Union Calendar No. 190 

106TH CONGRESS 

1ST SESSION H. R. 1875 

[Report No. 106–320] 

A BILL 

To amend title 28, United States Code, to allow the 

jurisdiction to interstate class actions. application of the principles of Federal diversity 

SEPTEMBER 14, 1999 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


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Union Calendar No. 190 

106TH CONGRESS 

1ST SESSION H. R. 1875 

[Report No. 106–320] 

To amend title 28, United States Code, to allow the application of the 

principles of Federal diversity jurisdiction to interstate class actions. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 19, 1999 

Mr. GOODLATTE (for himself, Mr. BOUCHER, Mr. BRYANT, Mr. MORAN of 

Virginia, Mr. DELAY, Mr. ARMEY, Mr. HYDE, Mr. SENSENBRENNER, 

Mr. MCCOLLUM, Mr. GEKAS, Mr. SMITH of Texas, Mr. GALLEGLY, Mr. 

CANADY of Florida, Mr. CHABOT, Mr. BARR of Georgia, Mr. HUTCHINSON, Mr. CANNON, Mr. ROGAN, Mrs. BONO, Mr. BLILEY, Mr. COX, 

Mr. CRAMER, Mr. DREIER, Mr. GOODE, Mr. HOLDEN, Mr. JOHN, Mrs. 

JOHNSON of Connecticut, Mr. LINDER, Mr. OXLEY, Mr. STENHOLM, Mr. 

SUNUNU, and Mr. UPTON) introduced the following bill; which was referred to the Committee on the Judiciary 

SEPTEMBER 14, 1999 

Additional sponsors: Mr. GARY MILLER of California, Mr. GOSS, Mr. BARTLETT of Maryland, Mrs. BIGGERT, Mr. DAVIS of Virginia, and Mr. BACHUS

SEPTEMBER 14, 1999 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on May 19, 1999] 

A BILL 

To amend title 28, United States Code, to allow the applicaVerDate Aug 31 2005 11:33 May 08, 2006 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6652 E:\PICKUP\H1875.RH H1875

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tion of the principles of Federal diversity jurisdiction 

to interstate class actions. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE AND REFERENCE. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Interstate Class Action Jurisdiction Act of 1999’’. 

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

7 made to an amendment to, or repeal of, a section or other 

8 provision, the reference shall be considered to be made to 

9 a section or other provision of title 28, United States Code. 

10 SEC. 2. FINDINGS. 

11 The Congress finds that— 

12 (1) as recently noted by the United States Court 

13 of Appeals for the Third Circuit, interstate class ac14 tions are ‘‘the paradigm for Federal diversity juris15 diction because, in a constitutional sense, they impli16 cate interstate commerce, invite discrimination by a 

17 local State, and tend to attract bias against business 

18 enterprises’’; 

19 (2) most such cases, however, fall outside the 

20 scope of current Federal diversity jurisdiction stat21 utes; 

22 (3) that exclusion is an unintended technicality, 

23 inasmuch as those statutes were enacted by Congress 

24 before the rise of the modern class action and therefore 


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1 without recognition that interstate class actions typi2 cally are substantial controversies of the type for 

3 which diversity jurisdiction was designed; 

4 (4) Congress is constitutionally empowered to 

5 amend the current Federal diversity jurisdiction stat6 utes to permit most interstate class actions to be 

7 brought in or removed to Federal district courts; and 

8 (5) in order to ensure that interstate class ac9 tions are adjudicated in a fair, consistent, and effi10 cient manner and to correct the unintended, technical 

11 exclusion of such cases from the scope of Federal di12 versity jurisdiction, it is appropriate for Congress to 

13 amend the Federal diversity jurisdiction and related 

14 statutes to allow more interstate class actions to be 

15 brought in or removed to Federal court. 

