The Interstate  Class Action Jurisdiction Act of 1999 (H.R. 1875)

UNDER CURRENT LAW...

• Most interstate class actions cannot be heard in federal court.  Our federal diversity jurisdiction statutes were originally enacted years ago – well before the modern day class action arose.  Those statutes "leave out" class actions, even though they are often the biggest lawsuits involving the largest number of citizens and have numerous interstate implications.

• The current statutes allow attorneys to game the system to keep class actions out of federal court.  Attorneys often name irrelevant parties to their class actions in an effort to "destroy diversity" – that is, to keep the case from qualifying for federal diversity jurisdiction.  Further, counsel make other statements about the case to keep the defendant from "removing" (transferring) the case to federal court (e.g., "plaintiffs seek only a very small amount of money in this case").  After one year, however, the attorneys recant those statements, since at that point, current statutes bar removal of the case to federal court.  

• Under current law, there is no mechanism by which plaintiff class members can insist that their claims be heard in federal court.  If class members would prefer to be in federal court, they presently have no way of moving their case there.  

UNDER THE INTERSTATE CLASS ACTION JURISDICTION ACT...
 

• Federal courts could handle many interstate class actions.  Only state courts could hear:

  
  (1) Local cases – cases in which a "substantial majority" of the class members and defendants are local and the claims will be governed primarily by local law.

  (2) Limited scope cases – cases involving fewer than 100 class members or less than $1 million.

(3) State action cases – cases against states or state officials.

• Interstate class actions filed in state court could be "removed" to federal court using existing removal procedures, with three new features:

(1)  Unnamed class members (plaintiffs) may remove to federal court class actions in which their claims are being asserted (within 30 days after formal notice).  

(2)  Any party may remove; the consent of other parties is not required.  

(3)  The bar on removing cases to federal court after one year would not apply to class actions (although removal would still be required within 30 days after first notice). 

• If a removed class action is found not to meet the requirements for proceeding on a class basis, the federal court would dismiss the action without prejudice.  Plaintiffs may refile  claims in state court.  The statute of limitations on individual class members' claims in such a dismissed class action will not run during the period the action was pending in federal court.

• The Act will not change the substantive law governing any claims; the bill is totally procedural.

• The Act is prospective only; it will apply only to cases filed after the date of enactment.