II 

108TH CONGRESS 

1ST SESSION S. 274

To amend the procedures that apply to consideration of interstate class 

actions to assure fairer outcomes for class members and defendants, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 4, 2003

Mr. GRASSLEY (for himself, Mr. KOHL, Mr. HATCH, Mr. CARPER, Mr. SPECTER, Mr. MILLER, Mr. CHAFEE, and Mr. LUGAR) introduced the following bill; which was read twice and referred to the Committee on the 

Judiciary 

A BILL

To amend the procedures that apply to consideration of 

interstate class actions to assure fairer outcomes for 

class members and defendants, and for other purposes.

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; REFERENCE; TABLE OF CON4 TENTS. 

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

6 ‘‘Class Action Fairness Act of 2003’’. 

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

8 made to an amendment to, or repeal of, a section or other 
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1 provision, the reference shall be considered to be made to 

2 a section or other provision of title 28, United States 

3 Code. 

4 (c) TABLE OF CONTENTS.—The table of contents for 

5 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. Effective date.

6 SEC. 2. FINDINGS AND PURPOSES. 

7 (a) FINDINGS.—Congress finds the following: 

8 (1) Class action lawsuits are an important and 

9 valuable part of the legal system when they permit 

10 the fair and efficient resolution of legitimate claims 

11 of numerous parties by allowing the claims to be ag12 gregated into a single action against a defendant 

13 that has allegedly caused harm. 

14 (2) Over the past decade, there have been 

15 abuses of the class action device that have—

16 (A) harmed class members with legitimate 

17 claims and defendants that have acted respon18 sibly; 

19 (B) adversely affected interstate commerce; 

20 and 
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1 (C) undermined public respect for our judi2 cial system. 

3 (3) Class members often receive little or no ben4 efit from class actions, and are sometimes harmed, 

5 such as where—

6 (A) counsel are awarded large fees, while 

7 leaving class members with coupons or other 

8 awards of little or no value; 

9 (B) unjustified awards are made to certain 

10 plaintiffs at the expense of other class mem11 bers; and 

12 (C) confusing notices are published that 

13 prevent class members from being able to fully 

14 understand and effectively exercise their rights. 

15 (4) Abuses in class actions undermine the na16 tional judicial system, the free flow of interstate 

17 commerce, and the concept of diversity jurisdiction 

18 as intended by the framers of the United States 

19 Constitution, in that State and local courts are—

20 (A) keeping cases of national importance 

21 out of Federal court; 

22 (B) sometimes acting in ways that dem23 onstrate bias against out-of-State defendants; 

24 and 
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1 (C) making judgments that impose their 

2 view of the law on other States and bind the 

3 rights of the residents of those States. 

4 (b) PURPOSES.—The purposes of this Act are to—

5 (1) assure fair and prompt recoveries for class 

6 members with legitimate claims; 

7 (2) restore the intent of the framers of the 

8 United States Constitution by providing for Federal 

9 court consideration of interstate cases of national 

10 importance under diversity jurisdiction; and 

11 (3) benefit society by encouraging innovation 

12 and lowering consumer prices. 

13 SEC. 3. CONSUMER CLASS ACTION BILL OF RIGHTS AND IM14 PROVED PROCEDURES FOR INTERSTATE 

15 CLASS ACTIONS. 

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

17 after chapter 113 the following:

18 ‘‘CHAPTER 114—CLASS ACTIONS

‘‘Sec. 

‘‘1711. Definitions. 

‘‘1712. Judicial scrutiny of coupon and other noncash settlements. 

‘‘1713. Protection against loss by class members. 

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

‘‘1715. Prohibition on the payment of bounties. 

‘‘1716. Clearer and simpler settlement information. 

‘‘1717. Notifications to appropriate Federal and State officials.

19 ‘‘§ 1711. Definitions 

20 ‘‘In this chapter: 
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1 ‘‘(1) CLASS.—The term ‘class’ means all of the 

2 class members in a class action. 

