Class Actions and Legislative Proposals in the 109th Congress: Class Action Fairness Act of 2005 (CRS Report for Congress)
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| Release Date |
Revised Feb. 18, 2005 |
| Report Number |
RL32761 |
| Report Type |
Report |
| Authors |
Paul S. Wallace, Jr., American Law Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
S. 5 , the Class Action Fairness Act of 2005 has three main sections: (1) an amendment
to the federal diversity statute; (2) a provision regarding removal; and (3) a consumer class action
"bill of rights." It would control and restrict class action lawsuits by shifting some of the suits from
state to federal courts. This would be achieved by creating federal jurisdiction over class action suits
when the total amount in dispute exceeds $5,000,000 and when any plaintiff lives in a state different
from that of any defendant. The bill would treat certain "mass actions" with more than 100 plaintiffs
as class actions for purposes of jurisdiction. S. 5 would require judges to review all
settlements based on the issuance of coupons to plaintiffs and limit attorney's fees to the value of the
coupon settlements actually received by class members. It would also require careful scrutiny of "net
loss" settlements in which class members ultimately lose money. The legislation would ban
settlements that award some class members a larger recovery because they live closer to the court.
It would allow federal courts to maximize the benefits of class action settlements. Among other
things, S. 5 would also require that a notice of proposed settlements be provided to the
appropriate state and federal officials such as the state attorneys general. It was reported out of the
Senate Judiciary Committee without amendment. On February 10, 2005, the Senate passed
S. 5 (72-26) without amendment. On February 17, 2005, the House also passed
S. 5 without amendment, 279-149 and it is expected to be signed by the President.
