```

[House Report 107-375]
[From the U.S. Government Publishing Office]

107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-375

======================================================================

 
PROVIDING FOR CONSIDERATION OF H.R. 2341, CLASS ACTION FAIRNESS ACT OF 
                                  2002

                                _______
                                

   March 12, 2002.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

    Ms.  Pryce of Ohio, from the Committee on Rules, submitted the 
                               following

                              R E P O R T

                       [To accompany H. Res. 367]

    The Committee on Rules, having had under consideration 
House Resolution 367, by a nonrecord vote, report the same to 
the House with the recommendation that the resolution be 
adopted.

                  summary of provisions of resolution

    The resolution provides for the consideration of H.R. 2341, 
the ``Class Action Fairness Act of 2002,'' under a structured 
rule. The rule provides one hour of general debate equally 
divided and controlled between 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 provides that the amendment in the nature of a 
substituted recommended by the Committee on the Judiciary now 
printed in the bill be considered as an original bill for the 
purpose of amendment. The rule makes in order only those 
amendments printed in this report. The rule provides that each 
amendment may be offered only in the order printed in this 
report, may be offered only by a Member designated in this 
report, shall be considered as read, shall be debatable for the 
time specified in this report equally divided and controlled by 
the proponent and an opponent, shall not be subject to 
amendment, and shall not be subject to a demand for division of 
the question in the House or in the Committee of the Whole. The 
rule waives all points of order against such amendments. 
Finally, the rule provides one motion to recommit with or 
without instructions.
    The waiver of all points of order against consideration of 
the bill includes a waiver of clause 4(a) of rule XIII 
(requiring a three-day layover of the committee report), which 
is needed because the committee report was not filed until 
Tuesday, March 12 and the bill may be considered by the House 
as early as Wednesday, March 13.

           summary of amendments made in order under the rule

    Issa: Creates a new paragraph in Section 3, the ``Consumer 
Class Action Bill of Rights,'' which would require class action 
settlement notices to provide a good faith estimate of the 
hourly rate that his or her lawyer will be paid. (20 min.)
    Nadler/Delahunt/Johnson (TX): Prevents records of class 
action cases from being sealed, if doing so would harm the 
public health and safety. (20 min.)
    Waters: Addresses parties that withheld or shred documents 
related to court-ordered discovery. Such parties would be 
deemed to have admitted to any fact relating to the discovery 
order. (20 min.)
    Keller: Ensures that when a class action judgment favors 
the plaintiff that their attorneys must disclose the amount of 
fees that they intend to collect. The amount must be disclosed 
to all plaintiffs at the time of rendered judgment or at the 
time that any award is transmitted to the plaintiffs. (20 min.)
    Lofgren/Schiff: Seeks to federalize any state cause of 
action that is brought on behalf of the general public 
including civil law enforcement actions brought by local 
prosecutors. Preserves the ability of local prosecutors to 
enforce state antitrust and consumer protection laws. (20 min.)
    Conyers/Jackson-Lee/Neal: Treats a foreign corporation 
which acquires a domestic corporation in a corporate 
repatriation transaction as being incorporated in the state 
under whose laws the acquired domestic corporation was 
organized. Ensures that a company cannot have a state class 
action removed to federal court merely be changing its place of 
incorporation abroad. (20 min.)
    Jackson-Lee: Prohibits a party to a class action from 
removing the case to a district court if that party destroys 
material relating to the subject matter of the class action, or 
makes a misrepresentation with respect to existence of such 
materials. (20 min.)
    Frank/Berman/Meehan: Provides that aspects of class actions 
filed in state court that could not be maintained under 
F.R.Civ.P. 23 in federal courts would still be heard by a state 
court rather than either dismissed or removed and remanded. 
Such an action refused to be heard by the federal court could 
only be removed again to federal court if it met the diversity 
standards of 28 U.S.C. Section 1332(a). (20 min.)
    Hart: Creates a new section 7 which would require the 
Judicial Conference of the United States to conduct a study and 
issue a report, including recommendations, within 12 months, 
detailing class action fee arrangements and ways they may be 
improved to benefit class members. (20 min.)
    Text of amendments made in order under the rule:

1. An Amendment To Be Offered by Representative Issa of California, or 
                  a Designee, Debatable for 20 Minutes

    Page 8, line 19, strike ``and''.
    Page 8, insert the following after line 21:
                          ``(vi) a good faith estimate of the 
                        average hourly rate that counsel will 
                        be paid if the amount of the attorney's 
                        fee that class counsel will be seeking 
                        is awarded; and
                              ----------                              

2. An Amendment To Be Offered by Representative Nadler of New York, or 
                  a Designee, Debatable for 20 Minutes

    Page 9, insert the following after line 20 and redesignate 
the succeeding section accordingly:

``Sec. 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.
