Illinois Association of Defense Trial Counsel
P.O. Box 7288, Springfield, IL 62791
IDC Quarterly Vol. 15, No. 1 (15.1.M1)
THE IDC MONOGRAPH:
THE CLASS ACTION
FAIRNESS ACT of 2005—
WHAT IS IT ALL ABOUT?
Bradley C. Nahrstadt
Brian Y. Boyd
Williams Montgomery & John Ltd.
Chicago, Illinois
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Illinois Association of Defense Trial Counsel
P.O. Box 7288, Springfield, IL 62791
IDC Quarterly Vol. 15, No. 1 (15.1.M1)
When George W. Bush ran for re-election in 2004, he promised his supporters, and the country,
that if re-elected he would make litigation reform a top priority. Shortly after the 2004 election, and
just before the beginning of his second term, Senate Republicans delivered on the president’s promise
and introduced legislation known as the Class Action Fairness Act of 2005 (S. 5). The bill, which was
sponsored by Senator Chuck Grassley, R-IA, was placed on the fast track and passed in the Senate on
February 10, 2005. The House of Representatives passed the same legislation on February 17, 2005 by
an overwhelming majority. President Bush signed the Class Action Fairness Act of 2005 into law on
February 18, 2005.1
Where did the perceived need for this legislation come from? What impact will it have on the
future of class action litigation in this country? What do the opponents of the Act contend are the
problems with this legislation? This article will provide a short history of the congressional efforts to
pass class action litigation reform, highlight the salient provisions of the Act and analyze the impact of
the Act on future class action litigation.
The History of the Class Action Fairness Act
In 1995, Congress passed the Private Securities Litigation Reform Act, hereinafter “PSLRA”2 in an
effort to stem the tide of corporate securities fraud class actions. According to one commentator, the
PSLRA appeased some of the more vocal pro-business lobbyists, but it did little to silence the harshest
critics of the class action system, including the National Association of Manufacturers and the U.S.
Chamber of Commerce.3 Those entities, and others, wanted reform for all types of class action cases,
not just securities suits.4
Against this backdrop, and a national outcry over the proliferation of class action lawsuits in state
courts around the country, in 1998 Representative Henry Hyde, R-IL, introduced the first of many
versions of what has been repeatedly labeled the Class Action Fairness Act.5 Representative Hyde’s
measure passed the House of Representatives, but the Senate never voted on it. In 2003, the House
again passed the measure, but the supporters of the bill in the Senate failed by one vote to get the 60
votes necessary to invoke cloture and limit debate on the bill.6 In 2004, although the House of
Representatives again passed a version of the Class Action Fairness Act, the supporters of the Act in
the Senate again failed to get the votes necessary for cloture, and managed to obtain the support of
only 44 senators.7
In early 2005, Senate Republicans decided to try to take advantage of an increase in the number of
Republican senators and set about passing an unadulterated version of the Class Action Fairness Act.
On January 25, 2005, Senator Charles Grassley, R-IA, introduced the Class Action Fairness Act of
2005.8 Republican senators defeated all attempts by the Democrats to amend the bill and it passed the
Senate by a vote of 72 to 26. The House of Representatives, which had passed a version of the Class
Action Fairness Act in 2002 and 2003, promptly passed the Class Action Fairness of Act of 2005 by a
vote of 279 to 149. One day later, in a high-profile ceremony, President Bush signed the Class Action
Fairness Act of 2005 into law with a sweep of his pen.9
The Important Provisions of the
Class Action Fairness Act of 2005
The Class Action Fairness Act of 2005 contains several provisions designed to ensure that large
class action litigation is resolved in a federal forum. The Act expands federal diversity jurisdiction,
adopts special rules for the removal and remand of class actions, limits attorneys fees for class action
work, and imposes a requirement that governmental authorities be notified of certain proposed class
settlements.
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P.O. Box 7288, Springfield, IL 62791
IDC Quarterly Vol. 15, No. 1 (15.1.M1)
Federal Jurisdiction Over Large Class Actions
The Class Action Fairness Act of 2005 greatly expands federal diversity jurisdiction, in that it
allows the “amount in controversy” requirement to be satisfied by an aggregate of class damages.
