The class action reform bill.

It's very hard for newspaper readers to understand what the current bill about class actions and federal jurisdiction is all about. Here's Senator Leahy blowing smoke:

Senator Patrick J. Leahy of Vermont, the ranking Democrat on the committee, said state courts had a long and honorable tradition of hearing class actions. He noted that of the four class actions consolidated for review by the Supreme Court that became part of the landmark ruling in Brown v. Board of Education in 1954, the only one that "got the case right by deciding for the African-American plaintiffs" was a state court in Delaware. (The other three were federal court decisions.)



"This bill erects new barriers to lawsuits and places new burdens on the plaintiffs," Mr. Leahy said. "Who does it benefit? The wealthy and powerful special interests. It overrides the laws of our states."

I've got to prep my Federal Jurisdiction class, so I must be brief.



First, Brown v. Board of Education and the cases like it were based on federal law, unlike the class actions the current bill is concerned with.



Second, the state courts traditionally presented problems for litigants who were claiming federal constitutional rights, so it doesn't make sense now to suddenly portray them as better than federal courts.



Third, the reason the lower courts didn't apply the law the Supreme Court recognized in Brown is because they were dutifully following the precedent that they had no power to overrule and had to wait for the Supreme Court to overrule in Brown. So this is no basis to slam the lower federal courts.



Fourth, the only state law the new bill (depending on the form it takes) is threatening to override is the state approach to choice of law. The class actions in question are still state law cases. (If they were federal law cases, there would be jurisdiction under a different statute!) The federal court would be applying state law, but empowered to use its own approach to choosing which state's law to apply.



The bill addresses the problem of plaintiffs' lawyers choosing a state court that will apply the law that is most favorable to them [ADDED: and will skew in their favor in other ways]. The bill is designed to enable defendants to remove the case to federal court: it is a correction for an unfair advantage that now exists for the party who files the lawsuit. The new bill bases federal jurisdiction on "diversity" -- the fact that there are parties from different states, which is a traditional, constitutional basis for federal jurisdiction.



The problem under the existing jurisdiction statutes is that they are interpreted in class actions cases to look only at the named representatives of the class, even though the class itself is full of persons who are from different states than the one the defendant is a citizen of. This interpretation of jurisdictional law permits the plaintiffs' lawyers to choose as named representatives some class members who are from the same state as the defendant, which then prevents the defendant from removing the case to federal court. There is also an issue about the amount of money in controversy -- which I won't trouble you with -- that is addressed by the new statute.



I think the bill really does address a kind of excessively self-advantaging forum shopping that takes place under the current law. It does not represent a disparagement of state courts generally. The problem is the ability of plaintiffs' lawyers to choose one state court from all the state courts, and their quite understandable (and not at all unethical) motivation to choose the state court that will skew furthest in their favor.