109TH CONGRESS

1ST SESSION S. 5

AN ACT

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 2005’’.
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1 (b) REFERENCE.—Whenever in this Act reference is

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

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

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

5 Code.

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

7 this Act is as follows:

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

Sec. 2. Findings and purposes.

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

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

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

Sec. 6. Report on class action settlements.

Sec. 7. Enactment of Judicial Conference recommendations.

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

Sec. 9. Effective date.

8 SEC. 2. FINDINGS AND PURPOSES.

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

10 (1) Class action lawsuits are an important and

11 valuable part of the legal system when they permit

12 the fair and efficient resolution of legitimate claims

13 of numerous parties by allowing the claims to be ag14 gregated into a single action against a defendant

15 that has allegedly caused harm.

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

17 abuses of the class action device that have—

18 (A) harmed class members with legitimate

19 claims and defendants that have acted respon20 sibly;
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1 (B) adversely affected interstate commerce;

2 and

3 (C) undermined public respect for our judi4 cial system.

5 (3) Class members often receive little or no ben6 efit from class actions, and are sometimes harmed,

7 such as where—

8 (A) counsel are awarded large fees, while

9 leaving class members with coupons or other

10 awards of little or no value;

11 (B) unjustified awards are made to certain

12 plaintiffs at the expense of other class mem13 bers; and

14 (C) confusing notices are published that

15 prevent class members from being able to fully

16 understand and effectively exercise their rights.

17 (4) Abuses in class actions undermine the na18 tional judicial system, the free flow of interstate

19 commerce, and the concept of diversity jurisdiction

20 as intended by the framers of the United States

21 Constitution, in that State and local courts are—

22 (A) keeping cases of national importance

23 out of Federal court;
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1 (B) sometimes acting in ways that dem2 onstrate bias against out-of-State defendants;

3 and

4 (C) making judgments that impose their

5 view of the law on other States and bind the

6 rights of the residents of those States.

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

8 (1) assure fair and prompt recoveries for class

9 members with legitimate claims;

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

11 United States Constitution by providing for Federal

12 court consideration of interstate cases of national

13 importance under diversity jurisdiction; and

14 (3) benefit society by encouraging innovation

15 and lowering consumer prices.

16 SEC. 3. CONSUMER CLASS ACTION BILL OF RIGHTS AND IM17 PROVED PROCEDURES FOR INTERSTATE

18 CLASS ACTIONS.

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

20 after chapter 113 the following:

21 ‘‘CHAPTER 114—CLASS ACTIONS

‘‘Sec.

‘‘1711. Definitions.

‘‘1712. Coupon settlements.

‘‘1713. Protection against loss by class members.

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

‘‘1715. Notifications to appropriate Federal and State officials.
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1 ‘‘§ 1711. Definitions

2 ‘‘In this chapter:

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

4 class members in a class action.

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

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

7 United States under rule 23 of the Federal Rules of

8 Civil Procedure or any civil action that is removed

9 to a district court of the United States that was

10 originally filed under a State statute or rule of judi11 cial procedure authorizing an action to be brought

12 by 1 or more representatives as a class action.

13 ‘‘(3) CLASS COUNSEL.—The term ‘class coun14 sel’ means the persons who serve as the attorneys

15 for the class members in a proposed or certified

16 class action.

17 ‘‘(4) CLASS MEMBERS.—The term ‘class mem18 bers’ means the persons (named or unnamed) who

19 fall within the definition of the proposed or certified

20 class in a class action.

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

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

23 class members are plaintiffs.

24 ‘‘(6) PROPOSED SETTLEMENT.—The term ‘pro25 posed settlement’ means an agreement regarding a

26 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. Coupon settlements

4 ‘‘(a) CONTINGENT FEES IN COUPON SETTLE5 MENTS.—If a proposed settlement in a class action pro6 vides for a recovery of coupons to a class member, the

7 portion of any attorney’s fee award to class counsel that

8 is attributable to the award of the coupons shall be based

9 on the value to class members of the coupons that are

10 redeemed.

11 ‘‘(b) OTHER ATTORNEY’S FEE AWARDS IN COUPON

12 SETTLEMENTS.—

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

14 a class action provides for a recovery of coupons to

15 class members, and a portion of the recovery of the

16 coupons is not used to determine the attorney’s fee

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

18 shall be based upon the amount of time class counsel

19 reasonably expended working on the action.

20 ‘‘(2) COURT APPROVAL.—Any attorney’s fee

21 under this subsection shall be subject to approval by

22 the court and shall include an appropriate attorney’s

23 fee, if any, for obtaining equitable relief, including

24 an injunction, if applicable. Nothing in this sub25 section shall be construed to prohibit application of
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1 a lodestar with a multiplier method of determining

2 attorney’s fees.

