Statement Of Senator Patrick Leahy
Class Action Fairness Act, S. 1751
Senate Floor
October 20, 2003

I must oppose the so-called “Class Action Fairness Act” for the simple reason that it is not fair.  This legislation would make it harder for citizens to protect themselves against violations of state civil rights, consumer, health, and environmental protection laws by forcing these cases out of convenient state courts, which have experience with the legal and factual issues involved in such cases, and instead into federal courts, with new barriers to lawsuits and new burdens on plaintiffs.

For the many Americans who will be watching this debate, we first need to at least mention, if not answer, the first basic question that scheduling this debate right now raises.  Here we are, three weeks beyond October 1^st, the beginning of the new federal fiscal year and our deadline for passing the appropriations bills that fund the basic work of the federal government.  We are in the final few weeks, if not days, of this congressional session.  But here we find ourselves, three weeks past our deadline, devoting these precious days not to acting on the people’s priorities, but instead we will spend these days debating this bill, which is a top priority of well-funded special interests.

Over the past several weeks I have received call after call from Vermonters who grow more and more anxious over Congress’ ability to finish appropriations for fiscal year 2004.  I know that other Senators must be getting similar calls from the people and the leaders of their states and communities.  I have told Vermonters to hang in there and assure them that Congress will eventually get these bills done.  But then the Senate majority leadership decides to have us consider controversial special interest legislation like this bill.  My colleagues and I who serve on the Appropriations Committee worked long and hard to get the fiscal year 2004 bills voted out of our committee, only to see them blocked by the Republican leadership. The House has passed all 13 of the regular appropriations bills and is now waiting for the Senate to move.

The new fiscal year began three weeks ago, but the Senate has not bothered to even to take up the Agriculture, Commerce-Justice-State and the Judiciary, Foreign Operations, Transportation-Treasury, and Veterans Affairs-Housing and Urban Development appropriations bills.  Within these bills are programs that would help millions of Americans at the national, state and local levels.  Mr. President, let me tell you about some of those programs of importance to the American people that are being pushed aside so that we instead can consider this special interest “tort reform” legislation.

In the area of agriculture, there is more than $1 billion in conservation assistance for farmers to help improve water quality and stop sprawling development.  Last year, this aid was delayed by more than four months.  Each month is critical for farmers who are struggling just to get by.  With a stalled Justice spending bill, no funds exist for the Bulletproof Vests Partnership Program, which helps state and local police agencies buy armored vests to protect the lives of their officers; the COPS Program, which puts new police officers on our communities’ streets and in our schools; and Violence Against Women Act programs that provide services for victims of domestic violence, sexual assault and stalking.

All funding for transportation and critical infrastructure projects is bottled up – in fact, the Senate has also failed to pass the transportation reauthorization bill, which is costing our nation an estimated 90,000 jobs.  All foreign assistance to nations other than Iraq and Afghanistan are on hold, as is all funding to combat HIV/AIDS and other infectious diseases.  And Mr. President, another group of Americans awaiting action by Congress are our veterans, who need the Congress to make basic decision about their medical care and benefits.

Instead of meeting these responsibilities to the American people, we are spending the waning hours of this legislative session in debate on a bill that will do far more harm than good to those same people.

So the American people are entitled to ask why we are bogged down considering this controversial and unfair class action bill when the Senate has yet to take up and debate five important appropriations bills, amounting to more than $301 billion.  I hope we will get an answer to that basic question during this debate.

Mr. President, I ask that the Senate get down to the business of the people and carry out the responsibilities given to it by the Constitution by taking up, debating and passing the remaining appropriations bills.  Those are urgent measures that we can pass – that we must pass.  The American people, as well as people around the world, depend on the funds and services supplied through the spending measures that are currently held hostage.  Let’s do our job and move these bills, rather than debating controversial special interest legislation.

Earlier this year, I joined Senators Kennedy, Biden, Feingold, Durbin and Edwards in respectfully requesting a hearing on class action litigation in order to help the Judiciary Committee develop consensus reforms to better serve both defendants and plaintiffs.  Unfortunately, our request was ignored and our letter went unanswered.  I ask that this letter be made a part of the record.

