```

[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 353 Reported in Senate (RS)]

                                                       Calendar No. 732
106th CONGRESS
  2d Session
                                 S. 353

      To provide for class action reform, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            February 3, 1999

 Mr. Grassley (for himself, Mr. Kohl, Mr. Thurmond, Mr. Sessions, Mr. 
   Helms, Mr. Abraham, Mr. Coverdell, and Mr. Gramm) introduced the 
 following bill; which was read twice and referred to the Committee on 
                             the Judiciary

                             July 27, 2000

                Reported by Mr. Hatch, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL

 
      To provide for class action reform, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Class Action Fairness Act 
of 1999''.</DELETED>

<DELETED>SEC. 2. NOTIFICATION REQUIREMENT OF CLASS ACTION CERTIFICATION 
              OR SETTLEMENT.</DELETED>

<DELETED>    (a) In General.--Part V of title 28, United States Code, 
is amended by inserting after chapter 113 the following new 
chapter:</DELETED>

            <DELETED>``CHAPTER 114--CLASS ACTIONS</DELETED>

<DELETED>``Sec.
<DELETED>``1711. Definitions.
<DELETED>``1712. Application.
<DELETED>``1713. Notification of class action certifications and 
                            settlements.
<DELETED>``1714. Limitation on attorney's fees in class actions.
<DELETED>``Sec. 1711. Definitions</DELETED>
<DELETED>    ``In this chapter the term--</DELETED>
        <DELETED>    ``(1) `class' means a group of persons that 
        comprise parties to a civil action brought by 1 or more 
        representative persons;</DELETED>
        <DELETED>    ``(2) `class action' means a civil action filed 
        pursuant to rule 23 of the Federal Rules of Civil Procedure or 
        similar State rules of procedure authorizing an action to be 
        brought by 1 or more representative persons on behalf of a 
        class;</DELETED>
        <DELETED>    ``(3) `class certification order' means an order 
        issued by a court approving the treatment of a civil action as 
        a class action;</DELETED>
        <DELETED>    ``(4) `class member' means a person that falls 
        within the definition of the class;</DELETED>
        <DELETED>    ``(5) `class counsel' means the attorneys 
        representing the class in a class action;</DELETED>
        <DELETED>    ``(6) `plaintiff class action' means a class 
        action in which class members are plaintiffs; and</DELETED>
        <DELETED>    ``(7) `proposed settlement' means a settlement 
        agreement between or among the parties in a class action that 
        is subject to court approval before the settlement becomes 
        binding on the parties.</DELETED>
<DELETED>``Sec. 1712. Application</DELETED>
<DELETED>    ``This chapter shall apply to--</DELETED>
        <DELETED>    ``(1) all plaintiff class actions filed in Federal 
        court; and</DELETED>
        <DELETED>    ``(2) all plaintiff class actions filed in State 
        court in which--</DELETED>
                <DELETED>    ``(A) any class member resides outside the 
                State in which the action is filed; and</DELETED>
                <DELETED>    ``(B) the transaction or occurrence that 
                gave rise to the class action occurred in more than 1 
                State.</DELETED>
<DELETED>``Sec. 1713. Notification of class action certifications and 
              settlements</DELETED>
<DELETED>    ``(a) Not later than 10 days after a proposed settlement 
in a class action is filed in court, class counsel shall serve the 
State attorney general of each State in which a class member resides 
and the Attorney General of the United States as if such attorneys 
general and the Department of Justice were parties in the class action 
with--</DELETED>
        <DELETED>    ``(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);</DELETED>
        <DELETED>    ``(2) notice of any scheduled judicial hearing in 
        the class action;</DELETED>
        <DELETED>    ``(3) any proposed or final notification to class 
        members of--</DELETED>
                <DELETED>    ``(A)(i) the members' rights to request 
                exclusion from the class action; or</DELETED>
                <DELETED>    ``(ii) if no right to request exclusion 
                exists, a statement that no such right exists; 
                and</DELETED>
                <DELETED>    ``(B) a proposed settlement of a class 
                action;</DELETED>
        <DELETED>    ``(4) any proposed or final class action 
        settlement;</DELETED>
        <DELETED>    ``(5) any settlement or other agreement 
        contemporaneously made between class counsel and counsel for 
        the defendants;</DELETED>
        <DELETED>    ``(6) any final judgment or notice of 
        dismissal;</DELETED>
        <DELETED>    ``(7)(A) if feasible the names of class members 
        who reside in each State attorney general's respective State 
        and the estimated proportionate claim of such members to the 
        entire settlement; or</DELETED>
        <DELETED>    ``(B) if the provision of information under 
        subparagraph (A) is not feasible, a reasonable estimate of the 
        number of class members residing in each attorney general's 
        State and the estimated proportionate claim of such members to 