3 ‘‘(c) ATTORNEY’S FEE AWARDS CALCULATED ON A

4 MIXED BASIS IN COUPON SETTLEMENTS.—If a proposed

5 settlement in a class action provides for an award of cou6 pons to class members and also provides for equitable re7 lief, including injunctive relief—

8 ‘‘(1) that portion of the attorney’s fee to be

9 paid to class counsel that is based upon a portion of

10 the recovery of the coupons shall be calculated in ac11 cordance with subsection (a); and

12 ‘‘(2) that portion of the attorney’s fee to be

13 paid to class counsel that is not based upon a por14 tion of the recovery of the coupons shall be cal15 culated in accordance with subsection (b).

16 ‘‘(d) SETTLEMENT VALUATION EXPERTISE.—In a

17 class action involving the awarding of coupons, the court

18 may, in its discretion upon the motion of a party, receive

19 expert testimony from a witness qualified to provide infor20 mation on the actual value to the class members of the

21 coupons that are redeemed.

22 ‘‘(e) JUDICIAL SCRUTINY OF COUPON SETTLE23 MENTS.—In a proposed settlement under which class

24 members would be awarded coupons, the court may ap25 prove the proposed settlement only after a hearing to de-
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1 termine whether, and making a written finding that, the

2 settlement is fair, reasonable, and adequate for class mem3 bers. The court, in its discretion, may also require that

4 a proposed settlement agreement provide for the distribu5 tion of a portion of the value of unclaimed coupons to 1

6 or more charitable or governmental organizations, as

7 agreed to by the parties. The distribution and redemption

8 of any proceeds under this subsection shall not be used

9 to calculate attorneys’ fees under this section.

10 ‘‘§ 1713. Protection against loss by class members

11 ‘‘The court may approve a proposed settlement under

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

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

14 only if the court makes a written finding that nonmone15 tary benefits to the class member substantially outweigh

16 the monetary loss.

17 ‘‘§ 1714. Protection against discrimination based on

18 geographic location

19 ‘‘The court may not approve a proposed settlement

20 that provides for the payment of greater sums to some

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

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

23 are located in closer geographic proximity to the court.
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1 ‘‘§ 1715. 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 ac6 tion; 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 $5,000,000, 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) A district court may, in the interests of justice

24 and looking at the totality of the circumstances, decline

25 to exercise jurisdiction under paragraph (2) over a class
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1 action in which greater than one-third but less than two2 thirds of the members of all proposed plaintiff classes in

3 the aggregate and the primary defendants are citizens of

4 the State in which the action was originally filed based

5 on consideration of—

6 ‘‘(A) whether the claims asserted involve mat7 ters of national or interstate interest;

8 ‘‘(B) whether the claims asserted will be gov9 erned by laws of the State in which the action was

10 originally filed or by the laws of other States;

11 ‘‘(C) whether the class action has been pleaded

12 in a manner that seeks to avoid Federal jurisdiction;

13 ‘‘(D) whether the action was brought in a

14 forum with a distinct nexus with the class members,

15 the alleged harm, or the defendants;

16 ‘‘(E) whether the number of citizens of the

17 State in which the action was originally filed in all

18 proposed plaintiff classes in the aggregate is sub19 stantially larger than the number of citizens from

20 any other State, and the citizenship of the other

21 members of the proposed class is dispersed among a

22 substantial number of States; and

23 ‘‘(F) whether, during the 3-year period pre24 ceding the filing of that class action, 1 or more other
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1 class actions asserting the same or similar claims on

2 behalf of the same or other persons have been filed.

3 ‘‘(4) A district court shall decline to exercise jurisdic4 tion under paragraph (2)—

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

6 ‘‘(I) greater than two-thirds of the mem7 bers of all proposed plaintiff classes in the ag8 gregate are citizens of the State in which the

9 action was originally filed;

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

11 ‘‘(aa) from whom significant relief is

12 sought by members of the plaintiff class;

13 ‘‘(bb) whose alleged conduct forms a

14 significant basis for the claims asserted by

15 the proposed plaintiff class; and

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

17 which the action was originally filed; and

18 ‘‘(III) principal injuries resulting from the

19 alleged conduct or any related conduct of each

20 defendant were incurred in the State in which

21 the action was originally filed; and

22 ‘‘(ii) during the 3-year period preceding the fil23 ing of that class action, no other class action has

24 been filed asserting the same or similar factual alle-
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1 gations against any of the defendants on behalf of

2 the same or other persons; or

3 ‘‘(B) two-thirds or more of the members of all

4 proposed plaintiff classes in the aggregate, and the

5 primary defendants, are citizens of the State in

6 which the action was originally filed.

