Archive for Saturday, February 19, 2005

Law sends class-action suits to federal courts

February 19, 2005


— President Bush on Friday signed a bill that he says will curtail multimillion-dollar class action lawsuits against companies and help end "the lawsuit culture in our country."

The legislation aims to discourage class-action lawsuits by having federal judges take them from state courts. It was a victory for conservatives who hope it will lead to other lawsuit limits and for businesses that have complained for decades that state judges and juries have been too generous to plaintiffs.

The president has described class-action suits, in which a single person or a small group can represent the interests of thousands in court, as often frivolous. He said greedy lawyers had taken advantage of the state class-action suit system by filing cases in places where they know they can win big-dollar verdicts -- while their clients get only small sums or coupons giving them discounts for products of the company they just sued.

"This bill helps fix the system," Bush said in the East Room of the White House, surrounded by Democratic and Republican lawmakers for his first bill-signing ceremony of the year. "Congress has done its duty."

Consumer groups and trial lawyers fought the bill but lost their struggle when Republicans gained seats in last fall's elections and Democrats defected on the issue.

During the ceremony, Bush repeatedly described the bill as just a beginning in his drive to place much broader restraints on the American legal system. Next up, he said, should be curbs on asbestos litigation and medical malpractice awards.

The president, the GOP and businesses have criticized what they see as a litigation crisis that enables lawyers to reap huge profits while businesses -- and thus consumers -- are stuck with the bill.

Under the legislation Bush signed, class-action suits seeking $5 million or more would be heard in state court only if the primary defendant and more than one-third of the plaintiffs are from the same state.

The bill also would limit lawyers' fees in settlements where plaintiffs get discounts on products. The measure links the fees to the coupon's redemption rate or the actual hours spent working on a case.

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