3 ‘‘(2) CLASS ACTION.—The term ‘class action’ 

4 means any civil action filed in a district court of the 

5 United States under rule 23 of the Federal Rules of 

6 Civil Procedure or any civil action that is removed 

7 to a district court of the United States that was 

8 originally filed under a State statute or rule of judi9 cial procedure authorizing an action to be brought 

10 by 1 or more representatives as a class action. 

11 ‘‘(3) CLASS COUNSEL.—The term ‘class coun12 sel’ means the persons who serve as the attorneys 

13 for the class members in a proposed or certified 

14 class action. 

15 ‘‘(4) CLASS MEMBERS.—The term ‘class mem16 bers’ means the persons (named or unnamed) who 

17 fall within the definition of the proposed or certified 

18 class in a class action. 

19 ‘‘(5) PLAINTIFF CLASS ACTION.—The term 

20 ‘plaintiff class action’ means a class action in which 

21 class members are plaintiffs. 

22 ‘‘(6) PROPOSED SETTLEMENT.—The term ‘pro23 posed settlement’ means an agreement regarding a 

24 class action that is subject to court approval and 
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1 that, if approved, would be binding on some or all 

2 class members.

3 ‘‘§ 1712. Judicial scrutiny of coupon and other 

4 noncash settlements 

5 ‘‘The court may approve a proposed settlement under 

6 which the class members would receive noncash benefits 

7 or would otherwise be required to expend funds in order 

8 to obtain part or all of the proposed benefits only after 

9 a hearing to determine whether, and making a written 

10 finding that, the settlement is fair, reasonable, and ade11 quate for class members. 

12 ‘‘§ 1713. Protection against loss by class members 

13 ‘‘The court may approve a proposed settlement under 

14 which any class member is obligated to pay sums to class 

15 counsel that would result in a net loss to the class member 

16 only if the court makes a written finding that nonmone17 tary benefits to the class member substantially outweigh 

18 the monetary loss. 

19 ‘‘§ 1714. Protection against discrimination based on 

20 geographic location 

21 ‘‘The court may not approve a proposed settlement 

22 that provides for the payment of greater sums to some 

23 class members than to others solely on the basis that the 

24 class members to whom the greater sums are to be paid 

25 are located in closer geographic proximity to the court. 
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1 ‘‘§ 1715. Prohibition on the payment of bounties 

2 ‘‘(a) IN GENERAL.—The court may not approve a 

3 proposed settlement that provides for the payment of a 

4 greater share of the award to a class representative serv5 ing on behalf of a class, on the basis of the formula for 

6 distribution to all other class members, than that awarded 

7 to the other class members. 

8 ‘‘(b) RULE OF CONSTRUCTION.—The limitation in 

9 subsection (a) shall not be construed to prohibit a pay10 ment approved by the court for reasonable time or costs 

11 that a person was required to expend in fulfilling the obli12 gations of that person as a class representative. 

13 ‘‘§ 1716. Clearer and simpler settlement information 

14 ‘‘(a) PLAIN ENGLISH REQUIREMENTS.—Any court 

15 with jurisdiction over a plaintiff class action shall require 

16 that any written notice concerning a proposed settlement 

17 of the class action provided to the class through the mail 

18 or publication in printed media contain—

19 ‘‘(1) at the beginning of such notice, a state20 ment in 18-point or greater bold type, stating 

21 ‘LEGAL NOTICE: YOU ARE A PLAINTIFF IN 

22 A CLASS ACTION LAWSUIT AND YOUR 

23 LEGAL RIGHTS ARE AFFECTED BY THE 

24 SETTLEMENT DESCRIBED IN THIS NO25 TICE.’; 
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1 ‘‘(2) a short summary written in plain, easily 

2 understood language, describing—

3 ‘‘(A) the subject matter of the class action; 

