Union Calendar No. 190 
106TH CONGRESS 
1ST SESSION 
H. R. 1875 
[Report No. 106–320] 
A BILL 
To amend title 28, United States Code, to allow the 
application of the principles of Federal diversity 
jurisdiction to interstate class actions. 
SEPTEMBER 14, 1999 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
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IB 
Union Calendar No. 190 
106TH CONGRESS 
1ST SESSION H. R. 1875 
[Report No. 106–320] 
To amend title 28, United States Code, to allow the application of the 
principles of Federal diversity jurisdiction to interstate class actions. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 19, 1999 
Mr. GOODLATTE (for himself, Mr. BOUCHER, Mr. BRYANT, Mr. MORAN of 
Virginia, Mr. DELAY, Mr. ARMEY, Mr. HYDE, Mr. SENSENBRENNER, 
Mr. MCCOLLUM, Mr. GEKAS, Mr. SMITH of Texas, Mr. GALLEGLY, Mr. 
CANADY of Florida, Mr. CHABOT, Mr. BARR of Georgia, Mr. HUTCH-
INSON, Mr. CANNON, Mr. ROGAN, Mrs. BONO, Mr. BLILEY, Mr. COX, 
Mr. CRAMER, Mr. DREIER, Mr. GOODE, Mr. HOLDEN, Mr. JOHN, Mrs. 
JOHNSON of Connecticut, Mr. LINDER, Mr. OXLEY, Mr. STENHOLM, Mr. 
SUNUNU, and Mr. UPTON) introduced the following bill; which was re-
ferred to the Committee on the Judiciary 
SEPTEMBER 14, 1999 
Additional sponsors: Mr. GARY MILLER of California, Mr. GOSS, Mr. BART-
LETT of Maryland, Mrs. BIGGERT, Mr. DAVIS of Virginia, and Mr. BACH-
US 
SEPTEMBER 14, 1999 
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 19, 1999] 
A BILL 
To amend title 28, United States Code, to allow the applica-
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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, 
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 ac-
tions are ‘‘the paradigm for Federal diversity juris-
diction because, in a constitutional sense, they impli-
cate 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 Congress 
before the rise of the modern class action and therefore 
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without recognition that interstate class actions typi-
cally are substantial controversies of the type for 
which diversity jurisdiction was designed; 
(4) Congress is constitutionally empowered to 
amend the current Federal diversity jurisdiction stat-
utes 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, technical 
exclusion of such cases from the scope of Federal di-
versity jurisdiction, it is appropriate for Congress to 
amend the Federal diversity jurisdiction and related 
statutes to allow more interstate class actions to be 
brought in or removed to Federal court. 
SEC. 3. 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 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; 
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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 gov-
erned 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 pri-
mary 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 proposed 
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 mem-
bers of all proposed plaintiff classes in the aggregate 
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 order-
ing relief. 
‘‘(3) Paragraph (1) shall not apply to any claim con-
cerning a covered security as that term is defined in section 
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 enterprise is in-
corporated or organized; or 
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‘‘(B) the rights, duties (including fiduciary du-
ties), and obligations relating to or created by or pur-
suant 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 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. 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 is 
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as that term is defined in section 16(f)(3) of the Secu-
rities Act of 1933 and section 28(f)(5)(E) of the Secu-
rities Exchange Act of 1934. 
‘‘(2) INTERNAL GOVERNANCE OF BUSINESS ENTI-
TIES.—This section shall not apply to any class ac-
tion solely involving a claim that relates to— 
‘‘(A) the internal affairs or governance of a 
corporation 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 
enterprise is incorporated or organized; or 
‘‘(B) the rights, duties (including fiduciary 
duties), 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 regulations issued thereunder).’’. 
(b) REMOVAL
LIMITATIONS.—Section 1446(b) is 
amended in the second sentence— 
(1) by inserting ‘‘, by exercising due diligence,’’ 
after ‘‘ascertained’’; and 
(2) 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.’’. 
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(d) APPLICATION
OF SUBSTANTIVE STATE LAW.— 
Nothing in this section or the amendments made by this 
section shall alter the substantive law applicable to an ac-
tion to which the amendments made by section 3 of this 
Act apply. 
(e) PROCEDURE AFTER REMOVAL.—Section 1447 is 
amended by adding at the end the following new subsection: 
‘‘(f) If, after removal, the court determines that no as-
pect of an action that is subject to its jurisdiction solely 
under the provisions of section 1332(b) may be maintained 
as a class action under Rule 23 of the Federal Rules of 
Civil Procedure, it shall dismiss the action. An action dis-
missed pursuant to this subsection may be amended and 
filed again in a State court, but any such refiled action 
may be removed again if it is an action of which the district 
courts of the United States have original jurisdiction. In 
any action that is dismissed pursuant to this subsection 
and that is refiled by any of the named plaintiffs therein 
in the same State court venue in which the dismissed action 
was originally filed, the limitations periods on all re-
asserted claims shall be deemed tolled for the period during 
which the dismissed class action was pending. The limita-
tions periods on any claims that were asserted in a class 
action dismissed pursuant to this subsection that are subse-
quently asserted in an individual action shall be deemed 
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tolled for the period during which the dismissed class action 
was pending.’’. 
SEC. 5. APPLICABILITY. 
The amendments made by this Act shall apply to any 
action commenced on or after the date of the enactment of 
this Act. 
SEC. 6. GAO STUDY. 
The Comptroller General of the United States shall, by 
not later than 1 year after the date of the enactment of this 
Act, conduct a study of the impact of the amendments made 
by this Act on the workload of the Federal courts and report 
to the Congress on the results of the study. 
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