        the entire settlement; and</DELETED>
        <DELETED>    ``(8) any written judicial opinion relating to the 
        materials described under paragraphs (3) through (6).</DELETED>
<DELETED>    ``(b) A hearing to consider final approval of a proposed 
settlement may not be held earlier than 120 days after the date on 
which the State attorneys general and the Attorney General of the 
United States are served notice under subsection (a).</DELETED>
<DELETED>    ``(c) Any court with jurisdiction over a plaintiff class 
action shall require that--</DELETED>
        <DELETED>    ``(1) any written notice provided to the class 
        through the mail or publication in printed media contain a 
        short summary written in plain, easily understood language, 
        describing--</DELETED>
                <DELETED>    ``(A) the subject matter of the class 
                action;</DELETED>
                <DELETED>    ``(B) the legal consequences of being a 
                member of the class action;</DELETED>
                <DELETED>    ``(C) the ability of a class member to 
                seek removal of the class action to Federal court if--
                </DELETED>
                        <DELETED>    ``(i) the action is filed in a 
                        State court; and</DELETED>
                        <DELETED>    ``(ii) Federal jurisdiction would 
                        apply to such action under section 
                        1332(d);</DELETED>
                <DELETED>    ``(D) if the notice is informing class 
                members of a proposed settlement agreement--</DELETED>
                        <DELETED>    ``(i) the benefits that will 
                        accrue to the class due to the 
                        settlement;</DELETED>
                        <DELETED>    ``(ii) the rights that class 
                        members will lose or waive through the 
                        settlement;</DELETED>
                        <DELETED>    ``(iii) obligations that will be 
                        imposed on the defendants by the 
                        settlement;</DELETED>
                        <DELETED>    ``(iv) the dollar amount of any 
                        attorney's fee class counsel will be seeking, 
                        or if not possible, a good faith estimate of 
                        the dollar amount of any attorney's fee class 
                        counsel will be seeking; and</DELETED>
                        <DELETED>    ``(v) an explanation of how any 
                        attorney's fee will be calculated and funded; 
                        and</DELETED>
                <DELETED>    ``(E) any other material matter; 
                and</DELETED>
        <DELETED>    ``(2) any notice provided through television or 
        radio to inform the class members of the right of each member 
        to be excluded from a class action or a proposed settlement, if 
        such right exists, shall, in plain, easily understood 
        language--</DELETED>
                <DELETED>    ``(A) describe the persons who may 
                potentially become class members in the class action; 
                and</DELETED>
                <DELETED>    ``(B) explain that the failure of a person 
                falling within the definition of the class to exercise 
                such person's right to be excluded from a class action 
                will result in the person's inclusion in the class 
                action.</DELETED>
<DELETED>    ``(d) Compliance with this section shall not provide 
immunity to any party from any legal action under Federal or State law, 
including actions for malpractice or fraud.</DELETED>
<DELETED>    ``(e)(1) 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 resides in a State where the State 
attorney general has not been provided notice and materials under 
subsection (a).</DELETED>
<DELETED>    ``(2) 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.</DELETED>
<DELETED>    ``(f) Nothing in this section shall be construed to impose 
any obligations, duties, or responsibilities upon State attorneys 
general or the Attorney General of the United States.</DELETED>
<DELETED>``Sec. 1714. Limitation on attorney's fees in class 
              actions</DELETED>
<DELETED>    ``(a) In any class action, the total attorney's fees and 
expenses awarded by the court to counsel for the plaintiff class may 
not exceed a reasonable percentage of the amount of--</DELETED>
        <DELETED>    ``(1) any damages and prejudgment interest 
        actually paid to the class;</DELETED>
        <DELETED>    ``(2) any future financial benefits to the class 
        based on the cessation of alleged improper conduct by the 
        defendants; and</DELETED>
        <DELETED>    ``(3) costs actually incurred by all defendants in 
        complying with the terms of an injunctive order or settlement 
        agreement.</DELETED>
<DELETED>    ``(b) Notwithstanding subsection (a), to the extent that 
the law permits, the court may award attorney's fees and expenses to 
counsel for the plaintiff class based on a reasonable lodestar 
calculation.''.</DELETED>
<DELETED>    (b) Technical and Conforming Amendment.--The table of 
chapters for part V of title 28, United States Code, is amended by 
inserting after the item relating to chapter 113 the 
following:</DELETED>

<DELETED>``114. Class Actions.................................. 1711''.

