S. 2750 (is) To authorize the Secretary of the Interior to assist in the planning, design, and construction of the Tumalo Irrigation District Water Conservation Project in Deschutes County, Oregon. [Introduced in Senate] ...

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                                                       Calendar No. 117
108th CONGRESS
  1st Session
                                 S. 274

To amend the procedures that apply to consideration of interstate class 
actions to assure fairer outcomes for class members and defendants, and 
                          for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 4, 2003

    Mr. Grassley (for himself, Mr. Kohl, Mr. Hatch, Mr. Carper, Mr. 
    Specter, Mr. Miller, Mr. Chafee, Mr. Lugar, Mr. Voinovich, Mr. 
 Chambliss, Mr. McConnell, Mr. Sessions, Mr. Allen, Mr. Domenici, Mr. 
   Ensign, Mr. Cornyn, Mr. Kyl, Mr. Bunning, Mr. Fitzgerald, and Mr. 
Hagel) introduced the following bill; which was read twice and referred 
                   to the Committee on the Judiciary

                              June 2, 2003

                 Reported by Mr. Hatch, with amendments
  [Omit the part struck through and insert the part printed in italic]

_______________________________________________________________________

                                 A BILL


 
To amend the procedures that apply to consideration of interstate class 
actions to assure fairer outcomes for class members and defendants, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; REFERENCE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Class Action 
Fairness Act of 2003''.
    (b) Reference.--Whenever in this Act reference is made to 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.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

 Sec. 1. Short title; reference; table of contents.
 Sec. 2. Findings and purposes.
 Sec. 3. Consumer class action bill of rights and improved procedures 
                            for interstate class actions.
 Sec. 4. Federal district court jurisdiction for interstate class 
                            actions.
 Sec. 5. Removal of interstate class actions to Federal district court.
 Sec. 6. Report on class action settlements.
 Sec. 7. Effective date.

 SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds the following:
            (1) Class action lawsuits are an important and valuable 
        part of the legal system when they permit the fair and 
        efficient resolution of legitimate claims of numerous parties 
        by allowing the claims to be aggregated into a single action 
        against a defendant that has allegedly caused harm.
            (2) Over the past decade, there have been abuses of the 
        class action device that have--
                    (A) harmed class members with legitimate claims and 
                defendants that have acted responsibly;
                    (B) adversely affected interstate commerce; and
                    (C) undermined public respect for our judicial 
                system.
            (3) Class members often receive little or no benefit from 
        class actions, and are sometimes harmed, such as where--
                    (A) counsel are awarded large fees, while leaving 
                class members with coupons or other awards of little or 
                no value;
                    (B) unjustified awards are made to certain 
                plaintiffs at the expense of other class members; and
                    (C) confusing notices are published that prevent 
                class members from being able to fully understand and 
                effectively exercise their rights.
            (4) Abuses in class actions undermine the national judicial 
        system, the free flow of interstate commerce, and the concept 
        of diversity jurisdiction as intended by the framers of the 
        United States Constitution, in that State and local courts 
        are--
                    (A) keeping cases of national importance out of 
                Federal court;
                    (B) sometimes acting in ways that demonstrate bias 
                against out-of-State defendants; and
                    (C) making judgments that impose their view of the 
                law on other States and bind the rights of the 
                residents of those States.
    (b) Purposes.--The purposes of this Act are to--
            (1) assure fair and prompt recoveries for class members 
        with legitimate claims;
            (2) restore the intent of the framers of the United States 
        Constitution by providing for Federal court consideration of 
        interstate cases of national importance under diversity 
        jurisdiction; and
            (3) benefit society by encouraging innovation and lowering 
        consumer prices.

 SEC. 3. CONSUMER CLASS ACTION BILL OF RIGHTS AND IMPROVED PROCEDURES 
              FOR INTERSTATE CLASS ACTIONS.

