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Archive for Wednesday, February 9, 2005

Congress preparing to debate measure that would limit class-action lawsuits

February 9, 2005

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— Congress is close to making it easier for corporations to dodge many of the class-action lawsuits that businesses say are bankrupting them while rewarding lawyers and doing little to help victims.

The measure, headed for a vote this week in the Senate and probably next week in the House, would be the first fulfillment of one of President Bush's priorities for his second term. But a fragile compromise could come unglued if senators make changes in the bill, such as giving federal judges a little more discretion to keep lawsuits alive.

"If the Senate passes any amendment, then they are jeopardizing" it, House Majority Leader Tom DeLay, R-Texas, said Tuesday.

Opponents of the legislation say it would only hurt average citizens and let big business escape multimillion-dollar judgments for wrongdoing.

But Bush, echoing business leaders' complaints, says a judicial system that lets lawyers look for friendly forums in state courts for "junk lawsuits" is tilted against corporate defendants.

Just by threatening a class-action suit -- in which one person or a small group represents the interests of an entire class of people in court -- lawyers often win quick, easy settlements, making more money for themselves than the victims they're representing, bill supporters say.

The legislation Bush supports would move many class-action suits with plaintiffs from several different states into federal court, where critics say judges have sent them back to state courts because applying the various applicable state laws was too unmanageable. Critics say that would effectively end multistate class-action suits because state courts would be prohibited from hearing them.

"The effect of this legislation as it stands now is to virtually guarantee that all large class-action lawsuits will be dismissed," said Sen. Jeff Bingaman, D-N.M.

Under the compromise legislation, class-action suits would be heard in state court if the primary defendant and more than one-third of the plaintiffs are from the same state. But if fewer than one-third of the plaintiffs are from the same state as the primary defendant, the case would go to federal court.

At least $5 million would have to be at stake for a federal court to hear a class-action suit.

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