Class Action Fairness Act (H.R. 2341)

March 11, 2002

To Members of the United States House of Representatives:

The U.S. Chamber of Commerce, the world's largest business federation, representing more than three million businesses and organizations of every size, sector, and region, strongly urges you to vote in favor of H.R. 2341, the Class Action Fairness Act and to oppose any weakening amendments.

H.R. 2341 is a timely piece of bi-partisan legislation that addresses the issue of abusive class action lawsuits in state courts where the rights of defendants are frequently trampled and the rights of class action members ignored. Even the Washington Post, in a March 9 editorial, called the legislation "a big step in the right direction." This legislation amends the diversity jurisdiction rule to more easily allow large, interstate class actions to be heard in federal court rather than being forced to remain in state courts that have fewer resources and experience to handle these complex, interstate cases. The legislation would also provide a number of protections for consumers by requiring judicial scrutiny of coupon settlements, plain-English notices, and prohibits settlements that result in net losses for plaintiffs, the payment of bounties and settlements based on geography.

The Class Action Fairness Act is critically needed because the dramatic increase of frivolous lawsuits affects all types of businesses resulting in higher prices, higher insurance premiums, lower earnings and excessive litigation costs. Additionally, one of the most common abuses is that suppliers, agent's retailers, dealers and other small businesses are brought into the litigation to prevent removal of the cases to federal court. In short, small businesses are named as defendants and must defend themselves, although they are only peripheral to the case. Finally, the class members suffer because the trial lawyers negotiate settlements that pay large attorneys' fees expenses, while disposing of the class members' claims on terms that offer them little or nothing.

If this type of conduct is permitted to continue unchecked, it will only encourage further abuses of our legal system. We therefore strongly urge you to support H.R. 2341 and to oppose any weakening amendments. The Chamber will use votes on or related to this matter in our annual "How they Voted" scorecard.

Sincerely,

Thomas J. Donohue
President and CEO
U.S. Chamber of Commerce