IB
Union Calendar No. 213
107TH CONGRESS
2D SESSION
H. R. 2341
[Report No. 107–370]
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 provide
for clearer and simpler information in class action settlement notices,
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
JUNE 27, 2001
Mr. GOODLATTE (for himself, Mr. BOUCHER, Mr. SENSENBRENNER, Mr.
MORAN of Virginia, Mr. ARMEY, Mr. STENHOLM, Mr. HYDE, Mr.
DOOLEY of California, Mr. BRYANT, Mr. HOLDEN, Mr. COX, Mr.
CHABOT, Mr. CRAMER, Mr. OXLEY, Mr. SUNUNU, Mr. BACHUS, Mr.
BARTLETT of Maryland, and Mr. GOSS) introduced the following bill;
which was referred to the Committee on the Judiciary
MARCH 12, 2002
Additional sponsors: Mr. RILEY, Mrs. BIGGERT, Mr. FLAKE, Mr. GILLMOR,
Mr. GOODE, Mr. KELLER, Mr. GALLEGLY, Mr. COOKSEY, Mr. DEAL of
Georgia, Mr. SHAYS, Mr. SIMMONS, Mr. SMITH of Texas, Mr. BARR of
Georgia, Mr. BRADY of Texas, Mr. EHRLICH, Mr. LEWIS of Kentucky,
Mr. KNOLLENBERG, Mr. COBLE, Mr. ISAKSON, Mr. WICKER, Ms. HART,
Mr. PENCE, Mr. ISSA, Mr. CANNON, Mr. HOSTETTLER, Mr. GEKAS, Mr.
TOM DAVIS of Virginia, Mrs. JOHNSON of Connecticut, Mr. BROWN of
South Carolina, Mr. CANTOR, Mr. FORBES, Mr. SCHROCK, Mr. ROGERS
of Michigan, Mr. NETHERCUTT, Mr. GRAHAM, Mr. GRAVES, Mr. FOLEY,
Mr. SULLIVAN, and Mr. TIBERI
MARCH 12, 2002
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 June 27, 2001]
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 provide for clearer and simpler information
in class action settlement notices, to assure prompt con-
sideration of interstate class actions, to amend title 28,
United States Code, to allow the application of the prin-
ciples of Federal diversity 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 2002’’.
(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 interstate
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) Over the past decade, there have been abuses
of the class action device that have harmed class
members with legitimate claims and defendants that
have acted responsibly, and that have thereby under-
mined public respect for our judicial system.
(3) Class members have been harmed by a num-
ber of actions taken by plaintiffs’ lawyers, which pro-
vide 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;
(B) unjustified rewards being made to cer-
tain plaintiffs at the expense of other class mem-
bers; and
(C) the publication of confusing notices that
prevent class members from being able to fully
understand and effectively exercise their rights.
(4) Through the use of artful pleading, plaintiffs
are able to avoid litigating class actions in Federal
court, forcing businesses and other organizations 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 merits
of the case; and
(C) defendants are effectively forced into set-
tlements, in order to avoid the possibility of huge
judgments that could destabilize their companies.
(5) These abuses undermine our Federal system
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 parties 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 settlements and exces-
sive 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. Clearer and simpler settlement information.
‘‘1716. 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 hear-
ing to determine whether, and making a written finding
that, the settlement is fair, reasonable, and adequate 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 nonmonetary
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 lo-
cated in closer geographic proximity to the court.
‘‘§ 1714. Prohibition on the payment of bounties
‘‘(a) IN GENERAL.—The court may not approve a pro-
posed settlement that provides for the payment of a greater
share of the award to a class representative serving on be-
half 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 obli-
gations as a class representative.
‘‘§ 1715. Clearer and simpler settlement information
‘‘(a) PLAIN ENGLISH REQUIREMENTS.—Any court
with jurisdiction over a plaintiff class action shall require
that any written notice concerning a proposed settlement
of the class action provided to the class through the mail
or publication in printed media contain—