39–008 

109TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 109–7 

PROVIDING FOR CONSIDERATION OF S. 5, CLASS ACTION 

FAIRNESS ACT OF 2005 

FEBRUARY 15, 2005.—Referred to the House Calendar and ordered to be printed 

Mr. GINGREY, from the Committee on Rules, 

submitted the following 

R E P O R T 

[To accompany H. Res. 96] 

The Committee on Rules, having had under consideration House 

Resolution 96, by a nonrecord vote, report the same to the House 

with the recommendation that the resolution be adopted. 

SUMMARY OF PROVISIONS OF THE RESOLUTION

The resolution provides for the consideration of S. 5, the Class 

Action Fairness Act of 2005, under a structured rule. The rule provides 90 minutes of debate in the House equally divided and controlled by the chairman and ranking minority member of the Committee on the Judiciary. The rule waives all points of order against 

consideration of the bill. 

The rule makes in order the amendment in the nature of a substitute printed in this report, if offered by Representative Conyers 

of Michigan or his designee, which shall be considered as read, and 

which shall be debatable for 40 minutes equally divided and controlled by the proponent and an opponent. The rule waives all 

points of order against the amendment in the nature of a substitute printed in this report. 

Finally, the rule provides one motion to commit with or without 

instructions. 

SUMMARY OF AMENDMENT MADE IN ORDER

(Summary derived from information provided by the amendment 

sponsor.) 

Conyers (MI)/Nadler (NY)/Jackson-Lee (TX): Amendment in the 

Nature of a Substitute. 

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Attorney General Carve-Out. Clarifies that cases brought by 

state attorneys general are excluded from the provisions of the 

class action bill and are not forced into federal court. 

Protecting the Integrity of the Courts. Would limit the court’s 

ability to seal or make subject to a protective order, records unless 

it is necessary to protect trade confidentiality and is consistent 

with the protection of public health and safety or the disclosure of 

the information is clearly outweighed by a specific and substantial 

interest in maintaining the confidentiality of the information. 

Civil Rights Carve-Out. Would carve out State civil rights claims 

in order to make sure that civil rights plaintiffs, especially those 

seeking immediate injunctive relief, can have their grievances addressed in a timely manner. 

Wage and Hour Carve-Out. Would carve out State civil rights 

claims to allow wage and hour class action members to have their 

grievances addressed in a timely manner. 

Prohibits Tax Traitor Benefits. Prohibits domestic corporations 

that reincorporate abroad in order to avoid U.S. taxes and legal liability from benefitting from the new class action rules. Such corporations will retain the citizenship they had prior to their reincorporation. 

Exclude Non-Class Action Cases Involving Physical Injuries. Removes the mass torts language. 

Federal Court Certification. Prohibits a federal judge from denying certification on the basis that more than one state law applies. 

(40 minutes). 

TEXT OF AMENDMENT MADE IN ORDER

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE; REFERENCE; TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Class Action 

Fairness Act of 2005’’. 

(b) REFERENCE.—Whenever in this Act reference is made to 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. 

(c) TABLE OF CONTENTS.—The table of contents for this Act is as 

follows: 

Sec. 1. Short title; reference; table of contents. 

Sec. 2. Findings and purposes. 

Sec. 3. Consumer class action bill of rights and improved procedures for interstate 

class actions. 

Sec. 4. Federal district court jurisdiction for interstate class actions. 

Sec. 5. Removal of interstate class actions to Federal district court. 

Sec. 6. Report on class action settlements. 

Sec. 7. Enactment of Judicial Conference recommendations. 

Sec. 8. Rulemaking authority of Supreme Court and Judicial Conference. 

Sec. 9. Effective date. 

SEC. 2. FINDINGS AND PURPOSES. 

(a) FINDINGS.—Congress finds the following: 

(1) Class action lawsuits are an important and valuable part 

of the legal system when they permit the fair and efficient resolution of legitimate claims of numerous parties by allowing 

the claims to be aggregated into a single action against a defendant that has allegedly caused harm. 

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(2) Over the past decade, there have been abuses of the class 

action device that have— (A) harmed class members with legitimate claims and 

defendants that have acted responsibly; 

(B) adversely affected interstate commerce; and 

(C) undermined public respect for our judicial system. 