According to the Act, the district courts shall have original jurisdiction over any civil action in which
the matter in controversy exceeds $5,000,000, exclusive of interest and costs,10 and the claims of the
individual class members shall be aggregated to determine whether the matter in controversy exceeds
$5,000,000.11 If this monetary threshold is satisfied, the case can be filed in federal court, or removed
to federal court, so long as the citizenship of at least one member of the plaintiff class is diverse from
at least one defendant. If one-third or fewer of the proposed class members are citizens of the original
forum state, the federal court must retain jurisdiction and hear the case.
Under the Act, the federal courts are given discretion to accept or decline jurisdiction over a class
action in which greater than one-third but less than two-thirds of the members of all proposed plaintiff
classes and the primary defendants are citizens of the original forum state. In these cases, the Act sets
forth six factors to be considered by the courts when deciding whether to exercise jurisdiction:
(1) whether the claims involve matters of national or interstate interest;
(2) whether the claims will be governed by the laws of the state in which the action was
originally filed or by the laws of other states;
(3) whether the action has been pled in a manner that seeks to avoid federal jurisdiction;
(4) whether the action was brought in a forum with a distinct nexus with the class members, the
alleged harm or the defendants;
(5) whether the number of plaintiffs from the state in which the action was originally filed in
the aggregate is substantially larger than the number of plaintiffs from any other state and
the citizenship of the other members of the proposed class is dispersed among a substantial
number of states; and
(6) whether, during the 3-year period preceding the filing of that class action, one or more other
class actions asserting the same or similar claims on behalf of the same or other persons
have been filed.12
According to the Act, the federal courts must decline to exercise jurisdiction over a class action in
which: more than two-thirds of the members of all proposed plaintiff classes are citizens of the state in
which the action was originally filed; at least one defendant is a defendant from whom significant
relief is sought, whose conduct forms a significant basis for the claims asserted, and who is a citizen
of the state in which the action was originally filed; the principal injuries resulting from the alleged
conduct or any related conduct of each defendant were incurred in the state where the action was
originally filed; and, during the three-year period preceding the filing of that class action, no other
class action was filed which asserted the same or similar factual allegations against any of the same
defendants.13 In addition, under the Act, a district court shall decline to exercise jurisdiction over a
class action in which two-thirds or more of the plaintiffs and the primary defendants are citizens of the
state in which the action was originally filed.14
The Class Action Fairness Act of 2005 does not apply to any class action in which the primary
defendants are states, state officials, or other governmental entities against whom the district court
may be foreclosed from ordering relief, or to any class action in which the number of members of the
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P.O. Box 7288, Springfield, IL 62791
IDC Quarterly Vol. 15, No. 1 (15.1.M1)
proposed plaintiff class is less than 100. The Act also does not apply to any class action that solely
involves a claim concerning a covered security as that term is defined under Section 16(f)(3) of the
Securities Act of 1933 and Section 28(f)(5)(E) of the Securities Exchange Act of 1934, that relates to
the internal affairs or governance of a corporation or other form of business enterprise and that arises
under or by virtue of the laws of the state in which such business or corporation is incorporated or
organized, or that relates to the rights, duties and obligations relating to or created by or pursuant to
any security as defined under Section 2(a)(1) of the Securities Act of 1933.15
Removal Procedures
The Class Action Fairness Act drastically expands the ability of a defendant to remove a class
action from state court to federal court. The Act provides that any defendant may remove an eligible
class action to federal court without the consent of the other defendants. The Act further provides that
the one year limitation period that typically applies to removals does not apply to the removal of class
actions. In addition, in a radical departure from prior law, the Act provides that a case filed against a
defendant in its home state can be removed to federal court.16
The Class Action Fairness Act also provides for expedited appellate review of district court
decisions granting or denying remand. Under certain provisions of the Act, a court of appeals may
accept an appeal from an order of a district court granting or denying a motion to remand a class
action to the state court from which it was removed, as long as the application is made to the court of
appeals not less than seven days after the entry of the order by the district court. If the court of appeals
accepts such an appeal, the court is required to complete all action, to judgment, on the appeal, not
later than 60 days after the date on which the appeal was granted (unless an extension is allowed under
the Act).17
Settlements and Attorneys’ Fees
One of the main provisions of the Class Action Fairness Act is designed to eliminate a perceived
abuse of the class action claim, that of disproportionate awards of attorneys’ fees while class members