4 ‘‘(B) the members of the class; 

5 ‘‘(C) the legal consequences of being a 

6 member of the class action; 

7 ‘‘(D) if the notice is informing class mem8 bers of a proposed settlement agreement—

9 ‘‘(i) the benefits that will accrue to 

10 the class due to the settlement; 

11 ‘‘(ii) the rights that class members 

12 will lose or waive through the settlement; 

13 ‘‘(iii) obligations that will be imposed 

14 on the defendants by the settlement; 

15 ‘‘(iv) the dollar amount of any attor16 ney’s fee class counsel will be seeking, or 

17 if not possible, a good faith estimate of the 

18 dollar amount of any attorney’s fee class 

19 counsel will be seeking; and 

20 ‘‘(v) an explanation of how any attor21 ney’s fee will be calculated and funded; 

22 and 

23 ‘‘(E) any other material matter. 
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1 ‘‘(b) TABULAR FORMAT.—Any court with jurisdiction 

2 over a plaintiff class action shall require that the informa3 tion described in subsection (a)—

4 ‘‘(1) be placed in a conspicuous and prominent 

5 location on the notice; 

6 ‘‘(2) contain clear and concise headings for 

7 each item of information; and 

8 ‘‘(3) provide a clear and concise form for stat9 ing each item of information required to be disclosed 

10 under each heading. 

11 ‘‘(c) TELEVISION OR RADIO NOTICE.—Any notice 

12 provided through television or radio (including trans13 missions by cable or satellite) to inform the class members 

14 in a class action of the right of each member to be ex15 cluded from a class action or a proposed settlement, if 

16 such right exists, shall, in plain, easily understood lan17 guage—

18 ‘‘(1) describe the persons who may potentially 

19 become class members in the class action; and 

20 ‘‘(2) explain that the failure of a class member 

21 to exercise his or her right to be excluded from a 

22 class action will result in the person’s inclusion in 

23 the class action. 
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1 ‘‘§ 1717. Notifications to appropriate Federal and 

2 State officials 

3 ‘‘(a) DEFINITIONS.—

4 ‘‘(1) APPROPRIATE FEDERAL OFFICIAL.—In 

5 this section, the term ‘appropriate Federal official’ 

6 means—

7 ‘‘(A) the Attorney General of the United 

8 States; or 

9 ‘‘(B) in any case in which the defendant is 

10 a Federal depository institution, a State deposi11 tory institution, a depository institution holding 

12 company, a foreign bank, or a nondepository in13 stitution subsidiary of the foregoing (as such 

14 terms are defined in section 3 of the Federal 

15 Deposit Insurance Act (12 U.S.C. 1813)), the 

16 person who has the primary Federal regulatory 

17 or supervisory responsibility with respect to the 

18 defendant, if some or all of the matters alleged 

19 in the class action are subject to regulation or 

20 supervision by that person. 

21 ‘‘(2) APPROPRIATE STATE OFFICIAL.—In this 

22 section, the term ‘appropriate State official’ means 

23 the person in the State who has the primary regu24 latory or supervisory responsibility with respect to 

25 the defendant, or who licenses or otherwise author26 izes the defendant to conduct business in the State, 
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1 if some or all of the matters alleged in the class ac2 tion are subject to regulation by that person. If 

3 there is no primary regulator, supervisor, or licens4 ing authority, or the matters alleged in the class ac5 tion are not subject to regulation or supervision by 

6 that person, then the appropriate State official shall 

7 be the State attorney general. 