<DELETED>SEC. 3. DIVERSITY JURISDICTION FOR CLASS ACTIONS.</DELETED>

<DELETED>    Section 1332 of title 28, United States Code, is amended--
</DELETED>
        <DELETED>    (1) by redesignating subsection (d) as subsection 
        (e); and</DELETED>
        <DELETED>    (2) by inserting after subsection (c) the 
        following:</DELETED>
<DELETED>    ``(d)(1) In this subsection, the terms `class', `class 
action', and `class certification order' have the meanings given such 
terms under section 1711.</DELETED>
<DELETED>    ``(2) The district courts shall have original jurisdiction 
of any civil action where the matter in controversy exceeds the sum or 
value of $75,000, exclusive of interest and costs, and is a class 
action in which--</DELETED>
        <DELETED>    ``(A) any member of a class of plaintiffs is a 
        citizen of a State different from any defendant;</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(3) The district court shall abstain from hearing a 
civil action described under paragraph (2) if--</DELETED>
                <DELETED>    ``(A)(i) the substantial majority of the 
                members of the proposed plaintiff class are citizens of 
                a single State of which the primary defendants are also 
                citizens; and</DELETED>
                <DELETED>    ``(ii) the claims asserted will be 
                governed primarily by the laws of that State; 
                or</DELETED>
                <DELETED>    ``(B) the primary defendants are States, 
                State officials, or other governmental entities against 
                whom the district court may be foreclosed from ordering 
                relief.</DELETED>
<DELETED>    ``(4) In any class action, the claims of the individual 
members of any class shall be aggregated to determine whether the 
matter in controversy exceeds the sum or value of $75,000, exclusive of 
interest and costs.</DELETED>
<DELETED>    ``(5) This subsection shall apply to any class action 
before or after the entry of a class certification order by the 
court.</DELETED>
<DELETED>    ``(6)(A) A district court shall dismiss, or, if after 
removal, strike the class allegations and remand, any civil action if--
</DELETED>
        <DELETED>    ``(i) the action is subject to the jurisdiction of 
        the court solely under this subsection; and</DELETED>
        <DELETED>    ``(ii) the court determines the action may not 
        proceed as a class action based on a failure to satisfy the 
        conditions of rule 23 of the Federal Rules of Civil 
        Procedure.</DELETED>
<DELETED>    ``(B) Nothing in subparagraph (A) shall prohibit 
plaintiffs from filing an amended class action in Federal or State 
court.</DELETED>
<DELETED>    ``(C) Upon dismissal or remand, the period of limitations 
for any claim that was asserted in an 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.</DELETED>
<DELETED>    ``(7) Paragraph (2) shall not apply to any class action, 
regardless of which forum any such action may be filed in, involving 
any claim relating to--</DELETED>
        <DELETED>    ``(A) the internal affairs or governance of a 
        corporation or other form of entity or business association 
        arising under or by virtue of the statutory, common, or other 
        laws of the State in which such corporation, entity, or 
        business association is incorporated (in the case of a 
        corporation) or organized (in the case of any other entity); 
        or</DELETED>
        <DELETED>    ``(B) 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 or the rules and regulations adopted 
        under such Act).''.</DELETED>

<DELETED>SEC. 4. REMOVAL OF CLASS ACTIONS TO FEDERAL COURT.</DELETED>

