Risk & Compliance

Bush Signs Class-Action Bill

The measure would require many cases to be brought in federal courts rather than in state courts, which are generally considered more favorable to ...
Stephen TaubFebruary 18, 2005

President Bush won the first significant legislative victory of his second term today when he signed the Class Action Fairness Act, which will make it much harder for individuals to sue corporations.

Yesterday, the House of Representatives passed the measure by a vote of 279 to 149; about 50 Democrats crossed party lines to vote in favor of the bill. The Senate passed the bill last week, 72 to 26; a similar measure failed last year by a single vote.

Under the new law, class actions seeking a total of $5 million or more could be heard in a state court — generally considered more favorable to plaintiffs than federal court — only when the primary defendant and at least one-third of the plaintiffs are from that state. Otherwise such cases would be heard in federal court.

House Speaker J. Dennis Hastert (R-Ill.) called the vote a “historic first step towards breaking one of the main shackles holding back our economy and America’s workforce — lawsuit abuse,” according to The Washington Post.

On the other side of the aisle, House Minority Leader Nancy Pelosi (D-Calif.) called the bill a “payback for big business at the expense of consumers,” according to the paper.

Joan Claybrook, of the consumer group Public Citizen, told the Post that she thinks the largest class-action cases — which offer the prospect of very large verdicts — will continue to attract lawyers willing to pursue them. Claybrook maintained, however, that class actions will no longer be a good tool for individuals seeking redress against credit-card companies, insurers, and other firms that commit “everyday frauds and deceptions that happen all the time.”