Canadian Underwriter

U.S. House passes class action reform

June 13, 2003   by Canadian Underwriter

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The U.S. House of Representatives has passed the “Class Action Fairness Act of 2003 (HR 1115) by a vote of 253 to 170.
The bill has been well received by the insurance industry as a means to streamline the class action process by consolidating certain inter-state cases in federal court.
“This bill directly and effectively addresses the issue of abusive class action lawsuits,” says Monte Ward, vice president of federal affairs for the National Association of Mutual Insurance Companies (NAMIC). “NAMIC believes that Congress must pass this legislation to stop the current class action crisis and put interstate class actions in federal court where they are more appropriate.”
The move attempts to address the issue of “forum shopping” where attorneys attempt to move an inter-state suit to the state likely to produce the most favorable settlement.
Other provisions include judicial review of non-cash settlements, to address “coupon settlements” which have been widely criticized as not giving claimants fair value. Also, it addresses cases in which attorneys receive fees disproportionate to the settlement, such that claimants actually lose money. And clearer information about settlements to class members is also required.
The Senate is currently considering its own class action bill with similar changes.
“NAMIC will continue its strong commitment to reforming class action lawsuits as this bill now proceeds to the Senate,” says Ward. “We are hopeful that the Senate will pass this important legislation this year under similar circumstances.”

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