Senate Panel Works On Class Action Compromise

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By Steven Brostoff, Washington Editor

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NU Online News Service, April 4, 11:23 a.m. EST,Washington?The Senate Judiciary Committee is trying towork out a compromise class action reform bill that supporters hopewill draw bipartisan support.

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The compromise proposal is based on S. 274, legislation whichwould establish federal court jurisdiction for major class actionlawsuits, but with some changes aimed at drawing the 60 votesnecessary to overcome a possible filibuster.

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The revision is co-sponsored by Sens. Diane Feinstein, D-Calif.;Charles Grassley, R-Iowa; Herb Kohl, D-Wisc.; and CommitteeChairman Orrin Hatch, R-Utah.

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Specifically, the original S. 274 set a threshold of at least $2million in damages before it qualified for federal courtjurisdiction. The compromise proposal sets the threshold at $5million.

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In addition, the proposed compromise would revise the formulafor federal jurisdiction based on the home states of the plaintiffclass and the primary defendants.

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The original bill would not grant federal jurisdiction in casesin which the substantial majority of members of the proposedplaintiff class and the primary defendants are citizens of thestate where the action was originally filed and the action will begoverned primarily by the laws of that state.

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Under the revisions, federal courts would have jurisdiction inclass actions filed in the home states of the primary defendants ifless than one-third of the class members are also citizens of thatstate.

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If two-thirds or more of the class are citizens of thedefendants' home state, there would be no federal jurisdiction.

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If between one-third and two-thirds of plaintiffs are from thedefendants home state, federal courts would have jurisdiction, buta court would have the option of declining jurisdiction based onconsideration of several factors, including whether the claims areof "significant" national interest.

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Joe Manero, a representative of the Downers Grove, Ill.-basedAlliance of American Insurers, said the proposed changes seem to bereasonable.

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They do not change the substance of the legislation, he said,and may help get the legislation passed by the Senate.

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In particular, Mr. Manero said, if Sen. Feinstein can be broughton board, it may encourage some of her Democratic colleagues tofollow suit.

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