    (a) In General.--Part V is amended by inserting after chapter 113 
the following:

                      ``CHAPTER 114--CLASS ACTIONS

``Sec.
``1711. Definitions.
``1712. Judicial scrutiny of coupon and other noncash settlements.
``1713. Protection against loss by class members.
``1714. Protection against discrimination based on geographic location.
``1715. Prohibition on the payment of bounties.
``1716. Clearer and simpler settlement information.
``1717. Notifications to appropriate Federal and State officials.
``Sec. 1711. Definitions
    ``In this chapter:
            ``(1) Class.--The term `class' means all of the class 
        members in a class action.
            ``(2) Class action.--The term `class action' means any 
        civil action filed in a district court of the United States 
        under rule 23 of the Federal Rules of Civil Procedure or any 
        civil action that is removed to a district court of the United 
        States that was originally filed under a State statute or rule 
        of judicial procedure authorizing an action to be brought by 1 
        or more representatives as a class action.
            ``(3) Class counsel.--The term `class counsel' means the 
        persons who serve as the attorneys for the class members in a 
        proposed or certified class action.
            ``(4) Class members.--The term `class members' means the 
        persons (named or unnamed) who fall within the definition of 
        the proposed or certified class in a class action.
            ``(5) Plaintiff class action.--The term `plaintiff class 
        action' means a class action in which class members are 
        plaintiffs.
            ``(6) Proposed settlement.--The term `proposed settlement' 
        means an agreement regarding a class action that is subject to 
        court approval and that, if approved, would be binding on some 
        or all class members.
``Sec. 1712. Judicial scrutiny of coupon and other noncash settlements
    ``The court may approve a proposed settlement under which the class 
members would receive noncash benefits or would otherwise be required 
to expend funds in order to obtain part or all of the proposed benefits 
only after a hearing to determine whether, and making a written finding 
that, the settlement is fair, reasonable, and adequate for class 
members.
``Sec. 1713. Protection against loss by class members
    ``The court may approve a proposed settlement under which any class 
member is obligated to pay sums to class counsel that would result in a 
net loss to the class member only if the court makes a written finding 
that nonmonetary benefits to the class member substantially outweigh 
the monetary loss.
``Sec. 1714. Protection against discrimination based on geographic 
              location
    ``The court may not approve a proposed settlement that provides for 
the payment of greater sums to some class members than to others solely 
on the basis that the class members to whom the greater sums are to be 
paid are located in closer geographic proximity to the court.
``Sec. 1715. Prohibition on the payment of bounties
    ``(a) In General.--The court may not approve a proposed settlement 
that provides for the payment of a greater share of the award to a 
class representative serving on behalf of a class, on the basis of the 
formula for distribution to all other class members, than that awarded 
to the other class members.
    ``(b) Rule of Construction.--The limitation in subsection (a) shall 
not be construed to prohibit a payment approved by the court for 
reasonable time or costs that a person was required to expend in 
fulfilling the obligations of that person as a class representative.
``Sec. 1716. Clearer and simpler settlement information
    ``(a) Plain English Requirements.--Any court with jurisdiction over 
a plaintiff class action shall require that any written notice 
concerning a proposed settlement of the class action provided to the 
class through the mail or publication in printed media contain--
            ``(1) at the beginning of such notice, a statement in 18-
        point or greater bold type, stating `LEGAL NOTICE: YOU ARE A 
        PLAINTIFF IN A CLASS ACTION LAWSUIT AND YOUR LEGAL RIGHTS ARE 
        AFFECTED BY THE SETTLEMENT DESCRIBED IN THIS NOTICE.'; and
            ``(2) a short summary written in plain, easily understood 
        language, describing--
                    ``(A) the subject matter of the class action;
                    ``(B) the members of the class;
                    ``(C) the legal consequences of being a member of 
                the class action;
                    ``(D) if the notice is informing class members of a 
                proposed settlement agreement--
                            ``(i) the benefits that will accrue to the 
                        class due to the settlement;
                            ``(ii) the rights that class members will 
                        lose or waive through the settlement;
                            ``(iii) obligations that will be imposed on 
                        the defendants by the settlement;
                            ``(iv) the dollar amount of any attorney's 
                        fee class counsel will be seeking, or if not 
                        possible, a good faith estimate of the dollar 
                        amount of any attorney's fee class counsel will 
