The Need for Class Action Reform

Article excerpt

Class action litigation in the United States has emerged over the last 10 years as a serious threat to the continued existence of corporations ranging across industries from pharmaceuticals to consumer products to insurance. While the over-all issue is complex, the aggregation of thousands of claims in each of a multitude of jurisdictions denies an even playing field and results in a materially flawed civil justice system. That fact, combined with the company-threatening enormous cost and exposure of such cases, compels reform.

There are currently two avenues for reform that deserve IADC members' attention and participation.

The legislative route

The first is legislative. On March 13 of this year, the House of Representatives passed H.R. 2341, the Class Action Fairness Act, by a vote of 233 to 190. The act provides for federal court jurisdiction of class action lawsuits in which there is minimum diversity and in which the aggregate class claims exceed $2 million. It allows for immediate appeal of class certification decisions, thereby allowing both parties to seek appellate review on what is often among the most important judicial decisions to be made in the case. The act also contains a consumer class action bill of fights, which provides a variety of protections to members of the putative class.

A version of the Class Action Fairness Act is currently before the Senate, S.1712. Whether, when and how the Senate may act on this legislation is uncertain. It is important that IADC members' and their clients become knowledgeable about these proposed changes in class action procedure and register their feelings with their United States senators.

The Rule 23 avenue

The second avenue of class action reform is the review of Rule 23 of the Federal Rules of Civil Procedure. The Committee on Rules of Practice and Procedure of the Judicial Conference has disseminated a number of proposals for changes in Rule 23. They address primarily the timing of the certification decision, the provision of notice to class members, judicial review of settlements, and the appointment and compensation of claimants'. …