16 SEC. 3. JURISDICTION OF DISTRICT COURTS. 

17 (a) EXPANSION OF FEDERAL JURISDICTION.—Section 

18 1332 is amended by redesignating subsections (b), (c), and 

19 (d) as subsections (c), (d), and (e), respectively, and by in20 serting after subsection (a) the following: 

21 ‘‘(b)(1) The district courts shall have original jurisdic22 tion of any civil action which is brought as a class action 

23 and in which— 

24 ‘‘(A) any member of a proposed plaintiff class is 

25 a citizen of a State different from any defendant; 


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1 ‘‘(B) any member of a proposed plaintiff class is 

2 a foreign state and any defendant is a citizen of a 

3 State; or 

4 ‘‘(C) any member of a proposed plaintiff class is 

5 a citizen of a State and any defendant is a citizen 

6 or subject of a foreign state. 

7 As used in this paragraph, the term ‘foreign state’ has the 

8 meaning given that term in section 1603(a). 

9 ‘‘(2)(A) The district courts shall not exercise jurisdic10 tion over a civil action described in paragraph (1) if the 

11 action is— 

12 ‘‘(i) an intrastate case, 

13 ‘‘(ii) a limited scope case, or 

14 ‘‘(iii) a State action case. 

15 ‘‘(B) For purposes of subparagraph (A)— 

16 ‘‘(i) the term ‘intrastate case’ means a class ac17 tion in which the record indicates that— 

18 ‘‘(I) the claims asserted therein will be gov19 erned primarily by the laws of the State in 

20 which the action was originally filed; and 

21 ‘‘(II) the substantial majority of the mem22 bers of all proposed plaintiff classes, and the pri23 mary defendants, are citizens of the State in 

24 which the action was originally filed; 


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1 ‘‘(ii) the term ‘limited scope case’ means a class 

2 action in which the record indicates that all matters 

3 in controversy asserted by all members of all proposed 

4 plaintiff classes do not in the aggregate exceed the 

5 sum or value of $1,000,000, exclusive of interest and 

6 costs, or a class action in which the number of mem7 bers of all proposed plaintiff classes in the aggregate 

8 is less than 100; and 

9 ‘‘(iii) the term ‘State action case’ means a class 

10 action in which the primary defendants are States, 

11 State officials, or other governmental entities against 

12 whom the district court may be foreclosed from order13 ing relief. 

14 ‘‘(3) Paragraph (1) shall not apply to any claim con15 cerning a covered security as that term is defined in section 

16 16(f)(3) of the Securities Act of 1933 and section 

17 28(f)(5)(E) of the Securities Exchange Act of 1934. 

18 ‘‘(4) Paragraph (1) shall not apply to any class action 

19 solely involving a claim that relates to— 

20 ‘‘(A) the internal affairs or governance of a cor21 poration or other form of business enterprise and that 

22 arises under or by virtue of the laws of the State in 

23 which such corporation or business enterprise is in24 corporated or organized; or 


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1 ‘‘(B) the rights, duties (including fiduciary du2 ties), and obligations relating to or created by or pur3 suant to any security (as defined under section 

4 2(a)(1) of the Securities Act of 1933 and the regula5 tions issued thereunder).’’. 

6 (b) CONFORMING AMENDMENT.—Section 1332(c) (as 

7 redesignated by this section) is amended by inserting after 

8 ‘‘Federal courts’’ the following: ‘‘pursuant to subsection (a) 

9 of this section’’. 

10 (c) DETERMINATION OF DIVERSITY.—Section 1332, as 

11 amended by this section, is further amended by adding at 

12 the end the following: 

13 ‘‘(f) For purposes of subsection (b), a member of a pro14 posed class shall be deemed to be a citizen of a State dif15 ferent from a defendant corporation only if that member 

16 is a citizen of a State different from all States of which 

17 the defendant corporation is deemed a citizen.’’. 

18 SEC. 4. REMOVAL OF CLASS ACTIONS. 

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

20 after section 1452 the following: 

21 ‘‘§ 1453. Removal of class actions 

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

23 a district court of the United States in accordance with this 

24 chapter, but without regard to whether any defendant is 


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1 a citizen of the State in which the action is brought, except 

2 that such action may be removed— 

3 ‘‘(1) by any defendant without the consent of all 

4 defendants; or 

5 ‘‘(2) by any plaintiff class member who is not a 

6 named or representative class member of the action 

7 for which removal is sought, without the consent of all 

8 members of such class. 

