II 

Calendar No. 1 

109TH CONGRESS 

1ST SESSION S. 5 

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 

JANUARY 25, 2005 

Mr. GRASSLEY (for himself, Mr. KOHL, Mr. HATCH, Mr. CARPER, Mr. FRIST, 

Mr. CHAFEE, Mr. DODD, Mrs. FEINSTEIN, Mr. HAGEL, Mr. KYL, Ms. 

LANDRIEU, Mrs. LINCOLN, Mr. LUGAR, Mr. MCCONNELL, Mr. SCHUMER, 

Mr. THUNE, Mr. VITTER, Mr. VOINOVICH, Mr. LOTT, Mr. ALEXANDER, 

Ms. SNOWE, Mr. SESSIONS, Mr. DEMINT, Mr. LIEBERMAN, Mr. MARTINEZ, Mr. ENSIGN, Mr. SANTORUM, Mr. DEWINE, and Mr. SUNUNU) 

introduced the following bill; which was read twice and referred to the 

Committee on the Judiciary 

FEBRUARY 3, 2005 

Reported by Mr. SPECTER, without amendment 

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, 
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1 SECTION 1. SHORT TITLE; REFERENCE; TABLE OF CON2 TENTS. 

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

4 ‘‘Class Action Fairness Act of 2005’’. 

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

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

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

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

9 Code. 

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

11 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. 

12 SEC. 2. FINDINGS AND PURPOSES. 

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

14 (1) Class action lawsuits are an important and 

15 valuable part of the legal system when they permit 

16 the fair and efficient resolution of legitimate claims 

17 of numerous parties by allowing the claims to be ag18 gregated into a single action against a defendant 

19 that has allegedly caused harm. 

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

21 abuses of the class action device that have— 
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1 (A) harmed class members with legitimate 

2 claims and defendants that have acted respon3 sibly; 

4 (B) adversely affected interstate commerce; 

5 and 

6 (C) undermined public respect for our judi7 cial system. 

8 (3) Class members often receive little or no ben9 efit from class actions, and are sometimes harmed, 

10 such as where— 

11 (A) counsel are awarded large fees, while 

12 leaving class members with coupons or other 

13 awards of little or no value; 

14 (B) unjustified awards are made to certain 

15 plaintiffs at the expense of other class mem16 bers; and 

17 (C) confusing notices are published that 

18 prevent class members from being able to fully 

19 understand and effectively exercise their rights. 

20 (4) Abuses in class actions undermine the na21 tional judicial system, the free flow of interstate 

22 commerce, and the concept of diversity jurisdiction 

23 as intended by the framers of the United States 

24 Constitution, in that State and local courts are— 
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1 (A) keeping cases of national importance 

2 out of Federal court; 

3 (B) sometimes acting in ways that dem4 onstrate bias against out-of-State defendants; 

5 and 

6 (C) making judgments that impose their 

7 view of the law on other States and bind the 

8 rights of the residents of those States. 

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

10 (1) assure fair and prompt recoveries for class 

11 members with legitimate claims; 

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

13 United States Constitution by providing for Federal 

14 court consideration of interstate cases of national 

15 importance under diversity jurisdiction; and 

16 (3) benefit society by encouraging innovation 

17 and lowering consumer prices. 

18 SEC. 3. CONSUMER CLASS ACTION BILL OF RIGHTS AND IM19 PROVED PROCEDURES FOR INTERSTATE 

20 CLASS ACTIONS. 

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

22 after chapter 113 the following: 

23 ‘‘CHAPTER 114—CLASS ACTIONS 

‘‘Sec. 

‘‘1711. Definitions. 

‘‘1712. Coupon settlements. 

‘‘1713. Protection against loss by class members. 
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‘‘1714. Protection against discrimination based on geographic location. 

‘‘1715. Notifications to appropriate Federal and State officials. 

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. 
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1 ‘‘(6) PROPOSED SETTLEMENT.—The term ‘pro2 posed settlement’ means an agreement regarding a 

3 class action that is subject to court approval and 

4 that, if approved, would be binding on some or all 

5 class members. 