8 ‘‘(b) IN GENERAL.—Not later than 10 days after a 

9 proposed settlement of a class action is filed in court, each 

10 defendant that is participating in the proposed settlement 

11 shall serve upon the appropriate State official of each 

12 State in which a class member resides and the appropriate 

13 Federal official, a notice of the proposed settlement con14 sisting of—

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

16 filed with the complaint and any amended com17 plaints (except such materials shall not be required 

18 to be served if such materials are made electronically 

19 available through the Internet and such service in20 cludes notice of how to electronically access such 

21 material); 

22 ‘‘(2) notice of any scheduled judicial hearing in 

23 the class action; 

24 ‘‘(3) any proposed or final notification to class 

25 members of—
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1 ‘‘(A)(i) the members’ rights to request ex2 clusion from the class action; or 

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

4 a statement that no such right exists; and 

5 ‘‘(B) a proposed settlement of a class ac6 tion; 

7 ‘‘(4) any proposed or final class action settle8 ment; 

9 ‘‘(5) any settlement or other agreement contem10 poraneously made between class counsel and counsel 

11 for the defendants; 

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

13 ‘‘(7)(A) if feasible, the names of class members 

14 who reside in each State and the estimated propor15 tionate share of the claims of such members to the 

16 entire settlement to that State’s appropriate State 

17 official; or 

18 ‘‘(B) if the provision of information under sub19 paragraph (A) is not feasible, a reasonable estimate 

20 of the number of class members residing in each 

21 State and the estimated proportionate share of the 

22 claims of such members to the entire settlement; and 

23 ‘‘(8) any written judicial opinion relating to the 

24 materials described under subparagraphs (3) 

25 through (6). 
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1 ‘‘(c) DEPOSITORY INSTITUTIONS NOTIFICATION.—

2 ‘‘(1) FEDERAL AND OTHER DEPOSITORY INSTI3 TUTIONS.—In any case in which the defendant is a 

4 Federal depository institution, a depository institu5 tion holding company, a foreign bank, or a non-de6 pository institution subsidiary of the foregoing, the 

7 notice requirements of this section are satisfied by 

8 serving the notice required under subsection (b) 

9 upon the person who has the primary Federal regu10 latory or supervisory responsibility with respect to 

11 the defendant, if some or all of the matters alleged 

12 in the class action are subject to regulation or super13 vision by that person. 

14 ‘‘(2) STATE DEPOSITORY INSTITUTIONS.—In 

15 any case in which the defendant is a State deposi16 tory institution (as that term is defined in section 3 

17 of the Federal Deposit Insurance Act (12 U.S.C. 

18 1813)), the notice requirements of this section are 

19 satisfied by serving the notice required under sub20 section (b) upon the State bank supervisor (as that 

21 term is defined in section 3 of the Federal Deposit 

22 Insurance Act (12 U.S.C. 1813)) of the State in 

23 which the defendant is incorporated or chartered, if 

24 some or all of the matters alleged in the class action 
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1 are subject to regulation or supervision by that per2 son, and upon the appropriate Federal official. 

3 ‘‘(d) FINAL APPROVAL.—An order giving final ap4 proval of a proposed settlement may not be issued earlier 

5 than 90 days after the later of the dates on which the 

6 appropriate Federal official and the appropriate State offi7 cial are served with the notice required under subsection 

8 (b). 

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

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

11 to comply with and may choose not to be bound by 

12 a settlement agreement or consent decree in a class 

13 action if the class member demonstrates that the no14 tice required under subsection (b) has not been pro15 vided. 

16 ‘‘(2) LIMITATION.—A class member may not 

17 refuse to comply with or to be bound by a settlement 

18 agreement or consent decree under paragraph (1) if 

19 the notice required under subsection (b) was directed 

20 to the appropriate Federal official and to either the 

21 State attorney general or the person that has pri22 mary regulatory, supervisory, or licensing authority 

23 over the defendant. 

24 ‘‘(3) APPLICATION OF RIGHTS.—The rights cre25 ated by this subsection shall apply only to class 
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1 members or any person acting on a class member’s 

2 behalf, and shall not be construed to limit any other 

3 rights affecting a class member’s participation in the 

4 settlement. 

