I 
109TH CONGRESS 
1ST SESSION 
H. R. 516 
To amend the procedures that apply to consideration of interstate class 
actions to assure fairer outcomes for class members and defendants, 
to outlaw certain practices that provide inadequate settlements for class 
members, to assure that attorneys do not receive a disproportionate 
amount of settlements at the expense of class members, to assure prompt 
consideration of interstate class actions, to amend title 28, United States 
Code, to allow the application of the principles of Federal diversity 
jurisdiction to interstate class actions, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 2, 2005 
Mr. GOODLATTE (for himself, Mr. BOUCHER, Mr. SENSENBRENNER, Mr. 
SMITH of Texas, Mr. DELAY, Mr. BLUNT, Mr. CANTOR, Ms. PRYCE of 
Ohio, Mr. DREIER, Mr. MANZULLO, Mr. KINGSTON, Mr. FEENEY, Mr. 
COBLE, Mr. CHABOT, Mr. FORBES, Mr. PENCE, Mr. ISSA, Mr. KELLER, 
Mr. BACHUS, Mr. HOSTETTLER, Mr. GALLEGLY, Mr. DANIEL E. LUN-
GREN of California, Mr. FLAKE, Mr. BRADLEY of New Hampshire, Mr. 
CARTER, Mr. SESSIONS, Mr. ROGERS of Michigan, Mr. KUHL of New 
York, Ms. HART, Mr. NORWOOD, Mr. PEARCE, Mr. GILCHREST, Mr. 
CHOCOLA, Mr. HENSARLING, Mr. BAKER, Mrs. BIGGERT, Mr. KENNEDY 
of Minnesota, Mr. BURGESS, Mr. GINGREY, Mr. COX, Mr. DENT, Mr. 
WICKER, Mr. CANNON, Mr. CUNNINGHAM, Mr. MILLER of Florida, Mr. 
FITZPATRICK of Pennsylvania, Mr. MCCRERY, Mr. STEARNS, Ms. FOXX, 
Mr. CONAWAY, Mr. MORAN of Virginia, Mr. MATHESON, Mr. HOLDEN, 
Mr. BOYD, Mr. TANNER, Mr. COOPER, Mr. CRAMER, Mr. SCOTT of Geor-
gia, Mr. DAVIS of Tennessee, Mr. MOORE of Kansas, Ms. GINNY BROWN- 
WAITE of Florida, and Mr. BOREN) introduced the following bill; which 
was referred to the Committee on the Judiciary 
A BILL 
To amend the procedures that apply to consideration of 
interstate class actions to assure fairer outcomes for
class members and defendants, to outlaw certain prac-
tices that provide inadequate settlements for class mem-
bers, to assure that attorneys do not receive a dispropor-
tionate amount of settlements at the expense of class 
members, to assure prompt consideration of interstate 
class actions, to amend title 28, United States Code, 
to allow the application of the principles of Federal diver-
sity jurisdiction to interstate class actions, and for other 
purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; REFERENCE; TABLE OF CON-
TENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Class Action Fairness Act of 2005’’. 
(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. 
(c) TABLE OF CONTENTS.—The table of contents for 
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 inter-
state class actions. 
Sec. 4. Federal district court jurisdiction of interstate class actions. 
Sec. 5. Removal of interstate class actions to Federal district court. 
Sec. 6. Appeals of class action certification orders. 
Sec. 7. Effective date.
SEC. 2. FINDINGS AND PURPOSES. 
(a) FINDINGS.—The Congress finds as follows: 
(1) Class action lawsuits are an important and 
valuable part of our legal system when they permit 
the fair and efficient resolution of legitimate claims 
of numerous parties by allowing the claims to be ag-
gregated into a single action against a defendant 
that has allegedly caused harm. 
(2) For many years there have been abuses of 
the class action device that have— 
(A) harmed class members with legitimate 
claims and defendants that have acted respon-
sibly; 
(B) adversely affected interstate commerce; 
and 
(C) undermined public respect for the judi-
cial system in the United States. 
