Union Calendar No. 397
105TH CONGRESS
2D SESSION
H. R. 3789
[Report No. 105–702]
A BILL
To amend title 28, United States Code, to enlarge
Federal Court jurisdiction over purported class
actions.
SEPTEMBER 10, 1998
Reported with an amendment, committed to the Commit-
tee of the Whole House on the State of the Union, and
ordered to be printed
IB
Union Calendar No. 397
105TH CONGRESS
2D SESSION
H. R. 3789
[Report No. 105–702]
To amend title 28, United States Code, to enlarge Federal Court jurisdiction
over purported class actions.
IN THE HOUSE OF REPRESENTATIVES
MAY 5, 1998
Mr. HYDE (for himself, Mr. MCCOLLUM, Mr. SMITH of Texas, Mr. CANADY
of Florida, Mr. BRYANT, Mr. PEASE, and Mr. MORAN of Virginia) intro-
duced the following bill; which was referred to the Committee on the Ju-
diciary
SEPTEMBER 10, 1998
Additional sponsors: Mr. FRANK of Massachusetts, Mr. INGLIS of South
Carolina, Mr. SENSENBRENNER, and Mr. ROGAN
SEPTEMBER 10, 1998
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
[For text of introduced bill, see copy of bill as introduced on May 5, 1998]
A BILL
To amend title 28, United States Code, to enlarge Federal
Court jurisdiction over purported class actions.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND REFERENCE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Class Action Jurisdiction Act of 1998’’.
(b) REFERENCE.—Whenever in this Act an amend-
ment or repeal is expressed in terms of 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. JURISDICTION OF DISTRICT COURTS.
(a) EXPANSION OF FEDERAL JURISDICTION.—Section
1332 is amended by redesignating subsections (b), (c), and
(d) as subsections (c), (d), and (e), respectively, and by in-
serting after subsection (a) the following:
‘‘(b)(1) The district courts shall have original jurisdic-
tion of any civil action, regardless of the sum or value of
the matter in controversy therein, which is brought as a
class action and in which—
‘‘(A) any member of a proposed plaintiff class is
a citizen of a State different from any defendant;
‘‘(B) any member of a proposed plaintiff class is
a foreign state or a citizen or subject of 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) In a civil action described in paragraph (1)
in which—
‘‘(i) the substantial majority of the members of
all proposed plaintiff classes are citizens of a single
State of which the primary defendants are also citi-
zens, and
‘‘(ii) the claims asserted will be governed pri-
marily by the laws of that State,
the district court should abstain from hearing such action.
‘‘(B) In a civil action described in paragraph (1) in
which—
‘‘(i) all matters in controversy asserted by the
individual members of all proposed plaintiff classes
in the aggregate do not exceed the sum or value of
$1,000,000, exclusive of interest and costs,
‘‘(ii) the number of members of all proposed
plaintiff classes in the aggregate is less than 100, or
‘‘(iii) the primary defendants are States, State
officials, or other governmental entities against whom
the district court may be foreclosed from ordering re-
lief,
the district court may, in its discretion, abstain from hear-
ing such action.
‘‘(3)(A) Paragraph (1) and section 1453 shall not
apply to any class action that is brought under the Securi-
ties Act of 1933.
‘‘(B) Paragraph (1) and section 1453 shall not apply
to a class action described in subparagraph (C) that is
based upon the statutory or common law of the State in
which the issuer concerned is incorporated (in the case of
a corporation) or organized (in the case of any other en-
tity).
‘‘(C) A class action is described in this subparagraph
if it involves—
‘‘(i) the purchase or sale of securities by an
issuer or an affiliate of an issuer exclusively from or
to holders of equity securities of the issuer; or
‘‘(ii) any recommendation, position, or other
communication with respect to the sale of securities of
an issuer that—
‘‘(I) is made by or on behalf of the issuer
or an affiliate of the issuer to holders of equity
securities of the issuer; and
‘‘(II) concerns decisions of those equity hold-
ers with respect to voting their securities, acting
in response to a tender or exchange offer, or exer-
cising dissenters’ or appraisal rights.
‘‘(D) As used in this paragraph, the terms ‘issuer’, ‘se-
curity’, and ‘equity security’ have the meanings given those
terms in section 3 of the Securities Exchange Act of 1934.’’.
(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 pro-
posed class shall be deemed to be a citizen of a State dif-
ferent from a defendant corporation only if that member
is a citizen of a State different from all States of which
the defendant corporation is deemed a citizen.’’.
SEC. 3. 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, except that such action may be removed—
‘‘(1) by any defendant without the consent of all
defendants; or