A measure designed to curb class-action
lawsuits is now federal law. However, OOIDA’s counsel said none of the
association’s current legal actions would be affected by it.
The bill – passed as S5 and now known as Public
Law No: 109-2 – was introduced by Sen. Chuck Grassley, R-IA, and signed into
law by President George W. Bush Feb. 18. Called “The Class Action
Fairness Act of 2005,” it will move a large number of class-action
lawsuits filed in state courts into federal courts.
Most of OOIDA’s legal actions are already
in the federal court system, said David A. Cohen of The Cullen Law Firm in
Washington, DC. A few of the current cases, such as a workers’ compensation
case against Springfield, MO-based Prime, are in state court. However, even
those current cases will not be affected.
“Those will not be impacted by this
bill,” Cohen said. “This legislation will not be applied retroactively.
“Most of our cases arise under federal
statutes or regulations. When you have a case that has what we call a federal
question, there’s a separate basis for jurisdiction in the federal courts. If
the controversy is dealing with a federal law, then you automatically can file
in federal court; you don’t have to meet any kind of monetary threshold. That’s
why our cases have generally always been in the federal courts.”
Cohen said the new law is aimed not at
actions like OOIDA’s, but at consumer-oriented class-action suits. Special
interest groups and attorneys in some of those cases have filed them based on
state laws and in state courts.
“People have been filing them in friendly
state courts and getting national classes certified, ringing up big judgments
and forcing companies to pay a lot of money and settlements,” Cohen said. “That
was what this bill was designed to do away with.
“It will have much less of an impact on
While the new law contains conditions
that would keep some cases in state court, for the most part, class-action
suits will automatically move to federal court if they meet two criteria:
- The total damages requested exceed $5 million; and
- Any member of the class – the people on whose behalf the
suit is filed – is a citizen of a different state than the defendant.
Even if a case that meets those criteria
is not filed in federal court, Cohen said “it can be automatically removed to
Cohen said those rules could affect
future OOIDA cases that are based on state law that in the past would have been
filed in state courts. And even in the association’s federal cases, it could
have an indirect effect.
Cohen said the federal courts are already
overloaded, having taken on a variety of cases that were once strictly tried in
state courts, such as drug cases. Compounding that, some federal laws now call
for mandatory sentences, which means fewer prosecutors can avoid a trial by
offering a plea bargain, putting even more trials before federal judges. The
new law will add to that burden even more.
“The federal courts are going to be even
busier than they are now,” he said. “The end result of this is that it slows
down civil litigation, and that’s part of the reason why our cases have been
taking so long. This will only, I think, increase the burden in the federal
courts, and that’s not good for us.”
The situation, however, could have been
worse, and many of the “more onerous” parts of the bill did not make it into
Cohen said earlier versions of the bill
would have made the law retroactive, which would have taken current state
class-action suits and moved them into federal court.
Another provision that didn’t make it, he
said, would have required appeals courts – once a class was certified – to hear
a company’s request to decertify the class. Paul Cullen Jr. of The Cullen Law
Firm said that under that provision, all other action on the case would have
stopped until the appeals court ruled on the company’s request.
“That would have been a very bad
development, and that didn’t happen,” Cohen said.
Bill makes waves
The bill sped through Congress earlier in
February, with the Senate granting passage by a vote of 72-26, and the House
adding its amen on a 279- 49 vote later on.
While the bill’s supporters
were crowing over the legislation’s passage, the acclaim was hardly universal.
The Consumer Federation of America
quickly released a statement pointing out potential problems the law could
Rachel Weintraub, assistant
general counsel of The Consumer Federation, called the measure “a broad
and dangerous change to our civil justice system,” as well as “a significant
vote against consumers’ rights.”
essentially denies consumers access to a uniquely important legal tool against
corporate wrongdoing,” she said. “For many consumers, litigating their case
individually is neither practicable nor possible.”
But the bill’s supporters said the
measure was an important reform in the legal system.
President Bush called the new law “a
practical way to begin restoring common sense and balance to America's legal
system,” adding that the measure was “a critical step toward ending the lawsuit
culture in our country.”
But even while signing a bill that limits
class actions, the president took time to point out the importance of the suits
in the legal system.
“Class actions can serve a valuable
purpose in our legal system,” he said. “When used properly, class actions make
the legal system more efficient and help guarantee that injured people receive
“That is an important principle of
– By Mark H. Reddig, associate editor