5 ‘‘(f) RULE OF CONSTRUCTION.—Nothing in this sec6 tion shall be construed to expand the authority of, or im7 pose any obligations, duties, or responsibilities upon, Fed8 eral or State officials.’’. 

9 (b) TECHNICAL AND CONFORMING AMENDMENT.—

10 The table of chapters for part V is amended by inserting 

11 after the item relating to chapter 113 the following:

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

12 SEC. 4. FEDERAL DISTRICT COURT JURISDICTION FOR 

13 INTERSTATE CLASS ACTIONS. 

14 (a) APPLICATION OF FEDERAL DIVERSITY JURISDIC15 TION.—Section 1332 is amended—

16 (1) by redesignating subsection (d) as sub17 section (e); and 

18 (2) by inserting after subsection (c) the fol19 lowing: 

20 ‘‘(d)(1) In this subsection—

21 ‘‘(A) the term ‘class’ means all of the class 

22 members in a class action; 

23 ‘‘(B) the term ‘class action’ means any civil ac24 tion filed under rule 23 of the Federal Rules of Civil 

25 Procedure or similar State statute or rule of judicial 
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1 procedure authorizing an action to be brought by 1 

2 or more representative persons as a class action; 

3 ‘‘(C) the term ‘class certification order’ means 

4 an order issued by a court approving the treatment

5 of some or all aspects of a civil action as a class 

6 action; and 

7 ‘‘(D) the term ‘class members’ means the per8 sons (named or unnamed) who fall within the defini9 tion of the proposed or certified class in a class ac10 tion. 

11 ‘‘(2) The district courts shall have original jurisdic12 tion of any civil action in which the matter in controversy 

13 exceeds the sum or value of $2,000,000, exclusive of inter14 est and costs, and is a class action in which—

15 ‘‘(A) any member of a class of plaintiffs is a 

16 citizen of a State different from any defendant; 

17 ‘‘(B) any member of a class of plaintiffs is a 

18 foreign state or a citizen or subject of a foreign state 

19 and any defendant is a citizen of a State; or 

20 ‘‘(C) any member of a class of plaintiffs is a 

21 citizen of a State and any defendant is a foreign 

22 state or a citizen or subject of a foreign state. 

23 ‘‘(3) Paragraph (2) shall not apply to any civil action 

24 in which—
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1 ‘‘(A)(i) the substantial majority of the members 

2 of the proposed plaintiff class and the primary de3 fendants are citizens of the State in which the action 

4 was originally filed; and 

5 ‘‘(ii) the claims asserted therein will be gov6 erned primarily by the laws of the State in which the 

7 action was originally filed; 

8 ‘‘(B) the primary defendants are States, State 

9 officials, or other governmental entities against 

10 whom the district court may be foreclosed from or11 dering relief; or 

12 ‘‘(C) the number of members of all proposed 

13 plaintiff classes in the aggregate is less than 100. 

14 ‘‘(4) In any class action, the claims of the individual 

15 class members shall be aggregated to determine whether 

16 the matter in controversy exceeds the sum or value of 

17 $2,000,000, exclusive of interest and costs. 

18 ‘‘(5) This subsection shall apply to any class action 

19 before or after the entry of a class certification order by 

20 the court with respect to that action. 

21 ‘‘(6)(A) A district court shall dismiss any civil action 

22 that is subject to the jurisdiction of the court solely under 

23 this subsection if the court determines the action may not 

24 proceed as a class action based on a failure to satisfy the 
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1 prerequisites of rule 23 of the Federal Rules of Civil Pro2 cedure. 

3 ‘‘(B) Nothing in subparagraph (A) shall prohibit 

4 plaintiffs from filing an amended class action in Federal 

5 court or filing an action in State court, except that any 

6 such action filed in State court may be removed to the 

7 appropriate district court if it is an action of which the 

8 district courts of the United States have original jurisdic9 tion. 