6 ‘‘§ 1712. Coupon settlements 

7 ‘‘(a) CONTINGENT FEES IN COUPON SETTLE8 MENTS.—If a proposed settlement in a class action pro9 vides for a recovery of coupons to a class member, the 

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

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

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

13 redeemed. 

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

15 SETTLEMENTS.— 

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

17 a class action provides for a recovery of coupons to 

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

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

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

21 shall be based upon the amount of time class counsel 

22 reasonably expended working on the action. 

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

24 under this subsection shall be subject to approval by 

25 the court and shall include an appropriate attorney’s 
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1 fee, if any, for obtaining equitable relief, including 

2 an injunction, if applicable. Nothing in this sub3 section shall be construed to prohibit application of 

4 a lodestar with a multiplier method of determining 

5 attorney’s fees. 

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

7 MIXED BASIS IN COUPON SETTLEMENTS.—If a proposed 

8 settlement in a class action provides for an award of cou9 pons to class members and also provides for equitable re10 lief, including injunctive relief— 

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

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

13 the recovery of the coupons shall be calculated in ac14 cordance with subsection (a); and 

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

16 paid to class counsel that is not based upon a por17 tion of the recovery of the coupons shall be cal18 culated in accordance with subsection (b). 

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

20 class action involving the awarding of coupons, the court 

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

22 expert testimony from a witness qualified to provide infor23 mation on the actual value to the class members of the 

24 coupons that are redeemed. 
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1 ‘‘(e) JUDICIAL SCRUTINY OF COUPON SETTLE2 MENTS.—In a proposed settlement under which class 

3 members would be awarded coupons, the court may ap4 prove the proposed settlement only after a hearing to de5 termine whether, and making a written finding that, the 

6 settlement is fair, reasonable, and adequate for class mem7 bers. The court, in its discretion, may also require that 

8 a proposed settlement agreement provide for the distribu9 tion of a portion of the value of unclaimed coupons to 1 

10 or more charitable or governmental organizations, as 

11 agreed to by the parties. The distribution and redemption 

12 of any proceeds under this subsection shall not be used 

13 to calculate attorneys’ fees under this section. 

14 ‘‘§ 1713. Protection against loss by class members 

15 ‘‘The court may approve a proposed settlement under 

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

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

18 only if the court makes a written finding that nonmone19 tary benefits to the class member substantially outweigh 

20 the monetary loss. 

21 ‘‘§ 1714. Protection against discrimination based on 

22 geographic location 

23 ‘‘The court may not approve a proposed settlement 

24 that provides for the payment of greater sums to some 

25 class members than to others solely on the basis that the 
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1 class members to whom the greater sums are to be paid 

2 are located in closer geographic proximity to the court. 

3 ‘‘§ 1715. Notifications to appropriate Federal and 

4 State officials 

5 ‘‘(a) DEFINITIONS.— 

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

7 this section, the term ‘appropriate Federal official’ 

8 means— 

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

10 States; or 

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

12 a Federal depository institution, a State deposi13 tory institution, a depository institution holding 

14 company, a foreign bank, or a nondepository in15 stitution subsidiary of the foregoing (as such 

16 terms are defined in section 3 of the Federal 

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

18 person who has the primary Federal regulatory 

19 or supervisory responsibility with respect to the 

20 defendant, if some or all of the matters alleged 

21 in the class action are subject to regulation or 

22 supervision by that person. 

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

24 section, the term ‘appropriate State official’ means 

25 the person in the State who has the primary regu-
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1 latory or supervisory responsibility with respect to 

2 the defendant, or who licenses or otherwise author3 izes the defendant to conduct business in the State, 

4 if some or all of the matters alleged in the class ac5 tion are subject to regulation by that person. If 

6 there is no primary regulator, supervisor, or licens7 ing authority, or the matters alleged in the class ac8 tion are not subject to regulation or supervision by 

9 that person, then the appropriate State official shall 

10 be the State attorney general. 