(3) Class members have been harmed by a 
number of actions taken by plaintiffs’ lawyers, which 
provide little or no benefit to class members as a 
whole, including— 
(A) plaintiffs’ lawyers receiving large fees, 
while class members are left with coupons or 
other awards of little or no value; and
(B) unjustified rewards being made to cer-
tain plaintiffs at the expense of other class 
members. 
(4) Through the use of artful pleading, plain-
tiffs are able to avoid litigating class actions in Fed-
eral court, forcing businesses and other organiza-
tions to defend interstate class action lawsuits in 
county and State courts where— 
(A) the lawyers, rather than the claimants, 
are likely to receive the maximum benefit; 
(B) less scrutiny may be given to the mer-
its of the case; and 
(C) defendants are effectively forced into 
settlements, in order to avoid the possibility of 
huge judgments that could destabilize their 
companies. 
(5) These abuses undermine the Federal judi-
cial system, the free flow of interstate commerce, 
and the intent of the framers of the Constitution in 
creating diversity jurisdiction, in that county and 
State courts are— 
(A) handling interstate class actions that 
affect parties from many States;
(B) sometimes acting in ways that dem-
onstrate bias against out-of-State defendants; 
and 
(C) making judgments that impose their 
view of the law on other States and bind the 
rights of the residents of those States. 
(6) Abusive interstate class actions have 
harmed society as a whole by forcing innocent par-
ties to settle cases rather than risk a huge judgment 
by a local jury, thereby costing consumers billions of 
dollars in increased costs to pay for forced settle-
ments and excessive judgments. 
(b) PURPOSES.—The purposes of this Act are— 
(1) to assure fair and prompt recoveries for 
class members with legitimate claims; 
(2) to protect responsible companies and other 
institutions against interstate class actions in State 
courts; 
(3) to restore the intent of the framers of the 
Constitution by providing for Federal court consider-
ation of interstate class actions; and 
(4) to benefit society by encouraging innovation 
and lowering consumer prices.
SEC. 3. CONSUMER CLASS ACTION BILL OF RIGHTS AND IM-
PROVED 
PROCEDURES 
FOR 
INTERSTATE 
CLASS ACTIONS. 
(a) IN GENERAL.—Part V is amended by inserting 
after chapter 113 the following: 
‘‘CHAPTER 114—CLASS ACTIONS 
‘‘Sec. 
‘‘1711. Judicial scrutiny of coupon and other noncash settlements. 
‘‘1712. Protection against loss by class members. 
‘‘1713. Protection against discrimination based on geographic location. 
‘‘1714. Prohibition on the payment of bounties. 
‘‘1715. Definitions. 
‘‘§ 1711. Judicial scrutiny of coupon and other 
noncash settlements 
‘‘The court may approve a proposed settlement under 
which the class members would receive noncash benefits 
or would otherwise be required to expend funds in order 
to obtain part or all of the proposed benefits only after 
a hearing to determine whether, and making a written 
finding that, the settlement is fair, reasonable, and ade-
quate for class members. 
‘‘§ 1712. Protection against loss by class members 
‘‘The court may approve a proposed settlement under 
which any class member is obligated to pay sums to class 
counsel that would result in a net loss to the class member 
only if the court makes a written finding that nonmone-
tary benefits to the class member outweigh the monetary 
loss.
‘‘§ 1713. Protection against discrimination based on 
geographic location 
‘‘The court may not approve a proposed settlement 
that provides for the payment of greater sums to some 
class members than to others solely on the basis that the 
class members to whom the greater sums are to be paid 
are located in closer geographic proximity to the court. 
‘‘§ 1714. Prohibition on the payment of bounties 
‘‘(a) IN GENERAL.—The court may not approve a 
proposed settlement that provides for the payment of a 
greater share of the award to a class representative serv-
ing on behalf of a class, on the basis of the formula for 
distribution to all other class members, than that awarded 
to the other class members. 
‘‘(b) RULE OF CONSTRUCTION.—The limitation in 
subsection (a) shall not be construed to prohibit any pay-
ment approved by the court for reasonable time or costs 
that a person was required to expend in fulfilling his or 
her obligations as a class representative. 