7 ‘‘(5) Paragraphs (2) through (4) shall not apply to

8 any class action in which—

9 ‘‘(A) the primary defendants are States, State

10 officials, or other governmental entities against

11 whom the district court may be foreclosed from or12 dering relief; or

13 ‘‘(B) the number of members of all proposed

14 plaintiff classes in the aggregate is less than 100.

15 ‘‘(6) In any class action, the claims of the individual

16 class members shall be aggregated to determine whether

17 the matter in controversy exceeds the sum or value of

18 $5,000,000, exclusive of interest and costs.

19 ‘‘(7) Citizenship of the members of the proposed

20 plaintiff classes shall be determined for purposes of para21 graphs (2) through (6) as of the date of filing of the com22 plaint or amended complaint, or, if the case stated by the

23 initial pleading is not subject to Federal jurisdiction, as

24 of the date of service by plaintiffs of an amended pleading,
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1 motion, or other paper, indicating the existence of Federal

2 jurisdiction.

3 ‘‘(8) This subsection shall apply to any class action

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

5 the court with respect to that action.

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

7 that solely involves a claim—

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

9 under 16(f)(3) of the Securities Act of 1933 (15

10 U.S.C. 78p(f)(3)) and section 28(f)(5)(E) of the Se11 curities Exchange Act of 1934 (15 U.S.C.

12 78bb(f)(5)(E));

13 ‘‘(B) that relates to the internal affairs or gov14 ernance of a corporation or other form of business

15 enterprise and that arises under or by virtue of the

16 laws of the State in which such corporation or busi17 ness enterprise is incorporated or organized; or

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

19 fiduciary duties), and obligations relating to or cre20 ated by or pursuant to any security (as defined

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

22 (15 U.S.C. 77b(a)(1)) and the regulations issued

23 thereunder).

24 ‘‘(10) For purposes of this subsection and section

25 1453, an unincorporated association shall be deemed to
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1 be a citizen of the State where it has its principal place

2 of business and the State under whose laws it is organized.

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

4 1453, a mass action shall be deemed to be a class action

5 removable under paragraphs (2) through (10) if it other6 wise meets the provisions of those paragraphs.

7 ‘‘(B)(i) As used in subparagraph (A), the term ‘mass

8 action’ means any civil action (except a civil action within

9 the scope of section 1711(2)) in which monetary relief

10 claims of 100 or more persons are proposed to be tried

11 jointly on the ground that the plaintiffs’ claims involve

12 common questions of law or fact, except that jurisdiction

13 shall exist only over those plaintiffs whose claims in a

14 mass action satisfy the jurisdictional amount requirements

15 under subsection (a).

16 ‘‘(ii) As used in subparagraph (A), the term ‘mass

17 action’ shall not include any civil action in which—

18 ‘‘(I) all of the claims in the action arise from

19 an event or occurrence in the State in which the ac20 tion was filed, and that allegedly resulted in injuries

21 in that State or in States contiguous to that State;

22 ‘‘(II) the claims are joined upon motion of a de23 fendant;

24 ‘‘(III) all of the claims in the action are as25 serted on behalf of the general public (and not on
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1 behalf of individual claimants or members of a pur2 ported class) pursuant to a State statute specifically

3 authorizing such action; or

4 ‘‘(IV) the claims have been consolidated or co5 ordinated solely for pretrial proceedings.

6 ‘‘(C)(i) Any action(s) removed to Federal court pur7 suant to this subsection shall not thereafter be transferred

8 to any other court pursuant to section 1407, or the rules

9 promulgated thereunder, unless a majority of the plaintiffs

10 in the action request transfer pursuant to section 1407.

11 ‘‘(ii) This subparagraph will not apply—

12 ‘‘(I) to cases certified pursuant to rule 23 of

13 the Federal Rules of Civil Procedure; or

14 ‘‘(II) if plaintiffs propose that the action pro15 ceed as a class action pursuant to rule 23 of the

16 Federal Rules of Civil Procedure.

17 ‘‘(D) The limitations periods on any claims asserted

18 in a mass action that is removed to Federal court pursu19 ant to this subsection shall be deemed tolled during the

20 period that the action is pending in Federal court.’’.

21 (b) CONFORMING AMENDMENTS.—

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

23 ‘‘subsection (a) or (d) of’’ before ‘‘section 1332’’.

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

25 ‘‘(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 section 1446 (except that the 1-year limitation under sec13 tion 1446(b) shall not apply), without regard to whether

14 any defendant is a citizen of the State in which the action

15 is brought, except that such action may be removed by

16 any defendant without the consent of all defendants.

