| FOR IMMEDIATE RELEASE |
CONTACT:
|
| June 12, 2003 |
Kate Dwyer: 202-226-7326
|
Ryan Votes to Curb Class Action Lawsuit Abuse
WASHINGTON – Wisconsin’s First District Congressman
Paul Ryan voted today for legislation to curb the abuse of class action lawsuits
and protect both consumers and plaintiffs from the actions of those who misuse
the current system. The legislation
– H.R. 1115, the Class Action Fairness Act of 2003 – passed the House of
Representatives by a vote of 253-170.
“Lawyers who abuse our legal system by clogging state
courts with frivolous class action lawsuits end up hurting good businesses and
their employees as well as consumers – who wind up paying higher prices.
This legislation aims to prevent this abuse and make the system fairer
for everyone involved,” Ryan said.
Class actions, properly used, can promote efficiency and
make it possible for a large number of people to bring small homogeneous claims,
which might otherwise go unaddressed. But
because class actions empower lawyers to represent the interests of thousands of
people without their permission or supervision, there is substantial risk of
serious abuse. Class action filings
in state courts have increased 1,000 percent over the past ten years, and far
more in certain magnet jurisdictions.
Current law forbids federal courts from hearing most
national class action lawsuits. The
Class Action Fairness Act would make it easier to move large multi-state suits
from state to federal courts by providing federal court jurisdiction over
interstate class actions when there are defendants and plaintiffs from different
states and the aggregate amount in dispute is over $5 million.
There are safeguards written into the measure to ensure that state issues
remain in state courts.
In addition, the Class Action Fairness Act would:
require enhanced judicial scrutiny of coupon settlements;
protect against settlements that would result in a net monetary loss to plaintiffs; (One example of this kind of abuse: a Boston bank settlement resulted in an award of less than $9 to each class member but cost them $90 each to cover the attorney fees.)
prohibit the unjustified payment of bounties to class representatives;
protect out-of-state class members against settlements that favor certain class members over others based upon where they reside; and
require that notices sent to class members be written so that they can understand their rights, obligations and benefits.
Last year, the House passed very similar legislation, but the Senate did not act on it. Similar legislation is currently pending consideration in the Senate.