(3) Class members often receive little or no benefit from class 

actions, and are sometimes harmed, such as where— (A) counsel are awarded large fees, while leaving class 

members with coupons or other awards of little or no 

value; 

(B) unjustified awards are made to certain plaintiffs at 

the expense of other class members; and 

(C) confusing notices are published that prevent class 

members from being able to fully understand and effectively exercise their rights. 

(4) Abuses in class actions undermine the national judicial 

system, the free flow of interstate commerce, and the concept 

of diversity jurisdiction as intended by the framers of the 

United States Constitution, in that State and local courts are— (A) keeping cases of national importance out of Federal 

court; 

(B) sometimes acting in ways that demonstrate bias 

against out-of-State defendants; and 

(C) making judgments that impose their view of the law 

on other States and bind the rights of the residents of 

those States. 

(b) PURPOSES.—The purposes of this Act are to— (1) assure fair and prompt recoveries for class members with 

legitimate claims; 

(2) restore the intent of the framers of the United States 

Constitution by providing for Federal court consideration of 

interstate cases of national importance under diversity jurisdiction; and 

(3) benefit society by encouraging innovation and lowering 

consumer prices. 

SEC. 3. CONSUMER CLASS ACTION BILL OF RIGHTS AND IMPROVED 

PROCEDURES FOR INTERSTATE CLASS ACTIONS. 

(a) IN GENERAL.—Part V is amended by inserting after chapter 

113 the following: 

‘‘CHAPTER 114—CLASS ACTIONS 

‘‘Sec. 

‘‘1711. Definitions. 

‘‘1712. Coupon settlements. 

‘‘1713. Protection against loss by class members. 

‘‘1714. Protection against discrimination based on geographic location. 

‘‘1715. Notifications to appropriate Federal and State officials. 

‘‘1716. Sunshine in court records. 

‘‘§ 1711. Definitions 

‘‘In this chapter: 

‘‘(1) CLASS.—The term ‘class’ means all of the class members 

in a class action. ‘‘(2) CLASS ACTION.—The term ‘class action’ means any civil 

action filed in a district court of the United States under rule 

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23 of the Federal Rules of Civil Procedure or any civil action 

that is removed to a district court of the United States that 

was originally filed under a State statute or rule of judicial 

procedure authorizing an action to be brought by 1 or more 

representatives as a class action. The term ‘class action’ does 

not include any civil action brought by, or on behalf of, any 

State attorney general or the chief prosecuting or civil attorney 

of any county or city within a State. 

‘‘(3) CLASS COUNSEL.—The term ‘class counsel’ means the 

persons who serve as the attorneys for the class members in 

a proposed or certified class action. 

‘‘(4) CLASS MEMBERS.—The term ‘class members’ means the 

persons (named or unnamed) who fall within the definition of 

the proposed or certified class in a class action. 

‘‘(5) PLAINTIFF CLASS ACTION.—The term ‘plaintiff class action’ means a class action in which class members are plaintiffs. 

‘‘(6) PROPOSED SETTLEMENT.—The term ‘proposed settlement’

means an agreement regarding a class action that is subject to 

court approval and that, if approved, would be binding on some 

or all class members. 

‘‘(7) STATE.—The term ‘State’ means each of the several 

States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern 

Mariana Islands, and any territory or possessions of the 

United States. 

‘‘(8) STATE ATTORNEY GENERAL.—The term ‘State attorney 

general’ means the chief legal officer of a State. 

‘‘§ 1712. Coupon settlements 

‘‘(a) CONTINGENT FEES IN COUPON SETTLEMENTS.—If a proposed 

settlement in a class action provides for a recovery of coupons to 

a class member, the portion of any attorney’s fee award to class 

counsel that is attributable to the award of the coupons shall be 

based on the value to class members of the coupons that are redeemed. 

‘‘(b) OTHER ATTORNEY’S FEE AWARDS IN COUPON SETTLEMENTS.—

‘‘(1) IN GENERAL.—If a proposed settlement in a class action 

provides for a recovery of coupons to class members, and a portion of the recovery of the coupons is not used to determine the 

attorney’s fee to be paid to class counsel, any attorney’s fee 

award shall be based upon the amount of time class counsel 

reasonably expended working on the action. 

‘‘(2) COURT APPROVAL.—Any attorney’s fee under this subsection shall be subject to approval by the court and shall include an appropriate attorney’s fee, if any, for obtaining equitable relief, including an injunction, if applicable. Nothing in 

this subsection shall be construed to prohibit application of a 

lodestar with a multiplier method of determining attorney’s 

fees. 

