Class Action Jurisdiction Act of 1998

SECTION 1. SHORT TITLE AND REFERENCE.

    (a) Short Title.--This Act may be cited as the ``Class Action 
Jurisdiction Act of 1998''.
    (b) Reference.--Whenever in this Act an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a section or 
other provision of title 28, United States Code.

SEC. 2. JURISDICTION OF DISTRICT COURTS.

    (a) Expansion of Federal Jurisdiction.--Section 1332 is amended by 
redesignating subsections (b), (c), and (d) as subsections (c), (d), 
and (e), respectively, and by inserting after subsection (a) the 
following:
    ``(b)(1) The district courts shall have original jurisdiction of 
any civil action, regardless of the sum or value of the matter in 
controversy therein, which is brought as a class action and in which--
            ``(A) any member of a proposed plaintiff class is a citizen 
        of a State different from any defendant;
            ``(B) any member of a proposed plaintiff class is a foreign 
        state or a citizen or subject of a foreign state and any 
        defendant is a citizen of a State; or
            ``(C) any member of a proposed plaintiff class is a citizen 
        of a State and any defendant is a citizen or subject of a 
        foreign state.
As used in this paragraph, the term `foreign state' has the meaning 
given that term in section 1603(a).
    ``(2)(A) In a civil action described in paragraph (1) in which--
            ``(i) the substantial majority of the members of all 
        proposed plaintiff classes are citizens of a single State of 
        which the primary defendants are also citizens, and
            ``(ii) the claims asserted will be governed primarily by 
        the laws of that State,
the district court should abstain from hearing such action.
    ``(B) In a civil action described in paragraph (1) in which--
            ``(i) all matters in controversy asserted by the individual 
        members of all proposed plaintiff classes in the aggregate do 
        not exceed the sum or value of $1,000,000, exclusive of 
        interest and costs,
            ``(ii) the number of members of all proposed plaintiff 
        classes in the aggregate is less than 100, or
            ``(iii) the primary defendants are States, State officials, 
        or other governmental entities against whom the district court 
        may be foreclosed from ordering relief,
the district court may, in its discretion, abstain from hearing such 
action.
    ``(3)(A) Paragraph (1) and section 1453 shall not apply to any 
class action that is brought under the Securities Act of 1933.
    ``(B) Paragraph (1) and section 1453 shall not apply to a class 
action described in subparagraph (C) that is based upon the statutory 
or common law of the State in which the issuer concerned is 
incorporated (in the case of a corporation) or organized (in the case 
of any other entity).
    ``(C) A class action is described in this subparagraph if it 
involves--
            ``(i) the purchase or sale of securities by an issuer or an 
        affiliate of an issuer exclusively from or to holders of equity 
        securities of the issuer; or
            ``(ii) any recommendation, position, or other communication 
        with respect to the sale of securities of an issuer that--
                    ``(I) is made by or on behalf of the issuer or an 
                affiliate of the issuer to holders of equity securities 
                of the issuer; and
                    ``(II) concerns decisions of those equity holders 
                with respect to voting their securities, acting in 
                response to a tender or exchange offer, or exercising 
                dissenters' or appraisal rights.
    ``(D) As used in this paragraph, the terms `issuer', `security', 
and `equity security' have the meanings given those terms in section 3 
of the Securities Exchange Act of 1934.''.
    (b) Conforming Amendment.--Section 1332(c) (as redesignated by this 
section) is amended by inserting after ``Federal courts'' the 
following: ``pursuant to subsection (a) of this section''.
    (c) Determination of Diversity.--Section 1332, as amended by this 
section, is further amended by adding at the end the following:
    ``(f) For purposes of subsection (b), a member of a proposed class 
shall be deemed to be a citizen of a State different from a defendant 
corporation only if that member is a citizen of a State different from 
all States of which the defendant corporation is deemed a citizen.''.

SEC. 3. REMOVAL OF CLASS ACTIONS.