receive coupons or other awards of little or no value.18 Under the Act, if a proposed settlement in a
class action provides for a recovery of coupons to a class member, the portion of any attorney’s fee
award to class counsel that is attributable to the award of the coupons shall be based on the value to
the class members of the coupons that are redeemed. The Act further provides that if a proposed
settlement in a class action allows for a recovery of coupons to class members, and a portion of the
recovery of the coupons is not used to determine the attorney’s fee to be paid to class counsel, any
attorney’s fee award, which must be approved by the court, is to be based upon the amount of time
class counsel reasonably expended working on the matter.19
In a proposed settlement under which class members would be awarded coupons, the court may
approve the proposed settlement only after a hearing to determine whether, and making a written
finding that, the settlement is fair, reasonable and adequate for class members. The court, in its
discretion, may also require that a proposed settlement agreement provide for the distribution of a
portion of the value of unclaimed coupons to one or more charitable or governmental organizations, as
agreed to by the parties.20 The Act further provides that a court may approve a proposed settlement in
which any class member is required to pay sums to class counsel that would result in a net loss to the
class member only if the court makes a written finding that non-monetary benefits to the class member
substantially outweighs the monetary loss.21 Moreover, the Act states that a court may not approve a
proposed settlement that provides for the payment of greater sums to some class members based solely
on the fact that the class members who are to receive the higher payments are located in closer
geographic proximity to the court.
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Illinois Association of Defense Trial Counsel
P.O. Box 7288, Springfield, IL 62791
IDC Quarterly Vol. 15, No. 1 (15.1.M1)
Notification of Class Action Settlements
According to the Act, no later than 10 days after a proposed settlement of a class action is filed in
court, each defendant that participates in the proposed settlement must serve upon the appropriate state
official of each state in which a class member resides, and the appropriate federal official a notice of
the proposed settlement.22 The notice of the proposed settlement must contain:
(1) a copy of the complaint and any materials filed with the complaint;
(2) notice of any scheduled judicial hearing in the class action;
(3) any proposed or final notification to class members of (a) the members’ rights to request
exclusion from the class action or, if no right to request exclusion exists, a statement that no
such right exists and (b) a proposed settlement of a class action;
(4) any proposed or final class action settlement;
(5) any settlement or other agreement contemporaneously made between class counsel and
counsel for the defendants;
(6) any final judgment or notice of dismissal;
(7) if feasible, the names of three class members who reside in each state and the estimated
proportionate share of the claims of such members to the entire settlement to that state’s
appropriate state official or, if that is not possible, a reasonable estimate of the number of
class members residing in each state and the estimated proportionate share of the claims of
such members to the entire settlement; and
(8) any written judicial opinion relating to the materials described under sub-paragraphs (3)
through (6).23
The court cannot approve a proposed settlement until 90 days after such notification. If proper
notification to the officials is not made, the settlement is not binding. These provisions, according to
the proponents of the Act, will serve as a check on the backroom bargaining in settlement negotiations
and will help assure the validity of these agreements.
One final point deserves mention. The Class Action Fairness Act of 2005 applies to any civil action
commenced on or after the date of enactment of the Act (in this case, February 18, 2005.)24
Criticisms of the Act
The most common criticism of the Class Action Fairness Act of 2005 is that plaintiffs will suffer
ponderous delays in the administration of justice from the “overburdened” federal court system. In
other words, opponents argue, “justice delayed is justice denied.”25 While it is true that many federal
courts have substantial backlogs on their dockets, and many unfilled vacancies exist in the judiciary,
there is no evidence that cases in state courts move more quickly.26 The median time for final
disposition of a civil claim filed in federal court is 9.3 months, and the median time to trial in a civil
matter in federal court is 22.5 months.27 The number of civil cases pending in federal court has
declined over the past several years.28 Since 1984, filings in the state trial courts of general jurisdiction
have increased 30 percent, compared to a four percent increase in filings in the federal courts.29 By
way of comparison, a new state court judge typically is assigned over three times the number of cases
that are assigned to a new federal court judge. In many jurisdictions, federal courts are known to
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Illinois Association of Defense Trial Counsel
P.O. Box 7288, Springfield, IL 62791
IDC Quarterly Vol. 15, No. 1 (15.1.M1)
dispose of cases more expeditiously than the corresponding state courts.30 Based on the foregoing, it
does not appear that the Act will delay resolution of class action lawsuits by moving them to federal
court.