I had hoped that the Judiciary Committee would undertake a deliberate and careful review of information from parties actually involved in class action litigation to provide a realistic picture of the benefits and problems with class actions.  But instead, we are proceeding with one-sided legislation that has repeatedly failed to pass the Senate in recent years.  The Committee did not carry out the kind of thorough and thoughtful legal and factual analysis of this difficult issue that it should have.  Thus, the Committee cannot provide our colleagues in the full Senate with the assistance that they may want and need as they consider the complex questions that arise in this arena.

I must pause, however, to acknowledge the hard work and dedication displayed by my friend, the Senator from California.  Senator Feinstein undertook an enormous task in attempting, through her amendment, to rectify some of the harms created by this bill.  I appreciate the sincerity of her concern, and I respect the genuine effort she made.  However, her amendment touches on only a thin sliver of the class action cases that this bill would affect -- only when plaintiffs and primary defendants are from the same state -- and even then, I am afraid that it may do more harm than good. 

At its core, this bill deprives citizens of the right to sue on state law claims in their own state courts if the principal defendant is a citizen of another state, even if that defendant has a substantial presence in the plaintiffs’ home state, and even if the harm done was in the plaintiffs’ home state.  Senator Feinstein’s amendment does not remedy that problem, and indeed in some circumstances it appears to burden the plaintiffs even more than the bill as introduced would. 

I also want to recognize the sincere efforts made on the class action issue by my friend from Wisconsin, Senator Kohl.  While I may disagree with him about the nature of the problems and the appropriate solutions in this area, I do so respectfully.  His efforts are much appreciated by all who work with him on the Judiciary Committee.

Before I go further, I must also note a significant change in the bill since it was passed out of Committee.  As originally drafted, this bill included mass tort claims along with class actions – and indeed treated them as if they were class actions.  One improvement that the Judiciary Committee did manage to make in the bill was to strike that provision. Yet now, without any further discussion or debate, mass tort actions are again included in this bill.  This simply amplifies the harm done to citizens’ rights, and to the possibility of vindicating those rights in their own state courts. 

In fact, the bill the Republican leadership is insisting on calling forward is not the bill considered and reported by the Judiciary Committee, S. 274.  It is, instead, another bill, S.1751, that was only introduced last week.  Under this new bill’s provisions, any mass action with at least 100 plaintiffs seeking monetary relief will be treated just as if it were a real class action.  It will be subjected to the same shunting to a federal court, and the plaintiffs will endure the same unnecessary difficulties in making their claims and pursuing their remedies.  But these mass tort cases are not class actions – they have not been analyzed under Rule 23’s standards or state law equivalents to Rule 23.  And they are an important means by which groups of injured people have long been able to pursue remedies against those who have harmed them:  Mass tort cases address injuries to citizens’ health from dangerous medical products, injuries to their property and their health from environmental disasters, and injuries to their rights and liberties from widespread mistreatment in the workplace.

In short, mass tort actions are entirely different procedural vehicles to reach justice than class actions.  They should not be lumped in with class actions in any kind of class action bill, either this misguided attempt or a better-wrought piece of legislation.

Some special interest groups are distorting the state of class action litigation by relying on a few anecdotes in an ends-oriented attempt to impede plaintiffs bringing class action cases.  We can and should take necessary steps to correct problems in class action litigation, but simply shoving most suits into federal court with new one-sided rules will not correct the real problems faced by plaintiffs and defendants. 

We should remember that our state-based tort system remains one of the greatest and most powerful vehicles for justice anywhere in the world.  One reason for that is the availability of class action litigation to let ordinary people band together to take on powerful corporations or even their own government.

Defrauded investors, deceived consumers, victims of defective products and environmental torts, and thousands of other ordinary people have been able to rely on class action lawsuits in our state court systems to seek and receive justice.

I am old enough to remember the civil rights battles of the 1950s and 1960s and the impact of class actions in vindicating basic rights through our courts.

The landmark Supreme Court decision in Brown v. Board of Education was the culmination of appeals from four class action cases, three from federal court decisions in Kansas, South Carolina and Virginia and one from a decision by the Supreme Court of Delaware.

Only the Supreme Court of Delaware, the state court, got the case right by deciding for the African-American plaintiffs.  The state court justices understood that they were constrained by the existing Supreme Court law, but nonetheless held that the segregated schools of Delaware violated the Fourteenth Amendment.  Before any federal court did so, a state court rejected separate and unequal schools.