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

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

13 defendant that is participating in the proposed settlement 

14 shall serve upon the appropriate State official of each 

15 State in which a class member resides and the appropriate 

16 Federal official, a notice of the proposed settlement con17 sisting of— 

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

19 filed with the complaint and any amended com20 plaints (except such materials shall not be required 

21 to be served if such materials are made electronically 

22 available through the Internet and such service in23 cludes notice of how to electronically access such 

24 material); 
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1 ‘‘(2) notice of any scheduled judicial hearing in 

2 the class action; 

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

4 members of— 

5 ‘‘(A)(i) the members’ rights to request ex6 clusion from the class action; or 

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

8 a statement that no such right exists; and 

9 ‘‘(B) a proposed settlement of a class ac10 tion; 

11 ‘‘(4) any proposed or final class action settle12 ment; 

13 ‘‘(5) any settlement or other agreement contem14 poraneously made between class counsel and counsel 

15 for the defendants; 

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

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

18 who reside in each State and the estimated propor19 tionate share of the claims of such members to the 

20 entire settlement to that State’s appropriate State 

21 official; or 

22 ‘‘(B) if the provision of information under sub23 paragraph (A) is not feasible, a reasonable estimate 

24 of the number of class members residing in each 
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1 State and the estimated proportionate share of the 

2 claims of such members to the entire settlement; and 

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

4 materials described under subparagraphs (3) 

5 through (6). 

6 ‘‘(c) DEPOSITORY INSTITUTIONS NOTIFICATION.— 

7 ‘‘(1) FEDERAL AND OTHER DEPOSITORY INSTI8 TUTIONS.—In any case in which the defendant is a 

9 Federal depository institution, a depository institu10 tion holding company, a foreign bank, or a non-de11 pository institution subsidiary of the foregoing, the 

12 notice requirements of this section are satisfied by 

13 serving the notice required under subsection (b) 

14 upon the person who has the primary Federal regu15 latory or supervisory responsibility with respect to 

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

17 in the class action are subject to regulation or super18 vision by that person. 

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

20 any case in which the defendant is a State deposi21 tory institution (as that term is defined in section 3 

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

23 1813)), the notice requirements of this section are 

24 satisfied by serving the notice required under sub25 section (b) upon the State bank supervisor (as that 
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1 term is defined in section 3 of the Federal Deposit 

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

3 which the defendant is incorporated or chartered, if 

4 some or all of the matters alleged in the class action 

5 are subject to regulation or supervision by that per6 son, and upon the appropriate Federal official. 

7 ‘‘(d) FINAL APPROVAL.—An order giving final ap8 proval of a proposed settlement may not be issued earlier 

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

10 appropriate Federal official and the appropriate State offi11 cial are served with the notice required under subsection 

12 (b). 

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

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

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

16 a settlement agreement or consent decree in a class 

17 action if the class member demonstrates that the no18 tice required under subsection (b) has not been pro19 vided. 

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

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

22 agreement or consent decree under paragraph (1) if 

23 the notice required under subsection (b) was directed 

24 to the appropriate Federal official and to either the 

25 State attorney general or the person that has pri-
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1 mary regulatory, supervisory, or licensing authority 

2 over the defendant. 

3 ‘‘(3) APPLICATION OF RIGHTS.—The rights cre4 ated by this subsection shall apply only to class 

5 members or any person acting on a class member’s 

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

7 rights affecting a class member’s participation in the 

8 settlement. 

9 ‘‘(f) RULE OF CONSTRUCTION.—Nothing in this sec10 tion shall be construed to expand the authority of, or im11 pose any obligations, duties, or responsibilities upon, Fed12 eral or State officials.’’. 

