiffs and defendants—for the first time—to have their claims heard in federal court,” Robert Rusbuldt, IIABA CEO, commented.

A companion Senate bill (S. 274) was approved by the Judiciary Committee April 11, but has not yet been voted on by the full chamber. The bill was introduced by Sen. Charles Grassley (R-Iowa) and has 20 bipartisan cosponsors.

“Independent agents and brokers call on the Senate to take up this bipartisan bill and approve it as soon as possible,” Rusbuldt said. “We need more certainty in our civil justice system so that runaway judgments do not further damage the country’s economy.

“The Class Action Fairness Act will go a long way toward creating balance in our legal system by guaranteeing those seeking redress their day in court and at the same time ensuring that individuals and companies on the other end of a lawsuit are treated equitably by federal courts that are better equipped to judge the case,” Rusbuldt continued.

Berthoud praised Goodlatte for advancing his reform proposal through the House and said IIABA will be working along side Grassley and Senate Judiciary Committee Chairman Orrin Hatch (R-Utah) to ensure that S. 274 is voted on by all senators soon.

“We are halfway to reforming our country’s class action litigation system thanks to the hard work and dedication of Rep. Goodlatte, whose determination pushed this bill through the House,” Berthoud added. “Next, IIABA will focus its energies on getting the Senate to approve on the companion bill so President Bush can sign this important and common-sense measure into law.”

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