New class lawsuit legislation that will facilitate removal of most class actions from state to federal courts moved closer to Congressional approval yesterday as the Senate prepared to approve it. The House of Representatives has already committed to ratifying the bill so long as the Senate does not materially amend the legislation, and President Bush has already publicly stated that he will sign the legislation into law.
Under the legislation, most large class actions with aggregate claims of more than $5 million would be subject to removal to federal court, where most defense attorneys prefer defending class action cases.
A few exemptions remain that would allow primarily local controversies to remain in state court, such as cases in which at least two-thirds of the class members are from the state of the state court in which the class action is filed. A similar exemption exists for cases involving injuries that occurred primarily in one state.
The theory behind the legislation is to prevent class action plaintiffs’ lawyers from forum shopping class actions in the state courts to find the most “damages friendly” venue for such cases. However, class action plaintiffs’ lawyers have forum shopped class actions in federal courts for years, so the main impact of the legislation is simply to reduce the supply of available courts in which plaintiffs’ lawyers can initiate a such a lawsuit.
The rest of the political debate regarding the bill is largely partisan drivel.