James Sensenbrenner, February 18, 2005

In years past, the class action judicial system has become a joke, with no one laughing except the trial lawyers, all the way to the bank. But on February 18, President Bush signed into law a bill to wipe the smile off the faces of many trial lawyers. With a flourish of his pen, the President’s signature marked the culmination of nearly a decade of legislative efforts to end systematic abuse of our nation’s class action system.

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 concerns by allowing numerous claims to be consolidated into a single action against a defendant.

But over the past ten years, 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 1315%. In certain "magnet courts" known for certifying even the most speculative class action suits, the increase in filings since 1998 now exceeds 5000%. 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.

A second major feature of the present class action crisis is a system producing outrageous settlements that benefit only lawyers and trample the rights of class members. Class actions were originally created to efficiently address a large number of similar claims by people suffering small harms. Today, they are too often used to efficiently transfer large fees to a small number of trial lawyers with little benefit to the victims.

The bill signed by President Bush on February 18 offers commonsense procedural changes that end the most serious abuses by allowing more interstate class actions to be heard in federal courts, while keeping truly local cases in state courts. 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 also 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.

This law will benefit our economy, because while trial lawyers may make out like bandits in class action lawsuits, 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. By discouraging frivolous class action lawsuits and expensive forced settlements for companies, this law will save jobs and money.

After years of toil, the moment has finally arrived. With the President’s signature, this time, justice and fairness and the American people will have the last laugh.

Congressman James Sensenbrenner, a Republican, represents the Fifth Congressional District of Wisconsin. He serves as chairman of the House Committee on the Judiciary. The Fifth District of Wisconsin forms an arc surrounding Milwaukee to the North and West, and includes parts of Jefferson, Milwaukee and Waukesha counties, and all of Ozaukee and Washington counties.