‘‘§ 1715. Definitions 
‘‘In this chapter: 
‘‘(1) CLASS ACTION.—The term ‘class action’ 
means— 
‘‘(A) any civil action filed in a district 
court of the United States pursuant to rule 23 
of the Federal Rules of Civil Procedure; or
‘‘(B) any civil action that is removed to a 
district court of the United States and that was 
originally filed pursuant to a State statute or 
rule of judicial procedure authorizing an action 
to be brought by one or more representatives on 
behalf of a class. 
‘‘(2) CLASS COUNSEL.—The term ‘class coun-
sel’ means the persons who serve as the attorneys 
for the class members in a proposed or certified 
class action. 
‘‘(3) CLASS MEMBER.—The term ‘class mem-
ber’ means any of the persons who fall within the 
definition of the proposed or certified class in a class 
action. 
‘‘(4) PROPOSED SETTLEMENT.—The term ‘pro-
posed settlement’ means an agreement that resolves 
claims in a class action, that is subject to court ap-
proval, and that, if approved, would be binding on 
the class members.’’. 
(b) TECHNICAL AND CONFORMING AMENDMENT.— 
The table of chapters for part V is amended by inserting 
after the item relating to chapter 113 the following: 
‘‘114. Class Actions ............................................................................ 1711’’.
SEC. 4. FEDERAL DISTRICT COURT JURISDICTION OF 
INTERSTATE CLASS ACTIONS. 
(a) APPLICATION OF FEDERAL DIVERSITY JURISDIC-
TION.—Section 1332 is amended— 
(1) by redesignating subsection (d) as sub-
section (e); and 
(2) by inserting after subsection (c) the fol-
lowing: 
‘‘(d)(1) In this subsection— 
‘‘(A) the term ‘class’ means all of the class 
members in a class action; 
‘‘(B) the term ‘class action’ means any civil ac-
tion filed pursuant to rule 23 of the Federal Rules 
of Civil Procedure or similar State statute or rule of 
judicial procedure authorizing an action to be 
brought by one or more representative persons on 
behalf of a class; 
‘‘(C) the term ‘class certification order’ means 
an order issued by a court approving the treatment 
of a civil action as a class action; and 
‘‘(D) the term ‘class member’ means any of the 
persons who fall within the definition of the pro-
posed or certified class in a class action. 
‘‘(2) The district courts shall have original jurisdic-
tion of any civil action in which the matter in controversy
exceeds the sum or value of $5,000,000, exclusive of inter-
est and costs, and is a class action in which— 
‘‘(A) any member of a class of plaintiffs is a 
citizen of a State different from any defendant; 
‘‘(B) any member of a class of plaintiffs 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 class of plaintiffs is a 
citizen of a State and any defendant is a foreign 
state or a citizen or subject of a foreign state. 
‘‘(3) A district court may, in the interests of justice, 
decline to exercise jurisdiction under paragraph (2) over 
a class action in which greater than one-third but less than 
two-thirds of the members of all proposed plaintiff classes 
in the aggregate and the primary defendants are citizens 
of the State in which the action was originally filed based 
on consideration of the following factors: 
‘‘(A) Whether the claims asserted involve mat-
ters of national or interstate interest. 
‘‘(B) Whether the claims asserted will be gov-
erned by laws other than those of the State in which 
the action was originally filed. 
‘‘(C) In the case of a class action originally 
filed in a State court, whether the class action has
been pleaded in a manner that seeks to avoid Fed-
eral jurisdiction. 
‘‘(D) Whether the number of citizens of the 
State in which the action was originally filed in all 
proposed plaintiff classes in the aggregate is sub-
stantially larger than the number of citizens from 
any other State, and the citizenship of the other 
members of the proposed class is dispersed among a 
substantial number of States. 
‘‘(E) Whether 1 or more class actions asserting 
the same or similar claims on behalf of the same or 
other persons have been or may be filed. 
‘‘(4) Paragraph (2) shall not apply to any class action 
in which— 
‘‘(A) two-thirds or more of the members of all 
proposed plaintiff classes in the aggregate and the 
primary defendants are citizens of the State in 
which the action was originally filed; 
‘‘(B) the primary defendants are States, State 
officials, or other governmental entities against 
whom the district court may be foreclosed from or-
dering relief; or 
‘‘(C) the number of members of all proposed 
plaintiff classes in the aggregate is less than 100.
