Class-action bill unlikely to have much impact on OOIDA's cases

| Wednesday, February 23, 2005

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 OOIDA’s litigation.”

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 federal court.”

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 law.

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 cause.

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.”

“This legislation 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 proper compensation.

“That is an important principle of justice.”

– By Mark H. Reddig, associate editor
mark_reddig@landlinemag.com

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