This document provides background information and summarizes the debate over class action reform. The links to the left will lead you to public documents that we have found.
A class action is a means by which a number of plaintiffs can collectively
sue in a single suit. Class actions are especially useful when each individual's
claim is too small to warrant an individual lawsuit. They are also useful when
the class of plaintiffs lacks the resources to hire a lawyer to represent their
individual interests. Most often class action suits are filed on behalf of consumers
who claim they have been victims of some type of fraud or negligence on the
part of a corporation that sold them a particular good or service. Class action
suits have also been used for broad political aims. Brown v. Board of Education
was a class action suit brought on behalf of a "class" of children
who were said to be victims of racial discrimination by the school system in
Class action suits are unpopular with business for the simple reason that successful cases cost them money. Insurance companies, who frequently have to pay judgments on the policies that they write for business clients, are particularly antagonistic toward this legal instrument. For years a coalition of various industry groups and insurance companies have tried to convince the Congress that class action suits need to be restrained. They cite what they regard as unreasonable judgments against various companies as evidence that they system for settling class action suits has gotten out of hand. The primary feature of the bill before the 106th Congress was to direct interstate class action suits to the federal courts instead of the state courts. The state courts are seen as much more sympathetic to class action claimants and more likely to render decisions that require substantial restitution.
As in previous sessions of Congress, class action reform was vigorously fought by trial lawyers and consumer groups. Trial lawyers earn substantial fees from successful cases and any curtailment of class action suits is going to result in a lower income for them. Lobbyists representing the trial lawyers in Washington vigorously deny that there is any "reform" behind the proposed legislation. Said one, "This is a thinly veiled attempt to eliminate citizens' rights to class action suits." He noted that the federal courts are much less likely to grant certification to a proposed class action suit, therefore stopping a suit before it can go to trial.
The bill passed the House of Representatives in a close vote (222-207) and was also reported out by the Senate Judiciary Committee. Class action reform is a highly partisan issue, with the Republicans giving almost uniform support to this kind of legislation. Democrats are no less aggressive in defending what they see as a consumer rights' issue. Each side accuses the other of being bought: Republicans get substantial PAC contributions from business and insurance interests advocating class action reform and the Democrats receive strong financial support from PACs representing trial lawyers. A very concerted lobbying effort was conducted by both sides. Even though President Clinton promised to veto the bill if it could get out of the Congress, supporters of class action reform pressed the case forward in the summer of 2000, believing that passage in the 106th would build support for a bill in the next Congress when George Bush, if elected, would surely sign such legislation. The bill, however, never made it to the Senate floor. In the 107th the pattern was repeated as the House passed a bill but no vote was taken in the Senate.