Class Action Lawsuit Reform Information

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2002
CLASS ACTION FAIRNESS ACT OF 2001

HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

ON
H.R. 2341

FEBRUARY 6, 2002

Serial No. 59

Printed for the use of the Committee on the Judiciary

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Available via the World Wide Web: http://www.house.gov/judiciary

COMMITTEE ON THE JUDICIARY
F. JAMES SENSENBRENNER, JR., WISCONSIN, Chairman
HENRY J. HYDE, Illinois
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR SMITH, Texas
ELTON GALLEGLY, California
BOB GOODLATTE, Virginia
ED BRYANT, Tennessee
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
CHRIS CANNON, Utah
LINDSEY O. GRAHAM, South Carolina
SPENCER BACHUS, Alabama
JOHN N. HOSTETTLER, Indiana
MARK GREEN, Wisconsin
RIC KELLER, Florida
DARRELL E. ISSA, California
MELISSA A. HART, Pennsylvania
JEFF FLAKE, Arizona
MIKE PENCE, Indiana

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JOHN CONYERS, JR., MICHIGAN
BARNEY FRANK, Massachusetts
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
TAMMY BALDWIN, Wisconsin
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California

PHILIP G. KIKO, Chief of Staff-General Counsel
PERRY H. APELBAUM, Minority Chief Counsel

C O N T E N T S

FEBRUARY 6, 2002

OPENING STATEMENT

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    The Honorable F. James Sensenbrenner, Jr., a Representative in Congress From the State of Wisconsin, and Chairman, Committee on the Judiciary

    The Honorable John Conyers, Jr., a Representative in Congress From the State of Michigan, and Ranking Member, Committee on the Judiciary

WITNESSES

Mr. Peter Detkin, Vice President and Assistant General Counsel, Intel Corporation
Oral Testimony
Prepared Statement

Mr. John Beisner, Partner, O'Melveny & Myers, LLP
Oral Testimony
Prepared Statement

Ms. Hilda Bankston, former small business owner, Jefferson County, MS
Oral Testimony
Prepared Statement

Mr. Andrew Friedman, Partner, Bonnett, Fairbourn, Friedman & Balint, PC
Oral Testimony
Prepared Statement

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

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    The Honorable Rick Boucher, a Representative in Congress From the State of Virginia
    The Honorable Bob Goodlatte, a Representative in Congress From the State of Virginia
    The Honorable Sheila Jackson Lee, a Representative in Congress From the State of Texas

APPENDIX

Material Submitted For The Record

    Civil Justice Report, ''They're Making A Federal Case Out of It. . .State Court''
    Washington Post Editorial ''Actions Without Class''
    Letter and Statement From Public Citizen
    Letter to Members of Congress signed by 87 of America's High-Tech Industry Companies
    Letter and Statement From Alliance of American Insurers
    Letter and Statement From the American Trucking Associations
    Letter from the National Association of Manufacturers
    Letter and Study by the Chamber of Commerce of the United States of America

CLASS ACTION FAIRNESS ACT OF 2001

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WEDNESDAY, FEBRUARY 6, 2002

House of Representatives,
Committee on the Judiciary,
Washington, DC.

    The Committee met, pursuant to notice, at 10 a.m., in Room 2141, Rayburn House Office Building, Hon. F. James Sensenbrenner, Jr. (Chairman of the Committee) presiding.

    Chairman SENSENBRENNER. The Committee will come to order. Today, the Committee will conduct a legislative hearing on H.R. 2341, the ''Class Action Fairness Act of 2001'', introduced by Representatives Goodlatte and Boucher.

    Class action lawsuits in America have raised a number of grave concerns. Currently, our rules foster a game where attorneys lump thousands and sometimes millions of speculative claims in one class action and race to any available State courthouse in hopes of a rubber-stamped settlement. It is a part of our civil justice system that has gone wild. Over the past 10 years State court class action filings have increased 1,000 percent. This creates an enormous economic drain on small businesses, big industries and insurers, and provides windfall attorney fees while individual class members usually receive a small fraction of any settlement award.

    This bill addresses some of these problems by updating antiquated Federal jurisdictional rules which have led to a situation where State courts are left with jurisdiction over most class actions. Currently, the Federal Rules provide jurisdiction for disputes dealing with Federal laws and disputes based on complete diversity: a requirement that all plaintiffs and defendants are residents of different States and that every plaintiff's claim is valued at $75,000 or more. Naturally, few class actions meet these requirements.

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    H.R. 2341 would apply new diversity standards to class actions by changing those requirements for class actions where any plaintiff and any defendant reside in different States and where the aggregate of all plaintiff's claims is at least $2 million.