Over the past ten years, class action filings in state courts have exploded at rate much greater than in federal courts. And many state courts do not have the resources to deal with what are essentially interstate cases. Indeed, many state courts have crushing caseloads, and far less staffing than federal judges have, such as magistrate judges and law clerks, available to manage such cases. Civil filings in state trial courts of general jurisdiction have increased 28 percent since 1984, versus only a 4 percent increase in our federal courts. Yet state courts continue to exercise jurisdiction over an overwhelming number of interstate class actions because of loopholes in the federal jurisdictional laws.
Federal law requires each member of the class to claim amounts over the jurisdictional amount.
Furthermore, trial attorneys have abused the state class action mechanism by settling class actions for exorbitant fees in exchange for coupons or other trivial benefits for class members. Let me give three examples of abuses of the class action mechanism. This is becoming all too familiar. The class obtains virtually nothing, while the trial lawyers get rich. The practice was fully disclosed to policyholders.