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Union Calendar No. 397
105th CONGRESS
2d Session
H. R. 3789
[Report No. 105-702]
_______________________________________________________________________
A BILL
To amend title 28, United States Code, to enlarge Federal Court
jurisdiction over purported class actions.
_______________________________________________________________________
September 10, 1998
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
Union Calendar No. 397
105th CONGRESS
2d Session
H. R. 3789
[Report No. 105-702]
To amend title 28, United States Code, to enlarge Federal Court
jurisdiction over purported class actions.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 5, 1998
Mr. Hyde (for himself, Mr. McCollum, Mr. Smith of Texas, Mr. Canady of
Florida, Mr. Bryant, Mr. Pease, and Mr. Moran of Virginia) introduced
the following bill; which was referred to the Committee on the
Judiciary
September 10, 1998
Additional sponsors: Mr. Frank of Massachusetts, Mr. Inglis of South
Carolina, Mr. Sensenbrenner, and Mr. Rogan
September 10, 1998
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on May 5,
1998]
_______________________________________________________________________
A BILL
To amend title 28, United States Code, to enlarge Federal Court
jurisdiction over purported class actions.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND REFERENCE.
(a) Short Title.--This Act may be cited as the ``Class Action
Jurisdiction Act of 1998''.
(b) Reference.--Whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a section or other
provision, the reference shall be considered to be made to a section or
other provision of title 28, United States Code.
SEC. 2. JURISDICTION OF DISTRICT COURTS.
(a) Expansion of Federal Jurisdiction.--Section 1332 is amended by
redesignating subsections (b), (c), and (d) as subsections (c), (d),
and (e), respectively, and by inserting after subsection (a) the
following:
``(b)(1) The district courts shall have original jurisdiction of
any civil action, regardless of the sum or value of the matter in
controversy therein, which is brought as a class action and in which--
``(A) any member of a proposed plaintiff class is a citizen
of a State different from any defendant;
``(B) any member of a proposed plaintiff class is a foreign
state or a citizen or subject of a foreign state and any
defendant is a citizen of a State; or
``(C) any member of a proposed plaintiff class is a citizen
of a State and any defendant is a citizen or subject of a
foreign state.
As used in this paragraph, the term `foreign state' has the meaning
given that term in section 1603(a).
``(2)(A) In a civil action described in paragraph (1) in which--
``(i) the substantial majority of the members of all
proposed plaintiff classes are citizens of a single State of
which the primary defendants are also citizens, and
``(ii) the claims asserted will be governed primarily by
the laws of that State,
the district court should abstain from hearing such action.
``(B) In a civil action described in paragraph (1) in which--
``(i) all matters in controversy asserted by the individual
members of all proposed plaintiff classes in the aggregate do
not exceed the sum or value of $1,000,000, exclusive of
interest and costs,
``(ii) the number of members of all proposed plaintiff
classes in the aggregate is less than 100, or
``(iii) the primary defendants are States, State officials,
or other governmental entities against whom the district court
may be foreclosed from ordering relief,
the district court may, in its discretion, abstain from hearing such
action.
``(3)(A) Paragraph (1) and section 1453 shall not apply to any
class action that is brought under the Securities Act of 1933.
``(B) Paragraph (1) and section 1453 shall not apply to a class
action described in subparagraph (C) that is based upon the statutory
or common law of the State in which the issuer concerned is
incorporated (in the case of a corporation) or organized (in the case
of any other entity).
``(C) A class action is described in this subparagraph if it
involves--
``(i) the purchase or sale of securities by an issuer or an
affiliate of an issuer exclusively from or to holders of equity
securities of the issuer; or
``(ii) any recommendation, position, or other communication
with respect to the sale of securities of an issuer that--
``(I) is made by or on behalf of the issuer or an
affiliate of the issuer to holders of equity securities
of the issuer; and
``(II) concerns decisions of those equity holders
with respect to voting their securities, acting in
response to a tender or exchange offer, or exercising
dissenters' or appraisal rights.
``(D) As used in this paragraph, the terms `issuer', `security',
and `equity security' have the meanings given those terms in section 3
of the Securities Exchange Act of 1934.''.
(b) Conforming Amendment.--Section 1332(c) (as redesignated by this
section) is amended by inserting after ``Federal courts'' the
following: ``pursuant to subsection (a) of this section''.
(c) Determination of Diversity.--Section 1332, as amended by this
section, is further amended by adding at the end the following:
``(f) For purposes of subsection (b), a member of a proposed class
shall be deemed to be a citizen of a State different from a defendant
corporation only if that member is a citizen of a State different from
all States of which the defendant corporation is deemed a citizen.''.
SEC. 3. REMOVAL OF CLASS ACTIONS.
(a) In General.--Chapter 89 is amended by adding after section 1452
the following:
``Sec. 1453. Removal of class actions
``(a) In General.--A class action may be removed to a district
court of the United States in accordance with this chapter, except that
such action may be removed--
``(1) by any defendant without the consent of all
defendants; or
``(2) by any plaintiff class member who is not a named or
representative class member of the action for which removal is
sought, without the consent of all members of such class.
``(b) When Removable.--This section shall apply to any class action
before or after the entry of any order certifying a class.
``(c) Procedure for Removal.--The provisions of section 1446(a)
relating to a defendant removing a case shall apply to a plaintiff
removing a case under this section. With respect to the application of
subsection (b) of such section, the requirement relating to the 30-day
filing period shall be met if a plaintiff class member who is not a
named or representative class member of the action for which removal is
sought files notice of removal within 30 days after receipt by such
class member, through service or otherwise, of the initial written
notice of the class action provided at the district court's direction
in accordance with Rule 23(c)(2) of the Federal Rules of Civil
Procedure.''.
(b) Removal Limitations.--Section 1446(b) is amended in the second
sentence--
(1) by inserting ``, by exercising due diligence,'' after
``ascertained''; and
(2) by inserting ``(a)'' after ``section 1332''.
(c) Technical and Conforming Amendments.--The table of sections for
chapter 89 is amended by adding after the item relating to section 1452
the following:
``1453. Removal of class actions.''.
(d) Application of Substantive State Law.--Nothing in this section
or the amendments made by this section shall alter the substantive law
applicable to an action to which the amendments made by section 2 of
this Act apply.
(e) Procedure After Removal.--Section 1447 is amended by adding at
the end the following new subsection:
``(f) If, after removal, the court determines that no aspect of an
action that is subject to its jurisdiction solely under the provisions
of section 1332(b) may be maintained as a class action under Rule 23 of
the Federal Rules of Civil Procedure, the court shall strike the class
allegations from the action and remand the action to the State court.
Upon remand of the action, the period of limitations for any claim that
was asserted in the action on behalf of any named or unnamed member of
any proposed class shall be deemed tolled to the full extent provided
under Federal law.''.
SEC. 4. APPLICABILITY.
The amendments made by this Act shall apply to any action commenced
on or after the date of the enactment of this Act.
SEC. 5. GAO STUDY.
The Comptroller General of the United States shall, by not later
than 1 year after the date of the enactment of this Act, conduct a
study of the impact of the amendments made by this Act on the workload
of the Federal courts, and report to the Congress on the results of the
study.
Pages: 1 Other Popular 105th Congressional Bills Documents:
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