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    It is no different with Enron. The loyal employees of Enron that were terminated lost their life savings, their retirement, their child's college tuition, their second honeymoon, their first home. Top executives were aware of their declining financial situation and yet misrepresented themselves, or had their accounting firm do so, to their own stockholders—their employees. They barred these employees from selling their shares, while at the same time, allowing only top executives to sell any shares they wanted to. Enron gave out tens of thousands of retention bonuses, while also terminating the ''rank and file''.

    I know this because these victims are my constituents and I have heard their stories and accounts. They have been robbed of savings that they were entitled to.

    It is important to recall the context in which this legislation arises—a class action has been filed in state court involving numerous state law claims, each of which if filed separately would not be subject to federal jurisdiction (either because the parties are not considered to be diverse or the amount in controversy for each claim does not exceed $75,000).

    H.R. 2341 also has the potential to raise serious Constitutional issues. For one, it unilaterally strips the state courts of their ability to use the class action procedural device to resolve state law disputes. The courts have previously indicated that efforts by Congress to dictate such state court procedures implicate important Tenth Amendment federalism issues and should be avoided. The Supreme Court has already made clear that state courts are constitutionally required to provide due process and other fairness protections to the parties in class action cases

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    It is also important to note that as fears of local court prejudice have subsided and concerns about diverting federal courts from their core responsibilities increased, the policy trend in recent years has been towards limiting federal diversity jurisdiction

    Thirdly, as the legislation is currently written, it assumes a defendant will be automatically subject to prejudice in any state where the corporation is not formally incorporated (typically Delaware) or maintains its principal place of business. In so doing, it can be said the bill ignores the fact that many large businesses have a substantial commercial presence in more than one state, through factories, business facilities or employees.

    In all, H.R. 2341 adversely impacts the ability of consumers and other victims to acquire compensation in cases concerning extensive damages. The bill possess the potential to force state class actions into federal courts resulting in expensive litigation and allowing defendants to potentially compel plaintiffs to travel distances to participate in court proceedings. Essentially, the extensive pleading requirements of the federal court will virtually make it impossible for individuals to bring a class actions case. For example, under the bill, individuals are required to plead with particularity the nature of the injuries suffered by class members in their initial complaints. The plaintiff must even prove the defendant's ''state of mind,'' such as fraud or deception, to be included in the initial complaint. To meet this criteria is virtually impossible in most instances that the plaintiff is able to provide this information prior to discovery. If the pleading requirements are not met, the judge is required to dismiss the plaintiff's complaint.

    Additionally, consumers under H.R. 2341 can be expected to have a far more complicated and time consuming problem in trying to certify class actions in the federal court system. Fourteen states, representing some 29% of the nation's population, have adopted different criteria for class action rules than Rule 23 of the federal rules of civil procedure.

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    Consumers may also be disadvantaged by the vague terms used in the legislation, such as ''substantial majority'' of plaintiffs, ''primary defendants,'' and claims ''primarily'' governed by a state's laws, as they are entirely new and undefined phrases with no precedent in the United States Code or the case law.

    Mr. Chairman, this bill is plagued with problems that cheat consumers form their rights under law and under the Constitution. I urge my colleagues to oppose it.

    Chairman SENSENBRENNER. Our first witness is Mr. Peter Detkin, vice president and assistant general counsel of Intel Corporation. Mr. Detkin joined Intel in 1994; is a graduate of the University of Pennsylvania's Moore School of Electrical Engineering, and received a J.D. from the University of Pennsylvania Law School.

    The Committee will then hear from Mr. John Beisner, a partner in the firm of O'Melveny & Myers, where he is responsible for the firm's class action practice group. Mr. Beisner specializes in class action defense and mass torts, and he has an extensive background in State and Federal class action practice. Mr. Beisner is an honors graduate of the University of Michigan Law School.

    The third witness will be Mrs. Hilda Bankston, the former owner of Bankston Drugstore, which is the only pharmacy serving Fayette, Mississippi. Mrs. Bankston managed this drugstore with her husband from 1971 until 2000. She was born in Guatemala, moved to New York City in 1958, and served in the United States Marine Corps before moving to Mississippi where she currently resides.

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    The final witness is Mr. Andrew Friedman, partner in the law firm of Bonnett, Fairbourn, Friedman & Balint, where he heads the firm's class action, security fraud, and consumer fraud practice group. He is a graduate of the University of Rochester and received a J.D. from the Duke University School of Law.

    Will all the witnesses please rise, raise your right hand, and taken an oath?

    Do you and each of you solemnly swear that the testimony you are about to give this Committee shall be the truth, the whole truth, and nothing but the truth, so help you God?