<DELETED>    (a) In General.--Chapter 89 of title 28, United States 
Code, is amended by adding after section 1452 the following:</DELETED>
<DELETED>``Sec. 1453. Removal of class actions</DELETED>
<DELETED>    ``(a) In this section, the terms `class', `class action', 
and `class member' have the meanings given such terms under section 
1711.</DELETED>
<DELETED>    ``(b) 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--</DELETED>
        <DELETED>    ``(1) by any defendant without the consent of all 
        defendants; or</DELETED>
        <DELETED>    ``(2) by any plaintiff class member who is not a 
        named or representative class member without the consent of all 
        members of such class.</DELETED>
<DELETED>    ``(c) This section shall apply to any class action before 
or after the entry of any order certifying a class.</DELETED>
<DELETED>    ``(d) The provisions of section 1446 relating to a 
defendant removing a case shall apply to a plaintiff removing a case 
under this section, except that in 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 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.</DELETED>
<DELETED>    ``(e) This section shall not apply to any class action, 
regardless of which forum any such action may be filed in, involving 
any claim relating to--</DELETED>
        <DELETED>    ``(1) the internal affairs or governance of a 
        corporation or other form of entity or business association 
        arising under or by virtue of the statutory, common, or other 
        laws of the State in which such corporation, entity, or 
        business association is incorporated (in the case of a 
        corporation) or organized (in the case of any other entity); 
        or</DELETED>
        <DELETED>    ``(2) 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 or the rules and regulations adopted 
        under such Act).''.</DELETED>
<DELETED>    (b) Removal Limitation.--Section 1446(b) of title 28, 
United States Code, is amended in the second sentence by inserting 
``(a)'' after ``section 1332''.</DELETED>
<DELETED>    (c) Technical and Conforming Amendments.--The table of 
sections for chapter 89 of title 28, United States Code, is amended by 
adding after the item relating to section 1452 the following:</DELETED>

<DELETED>``1453. Removal of class actions.''.

<DELETED>SEC. 5. REPRESENTATIONS AND SANCTIONS UNDER RULE 11 OF THE 
              FEDERAL RULES OF CIVIL PROCEDURE.</DELETED>

<DELETED>    Rule 11(c) of the Federal Rules of Civil Procedure is 
amended--</DELETED>
        <DELETED>    (1) in the first sentence by striking ``may, 
        subject to the conditions stated below,'' and inserting 
        ``shall'';</DELETED>
        <DELETED>    (2) in paragraph (2) by striking the first and 
        second sentences and inserting ``A sanction imposed for 
        violation of this rule may consist of reasonable attorneys' 
        fees and other expenses incurred as a result of the violation, 
        directives of a nonmonetary nature, or an order to pay penalty 
        into court or to a party.''; and</DELETED>
        <DELETED>    (3) in paragraph (2)(A) by inserting before the 
        period ``, although such sanctions may be awarded against a 
        party's attorneys''.</DELETED>

<DELETED>SEC. 6. EFFECTIVE DATE.</DELETED>

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Class Action Fairness Act of 2000''.

SEC. 2. NOTIFICATION REQUIREMENT OF CLASS ACTION CERTIFICATION OR 
              SETTLEMENT.

    (a) In General.--Part V of title 28, United States Code, is amended 
by inserting after chapter 113 the following:

                      ``CHAPTER 114--CLASS ACTIONS

``Sec.
``1711. Definitions.
``1712. Application.
``1713. Notification of class action certifications and settlements.