    Page 6, in the matter preceding line 1, strike the item 
relating to section 1716 and insert the following:

``1716. Sunshine in court records.
``1717. Definitions.''.
                    ____________________________________________________

 3. An Amendment To Be Offered by Representative Waters of California, 
                or a Designee, Debatable for 20 Minutes

  Page 9, insert the following after line 20 and redesignate 
the succeeding section accordingly:

``Sec. 1716. Withholding or destruction of material

  ``If the court in a class action issues a discovery order and 
a party to which the order is directed withholds or destroys 
material subject to the order or makes a misrepresentation with 
respect to the existence of such material, such action by that 
party shall be deemed an admission of any fact with respect to 
which the order was issued.
  Page 6, in the matter preceding line 1, strike the item 
relating to section 1716 and insert the following:

``1716. Withholding or destruction of material.
``1717. Definitions.''.
                    ____________________________________________________

4. An Amendment To Be Offered by Representative Keller of Florida, or a 
                   Designee, Debatable for 20 Minutes

    Page 9, insert the following after line 20 and redesignate 
the succeeding section accordingly:

``Sec. 1716. Disclosure of attorney's fees

    ``Any court with jurisdiction over a plaintiff class action 
shall require that, if there is a settlement of the class 
action or a judgment for the plaintiffs, the attorneys for the 
plaintiffs shall disclose to each plaintiff--
          ``(1) at the time when any payment or other award is 
        transmitted to the plaintiff in accordance with the 
        settlement of judgment, or
          ``(2) in a case in which no such payment or award is 
        made to a plaintiff, at the time when notice of the 
        final settlement or judgment is transmitted to such 
        plaintiff,
the full amount of the attorney's fees charged by the attorneys 
for services rendered in the action.
    Page 6, in the matter preceding line 1, strike the item 
relating to section 1716 and insert the following:

``1716. Disclosure of attorney's fees.
``1717. Definitions.''.
                    ____________________________________________________

5. An Amendment To Be Offered by Representative Lofgren of California, 
                or a Designee, Debatable for 20 Minutes

  Page 15, line 6, strike ``if--'' and all that follows through 
line 17 and insert the following: ``if monetary relief claims 
in the action are proposed to be tried jointly in any respect 
with the claims of 100 or more other persons on the ground that 
the claims involve common questions of law or fact.''.
  Page 15, line 21, strike ``The'' and all that follows through 
``subparagraph (A).'' on line 24.
  Page 16, line 2, strike ``subparagraph (B)'' and insert 
``this paragraph''.
                              ----------                              

6. An Amendment To Be Offered by Representative Conyers of Michigan, or 
                  a Designee, Debatable for 20 Minutes

  Page 16, line 2, strike the quotation marks and second 
period.
  Page 16, insert the following after line 2:
  ``(10)(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 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.''.
                              ----------                              

 7. An Amendment To Be Offered by Representative Jackson-Lee of Texas, 
                or a Designee, Debatable for 20 Minutes

  Page 18, line 14, strike the quotation marks and second 
period.
  Page 18, insert the following after line 14:
  ``(g) Certain Actions Not Removable.--A party to a class 
action may not remove the class action to a district court 
under this section if that party has been found by a court to 
have knowingly altered, destroyed, mutilated, concealed, 
falsified, or made a false entry in, any record, document, or 
tangible object in connection with that class action.''.
                              ----------                              

8. An Amendment To Be Offered by Representative Frank of Massachusetts, 
                or a Designee, Debatable for 20 Minutes

  Page 18, line 14, strike the quotation marks and second 
period.
  Page 18, insert the following after line 14:
  ``(g) Procedure After Removal.--If, after an action is 
removed under this section, the court determines that any 
aspect of the action that is subject to its jurisdiction solely 
under the provisions of section 1332(d) may not be maintained 
as a class action under Rule 23 of the Federal Rules of Civil 
Procedure, the court shall remand all such aspects of the 
action to the State court from which the action was removed. In 
such event, the State court may certify the action or any part 
thereof as a class action pursuant to the laws of that State, 
and such action may not be removed to Federal court unless it 
meets the requirements of section 1332(a).''.
                              ----------                              

 9. An Amendment To Be Offered by Representative Hart of Pennsylvania, 
                or a Designee, Debatable for 20 Minutes

  Page 19, insert the following after line 11 and redesignate 
the succeeding section accordingly:

SEC. 7. REPORT ON CLASS ACTION SETTLEMENTS.

  (a) In General.--Not later than 12 months after the date of 
the 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 House of 
Representatives a report on class action settlements in the 
Federal courts.
  (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 whom 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 attorney's fees.

                                  

```