‘‘(c) ATTORNEY’S FEE AWARDS CALCULATED ON A MIXED BASIS IN

COUPON SETTLEMENTS.—If a proposed settlement in a class action 

provides for an award of coupons to class members and also provides for equitable relief, including injunctive relief—

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‘‘(1) that portion of the attorney’s fee to be paid to class counsel that is based upon a portion of the recovery of the coupons 

shall be calculated in accordance with subsection (a); and 

‘‘(2) that portion of the attorney’s fee to be paid to class counsel that is not based upon a portion of the recovery of the coupons shall be calculated in accordance with subsection (b). 

‘‘(d) SETTLEMENT VALUATION EXPERTISE.—In a class action involving the awarding of coupons, the court may, in its discretion 

upon the motion of a party, receive expert testimony from a witness qualified to provide information on the actual value to the 

class members of the coupons that are redeemed. 

‘‘(e) JUDICIAL SCRUTINY OF COUPON SETTLEMENTS.—In a proposed settlement under which class members would be awarded 

coupons, the court may approve the proposed settlement only after 

a hearing to determine whether, and making a written finding 

that, the settlement is fair, reasonable, and adequate for class 

members. The court, in its discretion, may also require that a proposed settlement agreement provide for the distribution of a portion of the value of unclaimed coupons to 1 or more charitable or 

governmental organizations, as agreed to by the parties. The distribution and redemption of any proceeds under this subsection 

shall not be used to calculate attorneys’ fees under this section. 

‘‘§ 1713. Protection against loss by class members 

‘‘The court may approve a proposed settlement under which any 

class member is obligated to pay sums to class counsel that would 

result in a net loss to the class member only if the court makes a 

written finding that nonmonetary benefits to the class member 

substantially outweigh the monetary loss. 

‘‘§ 1714. Protection against discrimination based on geographic location 

‘‘The court may not approve a proposed settlement that provides 

for the payment of greater sums to some class members than to 

others solely on the basis that the class members to whom the 

greater sums are to be paid are located in closer geographic proximity to the court. 

‘‘§ 1715. Notifications to appropriate Federal and State officials 

‘‘(a) DEFINITIONS.—

‘‘(1) APPROPRIATE FEDERAL OFFICIAL.—In this section, the 

term ‘appropriate Federal official’ means—

‘‘(A) the Attorney General of the United States; or 

‘‘(B) in any case in which the defendant is a Federal depository institution, a State depository institution, a depository institution holding company, a foreign bank, or a 

nondepository institution subsidiary of the foregoing (as 

such terms are defined in section 3 of the Federal Deposit 

Insurance Act (12 U.S.C. 1813)), the person who has the 

primary Federal regulatory or supervisory responsibility 

with respect to the defendant, if some or all of the matters 

alleged in the class action are subject to regulation or supervision by that person. 

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‘‘(2) APPROPRIATE STATE OFFICIAL.—In this section, the term 

‘appropriate State official’ means the person in the State who 

has the primary regulatory or supervisory responsibility with 

respect to the defendant, or who licenses or otherwise authorizes the defendant to conduct business in the State, if some or 

all of the matters alleged in the class action are subject to regulation by that person. If there is no primary regulator, supervisor, or licensing authority, or the matters alleged in the class 

action are not subject to regulation or supervision by that person, then the appropriate State official shall be the State attorney general. 

‘‘(b) IN GENERAL.—Not later than 10 days after a proposed settlement of a class action is filed in court, each defendant that is participating in the proposed settlement shall serve upon the appropriate State official of each State in which a class member resides 

and the appropriate Federal official, a notice of the proposed settlement consisting of—

‘‘(1) a copy of the complaint and any materials filed with the 

complaint and any amended complaints (except such materials 

shall not be required to be served if such materials are made 

electronically available through the Internet and such service 

includes notice of how to electronically access such material); 

‘‘(2) notice of any scheduled judicial hearing in the class action; 

‘‘(3) any proposed or final notification to class members of—

‘‘(A)(i) the members’ rights to request exclusion from the 

class action; or 

‘‘(ii) if no right to request exclusion exists, a statement 

that no such right exists; and 

‘‘(B) a proposed settlement of a class action; 