9 ‘‘(b) WHEN REMOVABLE.—This section shall apply to 

10 any class action before or after the entry of any order certi11 fying a class. 

12 ‘‘(c) PROCEDURE FOR REMOVAL.—The provisions of 

13 section 1446(a) relating to a defendant removing a case 

14 shall apply to a plaintiff removing a case under this sec15 tion. With respect to the application of subsection (b) of 

16 such section, the requirement relating to the 30-day filing 

17 period shall be met if a plaintiff class member who is not 

18 a named or representative class member of the action for 

19 which removal is sought files notice of removal no later than 

20 30 days after receipt by such class member, through service 

21 or otherwise, of the initial written notice of the class action 

22 provided at the court’s direction. 

23 ‘‘(d) EXCEPTIONS.— 

24 ‘‘(1) COVERED SECURITIES.—This section shall 

25 not apply to any claim concerning a covered security 


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1 as that term is defined in section 16(f)(3) of the Secu2 rities Act of 1933 and section 28(f)(5)(E) of the Secu3 rities Exchange Act of 1934. 

4 ‘‘(2) INTERNAL GOVERNANCE OF BUSINESS ENTI5 TIES.—This section shall not apply to any class ac6 tion solely involving a claim that relates to— 

7 ‘‘(A) the internal affairs or governance of a 

8 corporation or other form of business enterprise 

9 and that arises under or by virtue of the laws of 

10 the State in which such corporation or business 

11 enterprise is incorporated or organized; or 

12 ‘‘(B) the rights, duties (including fiduciary 

13 duties), and obligations relating to or created by 

14 or pursuant to any security (as defined under 

15 section 2(a)(1) of the Securities Act of 1933 and 

16 the regulations issued thereunder).’’. 

17 (b) REMOVAL LIMITATIONS.—Section 1446(b) is 

18 amended in the second sentence— 

19 (1) by inserting ‘‘, by exercising due diligence,’’ 

20 after ‘‘ascertained’’; and 

21 (2) by inserting ‘‘(a)’’ after ‘‘section 1332’’. 

22 (c) TECHNICAL AND CONFORMING AMENDMENTS.—The 

23 table of sections for chapter 89 is amended by adding after 

24 the item relating to section 1452 the following: 

‘‘1453. Removal of class actions.’’. 


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1 (d) APPLICATION OF SUBSTANTIVE STATE LAW.— 

2 Nothing in this section or the amendments made by this 

3 section shall alter the substantive law applicable to an ac4 tion to which the amendments made by section 3 of this 

5 Act apply. 

6 (e) PROCEDURE AFTER REMOVAL.—Section 1447 is 

7 amended by adding at the end the following new subsection: 

8 ‘‘(f) If, after removal, the court determines that no as9 pect of an action that is subject to its jurisdiction solely 

10 under the provisions of section 1332(b) may be maintained 

11 as a class action under Rule 23 of the Federal Rules of 

12 Civil Procedure, it shall dismiss the action. An action dis13 missed pursuant to this subsection may be amended and 

14 filed again in a State court, but any such refiled action 

15 may be removed again if it is an action of which the district 

16 courts of the United States have original jurisdiction. In 

17 any action that is dismissed pursuant to this subsection 

18 and that is refiled by any of the named plaintiffs therein 

19 in the same State court venue in which the dismissed action 

20 was originally filed, the limitations periods on all re21 asserted claims shall be deemed tolled for the period during 

22 which the dismissed class action was pending. The limita23 tions periods on any claims that were asserted in a class 

24 action dismissed pursuant to this subsection that are subse25 quently asserted in an individual action shall be deemed 


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1 tolled for the period during which the dismissed class action 

2 was pending.’’. 

3 SEC. 5. APPLICABILITY. 

4 The amendments made by this Act shall apply to any 

5 action commenced on or after the date of the enactment of 

6 this Act. 

7 SEC. 6. GAO STUDY. 

8 The Comptroller General of the United States shall, by 

9 not later than 1 year after the date of the enactment of this 

10 Act, conduct a study of the impact of the amendments made 

11 by this Act on the workload of the Federal courts and report 

12 to the Congress on the results of the study. 


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