James Sensenbrenner, June 12, 2003

In years past, the occasional news account of some outrageous class action verdict or settlement was considered light humor. Now the stories are so common there's no punch line. The class action judicial system itself has become a joke, and no one is laughing except the trial lawyers–all the way to the bank! Worse yet, it is American consumers who are left with the bill for these legal gimmicks.

Typically, class actions are enormous lawsuits where thousands and sometimes millions of similar claims are consolidated into one lawsuit. Class action lawsuits are an important and valuable part of our legal system when they permit the fair and efficient resolution of legitimate claims allowing numerous claims to be consolidated into a single action against a defendant.

But over the past decade, rampant abuses of the class action device have undermined the legitimate claims of class action plaintiffs and eroded public respect for our judicial system. In the last ten years, state court class action filings nationwide have increased by over 1000 percent. In certain "magnet courts" known for certifying even the most speculative class action suits, the increase in filings over the last five years is now approaching 4000 percent. The only likely explanation for this phenomenon is aggressive forum shopping by trial lawyers -- a process where lawyers shop around for the most sympathetic state court in which to file their claim.

The current medical malpractice crisis has also given rise to outrageous settlements that benefit only lawyers and trample the rights of class members. In one recent class action settlement involving late fees charged by Blockbuster Video, trial lawyers walked away with $9.25 million in legal fees, while represented consumers received $1 coupons.

Summarizing the problem last November, the Washington Post editorial board, in a critique of the present system wrote: "Class actions permit almost infinite venue shopping; national class actions can be filed just about anywhere and are disproportionately brought in a handful of state courts whose judges get elected with lawyers' money. These judges effectively become regulators of products and services produced elsewhere and sold nationally. And when cases are settled, the 'clients' get token payments, while the lawyers get enormous fees. This is not justice. It is an extortion racket only Congress can fix."

To end the extortion, and fix this problem, on June 12, the House of Representatives passed HR 1115, the Class Action Fairness Act, by a vote of 253 to 170. As Chairman of the House Judiciary Committee, I co-sponsored this legislation and helped expedite the process which brought this critical legislation to a vote before the full House.

HR 1115 is a common sense bill that promotes a more efficient national litigation system, and provides fairness to all potential plaintiffs. It reduces forum shopping by permitting large interstate class action lawsuits to be removed from state to federal court. It requires that notices of class action settlements be written in plainer format so that the average consumer can easily understand his or her legal rights. It outlaws practices that provide inadequate settlements to some plaintiffs at the expense of other members in the same class, and it ensures that attorneys do not receive a disproportionate share of settlements at the expense of class members.

In the process of making our legal system better, HR 1115 will also help the national economy. By discouraging frivolous class action lawsuits and expensive forced settlements for companies, this legislation will save jobs and money, because while trial lawyers may make out like bandits, the real cost of these settlements is usually passed off to you, the American consumer, in the form of higher prices for goods and services.

The House passed a similar class action reform bill last year, but it stalled once it reached the Democrat-controlled Senate. The need to restore some common sense, fairness, and certainty to our class action system is even more pronounced today, and I hope the Senate will follow the lead of the House by promptly passing this legislation.

James Sensenbrenner, Jr., is a Republican Member of Congress representing the Fifth Congressional District of Wisconsin. He chairs the House Judiciary Committee.