Letter to Members of the U.S. House of Representatives from Joan Claybrook and Frank Clemente Urging Opposition to H.R. 1875

September 20, 1999

Dear Representative:

We write to urge you to oppose H.R. 1875, the Interstate Class Action Jurisdiction Act of 1999, scheduled for House floor action on September 23. Class action litigation is an area in which Public Citizen has considerable expertise: we have intervened in more than 30 class action cases over the past five years at both the state and federal levels to ensure that consumers receive fair treatment in class action settlements. Nothing in this bill does anything to address this problem.

Consumer class actions are filed when many individuals are similarly damaged -- whether for economic loss due to fraud or injury due to defective products. They compensate individuals for the harms they suffer at the hands of companies that commit fraudulent or harmful acts. They deter dangerous business conduct where individual consumers, acting alone, would not have the means to sue to force product changes or recalls. They also encourage reform of deceptive or fraudulent manufacturing and sales practices that cost consumers billions of dollars a year. For these reasons we believe it is perilous for Congress to tamper with a system that has served consumers well.

We have six principal objections to the bill:

• H.R. 1875 unfairly tilts the playing field and provides an advantage to defendant corporations.  Should the Interstate Class Action Jurisdiction Act become law, a significant majority of state court class actions will either have to be filed in federal court or will be removable by defendants to federal court, should defendants decide that it is to their advantage to do so. This is counter to the ordinary presumption that the plaintiff gets to choose his or her forum. Tobacco companies, HMOs, gun makers, auto manufacturers, insurance and drug companies that injure the public should not have the power to choose the legal forum they believe will benefit them most.

• H.R. 1875 will result in considerable delay for injured consumers.  The current high judicial vacancy rate and backlog of pending cases in the federal judiciary leads to delay of justice in the federal courts. For example, there were more than 25,000 civil cases pending in the federal courts for more than three years as of September 1998 -- an increase of more than 13% from 1997. Also as of September 1998, there were 3,114 class action civil cases pending in the U.S. district courts -- up from 2,641 twelve months prior. Class actions are often complex and resource-intensive cases that require enormous amounts of time to litigate. Forcing them to be heard in federal court will result not only in extended delays for class action plaintiffs, but also for individual plaintiffs with civil cases in the clogged federal courts.

As the Judicial Conference of the United States, chaired by Chief Justice William Rehnquist, recently noted in a letter to Judiciary Committee Chairman Henry Hyde concerning their opposition to H.R. 1875:

"When the additional, burdensome litigation resulting from H.R. 1875 is added to the already overcrowded dockets of federal courts across our country, substantial backlogs and attendant delays can be expected."

• H.R. 1875 could deny plaintiffs any meaningful ability to recover damages for their injuries.   Under this legislation, when a defendant removes a state class action to federal court, the federal court may or may not decide to certify the class. If the federal court does not certify the class, the case may then be refiled in state court. However, the defendants can again remove the case back to federal court. This state court to federal court revolving door can continue ad infinitum under H.R. 1875. This means that some injured consumers who could currently seek remedies under a state class action certification will never be able to have their day in court, resulting in a substantial loss of legal rights.

• H.R. 1875 will slow the continued interpretation of state law, which would also limit people’s legal rights. This bill affects only class actions that involve solely issues of state law. State judges are more familiar and expert in interpreting state law and regularly interpret state law to apply it as new factual situations arise and community standards of responsible behavior evolve. Federal judges, however, are less apt to extend state law in new areas, believing it is the province of state, not federal courts. Therefore, moving class actions based on state law to federal court could have a direct negative impact on emerging legal areas like tobacco, HMO, and gun litigation.

For example, the Fifth Circuit in Castano v. American Tobacco, refused to certify a federal tobacco class action stating that the supreme courts of the various states should have the first crack at addressing these state law cases. The same might have happened with Engle v. R.J. Reynolds Tobacco, et. al. In this Florida class action case, the jury recently found that the cigarette makers "engaged in extreme and outrageous conduct." A second part of the trial is now underway to determine damages on an individual basis.

• H.R. 1875 would trample on the rights of states to manage their legal systems.  H.R. 1875 will allow the removal of most state-based class actions to the federal courts. There is no overriding need for such a massive intrusion on matters traditionally handled at the state court level. For example, in Spielholz et. al. v. Los Angeles Cellular Telephone Company, Bellsouth Cellular Corporation, and AT&T Wireless Services, Inc., a group of California residents sued the defendants, claiming that they made inaccurate, misleading, and intentionally deceptive representations about their provided coverage. One of the plaintiffs was shot in the face during an attempted car jacking and was unable to call 911 on her phone due to an unidentified "dead zone" of coverage. Even though the overwhelming number of plaintiffs reside in California and the suit is based entirely on California state law, under H.R. 1875 the defendants would have the choice of removing this case to federal court since at least some of the defendants are out-of-state corporations. There is no federal interest in resolving such a dispute because it doesn’t involve federal law and is not national in character.

• Federalization of state class actions is another step in the strategy to limit liability for harmful corporate actions.   In the wake of Congress’s failure to pass federal products liability legislation, corporate lobbyists have moved to limit company liability in other ways. Class action legislation preempting state courts is but one example. However, the ultimate goal remains the same -- companies want to curtail (or even eliminate) legal liability for wrongdoing at the expense of injured consumers. Forcing state class actions into federal court serves these purposes: once these cases are federalized, lobbyists can then focus on changing the federal rules to severely limit all class actions, not just the ones filed in state court.

In a free-market system increasingly dominated by large corporations, the class-action device is an essential free-market tool to tame harmful corporate behavior. Please do not support H.R. 1875, which will only weaken this important means of consumer protection.

Sincerely,

Joan Claybrook President, Public Citizen

Frank Clemente Director, Public Citizen's Congress Watch

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