10 ‘‘(C) In any action that is dismissed under this para11 graph and is filed by any of the original named plaintiffs 

12 therein in the same State court venue in which the dis13 missed action was originally filed, the limitations periods 

14 on all reasserted claims shall be deemed tolled for the pe15 riod during which the dismissed class action was pending. 

16 The limitations periods on any claims that were asserted 

17 in a class action dismissed under this paragraph that are 

18 subsequently asserted in an individual action shall be 

19 deemed tolled for the period during which the dismissed 

20 action was pending. 

21 ‘‘(7) Paragraph (2) shall not apply to any class action 

22 that solely involves a claim—

23 ‘‘(A) concerning a covered security as defined 

24 under 16(f)(3) of the Securities Act of 1933 and 
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1 section 28(f)(5)(E) of the Securities Exchange Act 

2 of 1934; 

3 ‘‘(B) that relates to the internal affairs or gov4 ernance of a corporation or other form of business 

5 enterprise and that arises under or by virtue of the 

6 laws of the State in which such corporation or busi7 ness enterprise is incorporated or organized; or 

8 ‘‘(C) that relates to the rights, duties (including 

9 fiduciary duties), and obligations relating to or cre10 ated by or pursuant to any security (as defined 

11 under section 2(a)(1) of the Securities Act of 1933 

12 and the regulations issued thereunder). 

13 ‘‘(8) For purposes of this subsection and section 

14 1453 of this title, an unincorporated association shall be 

15 deemed to be a citizen of the State where it has its prin16 cipal place of business and the State under whose laws 

17 it is organized. 

18 ‘‘(9)(A) For purposes of this section and section 1453 

19 of this title, a civil action that is not otherwise a class 

20 action as defined in paragraph (1)(B) shall nevertheless 

21 be deemed a class action if—

22 ‘‘(i) the named plaintiff purports to act for the 

23 interests of its members (who are not named parties 

24 to the action) or for the interests of the general pub25 lic, seeks a remedy of damages, restitution, 
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1 disgorgement, or any other form of monetary relief, 

2 and is not a State attorney general; or 

3 ‘‘(ii) monetary relief claims in the action are 

4 proposed to be tried jointly in any respect with the 

5 claims of 100 or more other persons on the ground 

6 that the claims involve common questions of law or 

7 fact. 

8 ‘‘(B)(i) In any civil action described under subpara9 graph (A)(ii), the persons who allegedly were injured shall 

10 be treated as members of a proposed plaintiff class and 

11 the monetary relief that is sought shall be treated as the 

12 claims of individual class members. 

13 ‘‘(ii) Paragraphs (3) and (6) of this subsection and 

14 subsections (b)(2) and (d) of section 1453 shall not apply 

15 to any civil action described under subparagraph (A)(i). 

16 ‘‘(iii) Paragraph (6) of this subsection, and sub17 sections (b)(2) and (d) of section 1453 shall not apply to 

18 any civil action described under subparagraph (A)(ii).’’. 

19 (b) CONFORMING AMENDMENTS.—

20 (1) Section 1335(a)(1) is amended by inserting 

21 ‘‘(a) or (d)’’ after ‘‘1332’’. 

22 (2) Section 1603(b)(3) is amended by striking 

23 ‘‘(d)’’ and inserting ‘‘(e)’’. 
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1 SEC. 5. REMOVAL OF INTERSTATE CLASS ACTIONS TO FED2 ERAL DISTRICT COURT. 

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

4 after section 1452 the following: 

5 ‘‘§ 1453. Removal of class actions 

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

7 ‘class action’, ‘class certification order’, and ‘class mem8 ber’ shall have the meanings given such terms under sec9 tion 1332(d)(1). 

10 ‘‘(b) IN GENERAL.—A class action may be removed 

11 to a district court of the United States in accordance with 

12 this chapter, without regard to whether any defendant is 

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

14 that such action may be removed—

15 ‘‘(1) by any defendant without the consent of 

16 all defendants; or 

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

18 a named or representative class member without the 

19 consent of all members of such class. 

