Washington, D.C., May 17, 1999
- Legislation is needed to correct a serious flaw in our
judicial system that may prevent interstate class action lawsuits
from appropriately being heard in Federal courts, according to the
American Insurance Association.
A proposed bill sponsored by
Congressmen Bob Goodlatte (R-VA), Rick Boucher (D-VA), Ed Bryant
(R-TN), and Jim Moran (D-VA) would amend statutes to allow for
interstate class action lawsuits to be removed from state to
federal court by either plaintiff class members or defendants if
certain requirements are met. Current law allows most interstate
class actions to be heard at the state level, even though members
of the class are often from more than one state.
"In recent years, class actions have
become a hotbed for abuse. Class actions are flooding into certain
state courts because those courts tend to favor local lawyers in
cases against out-of-state companies or because those courts are
ill-equipped to handle such cases," explained Melissa Shelk, AIA
vice president, federal affairs.
The Constitution specifically
authorizes federal jurisdiction for controversies between citizens
of different states to protect out-of-state parties from being
"hometowned" in local courts. However, under current law, many
large interstate class actions are brought in state courts and
plaintiff lawyers frequently exploit major loopholes in federal
jurisdiction statutes to block the removal of class actions that
belong in federal court. As a result, many state courts are
deciding out-of-state residents' claims against out-of-state
companies under other states' laws.
Shelk said, "Presently, our federal
diversity jurisdiction statutes provide that interstate disputes
involving significant sums of money may be heard in a federal
court. But because class actions-as we now know them-did not exist
when those statutes were initially framed, class actions were
omitted, leading to these unintentional results."
The legislation sponsored by
Goodlatte, Boucher, Bryant, and Moran would allow for an
interstate class action suit with minimal diversity to be heard in
federal court. The bill would also replace the requirement that
each plaintiff's individual claim be worth more than $75,000 with
an aggregate one million-dollar amount-in-controversy requirement.
"This bill doesn't limit the ability
of anyone to file a class action lawsuit, nor does it change
anyone's rights to recovery. It merely allows federal courts to
hear big lawsuits involving truly interstate issues, while
ensuring that purely local controversies remain in state courts,"
Shelk said. She added that the changes would conform the law to
the unique nature of class action lawsuits and would put them in
the more appropriate forum.