‘‘(4) any proposed or final class action settlement; 

‘‘(5) any settlement or other agreement contemporaneously 

made between class counsel and counsel for the defendants; 

‘‘(6) any final judgment or notice of dismissal; 

‘‘(7)(A) if feasible, the names of class members who reside in 

each State and the estimated proportionate share of the claims 

of such members to the entire settlement to that State’s appropriate State official; or 

‘‘(B) if the provision of information under subparagraph (A) 

is not feasible, a reasonable estimate of the number of class 

members residing in each State and the estimated proportionate share of the claims of such members to the entire settlement; and 

‘‘(8) any written judicial opinion relating to the materials described under subparagraphs (3) through (6). 

‘‘(c) DEPOSITORY INSTITUTIONS NOTIFICATION.—

‘‘(1) FEDERAL AND OTHER DEPOSITORY INSTITUTIONS.—In any 

case in which the defendant is a Federal depository institution, 

a depository institution holding company, a foreign bank, or a 

non-depository institution subsidiary of the foregoing, the notice requirements of this section are satisfied by serving the 

notice required under subsection (b) upon the person who has 

the primary Federal regulatory or supervisory responsibility 

with respect to the defendant, if some or all of the matters alVerDate Aug 04 2004 05:05 Feb 16, 2005 Jkt 039008 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR007.XXX HR007
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leged in the class action are subject to regulation or supervision by that person. 

‘‘(2) STATE DEPOSITORY INSTITUTIONS.—In any case in which 

the defendant is a State depository institution (as that term is 

defined in section 3 of the Federal Deposit Insurance Act (12 

U.S.C. 1813)), the notice requirements of this section are satisfied by serving the notice required under subsection (b) upon 

the State bank supervisor (as that term is defined in section 

3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) of the 

State in which the defendant is incorporated or chartered, if 

some or all of the matters alleged in the class action are subject to regulation or supervision by that person, and upon the 

appropriate Federal official. 

‘‘(d) FINAL APPROVAL.—An order giving final approval of a proposed settlement may not be issued earlier than 90 days after the 

later of the dates on which the appropriate Federal official and the 

appropriate State official are served with the notice required under 

subsection (b). 

‘‘(e) NONCOMPLIANCE IF NOTICE NOT PROVIDED.—

‘‘(1) IN GENERAL.—A class member may refuse to comply 

with and may choose not to be bound by a settlement agreement or consent decree in a class action if the class member 

demonstrates that the notice required under subsection (b) has 

not been provided. 

‘‘(2) LIMITATION.—A class member may not refuse to comply 

with or to be bound by a settlement agreement or consent decree under paragraph (1) if the notice required under subsection (b) was directed to the appropriate Federal official and 

to either the State attorney general or the person that has primary regulatory, supervisory, or licensing authority over the 

defendant. 

‘‘(3) APPLICATION OF RIGHTS.—The rights created by this subsection shall apply only to class members or any person acting 

on a class member’s behalf, and shall not be construed to limit 

any other rights affecting a class member’s participation in the 

settlement. 

‘‘(f) RULE OF CONSTRUCTION.—Nothing in this section shall be 

construed to expand the authority of, or impose any obligations, duties, or responsibilities upon, Federal or State officials. 

‘‘§ 1716. Sunshine in court records 

‘‘No order, opinion, or record of the court in the adjudication of 

a class action, including a record obtained through discovery, 

whether or not formally filed with the court, may be sealed or subjected to a protective order unless the court makes a finding of 

fact—

‘‘(1) that the sealing or protective order is narrowly tailored, 

consistent with the protection of public health and safety, and 

is in the public interest; and 

‘‘(2) if the action by the court would prevent the disclosure 

of information, that disclosing the information is clearly outweighed by a specific and substantial interest in maintaining 

the confidentiality of such information.’’. 

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(b) TECHNICAL AND CONFORMING AMENDMENT.—The table of 

chapters for part V is amended by inserting after the item relating 

to chapter 113 the following: 

‘‘114. Class Actions ............................................................................................. 1711’’. 

SEC. 4. FEDERAL DISTRICT COURT JURISDICTION FOR INTERSTATE 

CLASS ACTIONS. 

