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 approved industry-supported legislation that would establish federal court jurisdiction over major class-action lawsuits.

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

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

In addition, H.R. 1115 establishes a “class-action bill of rights” which includes judicial review of non-cash settlements, standardized settlement notification and a prohibition on settlements in which the class members suffer a net loss due to payments to the plaintiffs’ attorneys.

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

“NAMIC applauds the House and Senate for moving so quickly on class-action reform,” said Monte Ward, vice president of federal affairs for the Indianapolis-based National Association of Mutual Insurance Companies.

“We believe that Congress must pass this legislation in order to stop the current class-action crisis,” he said.

Melissa Shelk, vice president for federal affairs with the Washington-based American Insurance Association, added that national, multi-state class-action lawsuits belong in federal courts. The need for reform is urgent, Ms. Shelk said, and the Judiciary Committee’s vote is an encouraging sign that Congress is listening.

Kenneth D. Schloman, Washington counsel for the Downers Grove, Ill.-based Alliance of American Insurers, added that the legislation hits at some of the worst problems in the class-action system, such as forum shopping, nuisance lawsuits, class certification and settlements that are not in the best interests of plaintiffs. Mr. Schloman added that he believes H.R. 1115 will receive strong bipartisan support when it is considered by the full House.