Legislation has been introduced in the House of Representatives that would make it more difficult for consumers to succeed in class action lawsuits against corporations that commit fraud and other violations of consumer health, safety, and environmental laws. The bill, called the Interstate Class Action Jurisdiction Act of 1999 (H.R. 1875), would make most state class action lawsuits removable to federal court by defendant corporations. Although this bill is portrayed as a modest effort to end "abusive" class actions brought in state court, it is actually an unprecedented attempt to shift cases that have historically been heard in state court to the federal courts.

Class actions are an important tool that protect consumers by offering a valuable mechanism for aggregating small claims that otherwise might not warrant individual litigation. Plaintiffs often use class actions in order to gain access to the courts in cases where a defendant may have gained a substantial benefit through inflicting small injuries on a large number of persons.

The bill would allow corporate defendants to remove the vast majority of state class actions to federal court. The only exceptions are when one of the following conditions is met:

1. the "substantial majority" of plaintiffs are citizens of the state where the case was filed, as are  all of the "primary" defendants, and the claims will be governed by the laws of that state;
2. the value of the aggregated amount in controversy is less than $1 million or there are fewer than 100 class members; or
3. the "primary" defendants are states, state officials, or other governmental entities.

There are four main problems with the Interstate Class Action Jurisdiction Act:

• Most state-based class actions are likely to become federal actions, providing an advantage to defendant corporations. Current research by the Rand Institute for Civil Justice suggests that class actions are increasing in number and importance, particularly at the state level. 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. Tobacco companies, HMOs, auto makers, insurance companies, securities firms, and drug companies that injure the public should not have the power to choose the legal forum they believe will benefit them most.

• The bill would slow the continued interpretation of state law. This bill affects only class actions which involve solely issues of state law. State judges are more familiar and expert in interpreting state law. State court judges regularly interpret state law to apply it as new factual situations arise and community standards of responsible behavior change. Federal judges, however, are less apt to extend state law in new areas, believing it is the province of state, not federal courts. Moving class actions based on state law to federal court could have a direct negative impact on evolving legal areas like tobacco and HMO litigation.

• Justice will be considerably delayed -- if not denied -- for injured consumers. The current high vacancy rate and backlog of pending cases in the federal judiciary leads to delay of justice in the federal courts. Congress increasingly assigns the federal courts jurisdiction over matters that traditionally have been handled by the states, creating even further delays. For example, there were over 25,000 civil cases pending in the federal courts for more than three years as of September 1998 -- an increase of over 13% from 1997. 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.

• The bill would trample on the rights of states to manage their legal systems. This legislation represents a substantial and inappropriate transfer of judicial power to federal courts from the states. All of these class actions involve alleged violations of state law, in which by definition there is no federal interest. Although some limited number of state class actions, such as some mass tort actions, may more appropriately be brought in federal court, there is no compelling evidence for the significant usurpation of authority by the federal government that will result from H.R. 1875. Moreover, if there are class action abuses at the state level they should be corrected in the state courts. The federal Constitution still assumes that the states are generally capable of interpreting their own laws and impartially meting out justice.

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