‘‘(5) In any class action, the claims of the individual 
class members shall be aggregated to determine whether 
the matter in controversy exceeds the sum or value of 
$5,000,000, exclusive of interest and costs. 
‘‘(6) This subsection shall apply to any class action 
before or after the entry of a class certification order by 
the court with respect to that action. 
‘‘(7)(A) A district court shall dismiss any civil action 
that is subject to the jurisdiction of the court solely under 
this subsection if the court determines that the action may 
not proceed as a class action based on a failure to satisfy 
the requirements of rule 23 of the Federal Rules of Civil 
Procedure. 
‘‘(B) Nothing in subparagraph (A) shall prohibit 
plaintiffs from filing an amended class action in Federal 
court or filing an action in State court, except that any 
such action filed in State court may be removed to the 
appropriate district court if it is an action of which the 
district courts of the United States have original jurisdic-
tion. 
‘‘(C) In any action that is dismissed under this para-
graph and is filed by any of the original named plaintiffs 
therein in the same State court venue in which the dis-
missed action was originally filed, the limitations periods 
on all reasserted claims shall be deemed tolled for the pe-
riod during which the dismissed class action was pending. 
The limitations periods on any claims that were asserted 
in a class action dismissed under this paragraph that are 
subsequently asserted in an individual action shall be 
deemed tolled for the period during which the dismissed 
action was pending. 
‘‘(8) Paragraph (2) shall not apply to any class action 
brought by shareholders that solely involves a claim that 
relates to— 
‘‘(A) a claim concerning a covered security as 
defined under section 16(f)(3) of the Securities Act 
of 1933 and section 28(f)(5)(E) of the Securities 
Exchange Act of 1934; 
‘‘(B) the internal affairs or governance of a cor-
poration or other form of business enterprise and 
arises under or by virtue of the laws of the State in 
which such corporation or business enterprise is in-
corporated or organized; or 
‘‘(C) 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). 
‘‘(9) For purposes of this subsection and section 
1453 of this title, an unincorporated association shall be
deemed to be a citizen of the State where it has its prin-
cipal place of business and the State under whose laws 
it is organized. 
‘‘(10) For purposes of this section and section 1453 
of this title, a civil action that is not otherwise a class 
action as defined in paragraph (1)(B) of this subsection 
shall nevertheless be deemed a class action if— 
‘‘(A) the named plaintiff purports to act for the 
interests of its members (who are not named parties 
to the action) or for the interests of the general pub-
lic, seeks a remedy of damages, restitution, 
disgorgement, or any other form of monetary relief, 
and is not a State attorney general; or 
‘‘(B) monetary relief claims in the action are 
proposed to be tried jointly in any respect with the 
claims of 100 or more other persons on the ground 
that the claims involve common questions of law or 
fact. 
In any such case, the persons who allegedly were injured 
shall be treated as members of a proposed plaintiff class 
and the monetary relief that is sought shall be treated as 
the claims of individual class members. The provisions of 
paragraph (7) of this subsection and subsections (b)(2) 
and (d) of section 1453 shall not apply to civil actions 
described under subparagraph (A). The provisions of para-
graph (7) of this subsection, and subsections (b)(2) and 
(d) of section 1453 shall not apply to civil actions de-
scribed under subparagraph (B).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1335(a)(1) is amended by inserting 
‘‘(a) or (d)’’ after ‘‘1332’’. 
(2) Section 1603(b)(3) is amended by striking 
‘‘(d)’’ and inserting ‘‘(e)’’. 
SEC. 5. REMOVAL OF INTERSTATE CLASS ACTIONS TO FED-
ERAL DISTRICT COURT. 
(a) IN GENERAL.—Chapter 89 is amended by adding 
after section 1452 the following: 
‘‘§ 1453. Removal of class actions 
‘‘(a) DEFINITIONS.—In this section, the terms ‘class’, 
‘class action’, ‘class certification order’, and ‘class mem-
ber’ have the meanings given these terms in section 
1332(d)(1). 