In fact, one proponent of the Act has argued that the Act will actually increase the judicial
efficiency of the handling of class actions.31 According to this proponent, federal courts can coordinate
a greater percentage of duplicative class actions through multidistrict litigation procedures. In
addition, federal courts generally have more resources to deal with large class actions, including
multiple law clerks on staff and the ability to delegate some or all aspects of class action cases to
magistrate judges or special masters (personnel that are generally not available to state court judges).
All in all, federal court judges seem to be in a better position to timely and economically handle class
action litigation.32
An even greater concern to those who opposed the Class Action Fairness Act of 2005 is whether
the plaintiffs will have their day in court. Many contend that strict class requirements under the new
federal law make class action lawsuits in federal court more difficult, if not impossible, to maintain.33
Among other things, the critics of the Act argue that district court judges are less inclined to apply a
particular state’s substantive law in a case where plaintiffs come from all across the country.34 They
further contend that members of a class action that is removed to federal court and then dismissed
based on conflicts of substantive law will be left at a judicial dead end with no court willing to hear
their grievances.
These arguments ignore several exceptions built into the act, as discussed above. Thus, when twothirds or more of the proposed plaintiffs in a class action are residents of a given state, a class action
brought in that state is exempt from federal removal. The plaintiffs still control the scope of their class
and where they choose to file their lawsuit. The plaintiffs in these situations, from any state, can
always institute a class action lawsuit in their respective state without fear of removal.
Some articles, and many of the opponents criticizing the Class Action Fairness Act, use the
popularized Erin Brockovich story as an example of class action justice that would be hindered or
thwarted by the Act.35 In fact, cases like Anderson v. Pacific Gas & Electric36 (upon which the
Brockovich story is based) are classic examples of class action lawsuits which would be unaffected by
the act. In that case, Pacific Gas & Electric was accused of polluting water in a small California town
causing serious health consequences to nearby residents. All or virtually all of the plaintiffs were
residents of the small California town affected by the pollution. Pacific Gas & Electric was also a
California resident. Therefore, even the less strict diversity requirements under the Act would not have
allowed the case to be removed to federal court.37
Indeed, a recent study conducted by two lawyers in Washington, D.C. reveals that the fear of
wholesale removal of class actions from state courts to federal courts appears to be misguided. John
Beisner and Jessica Miller examined all class actions for which there were reported decisions on the
Lexis or Westlaw legal databases between January 1, 1997 and June 30, 2003 in the state courts of
Connecticut, Delaware, Maine, New York, Massachusetts and Rhode Island. They also examined the
class action lawsuits that had been filed in Madison County, Illinois between 1998 and 2001.
According to Beisner and Miller, the majority of the class action lawsuits would have remained in
their respective states’ courts under the Class Action Fairness Act.38 However, 86% of the class
actions filed in Madison County would have been removed to federal court.39 This study demonstrates
that in those jurisdictions where the plaintiffs’ lawyers take advantage of favorable courts and jurists
to bring nationwide class actions, the Class Action Fairness Act will be invoked to “level the playing
field.” In those instances where the plaintiffs’ attorneys limit their classes to citizens of the state in
which the action is brought, there appears to be little chance that the cases will be removed to federal
court under the Act.
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Other opponents of the Act have argued that it will eliminate the ability of ordinary consumers to
keep corporate America from engaging in deceptive practices. These opponents argue that coupon
settlements serve a valid purpose in that they hold corporations responsible for illegal acts, and any
attempt to put controls on soft judgments or coupon awards will hinder the policing of big business.
However, these arguments ignore the fact that in recent years, there has been a virtual explosion in the
number of cases in which the plaintiffs receive little or nothing of value while the plaintiffs’ lawyers
have received millions of dollars in fees. In many of these cases the plaintiffs themselves were forced,
after receiving coupons or other non-monetary “benefits,” to come up with money to pay their
attorneys.
