Class Actions and Proposed Reform in the 108th Congress: Class Action Fairness Act of 2003 Page: 6 of 11
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CRS-3
unjustified rewards made to certain plaintiffs at the expense of other class members,
and (iii) confusing published notices that prevent class members from being able to
fully understand and effectively exercise their rights; (4) abuses in class actions
which undermine the national judicial system, the free flow of interstate commerce,
and the concept of diversity jurisdiction as intended by the framers of the United
States Constitution, in that State and local courts are (i) keeping cases of national
importance out of federal court, (ii) sometimes acting in ways that demonstrate bias
against out-of-state defendants, and (iii) making judgments that impose their view of
the law on other states and bind the rights of the residents of those states.
Section 3. Consumer Class Action Bill Of Rights And Improved
Procedures For Interstate Class Actions. These sections would add seven
(five in H.R. 1115) new sections to 28 U.S.C. which are intended to provide greater
protections for class members. In particular, section 3 would add the following:
* Section 1711-Judicial scrutiny of coupon and other noncash
settlements (Section 1712 in S. 274)
This provision is aimed at certain proposed settlements of class actions, in
which the plaintiffs' lawyer and the defendant work out a settlement that provides
class members with essentially valueless coupons while rewarding the lawyers with
substantial attorneys' fees. To address this problem, this section provides that a
judge "may approve a proposed settlement under which the class would receive
noncash benefits or would otherwise be required to expend funds in order to obtain
part or all of the proposed benefits only after a hearing to determine whether, and
making a written finding that, the settlement is fair, reasonable, and adequate for
class members."
* Section 1712-Protection against loss by class members (Section
1713 in S. 274)
This provision provides that a judge may not approve a class action settlement
in which the class member will be required to pay attorney's fees that would result
in a net loss to the class members until after a hearing to determine whether the
nonmonetary benefits to the class outweigh (or substantially outweigh in S. 274) the
monetary loss, and if so making a written finding to that effect.* Section 1713-Protection against discrimination based on
geographic location (Section 1714 in S. 274)
This provision provides that a settlement may not award some class members
a larger recovery than others solely because the favored members of the class are
located closer to the courthouse in which the settlement is filed.
* Section 1714-Prohibition on the payment of bounties (Section
1715 in Section in S. 274)
This provision provides that a class action may not be settled on terms that
award special and disproportionate bounties to the named class representative. A
class representative will, however, be able to be compensated for his reasonable time
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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/m1/6/: accessed July 18, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.