``Sec. 1711. Definitions
    ``In this chapter the term--
            ``(1) `class' means a group of persons that comprise 
        parties to a civil action brought by 1 or more representative 
        persons;
            ``(2) `class action' means a civil action filed pursuant to 
        rule 23 of the Federal Rules of Civil Procedure or similar 
        State statutes or rules of procedure authorizing an action to 
        be brought by 1 or more representative persons on behalf of a 
        class;
            ``(3) `class certification order' means an order issued by 
        a court approving the treatment of a civil action as a class 
        action;
            ``(4) `class member' means a person that falls within the 
        definition of the class;
            ``(5) `class counsel' means the attorneys representing the 
        class in a class action;
            ``(6) `plaintiff class action' means a class action in 
        which class members are plaintiffs; and
            ``(7) `proposed settlement' means a settlement agreement 
        regarding a class action that is subject to court approval and 
        would be binding on the class.
``Sec. 1712. Application
    ``This chapter shall apply to all plaintiff class actions filed in 
or removed to Federal court, except any such class action solely 
involving--
            ``(1) claims concerning a covered security as defined under 
        section 16(f)(3) of the Securities Act of 1933 and section 
        28(f)(5)(E) of the Securities Exchange Act of 1934;
            ``(2) claims that relate 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) claims that relate 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 and the regulations issued 
        thereunder).
``Sec. 1713. Notification of class action certifications and 
              settlements
    ``(a) Not later than 10 days after a proposed settlement in a class 
action is filed in court, class counsel shall serve the State attorney 
general of each State in which a class member resides and the Attorney 
General of the United States as if such attorneys general and the 
Department of Justice were parties in the class action with--
            ``(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 attorney general's respective State and the 
        estimated proportionate claim of such members to the entire 
        settlement; 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 attorney general's State and the 
        estimated proportionate claim of such members to the entire 
        settlement; and
            ``(8) any written judicial opinion relating to the 
        materials described under paragraphs (3) through (6).
    ``(b) A hearing to consider final approval of a proposed settlement 
may not be held earlier than 120 days after the date on which the State 
attorneys general and the Attorney General of the United States are 
served notice under subsection (a).
    ``(c) Any court with jurisdiction over a plaintiff class action 
shall require that--
            ``(1) any written notice provided to the class through the 
        mail or publication in printed media contain a short summary 
written in plain, easily understood language, describing--
                    ``(A) the subject matter of the class action;
                    ``(B) the legal consequences of being a member of 
                the class action;
                    ``(C) if the notice is informing class members of a 
                proposed settlement agreement--
                            ``(i) the benefits that will accrue to the 
                        class due to the settlement;
                            ``(ii) the rights that class members will 
                        lose or waive through the settlement;
                            ``(iii) obligations that will be imposed on 
                        the defendants by the settlement;
                            ``(iv) the dollar amount of any attorney's 
                        fee class counsel will be seeking, or if not 
                        possible, a good faith estimate of the dollar 
                        amount of any attorney's fee class counsel will 
                        be seeking; and
                            ``(v) an explanation of how any attorney's 
                        fee will be calculated and funded; and
                    ``(D) any other material matter; and
            ``(2) any notice provided through television or radio to 
        inform the class members of the right of each member to be 
        excluded from a class action or a proposed settlement, if such 
        right exists, shall, in plain, easily understood language--
                    ``(A) describe the persons who may potentially 
                become class members in the class action; and
                    ``(B) explain that the failure of a person falling 
                within the definition of the class to exercise such 
                person's right to be excluded from a class action will 
                result in the person's inclusion in the class action.
    ``(d) Compliance with this section shall not provide immunity to 
any party from any legal action under Federal or State law, including 
actions for malpractice or fraud.
    ``(e)(1) 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 resides in a State where the State attorney 
general has not been provided notice and materials under subsection 
(a).
    ``(2) 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) Nothing in this section shall be construed to expand the 
authority of, or impose any obligations, duties, or responsibilities 
upon, State attorneys general or the Attorney General of the United 
States.''.
    (b) Technical and Conforming Amendment.--The table of chapters for 
part V of title 28, United States Code, is amended by inserting after 
the item relating to chapter 113 the following:

``114. Class Actions........................................... 1711''.

SEC. 3. DIVERSITY JURISDICTION FOR CLASS ACTIONS.

    Section 1332 of title 28, United States Code, is amended--
            (1) by redesignating subsection (d) as subsection (e); and
            (2) by inserting after subsection (c) the following:
    ``(d)(1) In this subsection, the terms `class', `class action', and 
`class certification order' have the meanings given such terms under 
section 1711.