In one example, the plaintiffs’ attorneys were paid $22 million in a case where the plaintiffs
received a $50.00 rebate on future purchases.40 In another case, involving late fees charged by
Blockbuster, plaintiffs were awarded coupons of $1 off their next rental, while plaintiffs’ attorneys
were awarded $9.25 million.41 Experts estimate that as few as 20% of the class plaintiffs would ever
actually use their $1 coupons.42
Some, like Senator Joseph Biden of Delaware, have attempted to justify the practice of such
coupon settlements.43 In a 1993 case involving major airlines accused of price fixing, a settlement was
reached valued at $458 million.44 Despite the settlement value, most of the plaintiffs received no cash,
but rather travel vouchers with so many restrictions that they were virtually unusable.45 Senator Biden
observed that despite the apparent injustice, the effect of this litigation was that “the airlines stopped
cheating the people . . .”46 Senator Biden went on to rationalize: “So I’ll pay the bottom feeders their
high fees to stop the wrongdoers from doing bad things.”47 The flaw in Senator Biden’s logic is
twofold. First, contrary to his rhetorical offer, he will not pay the class action plaintiffs’ attorneys
fees—in many cases the class members themselves pay the fees. And second, coupon settlements are
not a necessary evil to keep corporate defendants honest.
Indeed, the opposite may be true. In another case involving changes to American Airlines’ frequent
flier program, a settlement in state court awarded class plaintiffs between $25 and $75 off future travel
with the airline, while the plaintiffs’ attorneys received $25 million in fees.48 Some estimated that
American Airlines would ultimately enjoy a net gain from the settlement because the class action
plaintiffs who otherwise would not have traveled on American Airlines would purchase tickets to
make use of their otherwise valueless coupons.49 Therefore, rather than penalizing the corporate
wrongdoer, American Airlines may have benefited from the settlement.
There is no reason to believe that such cases cannot be settled for cash rather than coupons, even if
that cash settlement has a lower total value and consequently lower contingency fees for the plaintiffs’
attorneys. Cash settlements mean more money in the pockets of the plaintiffs and may ultimately be a
greater deterrent to consumer fraud by big companies. The Class Action Fairness Act of 2005 seeks to
address the unfairness in class action litigation that currently exists when it comes to settlement and
attempts to address these concerns by creating the series of special consumer protections outlined
above (which require federal courts to give special scrutiny to non-cash settlements and which bar
approval of class settlements that result in net losses to some or all of the class members). The Class
Action Fairness Act does not penalize consumers; it helps them by ensuring that class action
settlements are fair not only to the lawyers, but to the people they claim to protect.
Finally, opponents of the Act argue that the Act will result in an unwarranted federal intrusion into
the ability of states to determine their own laws and policies concerning class action lawsuits. This
argument ignores the fact that the Class Action Fairness Act does not touch on substantive state law in
any manner. Instead, the Act applies uniform, federal procedural requirements to a narrow, carefully
defined group of lawsuits with national economic impact.50 In fact, the Act’s exclusion of federal
jurisdiction over intra-state cases specifically preserves the state’s authority to apply its own laws in
cases that primarily involve parties from its own state.51 Under the current system, many state courts
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IDC Quarterly Vol. 15, No. 1 (15.1.M1)
faced with interstate class actions have simply applied their own laws to all claims within the class.
Since a state court decision has binding effect everywhere by virtue of the Full Faith and Credit
clause, other states, before the Class Action Fairness Act, had no way to revisit these decisions.52 The
Class Action Fairness Act of 2005 will curb this disturbing trend.
Conclusion
Class action litigation has exploded in the last decade. In recent years, there have been substantial
increases in the number of class actions that have been filed in certain state court forums and it
appears that the popularity of these forums is directly attributable to the fact that the courts in these
jurisdictions are willing to certify almost anything as a class action. The Class Action Fairness Act of
2005 is designed to substantially diminish class action abuse, allow for the more efficient resolution of
duplicative class actions that are filed in different courts and ensure that large interstate class actions
are heard in the federal courts.
Endnotes
Press Release, White House Office of the Press Secretary, President Signs Class-Action Fairness Act of 2005 (Feb.
18, 2005)(available at: http://www.whitehouse.gov/news/releases/2005/02/20050218-11.html).
2
Pub. L. No. 104-67, 109 Stat. 737.
3
Ashby Jones, “A Class Act?”, The American Lawyer and Corporate Counsel (October 8, 2003).