(a) APPLICATION OF FEDERAL DIVERSITY JURISDICTION.—Section 

1332 is amended—

(1) by redesignating subsection (d) as subsection (e), and 

amending the subsection to read as follows: 

‘‘(e) As used in this section—

‘‘(1) the term ‘State’ means each of the several States of the 

United States, the District of Columbia, the Commonwealth of 

Puerto Rico, the Commonwealth of the Northern Mariana Islands, and any territory or possessions of the United States; 

and 

‘‘(2) the term ‘State attorney general’ means the chief legal 

officer of a State.’’; and 

(2) by inserting after subsection (c) the following: 

‘‘(d)(1) In this subsection—

‘‘(A) the term ‘class’ means all of the class members in a 

class action; 

‘‘(B) the term ‘class action’—

‘‘(i) means any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or 

rule of judicial procedure authorizing an action to be 

brought by 1 or more representative persons as a class action; and 

‘‘(ii) does not include—

‘‘(I) any civil action brought by, or on behalf of, any 

State attorney general or the chief prosecuting or civil 

attorney of any county or city within a State; 

‘‘(II) any class action brought under a State or local 

law prohibiting discrimination on the basis of race, 

color religion, sex, national origin, age, disability, or 

other classification specified in that law; or 

‘‘(III) any class action or collective action brought to 

obtain relief under a State or local law for failure to 

pay the minimum wage, overtime pay, or wages for all 

time worked, failure to provide rest or meal breaks, or 

unlawful use of child labor; 

‘‘(C) the term ‘class certification order’ means an order issued 

by a court approving the treatment of some or all aspects of 

a civil action as a class action; and 

‘‘(D) the term ‘class members’ means the persons (named or 

unnamed) who fall within the definition of the proposed or certified class in a class action. 

‘‘(2) The district courts shall have original jurisdiction of any civil 

action in which the matter in controversy exceeds the sum or value 

of $5,000,000, exclusive of interest and costs, and is a class action 

in which—

‘‘(A) any member of a class of plaintiffs is a citizen of a State 

different from any defendant; 

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‘‘(B) any member of a class of plaintiffs 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 class of plaintiffs is a citizen of a State 

and any defendant is a foreign state or a citizen or subject of 

a foreign state. ‘‘(3) A district court may, in the interests of justice and looking 

at the totality of the circumstances, decline to exercise jurisdiction 

under paragraph (2) over a class action in which greater than onethird but less than two-thirds of the members of all proposed plaintiff classes in the aggregate and the primary defendants are citizens of the State in which the action was originally filed based on 

consideration of— ‘‘(A) whether the claims asserted involve matters of national 

or interstate interest; ‘‘(B) whether the claims asserted will be governed by laws of 

the State in which the action was originally filed or by the 

laws of other States; ‘‘(C) whether the class action has been pleaded in a manner 

that seeks to avoid Federal jurisdiction; ‘‘(D) whether the action was brought in a forum with a distinct nexus with the class members, the alleged harm, or the 

defendants; ‘‘(E) whether the number of citizens of the State in which the 

action was originally filed in all proposed plaintiff classes in 

the aggregate is substantially larger than the number of citizens from any other State, and the citizenship of the other 

members of the proposed class is dispersed among a substantial number of States; and ‘‘(F) whether, during the 3-year period preceding the filing of 

that class action, 1 or more other class actions asserting the 

same or similar claims on behalf of the same or other persons 

have been filed. ‘‘(4) A district court shall decline to exercise jurisdiction under 

paragraph (2)—

‘‘(A)(i) over a class action in which—

‘‘(I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the 

State in which the action was originally filed; 

‘‘(II) at least 1 defendant is a defendant—

‘‘(aa) from whom significant relief is sought by members of the plaintiff class; 

‘‘(bb) whose alleged conduct forms a significant basis 

for the claims asserted by the proposed plaintiff class; 

and 

‘‘(cc) who is a citizen of the State in which the action 

was originally filed; and 

‘‘(III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed; 

and 

‘‘(ii) during the 3-year period preceding the filing of that 

class action, no other class action has been filed asserting the 

same or similar factual allegations against any of the defendants on behalf of the same or other persons; or 

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‘‘(B) two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are 

citizens of the State in which the action was originally filed. 

‘‘(5) Paragraphs (2) through (4) shall not apply to any class action 

in which—

‘‘(A) the primary defendants are States, State officials, or 

other governmental entities against whom the district court 

may be foreclosed from ordering relief; or 

‘‘(B) the number of members of all proposed plaintiff classes 

in the aggregate is less than 100. 

