Now maybe we will be drawn into a discussion of legal concepts and terms that will attempt to minimize this issue and take our minds off of one central fact: that at the heart of class action litigation are injured people, large numbers of them. So if a woman is injured by a faulty product like the Dalkon shield they will have to pay more money to get justice, jump through more hurdles to get their case heard, and wait months and sometimes years until there is something that could be described as a remedy. It is not uncommon for injured class members to die before their case is heard.

    There will be, I hope, discussion about minimal diversity in named plaintiffs. Now that takes us real quickly to the sick smokers who sued tobacco companies for lying about whether cigarettes were addictive and would have never seen their day in court. We will talk about heightened pleading rules. What that means to me is that when scores of Americans are killed by faulty tires and hundreds more maimed, that Congress in its wisdom would make it more difficult for them to obtain justice when their claims are joined together.

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    So in the end the question well may be whether this Congress, starting with this Committee, understands how easing the rules of civil liability makes it much easier for those in the business sector to defraud working Americans.

    So I thank you for the additional time that you have given me to make my statement, Mr. Chairman.

    Chairman SENSENBRENNER. Without objection, opening statements of other Members will be placed in record at this point.

    [The statements follow:]

A.eps

B.eps

C.eps

PREPARED STATEMENT OF THE HONORABLE BOB GOODLATTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA

    Mr. Chairman, I would like to thank you for holding today's important hearing on the Class Action Fairness Act—legislation I have introduced along with my good friend, Rick Boucher—to ensure that truly interstate class actions are heard in federal court.

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    This much-needed bipartisan legislation corrects a serious flaw in our federal jurisdiction statutes. At present, those statutes forbid our federal courts from hearing most interstate class actions—the lawsuits that involve more money and touch more Americans than virtually any other litigation pending in our legal system.

    The class action device is a necessary and important part of our legal system. It promotes efficiency by allowing plaintiffs with similar claims to adjudicate their cases in one proceeding. It also allows claims to be heard in cases where there are small harms to a large number of people, which would otherwise go unaddressed because the cost to the individuals suing could far exceed the benefit to the individual. However, class actions have been used with an increasing frequency and in ways that do not promote the interests they were intended to serve.

    In recent years, state courts have been flooded with class actions. As a result of the adoption of different class action certification standards in the various states, the same class might be certifiable in one state and not another, or certifiable in state court but not in federal court. This creates the potential for abuse of the class action device, particularly when the case involves parties from multiple states or requires the application of the laws of many states.

    For example, some state courts routinely certify classes before the defendant is even served with a complaint and given a chance to defend itself. Other state courts employ very lax class certification criteria, rendering virtually any controversy subject to class action treatment. There are instances where a state court, in order to certify a class, has determined that the law of that state applies to all claims, including those of purported class members who live in other jurisdictions. This has the effect of making the law of that state applicable nationwide.

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    The existence of state courts which broadly apply class certification rules encourages plaintiffs to forum shop for the court which is most likely to certify a purported class. In addition to forum-shopping, parties frequently exploit major loopholes in federal jurisdiction statutes to block the removal of class actions that belong in federal court. For example, plaintiffs' counsel may name parties that are not really relevant to the class claims in an effort to destroy diversity. In other cases, counsel may waive federal law claims or shave the amount of damages claimed to ensure that the action will remain in state court.

    Another problem created by the ability of state courts to certify class actions which adjudicate the rights of citizens of many states is that often times more than one case involving the same class is certified at the same time. In the federal court system, those cases involving common questions of fact may be transferred to one district for coordinated or consolidated pretrial proceedings.

    When these class actions are pending in state courts, however, there is no corresponding mechanism for consolidating the competing suits. Instead, a settlement or judgment in any of the cases makes the other class actions moot. This creates an incentive for each class counsel to obtain a quick settlement of the case, and an opportunity for the defendant to play the various class counsel against each other and drive the settlement value down. The loser in this system is the class member whose claim is extinguished by the settlement, at the expense of counsel seeking to be the one entitled to recovery of fees.

    Our bill is designed to prevent these abuses by allowing large interstate class action cases to be heard in federal court. It would expand the statutory diversity jurisdiction of the federal courts to allow class action cases involving minimal diversity - that is, when any plaintiff and any defendant are citizens of different states - to be brought in or removed to federal court.