4 Id.
5 See, e.g., The Class Action Fairness Act of 1998 (S. 2083); The Class Action Fairness Act of 2000 (S. 353); The Class
Action Fairness Act of 2001 (H.R. 2341, S. 1712); The Class Action Fairness Act of 2002 (H.R. 2341); The Class
Action Fairness Act of 2003 (H.R. 1115, S. 272 and S. 1751); and the Class Action Fairness Act of 2004 (S. 2062).
6 “Class Action Fairness Act of 2003 Fails to Clear Senate,” Hunton & Williams Litigation Alert, (October 24, 2003).
7 Those senators who voted in favor of cloture and limiting debate on the bill included: Lisa Murkowski (R-AK), Ted
Stevens (R-AK), Jeff Sessions (R-AL), Jon Kyl (R-AZ), Wayne Allard (R-CO), Saxby Chambliss (R-GA), Zell Miller
(D-GA), Charles Grassley (R-IA), Mike Crapo (R-ID), Richard Lugar (R-IN), Sam Brownback (R- KS), Pat Roberts
(R-KS), Jim Bunning (R- KY), Mitch McConnell (R-KY), Susan Collins (R- ME), Olympia Snowe (R-ME), Norm
Coleman (R-MN), Christopher Bond, (R-MO), Jim Talent (R- MO), Thad Cochran (R-MS), Trent Lott (R-MS),
Conrad Burns (R-MT), Elizabeth Dole (R-NC), Ben Nelson (R-NE), Judd Gregg (R-NH), John Sununu (R-NH), Peter
Domenici (R-NM), Mike DeWine (R-OH), George Voinovich (R-OH), James Inhofe (R-OK), Don Nickles (R-OK),
Gordon Smith (R-OR), Arlen Specter (R-PA), Lincoln Chafee (R-RI), Lindsey Graham (R-SC), Lamar Alexander (RTN), Bill Frist, (R-TN), John Cornyn (R-TX), Kay Bailey Hutchinson (R-TX), Robert Bennett (R-UT), Orrin Hatch (RUT), George Allen (R-VA), John Warner (R-VA) and Craig Thomas (R-WY).
Those who voted against cloture and limiting debate on the bill included Richard Shelby (R-AL), Blanche Lincoln (DAR), Mark Pryor (D-AR), John McCain (R-AZ), Dianne Feinstein (D-CA), Christopher Dodd (D-CT), Joseph
Lieberman (D-CT), Thomas Carper (D-DE), Bob Graham (D-FL), Bill Nelson (D-FL), Daniel Akaka (D-HI), Daniel
Inouye (D-HI), Tom Harkin (D-IA), Larry Craig (R-ID), Richard Durbin (D-IL), Evan Bayh (D-IN), John Breaux (DLA), Mary Landrieu (D-LA), Edward Kennedy (D-MA), Paul Sarbanes (D-MD), Carl Levin (D-MI), Debbie Stabenow
(D-MI), Mark Dayton (D-MN), Max Baucus (D-MT), Kent Conrad (D-ND), Byron Dorgan (D-ND), Jon Corzine (DNJ), Frank Lautenberg (D-NJ), Jeff Bingaman (D-NM), Harry Reid (D-NV), Charles Schumer (D-NY), Ron Wyden
(D-OR), Jack Reed (D-RI), Ernest Hollings (D-SC), Thomas Daschle (D-SD), Tim Johnson (D-SD), James Jeffords (IVT), Patrick Leahy (D-VT), Maria Cantwell (D- WA), Patty Murray (D-WA), Russ Feingold (D-WI), Herbert Kohl
(D-WI), John Rockefeller (D-WV).
Thirteen members of the Senate did not vote: Barbara Boxer (D-CA), Ben Nighthorse Campbell (R-CO), Joseph Biden
(D-DE), Peter Fitzgerald (R-IL), John Kerry (D-MA), Barbara Mikulski (D-MD), John Edwards (D-NC), Chuck Hagel
(R-NE), John Ensign (R-NV), Hillary Clinton (D-NY), Rick Santorum (R-PA), Robert Byrd (D-WV) and Michael Enzi
(R-WY).
