Thanks to a generous sprinkling of Democrats, Congress handed President Bush a significant political victory with passage of class-action-lawsuit reform, but it is hardly the landmark turning point in jurisprudence that backers claim. Nor will it slam the courthouse door on the little guy, as critics claim.
The final product is a commonsense legal reform, even an overdue exercise of Congress' powers to regulate interstate commerce, because it remedies a significant abuse of the old system — "forum shopping" for that "magical jurisdiction" by high-dollar plaintiffs' attorneys. That is, searching out a crossroads county-seat courthouse where local judges and juries were prone to hand out whopping-great awards.
As if to prove that point, in one notorious venue, Madison County, Ill., 19 class-action suits were filed last week to get in under the wire.
The new law requires that cases involving multiple plaintiffs, multiple jurisdictions and $5 million or more in damages be filed in federal court, where, presumably, judges and juries would be fairer and less swayed by local considerations. If the defendant and two-thirds of the plaintiffs are from the same state, the suit can be filed in that state's courts. All of this, although yet to be tested in practice, seems eminently fair.
Senate Democrats filibustered the bill the last two years and, as irritating as that might have been, the delay resulted in a better bill, eliminating one provision that would have made it difficult for some plaintiffs to get into any court.
The bill also changes the way attorneys are compensated to eliminate settlements giving the trial lawyers millions and cents-off coupons to ostensible plaintiffs. However, it does not cap attorneys' fees nor does it cap punitive damages. There will still be big-bucks awards; they'll just be harder to come by.
The success of any law depends on how well Congress follows up on it. The Class Action Fairness Act will clearly increase the workload of federal courts — by how much remains to be seen — but Congress must increase funding for the courts to see the act successfully implemented. Overburdened courts turning away plaintiffs because of the workload is a worse abuse of the system than forum shopping.