IIB
106TH CONGRESS
1ST SESSION
H. R. 1875
IN THE SENATE OF THE UNITED STATES
SEPTEMBER 24, 1999
Received
NOVEMBER 19, 1999
Read twice and referred to the Committee on the Judiciary
AN ACT
To amend title 28, United States Code, to allow the applica-
tion of the principles of Federal diversity jurisdiction
to interstate class actions.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE AND REFERENCE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Interstate Class Action Jurisdiction Act of 1999’’.
(b) REFERENCE.—Whenever in this Act reference is
made to an amendment to, or repeal of, a section or other
provision, the reference shall be considered to be made to
a section or other provision of title 28, United States
Code.
SEC. 2. FINDINGS.
The Congress finds that—
(1) as recently noted by the United States
Court of Appeals for the Third Circuit, interstate
class actions are ‘‘the paradigm for Federal diversity
jurisdiction because, in a constitutional sense, they
implicate interstate commerce, invite discrimination
by a local State, and tend to attract bias against
business enterprises’’;
(2) most such cases, however, fall outside the
scope of current Federal diversity jurisdiction stat-
utes;
(3) that exclusion is an unintended technicality,
inasmuch as those statutes were enacted by Con-
gress before the rise of the modern class action and
therefore without recognition that interstate class
actions typically are substantial controversies of the
type for which diversity jurisdiction was designed;
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(4) Congress is constitutionally empowered to
amend the current Federal diversity jurisdiction
statutes to permit most interstate class actions to be
brought in or removed to Federal district courts;
and
(5) in order to ensure that interstate class ac-
tions are adjudicated in a fair, consistent, and effi-
cient manner and to correct the unintended, tech-
nical exclusion of such cases from the scope of Fed-
eral diversity jurisdiction, it is appropriate for Con-
gress to amend the Federal diversity jurisdiction and
related statutes to allow more interstate class ac-
tions to be brought in or removed to Federal court.
SEC. 3. JURISDICTION OF DISTRICT COURTS.
(a) EXPANSION OF FEDERAL JURISDICTION.—Sec-
tion 1332 is amended by redesignating subsections (b),
(c), and (d) as subsections (c), (d), and (e), respectively,
and by inserting after subsection (a) the following:
‘‘(b)(1) The district courts shall have original juris-
diction of any civil action which is brought as a class ac-
tion and in which—
‘‘(A) any member of a proposed plaintiff class
is a citizen of a State different from any defendant;
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‘‘(B) any member of a proposed plaintiff class
is a foreign state and any defendant is a citizen of
a State; or
‘‘(C) any member of a proposed plaintiff class
is a citizen of a State and any defendant is a citizen
or subject of a foreign state.
As used in this paragraph, the term ‘foreign state’ has
the meaning given that term in section 1603(a).
‘‘(2)(A) The district courts shall not exercise jurisdic-
tion over a civil action described in paragraph (1) if the
action is—
‘‘(i) an intrastate case;
‘‘(ii) a limited scope case; or
‘‘(iii) a State action case.
‘‘(B) For purposes of subparagraph (A)—
‘‘(i) the term ‘intrastate case’ means a class ac-
tion in which the record indicates that—
‘‘(I) the claims asserted therein will be
governed primarily by the laws of the State in
which the action was originally filed; and
‘‘(II) the substantial majority of the mem-
bers of all proposed plaintiff classes, and the
primary defendants, are citizens of the State in
which the action was originally filed;
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‘‘(ii) the term ‘limited scope case’ means a class
action in which the record indicates that all matters
in controversy asserted by all members of all pro-
posed plaintiff classes do not in the aggregate exceed
the sum or value of $1,000,000, exclusive of interest
and costs, or a class action in which the number of
members of all proposed plaintiff classes in the ag-
gregate is less than 100; and
‘‘(iii) the term ‘State action case’ means a class
action in which the primary defendants are States,
State officials, or other governmental entities
against whom the district court may be foreclosed
from ordering relief.
‘‘(3) Paragraph (1) shall not apply to any claim con-
cerning a covered security as that term is defined in sec-
tion 16(f)(3) of the Securities Act of 1933 and section
28(f)(5)(E) of the Securities Exchange Act of 1934.
‘‘(4) Paragraph (1) shall not apply to any class action
solely involving a claim that relates to—
‘‘(A) the internal affairs or governance of a cor-
poration or other form of business enterprise and
that arises under or by virtue of the laws of the
State in which such corporation or business enter-
prise is incorporated or organized; or
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‘‘(B) the rights, duties (including fiduciary du-
ties), and obligations relating to or created by or
pursuant to any security (as defined under section
2(a)(1) of the Securities Act of 1933 and the regula-
tions issued thereunder).’’.
(b) CONFORMING AMENDMENT.—Section 1332(c) (as
redesignated by this section) is amended by inserting after
‘‘Federal courts’’ the following: ‘‘pursuant to subsection
(a) of this section’’.
(c) DETERMINATION OF DIVERSITY.—Section 1332,
as amended by this section, is further amended by adding
at the end the following:
‘‘(f) For purposes of subsection (b), a member of a
proposed class shall be deemed to be a citizen of a State
different from a defendant corporation only if that mem-
ber is a citizen of a State different from all States of which
the defendant corporation is deemed a citizen.’’.
SEC. 4. REMOVAL OF CLASS ACTIONS.
(a) IN GENERAL.—Chapter 89 is amended by adding
after section 1452 the following:
‘‘§ 1453. Removal of class actions
‘‘(a) IN GENERAL.—A class action may be removed
to a district court of the United States in accordance with
this chapter, but without regard to whether any defendant