Statement By Senator Harry Reid On Class Action bill.

In my floor statement yesterday, I expressed serious concern about the bill before us to limit class action lawsuits.

I explained why this bill is one of the most unfair, anti-consumer proposals to come before the Senate in years. It slams the courthouse doors on a wide range of injured plaintiffs. It turns federalism upside down by preventing state courts from hearing state law claims. And it limits corporate accountability at a time of rampant corporate scandals.

Instead of turning up the heat on corporate fraud, this bill lets corporate wrongdoers off the hook.

At the beginning of debate yesterday I expressed hope that the bill could be improved by the adoption of one or more of the modest amendments to be offered by Democratic Senators. But over the course of the last two days, the Senate has turned away each and every effort to make this bill less offensive.

The debate yesterday was characterized by two major misunderstandings about the bill. I want to set the record straight.

First: proponents claim that under this bill, class action lawsuits will stay in state court as long as two-thirds of the plaintiffs are from a single state. In fact, the bill reverses longstanding federal court diversity rules by saying that no matter how many plaintiffs are from a single state, the case can still be removed to federal court if the defendant corporation is incorporated in a different state.

Since 58% of all Fortune 500 companies are incorporated in Delaware, the majority of class action lawsuits will be removable, even if they involve residents of a single state suing in their own state court to enforce state law.

For example, in my state of Nevada, a lawsuit is pending in Clark County alleging that Yucca Mountain workers were negligently exposed to toxic mineral dust from 1994 to 1997. A motion for class action certification is pending. Even though well over two-thirds of the plaintiffs are residents of Nevada, the harm was caused in Nevada, and the defendants obviously do business in Nevada, a defendant incorporated outside Nevada could remove the case from Nevada state court. That is how this bill works.

In a second misunderstanding, the billís supporters make it sound as though all we are talking about is venue, that these cases will simply move from state court to federal court and proceed just the same. That is simply not true.

Under Supreme Court precedents that this bill does nothing to change, federal judges routinely dismiss class action lawsuits based on state law. Cases that are not dismissed go to the back of a very long line in the overburdened federal court system.

As Harvard Law Professor Arthur Miller says in a letter to Senator Bingaman: "Federal courts have consistently denied class certification in multi-state lawsuits based on consumer as well as other state lawsÖ.not a single Federal Circuit Court has granted class certification for such a lawsuit, and six Circuit Courts have expressly denied certification."

The rejection of the Feinstein-Bingaman amendment shows this billís true colors. If the sponsors merely wanted federal court review of lawsuits with national implications, they would not object to an amendment making clear that federal judges may not dismiss these cases.

But without that change, the truth is plain to see: this bill is designed to bury class action lawsuits, to cut off the one means by which individual Americans can band together to demand justice from corporate America.

What does this bill mean in the real world?

It means that cases like the one brought by Shaneen Wahl wonít go forward. Shaneen is a 55 year old woman whose health insurer increased her monthly premium from $194 a month to over $1,800 a month after she was diagnosed with breast cancer. She found out that the company was improperly raising rates for thousands of chronically ill customers, so Shaneen joined a class action lawsuit to make things right. They prevailed in state court.

Another breast cancer survivor, Susan Friedman of Florida, was not so lucky. Susanís insurance company removed her case to federal court, where it was dismissed. That is the fate of many other class action lawsuits under the bill the Senate will soon pass.

The real world effect of this law will be that when a phone company systematically bills customers for services they had cancelled, or a plumbing company routinely overcharges customers by $10, those practices will not be brought to light. The dollar amounts involved would be too small to bring individual lawsuits, but under this bill they would never see the inside of a courthouse as a class action.

Why should the plumbing company get an extra $10 from everyone? Is that fair?

And even more seriously, is it fair that automobile companies would never be forced to account for negligently producing cars with defective air bags or bad tires or doors that open too easily? State court cases involving defective air bags, for example, have brought about important improvements in car design. But a federal judge in Louisiana recently blocked such a suit from proceeding there.

Yet another real world effect of this bill is to help the tobacco industry avoid accountability. This billís requirements virtually guarantee that tobacco-related cases will end up in federal court since the major tobacco companies are all headquartered in only one or two states while tobacco victims are nationwide. No wonder that the Campaign for Tobacco-Free Kids calls this bill "a victory for Big Tobacco and a defeat for the legal rights of all Americans."

The Tobacco-Free Kids group is only one of numerous non-profit organizations that have urged the Senate to reject this bill. It is also opposed by Public Citizen, Consumers Union, the Leadership Conference on Civil Rights, the AFL-CIO and many others. I ask consent that a full list of public interest organizations opposed to the bill be included in the Record.

Also opposed to this bill are organizations representing all the state court judges in the country, the federal judges, the National Conference of State Legislators and many state Attorneys General.

Officials in our home states are telling us not to do this. Our constituents are telling us not to do this. The only groups that want us to pass this bill are those representing the defendants in these class action lawsuits. Sure, they want to be relieved of the burden of accountability. We shouldnít let them.

Some press reports say this bill is just a battle between big business and lawyers. Let me say a word about the lawyers.

Before I came to Congress, I was proud to call myself a trial lawyer. Lawyers are often the voice of people who cannot otherwise be heard. Without lawyers, the tobacco companies would not have been made to account for their deadly schemes over many decades. Without lawyers, the cases I have described involving insurance rip-offs and illegal employment practices would not be brought.

Without lawyers like Thurgood Marshall, one of the most important class action lawsuits in American history ‚ Brown v. Board of Education ‚ would not have been brought to a successful conclusion.

Are there bad lawyers that bring meritless cases? Sure there are, and we should crack down on them. But this bill is not about punishing bad lawyers. It is about hurting consumers and helping corporations avoid liability for misconduct.

More fundamentally, this bill is about limiting access to the civil courts. One of the grievances that inspired our Founding Fathers to revolt against King George was limited access to the civil courts. This is a basic right in our democracy, and after today it will be a diminished right.

I intend to vote against this ill-considered bill, and I urge my colleagues to do so as well.

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