‘‘(b) IN GENERAL.—A class action may be removed 
to a district court of the United States in accordance with 
this chapter, without regard to whether any defendant is 
a citizen of the State in which the action is brought, except 
that such action may be removed— 
‘‘(1) by any defendant without the consent of 
all defendants; or
‘‘(2) by any plaintiff class member who is not 
a named or representative class member without the 
consent of all members of such class. 
‘‘(c) WHEN REMOVABLE.—This section shall apply to 
any class action before or after the entry of a class certifi-
cation order in the action, except that a plaintiff class 
member who is not a named or representative class mem-
ber of the action may not seek removal of the action before 
an order certifying a class of which the plaintiff is a class 
member has been entered. 
‘‘(d) PROCEDURE FOR REMOVAL.—The provisions of 
section 1446 relating to a defendant removing a case shall 
apply to a plaintiff removing a case under this section, 
except that, in the application of subsection (b) of such 
section, the requirement relating to the 30-day filing pe-
riod shall be met if a plaintiff class member files notice 
of removal within 30 days after receipt by such class mem-
ber, through service or otherwise, of the initial written no-
tice of the class action. 
‘‘(e) REVIEW OF ORDERS REMANDING CLASS AC-
TIONS
TO STATE COURTS.—The provisions of section 
1447 shall apply to any removal of a case under this sec-
tion, except that, notwithstanding the provisions of section 
1447(d), an order remanding a class action to the State
court from which it was removed shall be reviewable by 
appeal or otherwise. 
‘‘(f) EXCEPTION.—This section shall not apply to any 
class action brought by shareholders that solely involves— 
‘‘(1) a claim concerning a covered security as 
defined under section 16(f)(3) of the Securities Act 
of 1933 and section 28(f)(5)(E) of the Securities 
Exchange Act of 1934; 
‘‘(2) a claim that relates to the internal affairs 
or governance of a corporation or other form of busi-
ness enterprise and arises under or by virtue of the 
laws of the State in which such corporation or busi-
ness enterprise is incorporated or organized; or 
‘‘(3) a claim that relates to the rights, duties 
(including fiduciary duties), and obligations relating 
to or created by or pursuant to any security (as de-
fined under section 2(a)(1) of the Securities Act of 
1933 and the regulations issued thereunder).’’. 
(b) REMOVAL
LIMITATION.—Section 1446(b) is 
amended in the second sentence by inserting ‘‘(a)’’ after 
‘‘section 1332’’. 
(c) TECHNICAL AND CONFORMING AMENDMENTS.— 
The table of sections for chapter 89 is amended by adding 
after the item relating to section 1452 the following: 
‘‘1453. Removal of class actions.’’.
SEC. 6. APPEALS OF CLASS ACTION CERTIFICATION OR-
DERS. 
(a) IN GENERAL.—Section 1292(a) is amended by in-
serting after paragraph (3) the following: 
‘‘(4) Orders of the district courts of the United 
States granting or denying class certification under 
rule 23 of the Federal Rules of Civil Procedure, if 
notice of appeal is filed within 10 days after entry 
of the order.’’. 
(b) DISCOVERY STAY.—All discovery and other pro-
ceedings shall be stayed during the pendency of any appeal 
taken pursuant to the amendment made by subsection (a), 
unless the court finds upon the motion of any party that 
specific discovery is necessary to preserve evidence or to 
prevent undue prejudice to that party. 
SEC. 7. EFFECTIVE DATE. 
(a) IN GENERAL.—The amendments made by this 
Act shall apply to— 
(1) any civil action commenced on or after the 
date of the enactment of this Act; and 
(2) any civil action commenced before such date 
of enactment in which a class certification order (as 
defined in section 1332(d)(1)(C) of title 28, United 
States Code, as amended by section 4 of this Act) 
is entered on or after such date of enactment.
(b) FILING OF NOTICE OF REMOVAL.—In the case 
of any civil action to which subsection (a)(2) applies, the 
requirement relating to the 30-day period for the filing 
of a notice of removal under section 1446(b) and section 
1453(d) of title 28, United States Code, shall be met if 
the notice of removal is filed within 30 days after the date 
on which the class certification order referred to in sub-
section (a)(2) is entered. 
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