Indeed, many civil rights advocates – including the Lawyers’ Committee for Civil Rights Under Law, to the Leadership Conference on Civil Rights, the Mexican American Legal Defense and Education Fund, and the National Asian Pacific Legal Consortium – have written to Senators in opposition to this legislation.  These civil rights advocates concluded that this legislation “would discourage civil rights class actions, impose substantial barriers to settling class actions and render federal courts unable to provide swift and effective administration of justice.”  I ask that their letter, dated September 16, 2003, be made a part of the Record.

We all know that without consolidating procedures like class actions, it might be impossible for plaintiffs to obtain effective legal representation.  Defense lawyers tend to be paid by the hour — and well paid.

Plaintiffs’ lawyers in this type of setting tend to work without pay for the possibility of obtaining a portion of the proceeds, if successful.  It may well prove uneconomical for counsel to take on governmental or corporate defendants if they must do so on a case-by-case, individual basis.  It may be that individual claims are simply too small to be pursued.

Sometimes that is what cheaters count on and it is how they get away with their schemes. Cheating thousands of people “just a little” is still cheating.  Class actions allow the little guys to band together, allow them to afford a competent lawyer, and allow them to redress wrongdoing.

For instance, class actions made it possible for individual tobacco victims to band together to take on the powerful tobacco conglomerates in ways that individual smokers could not afford.  It allows stockholders and small investors to join together to go after investment scams.

Another example of class action litigation serving the public interest is the Firestone Tire debacle.  The national tire recall was started, in part, from the disclosure of internal corporate documents on consumer complaints of tire defects and design errors that were discovered in litigation against Bridgestone/Firestone, Inc.

Plaintiffs’ attorneys turned this information over to the National Highway Traffic Safety Administration, triggering a government investigation.  Months later, Bridgestone/Firestone recalled 6.5 million tires after they were linked to 101 fatalities, 400 injuries and 2,226 consumer complaints.  As reported by TIME Magazine at the time, it is doubtful that the internal corporate consumer complaint information would have ever seen the light of day absent the civil justice discovery process.

Moreover this bill creates unique risks and obstacles to plaintiffs not present in the current system.  A particularly troubling aspect of S. 1751 is that it allows removal of a case at any time.  The possibilities for abusing this provision are obvious, and worth noting. 

As more than a hundred law professors noted in a letter to Senators Frist and Daschle:

This would give a defendant the power to yank a case away from a state-court judge who has properly issued pretrial rulings the defendant does not like, and would encourage a level of forum-shopping never before seen in this country.  Moreover, this provision would allow an unscrupulous defendant, anxious to put off the day of judgment so that more assets can be hidden, to remove a case on the eve of a state-court trial, resulting in an automatic delay of months or even years before the case can be tried in Federal courts.

I ask unanimous consent that this letter from a hundred law professors opposed to this legislation be made a part of the Record.

Added to the “removal-at-any-time” problems in the legislation are the hurdles established by Senator Feinstein’s amendment adopted in committee.  While undoubtedly well-intentioned, the amendment sets up cumbersome requirements for determining whether an action will be heard in state or Federal court.  The Feinstein amendment provides that a Federal judge may use five factors in deciding jurisdiction of a class action where between one-third and two-thirds of the plaintiffs are from the same state as the primary defendants, and that if two-thirds of the plaintiffs are from the same state as the primary defendants, then the case then would stay in state court.

 

But the bill fails to determine when this measurement must take place during the life of the litigation.  Given that membership in class actions frequently change, the two-thirds requirement, and the “middle-third” provision, which is subject to judicial discretion, could open up the process to legal gamesmanship.  A defendant could try to remove a case from state court at the discovery stage, when a court ruling goes against it, after all the evidence has been presented, after closing arguments, while the jury is deliberating or at all of these times as the bill is currently written.  Considering the vast resources of defendants in many class actions, as compared to the plaintiffs, this will only make it more difficult for class members to ever have a final ruling on the merits of their case. 

The result is a bill that will cause unnecessary and expensive litigation that favors corporate defendants at the expense of harmed victims. 

The legal rights and procedures that protect consumers, investors and employees matter now more than ever after the bankruptcies of Enron, Worldcom and other corporate scandals.  This bill will do nothing to make corporate America more accountable for its actions; indeed, the bill undercuts the Congress’s other efforts to make companies more responsible in their actions, more accountable for their misdeeds, and more susceptible to penalties when they do wrong. 

