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Class Action Reform Legislation Passed By Congress

April 1, 2005

By: Edmund G. Farrell, III

The Class Action Fairness Act of 2005 has overcome its last Congressional hurdle and will shortly be sent to the President for his signature. On February 17, 2005, the House took up the Senate's version of the class action reform bill, Senate Bill 5, and passed it by a vote of 279 - 149. Under a previous agreement with Senate leaders, House leadership had promised to fast track the bill if it was received unamended from the Senate. After the Senate fulfilled its part of the agreement, House supporters of class action reform defeated a substitute bill offered by reform opponents and passed Senate Bill 5 without amendments. Relentless lobbying from class action reform advocates and favorable political conditions - strong Republican backing in Congress and from the White House, bipartisan support in both chambers, and cooperation between the House and Senate - formed the right combination during this session to enact reform.

The amendments in the substitute bill mirrored some of the amendments that were defeated by the Senate last week, including a carve-out for civil rights and wage-and-hour class actions, a carve-out for cases brought by state Attorneys General, and a prohibition against denying certification because the law of more than one state applies to the class. Other amendments would have excluded mass torts from the bill, prohibited domestic corporations that reincorporated abroad for the purpose of avoiding taxes and liability from benefiting from the bill, and limited the court's ability to seal records.

Now that the bill has been passed by both chambers and lacks only the President's signature before becoming law, it is expected that the number of class action filings in state courts will surge slightly, as plaintiffs' attorneys wishing to avoid federal jurisdiction will act quickly to file in state court. Any class actions filed after the bill has been signed into law will be subject to the provisions of the new law.