17 ‘‘(c) REVIEW OF REMAND ORDERS.—

18 ‘‘(1) IN GENERAL.—Section 1447 shall apply to

19 any removal of a case under this section, except that

20 notwithstanding section 1447(d), a court of appeals

21 may accept an appeal from an order of a district

22 court granting or denying a motion to remand a

23 class action to the State court from which it was re24 moved if application is made to the court of appeals

25 not less than 7 days after entry of the order.
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1 ‘‘(2) TIME PERIOD FOR JUDGMENT.—If the

2 court of appeals accepts an appeal under paragraph

3 (1), the court shall complete all action on such ap4 peal, including rendering judgment, not later than

5 60 days after the date on which such appeal was

6 filed, unless an extension is granted under para7 graph (3).

8 ‘‘(3) EXTENSION OF TIME PERIOD.—The court

9 of appeals may grant an extension of the 60-day pe10 riod described in paragraph (2) if—

11 ‘‘(A) all parties to the proceeding agree to

12 such extension, for any period of time; or

13 ‘‘(B) such extension is for good cause

14 shown and in the interests of justice, for a pe15 riod not to exceed 10 days.

16 ‘‘(4) DENIAL OF APPEAL.—If a final judgment

17 on the appeal under paragraph (1) is not issued be18 fore the end of the period described in paragraph

19 (2), including any extension under paragraph (3),

20 the appeal shall be denied.

21 ‘‘(d) EXCEPTION.—This section shall not apply to

22 any class action that solely involves—

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

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

25 of 1933 (15 U.S.C. 78p(f)(3)) and section
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1 28(f)(5)(E) of the Securities Exchange Act of 1934

2 (15 U.S.C. 78bb(f)(5)(E));

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

4 or governance of a corporation or other form of busi5 ness enterprise and 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 ‘‘(3) a claim that relates to the rights, duties

9 (including fiduciary duties), and obligations relating

10 to or created by or pursuant to any security (as de11 fined under section 2(a)(1) of the Securities Act of

12 1933 (15 U.S.C. 77b(a)(1)) and the regulations

13 issued thereunder).’’.

14 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

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

16 after the item relating to section 1452 the following:

‘‘1453. Removal of class actions.’’.

17 SEC. 6. REPORT ON CLASS ACTION SETTLEMENTS.

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

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

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

21 of the Federal Judicial Center and the Director of the Ad22 ministrative Office of the United States Courts, shall pre23 pare and transmit to the Committees on the Judiciary of

24 the Senate and the House of Representatives a report on

25 class action settlements.
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1 (b) CONTENT.—The report under subsection (a) shall

2 contain—

3 (1) recommendations on the best practices that

4 courts can use to ensure that proposed class action

5 settlements are fair to the class members that the

6 settlements are supposed to benefit;

7 (2) recommendations on the best practices that

8 courts can use to ensure that—

9 (A) the fees and expenses awarded to

10 counsel in connection with a class action settle11 ment appropriately reflect the extent to which

12 counsel succeeded in obtaining full redress for

13 the injuries alleged and the time, expense, and

14 risk that counsel devoted to the litigation; and

15 (B) the class members on whose behalf the

16 settlement is proposed are the primary bene17 ficiaries of the settlement; and

18 (3) the actions that the Judicial Conference of

19 the United States has taken and intends to take to20 ward having the Federal judiciary implement any or

21 all of the recommendations contained in the report.

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

23 this section shall be construed to alter the authority of

24 the Federal courts to supervise attorneys’ fees.
†

26

S 5 ES

1 SEC. 7. ENACTMENT OF JUDICIAL CONFERENCE REC2 OMMENDATIONS.

3 Notwithstanding any other provision of law, the

4 amendments to rule 23 of the Federal Rules of Civil Pro5 cedure, which are set forth in the order entered by the

6 Supreme Court of the United States on March 27, 2003,

7 shall take effect on the date of enactment of this Act or

8 on December 1, 2003 (as specified in that order), which9 ever occurs first.

10 SEC. 8. RULEMAKING AUTHORITY OF SUPREME COURT

11 AND JUDICIAL CONFERENCE.

12 Nothing in this Act shall restrict in any way the au13 thority of the Judicial Conference and the Supreme Court

14 to propose and prescribe general rules of practice and pro15 cedure under chapter 131 of title 28, United States Code.

16 SEC. 9. EFFECTIVE DATE.

17 The amendments made by this Act shall apply to any

18 civil action commenced on or after the date of enactment

19 of this Act.

Passed the Senate February 10, 2005.

Attest:

Secretary.
109TH CONGRESS

1ST SESSION S. 5

AN ACT

To amend the procedures that apply to considerfor other purposes. outcomes for class members and defendants, and ation of interstate class actions to assure fairer