President Bush today signed S. 5, enacting a law that will move jurisdiction over large, multi-state class-action lawsuits into the federal courts.[@@]
The House passed the bill Thursday and the Senate passed the bill last week with wide, bipartisan majorities.
The law will require class-action suits seeking $5 million or more in damages to be heard in state court if the primary defendant and more than one-third of the plaintiffs were from the same state. If fewer than one-third of the plaintiffs were from the same state as the primary defendant, the case will go to federal court.
The bill also will limit lawyers' fees in so-called coupon settlements – when plaintiffs get discounts on products instead of financial settlements – by linking the fees to a coupon's redemption rate or the actual number of hours the lawyers spent working on a case.
Life insurers and health insurers are hoping the new law will reduce their vulnerability to big class-action suits.
Frank Keating, president and chief executive officer of the American Council of Life Insurers, has hailed the signing of S. 5 and the lawmakers and others who worked for the bill's passage.
"President Bush deserves high marks for his determination in getting the reform legislation enacted into law," Keating says in a statement. "Congress also deserves great credit for acting quickly this year to address class action abuses. In addition, Tom Donohue and the U.S. Chamber of Commerce earned special recognition for their role on this issue. Without the leadership of Tom and chamber, it is not clear whether we'd be celebrating today."
The role of chamber also drew some criticism from opponents of the bill, however, who claim that it is a gift for special interests that will limit the rights of regular American citizens.
"This brazen and shameless attack on Americans' legal rights was well-funded by the insurance, drug and other industries," says Todd Smith, president of the Association of Trial Lawyers of America, Washington, after the House approved the bill Thursday. "Indeed, the U.S. Chamber of Congress openly acknowledged this week that it spent more than $53 million in 2004 alone on efforts to lobby this bill and others that undermine the legal rights of American families."
But "members on both sides of the aisle have acknowledged that corporate and insurance interests face bleak prospects in the upcoming session for their other legislative priorities – restricting the rights of innocent victims of medical negligence and bailing out the asbestos manufacturers," Smith says. "These constitutional guarantees must not be for sale.
Here is a transcript of the speech Bush made in Washington at the S. 5 signing:
Thank you all. Thanks for coming. (Applause.) Please be seated. Thank you for coming. Thanks for the warm welcome. Welcome to the people's house. Glad you're here for the first bill signing ceremony of 2005. (Applause.)
The bill I'm about to sign is a model of effective, bipartisan legislation. By working together over several years, we have agreed on a practical way to begin restoring common sense and balance to America's legal system. The Class-Action Fairness Act of 2005 marks a critical step toward ending the lawsuit culture in our country. The bill will ease the needless burden of litigation on every American worker, business, and family. By beginning the important work of legal reform, we are meeting our duty to solve problems now, and not to pass them on to future generations.
I appreciate so very much the leadership that Sen. Frist and Sen. McConnell have shown on this bill in the United States Senate. I want to thank Sen. Chris Dodd and Sen. Tom Carper and Sen. Craig Thomas, as well for working in a bipartisan fashion to get this good bill to my desk.
I appreciate Congressman Jim Sensenbrenner, as well as Congressman Lamar Smith, joining us today. I particularly want to pay tribute to the bill sponsors ? Sen. Grassley and Sen. Kohl, as well as Congressman Bob Goodlatte and Congressman Rick Boucher, who are with us here today.
Congress showed what is possible when we set aside partisan differences and focus on what's doing right for Congress, and you all are to be — I mean, for the country — and you're to be credited for your good work. Thank you very much. (Applause.)
I welcome our new attorney general — oh, right there. (Laughter.) How quickly they forget in Washington. (Laughter.) Al Gonzales. Proud you're up here, Al. Hector Barreto, the SBA. Thank you, all the business leaders, community leaders, consumer groups who care about this issue. Thanks for your hard work. Thanks for being patient. Thanks for not becoming discouraged. And thanks for witnessing the fruits of your labor as I sign this bill.
