 Printer friendly version
of this page
THE INTERSTATE CLASS
ACTION JURISDICTION ACT:
HOW WILL IT CHANGE
THINGS?
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were originally enacted years ago - well before the modern day class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.
NAM STAFF CONTACT: Lawrence Fineran,
(202) 637-3174, lfineran@nam.org, Resources,
Environment & Regulation Policy Department
|
.gif){kind=tracking}