8 In addition to Grassley, there were 33 co-sponsors of the Act. The co-sponsors, both Republicans and Democrats,
were: Lamar Alexander (R-TN), George Allen (R-VA), Christopher Bond (R-MO), Thomas Carper (D-DE), Lincoln
Chafee (R-RI), Susan Collins (R-ME), John Cornyn (R-TX), Jim DeMint (R-SC), Mike DeWine (R-OH), Christopher
Dodd (D-CT), John Ensign (R-NV), Dianne Feinstein (D-CA), William Frist (R-TN), Chuck Hagel (R-NE), Orrin
Hatch (R-UT), Herb Kohl (D-WI), Jon Kyl (R-AZ), Mary Landrieu (D-LA), Joseph Lieberman (D-CT), Blanche
Lincoln (D-AR), Trent Lott (R-MS), Richard Lugar (R-IN), Mel Martinez (R-FL), John McCain (R-AZ), Mitch
McConnell (R-KY), Rick Santorum (R-PA), Charles Schumer (D-NY), Jeff Sessions (R-AL), Olympia Snowe (R-ME),
John Sununu (R-NH), John Thune (R-SD), David Vitter (R-LA), George Voinovich (R-OH).
1
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IDC Quarterly Vol. 15, No. 1 (15.1.M1)
John F. Harris and William Branigin, Bush Signs Class-Action Changes Into Law, The Washington Post, February 18,
2005.
10 28 U.S.C.A. § 1332 (d)(2).
11 28 U.S.C.A. § 1332 (d)(6).
12 28 U.S.C.A. § 1332 (d)(3)(A-F).
13
28 U.S.C.A. § 1332 (d)(4)(A).
14 28 U.S.C.A. § 1332 (d)(4)(B).
15 28 U.S.C.A. § 1332 (d)(9).
16 28 U.S.C.A. § 1453 (b).
17
28 U.S.C.A. § 1453 (c)(2-3). A court of appeals can grant an unlimited extension of the 60-day period if all parties
agree to such an extension, or may grant an extension for a period not to exceed ten days, if such an extension is for
good cause shown and should be granted in the interests of justice.
18 In a recent class action in Illinois against Poland Springs, the plaintiffs received coupons for discounts on Poland
Springs water (which the plaintiffs had already claimed was not pure and was not from a spring) while their lawyers
received $1.35 million. 151 Cong. Rec. S1008 (daily ed. Feb. 7, 2005)(statement of Sen. Hatch). Also, in a recent
Texas class action settlement with Blockbuster concerning late fees on movie rentals, class members received coupons
on future movie rentals while their lawyers received $9.25 million in fees and expenses. Dan Ackman, Top Of The
News: Bogus Blockbuster Settlement, FORBES, Jun. 6, 2001, Management & Trends, available at:
http://www.forbes.com/2001/06/06/0606topblock.html.
19
28 U.S.C.A. § 1712 (b).
20 28 U.S.C.A. § 1712(e).
21
28 U.S.C.A. § 1713. In a recent Alabama class action against the Bank of Boston, the plaintiffs “won” the case, but
actually lost money. The case involved the amount of money kept in customers’ mortgage escrow accounts. According
to the settlement agreement, some class members received payments of less than $10 apiece, only to have almost $80
deducted from their account to pay the lawyers’ fees ($8.5 million worth) H.R. Rep. No. 108-144 at 16 (2003).
22
28 U.S.C.A. § 1715 (b). “Appropriate federal official” is defined as the Attorney General of the United States or the
person who has the primary federal regulatory or supervisory responsibility with respect to the defendant if some or all
of the matters alleged in the class action are subject to regulation or supervision. “Appropriate state official” is defined
as the person who has the primary regulatory or supervisory responsibility with respect to the defendant, or who
licenses or otherwise authorizes the defendant to conduct business in the state. If there is no such person, then the
appropriate state official is the state attorney general. Id. at (a).
23 28 U.S.C.A. § 1715 (b)(1-8).
24 Interestingly, 34 class action lawsuits filed in Madison County, Illinois (described by many as the nation’s top
judicial “hell hole”) between February 13 and February 18, 2005. By comparison, there were only two class action
lawsuits filed in Madison County in all of 1998. Brian Brueggeman, Study Expects Sharp Dip in County’s Class
Actions, Belleville News-Democrat, February 20, 2005.
