House approves class-action act

The House overwhelmingly passed the Class Action Fairness Act yesterday, setting the stage for President Bush to sign into law as early as today the most sweeping federal tort reform measure in more than a decade.

“After 10 years of tireless work on multiple fronts, our efforts are finally paying off, and the Republican Congress has passed the first substantive lawsuit abuse reform bill,” said House Majority Leader Tom DeLay, Texas Republican. “This bill is a major accomplishment and it will make history.”

The bill, which passed the Senate last week and is the first major policy push by Republicans in this Congress, aims to halt some of the largest frivolous lawsuits in which lawyers bag huge fees and plaintiffs score pittances. It passed the House yesterday on a 279-149 vote.

Specifically, the bill diverts large, multistate class-action lawsuits from state courts into federal courts to stop lawyers from shopping their cases around the country in search of generous state judges and juries known for awarding huge verdicts. One such jurisdiction — Madison County, Ill. — reported a glut of suits filed in recent months as the legislation appeared likely to pass into law.

The law also will enhance judicial scrutiny of settlements where coupons are awarded to plaintiffs to ensure that legal fees are not too generous by comparison.

Yesterday’s vote was a major victory for Mr. Bush, for whom tort reform has been a linchpin policy goal. He campaigned vigorously on the issue and this bill in particular. He is expected to sign it as early as today.

“[The bill] will help protect people who are wrongfully harmed while reducing the frivolous lawsuits that clog courts, hurt the economy, cost jobs and burden American businesses,” he said yesterday.

“Junk lawsuits have driven the cost of America’s tort system to more than 240 billion dollars a year — greater than any other major industrialized nation,” Mr. Bush said. “This bill is an important step forward in our efforts to reform the litigation system and to continue creating jobs and growing our economy.”

Opponents of the bill — all Democrats — say the legislation will undermine plaintiffs’ ability to seek redress from large corporations that have deep pockets and armies of lawyers. They accuse Mr. Bush and Republicans in Congress of working at the behest of corporate interests — particularly the insurance industry — which have donated generously to Republican efforts.

“In the 1960s, President Kennedy used to say, ’Ask not what your country can do for you, but what you can do for your country,’ ” Rep. Edward J. Markey, Massachusetts Democrat, said on the House floor. “Today, Republican leaders in Washington have issued a new challenge: ’Ask not what your country can do for you, but what you can do for your country club.’ That is what this bill is all about.”

Like many Democrats opposed to the legislation, Mr. Markey said it will “repeal the protections that have been placed upon the books for two generations that ensure that the individual in our society is given the protection which they need.”

While on the opposite end of the debate, Republicans agreed that the bill was one of historic proportions.

“I’m pleased to join my colleagues here today who support taking a historic first step towards breaking one of the main shackles holding back our economy and America’s work force — lawsuit abuse,” said House Speaker J. Dennis Hastert, Illinois Republican.

The Class Action Fairness Act is part of a broad assault Republicans are levying against rampant litigation and the trial attorney industry, one of the biggest financial backers of Democratic causes. Another key element of that assault is the Bankruptcy Abuse Prevention and Consumer Prevention Act, which was approved by the Senate Judiciary Committee yesterday and is headed to the Senate floor for a final vote.

That bill aims to unclog the courts of meritless bankruptcy claims and limit some of the abuse by claimants. Those changes include limiting a debtor’s ability to run up significant debt just prior to bankruptcy and capping the value of a primary residence eligible to be shielded from creditors.

The class-action bill, sponsored by Virginia Reps. Robert W. Goodlatte, a Republican, and Rick Boucher, a Democrat, was first introduced nearly 10 years ago and has been blocked by Democrats ever since.

“Presently, the only winners are the lawyers who may get a half-billion dollar payday,” Mr. Goodlatte said. “This law will help ensure that real plaintiffs with real grievances are protected against settlements that give the lawyers millions and mere coupons to the consumers.”

One of the most outrageous cases, the congressman said, was one in which a bank was sued and the class of plaintiffs’ lawyers walked away with millions. The purportedly injured plaintiffs, meanwhile, were paid just 33 cents each. But in order to recover their award, the plaintiffs had to mail in a request, complete with a 34-cent stamp they had to pay for themselves.

Yesterday marked the fourth time the House approved the measure, each time with an increasingly larger majority.

In the Senate, the legislation had been stalled since October 2003 by a filibuster lodged by 41 senators, all but two of whom were Democrats. The bill passed the Senate last week with support from 72 senators.