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Senate Votes to Block Most Consumer Class Actions

February 12, 2004
President Bush got the first big victory of his second term as the Senate voted 72-26 to approve a bill shielding businesses from major class action lawsuits like the ones that have been brought against tobacco companies. The measure now goes to the House, where it is expected to pass easily.

"Class Action Fairness Act" • Bush Prepares to Sign Class Action Bill • Big Business Applauds House Passage of Class Action Limits • Senate Votes to Block Most Consumer Class Actions • Senate Roll Call • Consumers Protest Class Action Bill • Attorneys General Oppose Class Action Bill

Under the legislation, large multistate class action lawsuits will no longer be heard in state courts. Instead, the cases will be heard in federal courts, where there are much tougher restrictions.

The Senate votes "has given banks, credit card companies, insurers, HMOs, drug manufacturers and other big corporations a green light to defraud and deceive consumers without fear of being held accountable," said Public Citizen President Joan Claybrook.

"Innocent consumers who are victimized by predatory lending, car repossessions, fraudulent billing practices and other corporate abuses will be locked out of the courthouse," Claybrook said.

"Instead of turning up the heat on corporate fraud, this bill lets corporate wrongdoers off the hook," said Senate Minority Leader Harry Reid, D-Nev.

"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," Reid said. "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."

"Consumers who are victims of fraud, who suffer toxic pollution of their air and water, or suffer discrimination in the workplace have precious few avenues of redress," said Sally Greenberg, senior product safety counsel for Consumers Union. "Now, the U.S. Senate has closed off citizens’ ability to band together and have their claims heard by their own judges in their own state courts under their own state laws.”

Business interests cheered the action.

"Small businesses are too often targeted by unscrupulous lawyers for class-action lawsuits not because of their actions, but because they would rather keep these lawsuits out of federal courts for their own personal financial gain," said Steven C. Anderson, president and chief executive officer of the National Restaurant Association.

"The undue burden of frivolous lawsuits on small business owners threatens jobs across America and creates a logjam in civil courtrooms for those in serious need of legal assistance."

Civil Rights, Wage Cases

Besides blocking more consumer class actions, the Senate measure will shift civil rights and wage-and-hour cases that are filed in state courts under state law by mostly in-state plaintiffs into federal court.

An amendment offered by Senators Edward Kennedy, D-Mass., and Maria Cantwell, D-Wash. would have exempted those cases but the amendment was defeated.

"There is absolutely no evidence that lawsuits brought by workers seeking justice in state courts on issues ranging from overtime pay to working off the clock are abusing the system. To the contrary, failure to exempt such lawsuits in this legislation is an abusive act against every hard-working American seeking fair pay and a better life, said Nancy Zirkin, deputy director for the Leadership Conference on Civil Rights (LCCR).

New York's senators, Democrats Charles Schumer and Hillary Rodham Clinton, parted company on the class action bill, with Schumer voting for it and Clinton against.

Schumer said he voted for the measure because it was "a balanced bill that protects a consumer's right to go to court while still making sure that frivolous lawsuits don't get out of hand."

Clinton called it "an extremely blunt instrument that I believe will result in justice delayed and justice denied for many Americans."

The U.S. Chamber of Commerce Institute for Legal Reform didn't see it that way.

"The Senate has taken a critical step toward granting families, consumers and employers relief from the heavy burden of lawsuit abuse," said Thomas Donohue, Chamber President. "Now it's time for the House to finish the job and take back our civil justice system from plaintiffs' lawyers seeking jackpot justice."

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