    ``(2) The district courts shall have original jurisdiction of any 
civil action where the matter in controversy exceeds the sum or value 
of $2,000,000, 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;
            ``(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) Paragraph (2) shall not apply to any civil action in which--
            ``(A)(i) the substantial majority of the members of the 
        proposed plaintiff class and the primary defendants are 
        citizens of the State in which the action was originally filed; 
        and
            ``(ii) the claims asserted therein will be governed 
        primarily by the laws of the State in which the action was 
        originally filed;
            ``(B) the primary defendants are States, State officials, 
        or other governmental entities against whom the district court 
        may be foreclosed from ordering relief; or
            ``(C) the number of members of all proposed plaintiff 
        classes in the aggregate is less than 100.
    ``(4) In any class action, the claims of the individual members of 
any class shall be aggregated to determine whether the matter in 
controversy exceeds the sum or value of $2,000,000, exclusive of 
interest and costs.
    ``(5) This subsection shall apply to any class action before or 
after the entry of a class certification order by the court.
    ``(6)(A) A district court shall dismiss any civil action that is 
subject to the jurisdiction of the court solely under this subsection 
if the court determines the action may not proceed as a class action 
based on a failure to satisfy the conditions of rule 23 of the Federal 
Rules of Civil Procedure.
    ``(B) Nothing in subparagraph (A) shall prohibit plaintiffs from 
filing an amended class action in Federal court or filing an action in 
State court, but any such filed action may be removed if it is an 
action of which the district courts of the United States have original 
jurisdiction.
    ``(C) In any action that is dismissed under this subsection and is 
filed by any of the original named plaintiffs therein in the same State 
court venue in which the dismissed action was originally filed, the 
limitations periods on all reasserted claims shall be deemed tolled for 
the period during which the dismissed class action was pending. The 
limitations periods on any claims that were asserted in a class action 
dismissed under this subsection that are subsequently asserted in an 
individual action shall be deemed tolled for the period during which 
the dismissed action was pending.
    ``(7) Paragraph (2) shall not apply to any class action solely 
involving a claim that relates to--
            ``(A) 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
            ``(B) 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 and the regulations issued thereunder).
    ``(8) For purposes of this subsection and section 1453 of this 
title, 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.''.

SEC. 4. REMOVAL OF CLASS ACTIONS TO FEDERAL COURT.

    (a) In General.--Chapter 89 of title 28, United States Code, is 
amended by adding after section 1452 the following:
``Sec. 1453. Removal of class actions
    ``(a) In this section, the terms `class', `class action', and 
`class member' have the meanings given such terms under section 1711.
    ``(b) A class action may be removed to a district court of the 
United States in accordance with this chapter, 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--
            ``(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 without the consent of all members 
        of such class.
    ``(c) This section shall apply to any class action before or after 
the entry of any order certifying a class.
    ``(d) The provisions of section 1446 relating to a defendant 
removing a case shall apply to a plaintiff removing a case under this 
section, except that in 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 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.
    ``(e) This section shall not apply to any class action solely 
involving--
            ``(1) a claim concerning a covered security as defined 
        under section 16(f)(3) of the Securities Act of 1933 and 
        section 28(f)(5)(E) of the Securities Exchange Act of 1934;
            ``(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 and the regulations issued 
        thereunder).''.
    (b) Removal Limitation.--Section 1446(b) of title 28, United States 
Code, is amended in the second sentence by inserting ``(a)'' after 
``section 1332''.
    (c) Technical and Conforming Amendments.--The table of sections for 
chapter 89 of title 28, United States Code, is amended by adding after 
the item relating to section 1452 the following:

``1453. Removal of class actions.''.

SEC. 5. 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.

SEC. 6. 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.
                                                       Calendar No. 732

106th CONGRESS

  2d Session

                                 S. 353

_______________________________________________________________________

                                 A BILL

      To provide for class action reform, and for other purposes.

_______________________________________________________________________

                             July 27, 2000

                       Reported with an amendment
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