Copyright 1999 The Tribune Co. Publishes The Tampa Tribune
The Tampa Tribune
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May 13, 1999, Thursday, FINAL EDITION
SECTION: NATION/WORLD, Pg. 10
LENGTH: 669 words
HEADLINE:
U.S. courts and class-action suits;
BODY:
An attempt to reform the class-action lawsuit
system is touted as an effort to protect consumers from unscrupulous
lawyers who line their own pockets at the expense of aggrieved consumers.
It sounds good on its face, but the federal bill proposed by U.S. Sens.
Charles Grassley, R-Iowa, and Herb Kohl, D-Wis., has a fatal flaw: The
Class Action Fairness Act of 1999 would make it too easy for peculiarly
state claims to be moved to federal court.
The bill, which is similar to
legislation considered in the past two years, has positive aspects. IT
WOULD REQUIRE that settlement proposals be written in easy-to-understand terms,
including the amount and source of attorneys' fees; it would give state
attorneys general the power to object to a settlement they concluded was
unfair to the class; and it would tie legal fees to a reasonable
percentage of damages actually paid to class members or force lawyers to
work for a reasonable hourly rate.
But the law would work a
massive shift of power and caseload to an already overwhelmed federal
court system at the expense of the state courts. We have written
repeatedly against the federalization of state cases and have taken note
of Chief Justice William Rehnquist's pleas that lawmakers show restraint
in trying to solve state problems by shifting power.
Class-action
lawsuits are used in situations where individual claims would not be
economically viable. Without this ability, claims worth only a few hundred
dollars would be lost because litigation is so expensive.
Grassley
and Kohl filed their legislation because they see a class-action crisis. Indeed,
there have been egregious examples of outrageous settlements that were
unfair to consumers while lawyers got rich.
But moving the cases
into federal courts will hardly solve the problem. The Justice Department
has objected to the bill, arguing that there is nothing magical about
federal courts. Who is to say federal judges would be any better at
remedying unfair settlements?
"We heard about settlements where
plaintiffs receive coupons of little value or redemption restrictions
making them practically useless, yet their attorneys receive millions of dollars
in attorneys' fees," Grassley said during hearings last week. "We heard
about lawyers using the state court system to get the lowest settlement
amount possible for defendants and the highest amount in attorneys' fees
for plaintiff class lawyers."
Kohl said one of his constituents won a
little more than $ 4 as her share in a class-action lawsuit against her
mortgage company, but a few months later, her lawyers charged her $ 80 for their
work. The lawyers pocketed more than $ 8 million in fees but never
explained to the court or to their own clients that the class - not the
defendant - would pay the attorneys' fees.
Nevertheless, the perception
of lawyers run amok overstates the actual abuse in class-action
settlements and ignores the effective role that courts can and do play in
reporting or forcing the improvement of settlements.
As Public
Citizen, a consumer advocacy organization, points out, it is often corporate
defendants that are the motivating force behind bad settlements.
The proposed law would end most, and potentially all, state-court
involvement in consumer class actions because it merely requires that one
class member be from a state other than that of any defendant.
So
even where most of the plaintiffs live in one state and the law governing the
case is peculiar to the state, the case could end up in federal court.
THESE CASES ARE COMPLEX and time-consuming. Federal judges would have to
add them to their caseloads and use state law to decide them. State court
judges are in a much better position to know and understand the state
laws.
The courts themselves can properly police improper and abusive
settlements. Congress should not intervene until it is clear the courts
have failed to do their job.
NOTES: EDITORIALS
LOAD-DATE: May 14, 1999 
