S. 2062, the “Class Action Fairness Act”
July 6, 2004
Consumers Union writes today to urge all Senators, supporters and opponents of the legislation alike, to support the Bingaman Consumer Amendment to S. 2062, the “Class Action Fairness Act” when the bill reaches the floor. This amendment will help to ensure that the legislation accomplishes its purported goal – to have multi-state class actions actually get a hearing in federal court.
Your support for this amendment is critical if we are to preserve access to the courts when consumers have been harmed by a dangerous product or defrauded by illegal practices that violate state consumer protection laws. If S. 2062 passes without this amendment, consumers who are harmed will no longer be able to use multi-state class actions to recover their losses and help to change corporate behavior.
Here are the facts: The overwhelming trend in federal courts is to deny certification in cases involving citizens of more than one state. In fact, no federal circuit court has certified a multi-state consumer class action, while six circuit courts and twenty-six district courts have expressly denied such certification.(1) The proponents of the bill tell two different stories on this point. On one hand, they admit that these cases do not get certified in federal courts. The Chamber of Commerce, the leading proponent of the legislation, recently wrote a brief to the Second Circuit Court of Appeals saying “… it is nearly a truism that nationwide class actions in which the claims are subject to varying state laws cannot be certified because they are unmanageable.” (2)
On the other hand, they say the goal of S. 2062 is to send most class actions to federal court, in order to provide a single forum for cases involving plaintiffs from multiple states. They argue that the Class Action Fairness Act would simply allow federal courts to more easily hear large, national class action lawsuits affecting consumers all over the country.” (3) You can’t have it both ways, arguing to a court during litigation that it should not certify nationwide class actions, and on the other hand, arguing to Congress that you are trying only to shift forums, not prevent these cases from being heard. The practical result of S. 2062 as it is written is that these cases will not be heard. Instead, they will be denied certification because multiple state laws apply, the very reason they were sent to federal court.
Under current law, consumers often have the option of bringing a multi-state class action involving violations of state laws in state court, where judges are more likely to find a way to manage the case. In general, state court judges are simply more comfortable than federal judges handling cases brought under areas traditionally reserved to state courts, like contract, warranty or tort law. When faced with a case that involves these kinds of laws, even where the laws of many different states are involved, state courts have largely adopted practices that ensure that the aggrieved class members have their day in court. Federal courts have proved to be far more reluctant to accommodate state law-based cases in this way.
If S. 2062 becomes law, since consumers will no longer have the option of bringing a multi-state case in state court, we must preserve their right to be heard in federal court. That is why the Bingaman Consumer Amendment is so critical. The amendment is quite modest. It merely provides a federal judge with an additional tool to manage multi-state class actions based on consumer laws. Under the amendment, a judge would have the option of bypassing complex state procedural choice-of-law rules, and instead would apply the law of a state whose connection – or “nexus” – with the case is strong enough to meet constitutional requirements. If the judge rejects this option, he or she may not deny class certification on the single ground that multiple state laws apply.
The Bingaman Consumer Amendment will ensure that S. 2062 accomplishes its intended goal, to move nationwide class actions into one federal forum. Without this amendment, harmed consumers will be forced to bring single-state class actions in federal court, recreating the “copy cat lawsuit” problem that proponents of S. 2062 have criticized. Moreover, consumers who live in relatively small states may never get relief, because there simply may not be enough injured consumers in their states to justify litigating a costly and complex class action lawsuit.
If you believe S. 2062 is about moving cases to federal court, not depriving harmed consumers from ever getting their day in court, then we strongly urge you to vote for the Bingaman Consumer Amendment.
Senior Product Safety Counsel
(1) Third, Fifth, Sixth, Seventh, Ninth and Eleventh Circuits, the Districts of Connecticut, District of Columbia, Kansas, Massachusetts, Minnesota, New Hampshire, and New Jersey, the Eastern Districts of Louisiana, North Carolina, Pennsylvania, and Texas, the Northern Districts of Florida, Georgia, Illinois, Mississippi, Ohio, and Oklahoma, the Southern Districts of Alaska, Florida, Illinois, New York, and Texas, the Western Districts of Michigan, Montana, and Washington, and the Middle District of Alabama.
(2) Brief of the Chamber of Commerce of the United States as amicus curiae in support of appellants, In Re Simon II Litigation, No. 03-7140-L, U.S. Court of Appeals for the Second Circuit, p. 16, June 3, 2003.
(3) Letter-to-the-editor from Stanton D. Anderson, executive vice president and chief legal officer, U.S. Chamber of Commerce, Philadelphia Inquirer, February 27, 2004.