‘‘(6) In any class action, the claims of the individual class members shall be aggregated to determine whether the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs. 

‘‘(7) Citizenship of the members of the proposed plaintiff classes 

shall be determined for purposes of paragraphs (2) through (6) as 

of the date of filing of the complaint or amended complaint, or, if 

the case stated by the initial pleading is not subject to Federal jurisdiction, as of the date of service by plaintiffs of an amended 

pleading, motion, or other paper, indicating the existence of Federal jurisdiction. 

‘‘(8) This subsection shall apply to any class action before or after 

the entry of a class certification order by the court with respect to 

that action. 

‘‘(9) Paragraph (2) shall not apply to any class action that solely 

involves a claim—

‘‘(A) concerning a covered security as defined under 16(f)(3) 

of the Securities Act of 1933 (15 U.S.C. 78p(f)(3)) and section 

28(f)(5)(E) of the Securities Exchange Act of 1934 (15 U.S.C. 

78bb(f)(5)(E)); 

‘‘(B) that relates to the internal affairs or governance of a 

corporation or other form of business enterprise and that arises 

under or by virtue of the laws of the State in which such corporation or business enterprise is incorporated or organized; or 

‘‘(C) that relates to the rights, duties (including fiduciary duties), and obligations relating to or created by or pursuant to 

any security (as defined under section 2(a)(1) of the Securities 

Act of 1933 (15 U.S.C. 77b(a)(1)) and the regulations issued 

thereunder). 

‘‘(10) For purposes of this subsection and section 1453, an unincorporated association shall be deemed to be a citizen of the State 

where it has its principal place of business and the State under 

whose laws it is organized. 

‘‘(11)(A) For purposes of this subsection and section 1453 of this 

title, a foreign corporation which acquires a domestic corporation in 

a corporate repatriation transaction shall be treated as being incorporated in the State under whose laws the acquired domestic corporation was organized. 

‘‘(B) In this paragraph, the term ‘corporate repatriation transaction’ means any transaction in which—

‘‘(i) a foreign corporation acquires substantially all of the 

properties held by a domestic corporation; 

‘‘(ii) shareholders of the domestic corporation, upon such acquisition, are the beneficial owners of securities in the foreign 

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corporation that are entitled to 50 percent or more of the votes 

on any issue requiring shareholder approval; and 

‘‘(iii) the foreign corporation does not have substantial business activities (when compared to the total business activities 

of the corporate affiliated group) in the foreign country in 

which the foreign corporation is organized.’’. 

(b) CONFORMING AMENDMENTS.—

(1) Section 1335(a)(1) is amended by inserting ‘‘subsection (a) 

or (d) of’’ before ‘‘section 1332’’. 

(2) Section 1603(b)(3) is amended by striking ‘‘(d)’’ and inserting ‘‘(e)’’. 

SEC. 5. REMOVAL OF INTERSTATE CLASS ACTIONS TO FEDERAL DISTRICT COURT. 

(a) IN GENERAL.—Chapter 89 is amended by adding after section 

1452 the following: 

‘‘§ 1453. Removal of class actions 

‘‘(a) DEFINITIONS.—In this section, the terms ‘class’, ‘class action’, 

‘class certification order’, and ‘class member’ shall have the meanings given such terms under section 1332(d)(1). 

‘‘(b) IN GENERAL.—A class action may be removed to a district 

court of the United States in accordance with section 1446 (except 

that the 1-year limitation under section 1446(b) shall not apply), 

without regard to whether any defendant is a citizen of the State 

in which the action is brought, except that such action may be removed by any defendant without the consent of all defendants. 

‘‘(c) REVIEW OF REMAND ORDERS.—

‘‘(1) IN GENERAL.—Section 1447 shall apply to any removal of 

a case under this section, except that notwithstanding section 

1447(d), a court of appeals may accept an appeal from an order 

of a district court granting or denying a motion to remand a 

class action to the State court from which it was removed if application is made to the court of appeals not less than 7 days 

after entry of the order. 

‘‘(2) TIME PERIOD FOR JUDGMENT.—If the court of appeals accepts an appeal under paragraph (1), the court shall complete 

all action on such appeal, including rendering judgment, not 

later than 60 days after the date on which such appeal was 

filed, unless an extension is granted under paragraph (3). 