13 (b) TECHNICAL AND CONFORMING AMENDMENT.— 

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

15 after the item relating to chapter 113 the following: 

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

16 SEC. 4. FEDERAL DISTRICT COURT JURISDICTION FOR 

17 INTERSTATE CLASS ACTIONS. 

18 (a) APPLICATION OF FEDERAL DIVERSITY JURISDIC19 TION.—Section 1332 is amended— 

20 (1) by redesignating subsection (d) as sub21 section (e); and 

22 (2) by inserting after subsection (c) the fol23 lowing: 

24 ‘‘(d)(1) In this subsection— 
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1 ‘‘(A) the term ‘class’ means all of the class 

2 members in a class action; 

3 ‘‘(B) the term ‘class action’ means any civil ac4 tion filed under rule 23 of the Federal Rules of Civil 

5 Procedure or similar State statute or rule of judicial 

6 procedure authorizing an action to be brought by 1 

7 or more representative persons as a class action; 

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

9 an order issued by a court approving the treatment 

10 of some or all aspects of a civil action as a class ac11 tion; and 

12 ‘‘(D) the term ‘class members’ means the per13 sons (named or unnamed) who fall within the defini14 tion of the proposed or certified class in a class ac15 tion. 

16 ‘‘(2) The district courts shall have original jurisdic17 tion of any civil action in which the matter in controversy 

18 exceeds the sum or value of $5,000,000, exclusive of inter19 est and costs, and is a class action in which— 

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

21 citizen of a State different from any defendant; 

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

23 foreign state or a citizen or subject of a foreign state 

24 and any defendant is a citizen of a State; or 
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1 ‘‘(C) any member of a class of plaintiffs is a 

2 citizen of a State and any defendant is a foreign 

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

4 ‘‘(3) A district court may, in the interests of justice 

5 and looking at the totality of the circumstances, decline 

6 to exercise jurisdiction under paragraph (2) over a class 

7 action in which greater than one-third but less than two8 thirds of the members of all proposed plaintiff classes in 

9 the aggregate and the primary defendants are citizens of 

10 the State in which the action was originally filed based 

11 on consideration of— 

12 ‘‘(A) whether the claims asserted involve mat13 ters of national or interstate interest; 

14 ‘‘(B) whether the claims asserted will be gov15 erned by laws of the State in which the action was 

16 originally filed or by the laws of other States; 

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

18 in a manner that seeks to avoid Federal jurisdiction; 

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

20 forum with a distinct nexus with the class members, 

21 the alleged harm, or the defendants; 

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

23 State in which the action was originally filed in all 

24 proposed plaintiff classes in the aggregate is sub25 stantially larger than the number of citizens from 
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1 any other State, and the citizenship of the other 

2 members of the proposed class is dispersed among a 

3 substantial number of States; and 

4 ‘‘(F) whether, during the 3-year period pre5 ceding the filing of that class action, 1 or more other 

6 class actions asserting the same or similar claims on 

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

8 ‘‘(4) A district court shall decline to exercise jurisdic9 tion under paragraph (2)— 

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

11 ‘‘(I) greater than two-thirds of the mem12 bers of all proposed plaintiff classes in the ag13 gregate are citizens of the State in which the 

14 action was originally filed; 

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

16 ‘‘(aa) from whom significant relief is 

17 sought by members of the plaintiff class; 

18 ‘‘(bb) whose alleged conduct forms a 

19 significant basis for the claims asserted by 

20 the proposed plaintiff class; and 

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

22 which the action was originally filed; and 

23 ‘‘(III) principal injuries resulting from the 

24 alleged conduct or any related conduct of each 
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1 defendant were incurred in the State in which 

2 the action was originally filed; and 

3 ‘‘(ii) during the 3-year period preceding the fil4 ing of that class action, no other class action has 

5 been filed asserting the same or similar factual alle6 gations against any of the defendants on behalf of 

7 the same or other persons; or 

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

9 proposed plaintiff classes in the aggregate, and the 

10 primary defendants, are citizens of the State in 

11 which the action was originally filed. 

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

13 any class action in which— 

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

15 officials, or other governmental entities against 

16 whom the district court may be foreclosed from or17 dering relief; or 

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

19 plaintiff classes in the aggregate is less than 100. 

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

21 class members shall be aggregated to determine whether 

22 the matter in controversy exceeds the sum or value of 

23 $5,000,000, exclusive of interest and costs. 