25 Attributed to William Ewart Gladstone, four-time prime minister of Great Britain.
26 Some observers note that the federal courts generally deal with larger, more complex cases than state courts. This
may partially explain why a new state court judge is assigned many more cases than a newly assigned federal judge. By
the same token, however, insofar as federal courts do in fact deal with larger, more complex cases, one would expect a
federal court to take longer to resolve its average case when compared to a state court.
27 See Administrative Office of the U.S. Courts, Judicial Business of the United States Courts
2003, at 159, 172 (2004).
28
H.R. Rep. No. 108-144 at 24 (2003).
29 Id.
30
Id.
31 Walter Dellinger, The Class Action Fairness Act: Curbing Unfairness and Restoring Faith in Our Judicial System,
Progressive Policy Institute Policy Report March 2003.
32 Id. at p. 8.
33 S. Rep. No. 108-123 at 79-80 (2003). This argument ignores the fact that the Class Action Reform Act does not
prohibit any class actions from being filed since it does not address whether class actions may be brought. The Act does
not alter substantive law at all and makes no changes in a person’s right or ability to assert claims. It only addresses
where a particular type of class action must be adjudicated. Dellinger, supra, p. 8.
34 S. Rep. No. 108-123 at 39 (2003).
35
E.g. Little, Amanda Griscom, Erin Brockovich, drop dead, Feb. 12, 2005, available at
http://www.salon.com/opinion/feature/2005/02/12/class_action/index.html.
36
See
JAMS
biography
on
Hon.
LeRoy
A.
Simmons
(Ret.),
available
at:
http://www.jamsadr.com/neutrals/Bio.asp?NeutralID=1750 (“Judge Simmons played himself as the trial judge in the
movie, “Erin Brockovich,” based on the famous case, Anderson v. Pacific Gas & Electric”).
37 Moreover, the parties in Anderson v. Pacific Gas & Electric agreed to arbitration, making it even farther a field from
the application of the Class Action Fairness Act.
9
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Illinois Association of Defense Trial Counsel
P.O. Box 7288, Springfield, IL 62791
IDC Quarterly Vol. 15, No. 1 (15.1.M1)
John Beisner and Jessica Miller, Debunking a Myth (2003). According to the study, 61% of the class actions filed in
Connecticut, 91% of the class actions filed in Delaware, 58% of the class actions filed in Maine, 63% of the class
actions filed in New York, 61% of the class actions filed in Massachusetts and 58% of the class actions filed in Rhode
Island would have remained in state court under the Class Action Fairness Act.
39 Id.
40
Lavelle, Marianne, Class Action Crackdown, U.S NEWS AND WORLD REPORT, Money & Business, February 21, 2005.
41 S. Rep. No. 108-123 at 16 (2003)(citing Scott v. Blockbuster Inc. (No. D162–535, Jefferson County, Texas, 2001)).
42 Id.
43 Lavelle, Marianne, Class Action Crackdown, U.S NEWS AND WORLD REPORT, Money & Business, February 21, 2005.
44
See In re Domestic Air Transportation Antitrust Litig., 137 F.R.D. 677 (N.D. Ga. 1991)
45 Lavelle, Marianne, Class Action Crackdown, U.S NEWS AND WORLD REPORT, Money & Business, February 21, 2005.
46 Id.
47 Id.
48
S. Rep. No. 108-123 at 17 (2003).
49 Id.
50 Dellinger, supra note 18, p. 7.
51
Id.
52 Id.
38
ABOUT THE AUTHORS: Bradley C. Nahrstadt is a partner with the Chicago firm of Williams
Montgomery & John Ltd. His practice is devoted to litigation, including the defense of product liability,
medical malpractice and insurance bad faith cases in state and federal courts. Mr. Nahrstadt received his
B.A. from Monmouth College, summa cum laude, in 1989, and his J.D. from the University of Illinois
College of Law, cum laude, in 1992. He is a member of the Illinois State Bar Association, IDC and DRI.
Brian Y. Boyd is an associate with the Chicago firm of Williams Montgomery & John Ltd. He is a 2002
graduate of Loyola University Chicago School of Law and a 1997 graduate of Davidson College. His
practice focuses on commercial litigation, including intellectual property matters. He also practices in
director and officer defense and professional malpractice.
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