House Committee Moves Class-Action Bill

By Steven Brostoff, Washington Editor

NU Online News Service, May 22, 11:44 a.m. EDT,Washington?The House Judiciary Committee has approvedindustry-supported legislation that would establish federal courtjurisdiction over major class-action lawsuits.

The legislation, H.R. 1115, was approved by a 20-14 vote and nowgoes to the floor of the House for a final vote. The SenateJudiciary Committee approved a similar bill in April, which iscurrently pending before the full Senate.

Under the legislation, federal district courts would havejurisdiction over any class action in which the plaintiffs areasking for at least $2 million in damages and any member of theplaintiff class is from a different state from any defendant.

In addition, H.R. 1115 establishes a "class-action bill ofrights" which includes judicial review of non-cash settlements,standardized settlement notification and a prohibition onsettlements in which the class members suffer a net loss due topayments to the plaintiffs' attorneys.

Insurance industry representatives were unanimous in theirsupport for H.R. 1115 and urged Congress to enact a final bill asquickly as possible.

"NAMIC applauds the House and Senate for moving so quickly onclass-action reform," said Monte Ward, vice president of federalaffairs for the Indianapolis-based National Association of MutualInsurance Companies.

"We believe that Congress must pass this legislation in order tostop the current class-action crisis," he said.

Melissa Shelk, vice president for federal affairs with theWashington-based American Insurance Association, added thatnational, multi-state class-action lawsuits belong in federalcourts. The need for reform is urgent, Ms. Shelk said, and theJudiciary Committee's vote is an encouraging sign that Congress islistening.

Kenneth D. Schloman, Washington counsel for the Downers Grove,Ill.-based Alliance of American Insurers, added that thelegislation hits at some of the worst problems in the class-actionsystem, such as forum shopping, nuisance lawsuits, classcertification and settlements that are not in the best interests ofplaintiffs. Mr. Schloman added that he believes H.R. 1115 willreceive strong bipartisan support when it is considered by the fullHouse.