Legislation that makes it more difficult for the victims of corporate wrongdoing to join together to make those companies accountable is the exact opposite approach we should be taking.  Not surprisingly, consumer groups object strongly to the enactment of this legislation, and I ask unanimous consent to include in the Record letters from numerous consumer advocates in opposition to this bill.

Last year, a group of investors recovered millions in lost investments under state corporate fraud laws in a state class action case.  In Baptist Foundation of Arizona v. Arthur Andersen, mostly elderly investors banded together to successfully recoup $217 million from Arthur Andersen for questionable accounting practices surrounding an investment trust.  This case is just one example of how state-based class action litigation holds corporate wrongdoers accountable and helps defrauded investors recoup their losses.

As a strong supporter of the environment, I am also concerned that this bill will allow polluters and other bad actors responsible for environmental damages to avoid accountability in court. 

This legislation would remove almost all important environmental class actions from state to federal court.  Not only does this deny state courts the opportunity to interpret their own state=s environmental protection laws, but it also hampers and deters plaintiffs from pursuing important environmental litigation.

Under this bill, environmental class actions may not get litigated, reducing the incentive that polluters have to keep our environment clean.  Plaintiffs’ attorneys may not be willing to take these high-risk, high-cost, and time-consuming cases, particularly when the judicial remedy sought is injunctive relief.  This has the potential to leave our environment and the victims of reckless polluters unprotected by our civil justice system.  This bill, intentionally or not, protects polluters and ignores the innocent victims of their negligence.

Just a few months ago, we read about a horrible toxic dumping situation in Alabama and a monumental settlement in state court to clean up an entire community.  In Anniston, Alabama, the Monsanto Company manufactured PCBs – carcinogens – from 1929 until 1971.  For more than 40 years, Monsanto dumped untreated, unfiltered waste from its PCB plant into the streams and landfills of Anniston, without ever letting the residents, many of whom worked for Monsanto, know of the horrific risk to their environment and their health. 

When the undeniable truth of Monsanto’s malfeasance became clear, several thousand residents of Anniston sued in state court, and they have recently won a liability jury verdict.  As the case moved into the damages phase, the defendants’ efforts were directed largely toward getting the judge removed.  Although the Alabama Supreme Court has already held that the trial judge was acting properly, Monsanto continued to oppose his participation.  Finally the corporate defendants focused on the merits of the case and settled with the local residents for $600 million and pledged to pay additional cleanup costs for the town.  But despite the undeniably sound administration by this local state court judge, this bill would send all these plaintiffs into federal court, simply because there are more than 100 of them.

Cases such as this one provide hard evidence that our state-based civil justice system is working to protect the environment and the victims of polluters, and there is simply no reason to prefer a federal forum for resolution of their claims.  State courts, unlike the federal courts, have a sound understanding of evolving local law and the open dockets to resolve conflicts in the efficient manner necessary to protect our society from polluters.

Indeed, the Judicial Conference, headed by Chief Justice Rehnquist, wrote a letter dated March 26, 2003, opposing this bill because its “provisions would add substantially to the workload of the federal courts and are inconsistent with principles of federalism,” and singled out serious environmental disasters as an example of class actions that should remain in state courts.  Numerous organizations devoted to the protection of the environment have similarly opposed this bill, including Clean Water Action, Earthjustice, the Environmental Working Group, Friends of the Earth, Greenpeace, the Mineral Policy Center, the Natural Resources Defense Council, the Sierra Club, and the U.S. Public Interest Research Group.  These advocates conclude, in a letter dated April 2, 2003, that this bill “would benefit polluters at the expense of people and communities harmed by public health and environmental disasters.”  I ask for unanimous consent that both these letters be made a part of the Record.

The so-called Class Action Fairness Act will leave many injured parties who have valid claims with no effective way to seek relief.  Class action suits have helped win justice and expose wrongdoing by the big polluters, by big tobacco companies, and the big civil rights violators.  They have given average Americans at least a chance for justice.  We should not take that chance for justice away from the American people.  I urge my colleagues to consider the harm that this bill will do to the American people and to their constituents, and to join me in opposition.
 

 

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