                        be seeking; and
                            ``(v) an explanation of how any attorney's 
                        fee will be calculated and funded; and
                    ``(E) any other material matter.
    ``(b) Tabular Format.--Any court with jurisdiction over a plaintiff 
class action shall require that the information described in subsection 
(a)--
            ``(1) be placed in a conspicuous and prominent location on 
        the notice;
            ``(2) contain clear and concise headings for each item of 
        information; and
            ``(3) provide a clear and concise form for stating each 
        item of information required to be disclosed under each 
        heading.
    ``(c) Television or Radio Notice.--Any notice provided through 
television or radio (including transmissions by cable or satellite) to 
inform the class members in a class action of the right of each member 
to be excluded from a class action or a proposed settlement, if such 
right exists, shall, in plain, easily understood language--
            ``(1) describe the persons who may potentially become class 
        members in the class action; and
            ``(2) explain that the failure of a class member to 
        exercise his or her right to be excluded from a class action 
        will result in the person's inclusion in the class action.
``Sec. 1717. Notifications to appropriate Federal and State officials
    ``(a) Definitions.--
            ``(1) Appropriate federal official.--In this section, the 
        term `appropriate Federal official' means--
                    ``(A) the Attorney General of the United States; or
                    ``(B) in any case in which the defendant is a 
                Federal depository institution, a State depository 
                institution, a depository institution holding company, 
                a foreign bank, or a nondepository institution 
                subsidiary of the foregoing (as such terms are defined 
                in section 3 of the Federal Deposit Insurance Act (12 
                U.S.C. 1813)), the person who has the primary Federal 
                regulatory or supervisory responsibility with respect 
                to the defendant, if some or all of the matters alleged 
                in the class action are subject to regulation or 
                supervision by that person.
            ``(2) Appropriate state official.--In this section, the 
        term `appropriate State official' means the person in the State 
        who has the primary regulatory or supervisory responsibility 
        with respect to the defendant, or who licenses or otherwise 
        authorizes the defendant to conduct business in the State, if 
some or all of the matters alleged in the class action are subject to 
regulation by that person. If there is no primary regulator, 
supervisor, or licensing authority, or the matters alleged in the class 
action are not subject to regulation or supervision by that person, 
then the appropriate State official shall be the State attorney 
general.
    ``(b) In General.--Not later than 10 days after a proposed 
settlement of a class action is filed in court, each defendant that is 
participating in the proposed settlement shall serve upon the 
appropriate State official of each State in which a class member 
resides and the appropriate Federal official, a notice of the proposed 
settlement consisting of--
            ``(1) a copy of the complaint and any materials filed with 
        the complaint and any amended complaints (except such materials 
        shall not be required to be served if such materials are made 
        electronically available through the Internet and such service 
        includes notice of how to electronically access such material);
            ``(2) notice of any scheduled judicial hearing in the class 
        action;
            ``(3) any proposed or final notification to class members 
        of--
                    ``(A)(i) the members' rights to request exclusion 
                from the class action; or
                    ``(ii) if no right to request exclusion exists, a 
                statement that no such right exists; and
                    ``(B) a proposed settlement of a class action;
            ``(4) any proposed or final class action settlement;
            ``(5) any settlement or other agreement contemporaneously 
        made between class counsel and counsel for the defendants;
            ``(6) any final judgment or notice of dismissal;
            ``(7)(A) if feasible, the names of class members who reside 
        in each State and the estimated proportionate share of the 
        claims of such members to the entire settlement to that State's 
        appropriate State official; or
            ``(B) if the provision of information under subparagraph 
        (A) is not feasible, a reasonable estimate of the number of 
        class members residing in each State and the estimated 
        proportionate share of the claims of such members to the entire 
        settlement; and
            ``(8) any written judicial opinion relating to the 
        materials described under subparagraphs (3) through (6).
    ``(c) Depository Institutions Notification.--
            ``(1) Federal and other depository institutions.--In any 

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