‘‘(3) EXTENSION OF TIME PERIOD.—The court of appeals may 

grant an extension of the 60-day period described in paragraph 

(2) if—

‘‘(A) all parties to the proceeding agree to such extension, for any period of time; or 

‘‘(B) such extension is for good cause shown and in the 

interests of justice, for a period not to exceed 10 days. 

‘‘(4) DENIAL OF APPEAL.—If a final judgment on the appeal 

under paragraph (1) is not issued before the end of the period 

described in paragraph (2), including any extension under 

paragraph (3), the appeal shall be denied. 

‘‘(d) EXCEPTION.—This section shall not apply to any class action 

that solely involves—

‘‘(1) a claim concerning a covered security as defined under 

section 16(f)(3) of the Securities Act of 1933 (15 U.S.C. 

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78p(f)(3)) and section 28(f)(5)(E) of the Securities Exchange Act 

of 1934 (15 U.S.C. 78bb(f)(5)(E)); 

‘‘(2) a claim that relates to the internal affairs or governance 

of a corporation or other form of business enterprise and arises 

under or by virtue of the laws of the State in which such corporation or business enterprise is incorporated or organized; or 

‘‘(3) a claim that relates to the rights, duties (including fiduciary duties), and obligations relating to or created by or pursuant to any security (as defined under section 2(a)(1) of the 

Securities Act of 1933 (15 U.S.C. 77b(a)(1)) and the regulations 

issued thereunder).’’. 

(b) 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.’’. 

(c) CHOICE OF STATE LAW IN INTERSTATE CLASS.—Notwithstanding any other choice of law rule, in any class action over 

which the United States district courts have jurisdiction and that 

asserts claims arising under State law concerning products or services marketed, sold, or provided in more than 1 State on behalf of 

a proposed class which includes citizens of more than 1 such State, 

as to each such claim and any defense to such claim, the district 

court shall not deny class certification, in whole or in part, on the 

ground that the law of more than 1 State will be applied. 

SEC. 6. REPORT ON CLASS ACTION SETTLEMENTS. 

(a) IN GENERAL.—Not later than 12 months after the date of enactment of this Act, the Judicial Conference of the United States, 

with the assistance of the Director of the Federal Judicial Center 

and the Director of the Administrative Office of the United States 

Courts, shall prepare and transmit to the Committees on the Judiciary of the Senate and the House of Representatives a report on 

class action settlements. 

(b) CONTENT.—The report under subsection (a) shall contain—

(1) recommendations on the best practices that courts can 

use to ensure that proposed class action settlements are fair to 

the class members that the settlements are supposed to benefit; 

(2) recommendations on the best practices that courts can 

use to ensure that—

(A) the fees and expenses awarded to counsel in connection with a class action settlement appropriately reflect 

the extent to which counsel succeeded in obtaining full redress for the injuries alleged and the time, expense, and 

risk that counsel devoted to the litigation; and 

(B) the class members on whose behalf the settlement is 

proposed are the primary beneficiaries of the settlement; 

and 

(3) the actions that the Judicial Conference of the United 

States has taken and intends to take toward having the Federal judiciary implement any or all of the recommendations 

contained in the report. 

(c) AUTHORITY OF FEDERAL COURTS.—Nothing in this section 

shall be construed to alter the authority of the Federal courts to 

supervise attorneys’ fees. 

13 

SEC. 7. ENACTMENT OF JUDICIAL CONFERENCE RECOMMENDATIONS. 

Notwithstanding any other provision of law, the amendments to 

rule 23 of the Federal Rules of Civil Procedure, which are set forth 

in the order entered by the Supreme Court of the United States on 

March 27, 2003, shall take effect on the date of enactment of this 

Act or on December 1, 2003 (as specified in that order), whichever 

occurs first. 

SEC. 8. RULEMAKING AUTHORITY OF SUPREME COURT AND JUDICIAL 

CONFERENCE. 

Nothing in this Act shall restrict in any way the authority of the 

Judicial Conference and the Supreme Court to propose and prescribe general rules of practice and procedure under chapter 131 of 

title 28, United States Code. 

SEC. 9. EFFECTIVE DATE. 

The amendments made by this Act shall apply to any civil action 

commenced on or after the date of enactment of this Act. 

Æ