- The Washington Times - Wednesday, July 12, 2000

Imagine being a defendant in a lawsuit, going to court to tell your story and hearing the judge toss out the complaint.
Good news, right? Now imagine your reaction if the same complaint was first filed against you in Nebraska, then in California and again in Georgia, until finally the plaintiff finds a judge who will allow the case to proceed to trial.
Welcome to the world of interstate class-action lawsuits, where plaintiffs are drawn from all over the country, and where defendants can be sued in serial fashion in a variety of state courts.
Here, even the most frivolous case stands a good chance of going to trial, because there is always another state court in which it can brought.
A bill currently before the U.S. Senate would put an end to this lunacy by bringing "interstate" class actions under federal court jurisdiction. The House passed similar legislation last fall.
For a class-action case to go to trial, a judge must first determine whether the plaintiff class should be "certified." Among the requirements: Does the case present questions of law and fact common to all class members? Are the circumstances of individual plaintiffs similar enough to warrant a class action, or should they be tried individually?
For plaintiff attorneys, there are definite advantages to certifying a class with members from a multitude of states.
For one thing, the total damages in a case determine the lawyers' fees. So, attorneys representing huge interstate classes stand to earn gigantic fees though their clients frequently end up with mere pennies.
Also, if one state court declines to certify an interstate class, the lawyers then have the option of shopping it around to the other states represented in the class until they find a compliant judge.
Since interstate class-action suits invariably have national implications, the verdict will, after all, apply to citizens in every state represented by the plaintiff class.
The logical place for these type of class-actions to be heard is in federal court. But trial lawyers don't like federal courts, in part because federal judges are far less tolerant of trial lawyers using their courtrooms as their own personal lab for testing bizarre legal theories. Another prime reason is obvious: trial lawyers want to have as many bites at the class-certification apple as possible.
For the rest of us, however, the consequences of having state courts reside over lawsuits that are national in scope can be disastrous.
Last year, for example, a class-action lawsuit against State Farm Insurance Co. on behalf of some 4 million people in 48 states was certified by a judge in rural Marion, Ill. The local jury returned a $1.2 billion verdict against the insurer because of its practice of sometimes repairing its customers' cars with generic replacement parts, which generally cost less than the parts sold by the vehicle's original manufacturer.
Insurance companies now are loath to use anything but expensive original equipment repair parts, lest they too be sued for millions of dollars. No wonder auto insurance premiums have shot upward in recent years.
The state judge in the State Farm case declared that he need consider only Illinois law. Thus, the verdict in effect imposed Illinois state law on the other states represented in the class.
Even more troublesome is that the action in Illinois actually overturned laws in at least one other state that requires generic parts as a way of keeping insurance premiums down.
Lawmakers in Congress have fashioned a solution to the problem of serial court-shopping in interstate class actions. The Class Action Fairness Act would make it easier for defendants in interstate class-action lawsuits to transfer their cases from state to federal courts.
That is important because when a federal court refuses to certify a class, it has the last word.
No longer will plaintiff attorneys be able to go from state to state until they finally find a sympathetic judge. And in a case such as State Farm's, federal judges will resist imposing one state's laws on another.
If Illinoisans or the citizens of any other state are willing to tolerate judicial court-shopping within their own state court system, on behalf of plaintiff classes composed of their own residents, that is their prerogative.
But people in, say, Nebraska should not be subject to the policy decisions of state courts outside Nebraska.
The bill is expected to reach the Senate floor shortly. For the sake of legal sanity, taxpayers and consumers should do everything they can to help this bill becomes law.


Jan Amundsen is general counsel of the National Association of Manufacturers.

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