FOR IMMEDIATE RELEASE: |
JUNE 29, 2000 |
WASHINGTON -- The U.S. Senate Judiciary Committee today approved legislation sponsored by Sen. Herb Kohl to stop unfair and abusive class action settlements that ignore the best interests of injured plaintiffs. Class action suits are brought on behalf of a group of individuals who all have the same complaint. The "Class Action Fairness Act" protects those individuals, who often aren't aware of their involvement in the lawsuit, from unscrupulous defendants and attorneys who reach unfair settlements from which they reap rewards.
"This bill will eliminate some of the worst problems associated with class action lawsuits and provide more protection for the individuals whose interests are not always being served," Kohl said.
A Baraboo, Wisconsin woman testified during a 1997 hearing on the bill about her battles with the legal system when her mortgage company was sued. She was a member of a class action lawsuit against her mortgage company, although she did not initiate the suit or even have knowledge of it. And, because she was included, she was the victim of a counter-suit for $25 million brought by out-of-state attorneys.
Kohl's Class Action Fairness Act requires that settlement notices for class actions must be sent to the Attorneys General of the states that have residents involved. Armed with the notice, the attorneys general can intervene to object to a settlement that they think is unfair or collusive. The legislation also requires that the settlement notice be written in plain, easily understood language to insure that class action suit members understand the settlement so they can make informed decisions.
Kohl's legislation requires a study of attorneys' fees and whether the fees need to be tied to actual damages. Finally, it allows more multi-state class actions to be removed to federal court by defendants and plaintiffs alike. Class action lawyers often shop around for a lax state court where they don't have to worry about close scrutiny over the settlement, in the best interest of attorneys' fees at the expense of consumers.