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

25 plaintiff classes shall be determined for purposes of para-
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1 graphs (2) through (6) as of the date of filing of the com2 plaint or amended complaint, or, if the case stated by the 

3 initial pleading is not subject to Federal jurisdiction, as 

4 of the date of service by plaintiffs of an amended pleading, 

5 motion, or other paper, indicating the existence of Federal 

6 jurisdiction. 

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

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

9 the court with respect to that action. 

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

11 that solely involves a claim— 

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

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

14 U.S.C. 78p(f)(3)) and section 28(f)(5)(E) of the Se15 curities Exchange Act of 1934 (15 U.S.C. 

16 78bb(f)(5)(E)); 

17 ‘‘(B) that relates to the internal affairs or gov18 ernance of a corporation or other form of business 

19 enterprise and that arises under or by virtue of the 

20 laws of the State in which such corporation or busi21 ness enterprise is incorporated or organized; or 

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

23 fiduciary duties), and obligations relating to or cre24 ated by or pursuant to any security (as defined 

25 under section 2(a)(1) of the Securities Act of 1933 
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1 (15 U.S.C. 77b(a)(1)) and the regulations issued 

2 thereunder). 

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

4 1453, an unincorporated association shall be deemed to 

5 be a citizen of the State where it has its principal place 

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

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

8 1453, a mass action shall be deemed to be a class action 

9 removable under paragraphs (2) through (10) if it other10 wise meets the provisions of those paragraphs. 

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

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

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

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

15 jointly on the ground that the plaintiffs’ claims involve 

16 common questions of law or fact, except that jurisdiction 

17 shall exist only over those plaintiffs whose claims in a 

18 mass action satisfy the jurisdictional amount requirements 

19 under subsection (a). 

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

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

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

23 an event or occurrence in the State in which the ac24 tion was filed, and that allegedly resulted in injuries 

25 in that State or in States contiguous to that State; 
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1 ‘‘(II) the claims are joined upon motion of a de2 fendant; 

3 ‘‘(III) all of the claims in the action are as4 serted on behalf of the general public (and not on 

5 behalf of individual claimants or members of a pur6 ported class) pursuant to a State statute specifically 

7 authorizing such action; or 

8 ‘‘(IV) the claims have been consolidated or co9 ordinated solely for pretrial proceedings. 

10 ‘‘(C)(i) Any action(s) removed to Federal court pur11 suant to this subsection shall not thereafter be transferred 

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

13 promulgated thereunder, unless a majority of the plaintiffs 

14 in the action request transfer pursuant to section 1407. 

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

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

17 the Federal Rules of Civil Procedure; or 

18 ‘‘(II) if plaintiffs propose that the action pro19 ceed as a class action pursuant to rule 23 of the 

20 Federal Rules of Civil Procedure. 

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

22 in a mass action that is removed to Federal court pursu23 ant to this subsection shall be deemed tolled during the 

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

25 (b) CONFORMING AMENDMENTS.— 
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1 (1) Section 1335(a)(1) is amended by inserting 

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

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

4 ‘‘(d)’’ and inserting ‘‘(e)’’. 

5 SEC. 5. REMOVAL OF INTERSTATE CLASS ACTIONS TO FED6 ERAL DISTRICT COURT. 

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

8 after section 1452 the following: 

9 ‘‘§ 1453. Removal of class actions 

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

11 ‘class action’, ‘class certification order’, and ‘class mem12 ber’ shall have the meanings given such terms under sec13 tion 1332(d)(1). 

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

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

16 section 1446 (except that the 1-year limitation under sec17 tion 1446(b) shall not apply), without regard to whether 

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

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

20 any defendant without the consent of all defendants. 

21 ‘‘(c) REVIEW OF REMAND ORDERS.— 

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

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

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

25 may accept an appeal from an order of a district 
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1 court granting or denying a motion to remand a 

2 class action to the State court from which it was re3 moved if application is made to the court of appeals 

4 not less than 7 days after entry of the order. 