20 ‘‘(c) WHEN REMOVABLE.—This section shall apply to 

21 any class action before or after the entry of a class certifi22 cation order in the action. 

23 ‘‘(d) PROCEDURE FOR REMOVAL.—Section 1446 re24 lating to a defendant removing a case shall apply to a 

25 plaintiff removing a case under this section, except that 

26 in the application of subsection (b) of such section the re-
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1 quirement relating to the 30-day filing period shall be met 

2 if a plaintiff class member files notice of removal within 

3 30 days after receipt by such class member, through serv4 ice or otherwise, of the initial written notice of the class 

5 action. 

6 ‘‘(e) REVIEW OF ORDERS REMANDING CLASS AC7 TIONS TO STATE COURTS.—Section 1447 shall apply to 

8 any removal of a case under this section, except that not9 withstanding section 1447(d), an order remanding a class 

10 action to the State court from which it was removed shall 

11 be reviewable by appeal or otherwise. 

12 ‘‘(f) EXCEPTION.—This section shall not apply to any 

13 class action that solely involves—

14 ‘‘(1) a claim concerning a covered security as 

15 defined under section 16(f)(3) of the Securities Act 

16 of 1933 and section 28(f)(5)(E) of the Securities 

17 Exchange Act of 1934; 

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

19 or governance of a corporation or other form of busi20 ness enterprise and arises under or by virtue of the 

21 laws of the State in which such corporation or busi22 ness enterprise is incorporated or organized; or 

23 ‘‘(3) a claim that relates to the rights, duties 

24 (including fiduciary duties), and obligations relating 

25 to or created by or pursuant to any security (as de-
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1 fined under section 2(a)(1) of the Securities Act of 

2 1933 and the regulations issued thereunder).’’. 

3 (b) REMOVAL LIMITATION.—Section 1446(b) is 

4 amended in the second sentence by inserting ‘‘(a)’’ after 

5 ‘‘section 1332’’. 

6 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

7 The table of sections for chapter 89 is amended by adding 

8 after the item relating to section 1452 the following:

‘‘1453. Removal of class actions.’’.

9 SEC. 6. REPORT ON CLASS ACTION SETTLEMENTS. 

10 (a) IN GENERAL.—Not later than 12 months after 

11 the date of enactment of this Act, the Judicial Conference 

12 of the United States, with the assistance of the Director 

13 of the Federal Judicial Center and the Director of the Ad14 ministrative Office of the United States Courts, shall pre15 pare and transmit to the Committees on the Judiciary of 

16 the Senate and the House of Representatives a report on 

17 class action settlements. 

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

19 contain—

20 (1) recommendations on the best practices that 

21 courts can use to ensure that proposed class action 

22 settlements are fair to the class members that the 

23 settlements are supposed to benefit; 

24 (2) recommendations on the best practices that 

25 courts can use to ensure that—
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1 (A) the fees and expenses awarded to 

2 counsel in connection with a class action settle3 ment appropriately reflect the extent to which 

4 counsel succeeded in obtaining full redress for 

5 the injuries alleged and the time, expense, and 

6 risk that counsel devoted to the litigation; and 

7 (B) the class members on whose behalf the 

8 settlement is proposed are the primary bene9 ficiaries of the settlement; and 

10 (3) the actions that the Judicial Conference of 

11 the United States has taken and intends to take to12 ward having the Federal judiciary implement any or 

13 all of the recommendations contained in the report. 

14 (c) AUTHORITY OF FEDERAL COURTS.—Nothing in 

15 this section shall be construed to alter the authority of 

16 the Federal courts to supervise attorneys’ fees. 

17 SEC. 7. EFFECTIVE DATE. 

18 The amendments made by this Act shall apply to any 

19 civil action commenced on or after the date of enactment 

20 of this Act.

Æ