Class Actions and Proposed Reform in the 108th Congress: Class Action Fairness Act of 2003 Page: 5 of 11
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CRS-2
federal diversity statute, 28 U.S.C. 1332;2 (2) a provision regarding removal;3 and
(3) a consumer class action "bill of rights."4
The Legislation
Section 1. Short Title (H.R. 1115 and S. 274). The Act may be cited as
the "Class Action Fairness Act of 2003." This section also states that it amends title
28 of the United States Code.
Section 2. Findings And Purposes Of The Act. Both bills set out
Congress' findings describing the: (1) circumstances in which class actions are
valuable to our legal system; (2) abuses of the class action process that have harmed
class members with legitimate claims and defendants that have acted responsibly,
adversely affected interstate commerce, and undermined public respect for our
judicial system; (3) the manner by which class members have been harmed by a
number of actions taken by plaintiffs' lawyers, which provide little or no benefit to
class members as a whole, including (i) plaintiffs' lawyers receiving large fees, while
class members are left with coupons or other awards of little or no value, (ii)
2 Diversity jurisdiction is the authority of federal courts to try cases arising out of state law
when the parties are from different states. The federal jurisdiction section of each of the two
bills amends Section 1332 to provide for federal jurisdiction in class actions where the
aggregate amount in controversy of all individual claims exceeds $5 million and any
member of the putative plaintiff class is a citizen of a state different from any defendant, in
cases with less than one-third of the plaintiffs and the primary defendants come from the
same state where the suit is filed. On the other hand, the Acts' expanded jurisdictional
provisions would not apply to this section if two-thirds or more of the plaintiffs and the
primary defendant come from the state where the suit is filed (or if the case involves less
than $5 million, fewer than 100 class members, or state entities or officials as primary
defendants). In between, in cases involving more than one-third but less than two-thirds of
the plaintiffs and the primary defendant coming from the same state where the suit is filed,
the federal courts would have discretion to try class actions after weighing five factors.
3 The H.R. 1115 and S. 274 removal provisions allow any defendant or absent class member
to remove a class action from state court to federal court if the minimal diversity and other
requirements of Section 1332 are satisfied, regardless of whether a defendant is a citizen ofthe state where the action was filed, and without the consent of other defendants or class
members.
4 The "bill of rights" portion of the proposed legislation requires a hearing and written
findings before a court may approve any class settlement providing noncash benefits or
requiring expenditure of funds in order to obtain the proposed benefits. Similarly, a court
must make written findings in order to approve a settlement that obligates a class member
to pay sums to class members in an amount that would result in a net loss to the class
member. Further, the two bills prohibit approval of a settlement that pays class members
higher amounts based solely on their economic proximity to the court or that pays a bounty
to the class representatives (other than payment for reasonable time and cost).
H.R. 1115 and S. 274 provide that the Act's provisions apply to any civil action begun
on or after the date of enactment of the Act. However, H.R. 1115 would also be retroactive
to existing cases where a class has not been certified or when certification is entered on or
after the date of enactment.
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Wallace, Paul Starett, Jr. Class Actions and Proposed Reform in the 108th Congress: Class Action Fairness Act of 2003, report, June 23, 2003; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metacrs5117/m1/5/: accessed July 18, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.