IIAA Hails Passage of Class Action Reform Measure

March 21, 2002

Independent agents and brokers believe a class action reform bill approved by the House last week will help return a sense of normalcy to interstate class-status lawsuits and protect the rights of consumers and defendants, according to the Independent Insurance Agents of America (IIAA). The House of Representatives approved the Class Action Fairness Act (H.R. 2341) last week by a 233-190 vote. The measure was introduced by Rep. Bob Goodlatte (R-Va.) and is cosponsored by 56 bipartisan members.

IIAA supports H.R. 2341 because it will help rein in a significant part of the country’s legal system that has gone awry and is fraught with abuse, IIAA Senior Vice President of Federal Government Affairs Maria L. Berthoud, said.

“The Class Action Fairness Act is a commonsense measure that will ensure a balanced and fair review of interstate class action lawsuits by permitting them to be heard in federal district courts,” Berthoud asserted. “Federal courts are better equipped to deal with these complex cases. This measure also will bring an end to the practice of trial lawyers forum-shopping around the country looking for the most favorable venue to try a class action case.”

The Class Action Fairness Act would allow litigants—either the defendant or plaintiff—to move interstate class action suits into federal courts, which generally are more protective of consumer and defendant rights. It would provide federal district courts with original jurisdiction of any civil action where the amount in controversy exceeds $2 million and the members of the class meet the following requirements—any member of a class of plaintiffs is: a citizen of a state different from any defendant; a citizen of foreign country; or a citizen of a state and any defendant is a foreign citizen.

The measure also proposes the establishment of a consumer class action bill of rights that would include provisions for:

judicial review of non-cash settlements,

protection against loss by class members because of payments to class counsel,

prohibition of court approval if larger payments are proposed to class members located in closer geographic proximity to the court,

a ban on court approval of a greater share of a settlement being awarded to a representative serving on behalf of a class,

standardized settlement notification information, and

specific requirements regarding proposed settlement notifications to federal and state officials.

“This bill is a simple correction—its provisions would not impinge anybody’s rights to sue. It would merely allow litigants to move big suits involving interstate issues into federal courts. It also would allow plaintiffs—for the first time—to have their claims heard in federal court,” says Robert K. Houton, IIAA Washington representative. A companion Senate bill (S. 865) was introduced by Sen. Charles Grassley (R-Iowa) and referred to the Judiciary Committee. The bill, which has 11 cosponsors, has not seen action yet.

“Independent agents and brokers call on the Senate to take up this bipartisan bill and approve it as soon as possible,” Houton said. “We need more certainty in our civil justice system so that runaway judgments do not further damage the economic fabric of this country. H.R. 2341 is a huge step in the right direction.”

“The Class Action Fairness Act will go a long way toward creating balance in our legal system by guaranteeing those seeking redress their day in court and at the same time ensuring that individuals and companies on the other end of a lawsuit are treated equitably by federal courts that are better equipped to judge the case,” Houton added.

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