    (a) In General.--Chapter 89 is amended by adding after section 1452 
the following:
``Sec. 1453. Removal of class actions
    ``(a) In General.--A class action may be removed to a district 
court of the United States in accordance with this chapter, except that 
such action may be removed--
            ``(1) by any defendant without the consent of all 
        defendants; or
            ``(2) by any plaintiff class member who is not a named or 
        representative class member of the action for which removal is 
        sought, without the consent of all members of such class.
    ``(b) When Removable.--This section shall apply to any class action 
before or after the entry of any order certifying a class.
    ``(c) Procedure for Removal.--The provisions of section 1446(a) 
relating to a defendant removing a case shall apply to a plaintiff 
removing a case under this section. With respect to the application of 
subsection (b) of such section, the requirement relating to the 30-day 
filing period shall be met if a plaintiff class member who is not a 
named or representative class member of the action for which removal is 
sought files notice of removal within 30 days after receipt by such 
class member, through service or otherwise, of the initial written 
notice of the class action provided at the district court's direction 
in accordance with Rule 23(c)(2) of the Federal Rules of Civil 
Procedure.''.
    (b) Removal Limitations.--Section 1446(b) is amended in the second 
sentence--
            (1) by inserting ``, by exercising due diligence,'' after 
        ``ascertained''; and
            (2) by inserting ``(a)'' after ``section 1332''.
    (c) Technical and Conforming Amendments.--The table of sections for 
chapter 89 is amended by adding after the item relating to section 1452 
the following:

``1453. Removal of class actions.''.
    (d) Application of Substantive State Law.--Nothing in this section 
or the amendments made by this section shall alter the substantive law 
applicable to an action to which the amendments made by section 2 of 
this Act apply.
    (e) Procedure After Removal.--Section 1447 is amended by adding at 
the end the following new subsection:
    ``(f) If, after removal, the court determines that no aspect of an 
action that is subject to its jurisdiction solely under the provisions 
of section 1332(b) may be maintained as a class action under Rule 23 of 
the Federal Rules of Civil Procedure, the court shall strike the class 
allegations from the action and remand the action to the State court. 
Upon remand of the action, the period of limitations for any claim that 
was asserted in the action on behalf of any named or unnamed member of 
any proposed class shall be deemed tolled to the full extent provided 
under Federal law.''.

SEC. 4. APPLICABILITY.

    The amendments made by this Act shall apply to any action commenced 
on or after the date of the enactment of this Act.

SEC. 5. GAO STUDY.

    The Comptroller General of the United States shall, by not later 
than 1 year after the date of the enactment of this Act, conduct a 
study of the impact of the amendments made by this Act on the workload 
of the Federal courts, and report to the Congress on the results of the 
study.

Summary: Class Action Jurisdiction Act of 1998 - Amends the Federal judicial code to grant the district courts original jurisdiction of any civil action, regardless of the sum or value of the matter in controversy, which is brought as a class action in which any member of a proposed plaintiff class is: (1) a citizen of a State different from any defendant. (2) a foreign state or a citizen or subject of a foreign state and any defendant is a citizen of a State. Or (3) a citizen of a State and any defendant is a citizen or subject of a foreign state. Directs the district court to abstain from hearing any such action in which: (1) the substantial majority of the members of all proposed plaintiff classes are citizens of a single State of which the primary defendants are also citizens. And (2) the claims asserted will be governed primarily by the laws of that State. Authorizes the district court to abstain from hearing any such action in which: (1) all matters in controversy asserted by the individual members of all proposed plaintiff classes in the aggregate do not exceed the sum or value of $1 million, exclusive of interest and costs. (2) the number of members of all proposed plaintiff classes in the aggregate is less than 100. Or (3) the primary defendants are States, State officials, or other governmental entities against whom the district court may be foreclosed from ordering relief. Makes provisions of this Act regarding district court jurisdiction and removal of class actions inapplicable to any class action that is brought under the Securities Act of 1933 and to specified other securities-related class actions. Considers a member of a proposed class to be a citizen of a State different from a defendant corporation only if that member is a citizen of a State different from all States of which the defendant corporation is deemed a citizen. Authorizes a class action to be removed to a United States district court by any: (1) defendant without the consent of all defendants. Or (2) plaintiff class member who is not a named or representative class member of the action for which removal is sought, without the consent of all members of such class. Makes such provision applicable to any class action before or after the entry of any order certifying a class. Specifies that the removal requirement relating to the 30-day filing period shall be met if a plaintiff class member who is not a named or representative class member of the action for which removal is sought files notice of removal within 30 days after receipt by such class member of the initial written notice of the class action provided at the district court's direction in accordance with rule 23 of the Federal Rules of Civil Procedure. Provides that if the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after defendant's receipt of a copy of an amended paper from which it may first be ascertained by exercising due diligence that the case is one which is or has become removable, with an exception. Directs the court to strike the class allegations from the action and remand it to State court, if, after removal, it determines that no aspect of an action that is subject to its jurisdiction may be maintained as a class action under rule 23. Provides that upon remand of the action, the period of limitations for any claim that was asserted in the action on behalf of any named or unnamed member of any proposed class shall be deemed tolled as provided under Federal law. Directs the Comptroller General of the United States to conduct a study of the impact of the amendments made by this Act on the workload of the Federal courts, and to report the results to the Congress.