Article III of the Constitution empowers Congress to establish Federal jurisdiction over diversity cases: cases between citizens of different States. This authority was premised on concerns that States may discriminate against out-of-State citizens. These concerns have been realized in settlements where members of different classes and different State courts are pitted against each other in copycat class actions: identical lawsuits filed in a number of States. The first settled wins. Members of the other class actions must either find a way to join the settled action, wherever it may be, or forgo pursuing their claim.

    This practice highlights jurisdictions with lax class action procedural requirements such as Madison County, Illinois; Jefferson County, Texas; and Palm Beach County, Florida. In addition, many of these State court decisions have the effect of making national law, as was the case with auto insurance and the use of OEM replacement parts.

    The bill also establishes a consumer's class action bill of rights to address ethical concerns raised in a variety of class action settlements. For example, an airline price fixing settlement that produced $16 million in attorneys fees and only $25 credit for class members if they purchased an additional airline ticket for more than $250; a Bank of Boston settlement over disputed accounting practices that $8.5 million in attorneys fees actually costing class members around $80. Later plaintiffs' attorneys in this case also sued the class members for an additional $25 million; an infamous Mississippi asbestos settlement rewarded class members from Mississippi as much as 18 times more than class members from other States; a settlement with Cheerios over food additives produced $2 million in attorneys fees and class members only received coupons for more Cheerios.

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    In order to help prevent abuses like these, the bill aims to protect plaintiffs by prohibiting the payment of bounties to class representatives, barring the approval of net loss settlements, establishing a plain English requirement which clarifies class members' rights, and requiring greater scrutiny of coupon settlements and settlements involving out-of-State class members.

    Now with regards to Enron, there are many investigations, and there will be many lawsuits. It is important to note that nothing in this bill—and that means nothing—will limit the rights of Enron employees to seek redress in court. Under current law, the lawsuits against the company will be heard in Federal bankruptcy court under the current bankruptcy law for the same reasons Federal courts should be able to resolve many of the other class actions: Federal courts protect the interests of all parties. Section 4 of H.R. 2341 specifically excludes a number of Federal securities and State-based corporate fraud lawsuits.

    I reserve the balance of my time and after recognizing Ranking Member John Conyers I would like to go to the testimony because we will be having a vote at 11 o'clock and it is important that this hearing conclude by noon or thereabouts.

    The gentleman from Michigan.

    Mr. CONYERS. Thank you, Mr. Chairman and Members of the Committee. I want to first of all indicate to the Chairman how much I appreciate the cooperation that has been flowing between our staffs in terms of many activities that have required the rooms and resources of the Judiciary Committee in the last several weeks. I appreciate it very much.

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    Now this is a hearing that is bringing us together at the same time that what may turn into one of the largest financial debacles in the history of America is taking place. The bottom line is that we are probably considering legislation that would make it easier for corporations, their lawyers, and their accountants, to engage in questionable practices. That is the setting that brings us together.

    Now my Chairman has observed that there is nothing, zero in this measure that deals with Enron so we may breathe easier while we are in room 2141. Well, maybe; maybe not. Because much of the damage has been done in earlier congressional sessions, which we may have a chance to allude to either at this hearing, or if it is as abbreviated as suggested, somewhere else. We have got to hook all this together. Why? Because everything is connected to everything. This hearing is not being held in isolation. We are not suspending our judgment on everything else that is going on on the planet and in the American economy.

    Now I hate to go back to the Newt Gingrich Contract With America era, but it was at that time that a Republican-driven Congress decided to override President Clinton's veto of securities tort reform. The result is that at this moment, and as a direct consequence of that, it is much harder for the Enron employees—forgive me for referring to them publicly at this hearing where they are not involved—who were scammed, apparently, out of their retirement savings and will not get any relief as the top fellows walked away with hundreds of millions of dollars, maybe more.

    I also have to put this in some slight historical context with reference to the savings and loans scandals of the 1980's in which Keating and company—and that was considered outrageous. Several billions of dollars went down there. That too was a result of a reduced—of regulations that were trimmed and cut and limited to make it very difficult for there to be any real recovery for the people who were the true victims.

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    Now to me this is an appropriate time to be considering things that we, as national policymakers, may do to create more corporate responsibility, not less. Our citizens need more protections against being swindled, not less. But if I understand this measure, and that is what we are here to do, this is the direction that we are being taken, into less corporate responsibility. I have got maybe 13,000 investors from the Baptist Foundation of Arizona who would say amen to that, who would have been barred from the courthouse from any civil judicial relief had the measure that we are examining today been the law of the land as is being proposed at this hearing.