US Senate considers Class Action Fairness Act

Long Island Business News, Jul 16, 2004 by LIBN Staff

The United States Senate is considering the Class Action Fairness Act, legislation that would shift many class-action suits from state to federal courts.

Supporters of the act said it would lead to more closely regulated shareholder suits and most likely rein in some large awards. Critics, on the other hand, charge the legislation would achieve only one thing: limiting the rights of plaintiffs seeking to hold businesses accountable for misrepresenting their bottom lines.

While juries in the state courts sometimes grant huge contested awards, federal courts reputedly have higher thresholds for cases and typically award smaller sums.

The legislation, which has widespread Republican and scattered Democratic support, also would make it more difficult for national suits to be filed in courts perceived as more likely to grant large awards.

Senate Majority Leader Bill Frist is among the supporters of the legislation, which is opposed by his Democratic counterpart, Tom Daschle.

A companion bill already has been passed in the House, and the current Senate bill is a revised version of legislation that failed to pass last fall.