5 ‘‘(2) TIME PERIOD FOR JUDGMENT.—If the 

6 court of appeals accepts an appeal under paragraph 

7 (1), the court shall complete all action on such ap8 peal, including rendering judgment, not later than 

9 60 days after the date on which such appeal was 

10 filed, unless an extension is granted under para11 graph (3). 

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

13 of appeals may grant an extension of the 60-day pe14 riod described in paragraph (2) if— 

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

16 such extension, for any period of time; or 

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

18 shown and in the interests of justice, for a pe19 riod not to exceed 10 days. 

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

21 on the appeal under paragraph (1) is not issued be22 fore the end of the period described in paragraph 

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

24 the appeal shall be denied. 
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1 ‘‘(d) EXCEPTION.—This section shall not apply to 

2 any class action that solely involves— 

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

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

5 of 1933 (15 U.S.C. 78p(f)(3)) and section 

6 28(f)(5)(E) of the Securities Exchange Act of 1934 

7 (15 U.S.C. 78bb(f)(5)(E)); 

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

9 or governance of a corporation or other form of busi10 ness enterprise and arises under or by virtue of the 

11 laws of the State in which such corporation or busi12 ness enterprise is incorporated or organized; or 

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

14 (including fiduciary duties), and obligations relating 

15 to or created by or pursuant to any security (as de16 fined under section 2(a)(1) of the Securities Act of 

17 1933 (15 U.S.C. 77b(a)(1)) and the regulations 

18 issued thereunder).’’. 

19 (b) TECHNICAL AND CONFORMING AMENDMENTS.— 

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

21 after the item relating to section 1452 the following: 

‘‘1453. Removal of class actions.’’. 

22 SEC. 6. REPORT ON CLASS ACTION SETTLEMENTS. 

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

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

25 of the United States, with the assistance of the Director 
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1 of the Federal Judicial Center and the Director of the Ad2 ministrative Office of the United States Courts, shall pre3 pare and transmit to the Committees on the Judiciary of 

4 the Senate and the House of Representatives a report on 

5 class action settlements. 

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

7 contain— 

8 (1) recommendations on the best practices that 

9 courts can use to ensure that proposed class action 

10 settlements are fair to the class members that the 

11 settlements are supposed to benefit; 

12 (2) recommendations on the best practices that 

13 courts can use to ensure that— 

14 (A) the fees and expenses awarded to 

15 counsel in connection with a class action settle16 ment appropriately reflect the extent to which 

17 counsel succeeded in obtaining full redress for 

18 the injuries alleged and the time, expense, and 

19 risk that counsel devoted to the litigation; and 

20 (B) the class members on whose behalf the 

21 settlement is proposed are the primary bene22 ficiaries of the settlement; and 

23 (3) the actions that the Judicial Conference of 

24 the United States has taken and intends to take to-
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1 ward having the Federal judiciary implement any or 

2 all of the recommendations contained in the report. 

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

4 this section shall be construed to alter the authority of 

5 the Federal courts to supervise attorneys’ fees. 

6 SEC. 7. ENACTMENT OF JUDICIAL CONFERENCE REC7 OMMENDATIONS. 

8 Notwithstanding any other provision of law, the 

9 amendments to rule 23 of the Federal Rules of Civil Pro10 cedure, which are set forth in the order entered by the 

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

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

13 on December 1, 2003 (as specified in that order), which14 ever occurs first. 

15 SEC. 8. RULEMAKING AUTHORITY OF SUPREME COURT 

16 AND JUDICIAL CONFERENCE. 

17 Nothing in this Act shall restrict in any way the au18 thority of the Judicial Conference and the Supreme Court 

19 to propose and prescribe general rules of practice and pro20 cedure under chapter 131 of title 28, United States Code. 

21 SEC. 9. EFFECTIVE DATE. 

22 The amendments made by this Act shall apply to any 

23 civil action commenced on or after the date of enactment 

24 of this Act. 

Calendar No. 1 

109TH CONGRESS 

1ST SESSION S. 5 

A BILL 

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 

FEBRUARY 3, 2005 

Reported without amendment