Bush signs class-action bill into law
Legislation will limit 'lawsuit abuse,' backers say



WASHINGTON (AP) -- President Bush wasted no time in signing a bill that he says will curtail multimillion-dollar class-action lawsuits against companies.

The first legislative triumph of Bush's second term is a historic step toward "breaking one of the main shackles holding back our economy and America's work force -- lawsuit abuse," said House Speaker Dennis Hastert, R-Illinois.

The House approved the bill by a 279-149 vote Thursday as businesses finally saw success after a decade of efforts to reduce their legal liability from cases where a single person or a small group can represent the interests in court of many thousands of people.

While businesses failed to get the measure to apply to suits already in the courts, Bush offered immediate help by signing the bill Friday.

The president has described class-action suits as often frivolous. Businesses complain that state judges and juries have been too generous to plaintiffs.

The bill "will help protect people who are wrongfully harmed while reducing the frivolous lawsuits that clog our courts, hurt the economy, cost jobs, and burden American businesses," Bush said.

Under the legislation, class-action suits seeking $5 million or more would be heard in state court only if the primary defendant and more than one-third of the plaintiffs are from the same state. But if fewer than one-third of the plaintiffs are from the same state as the primary defendant, and more than $5 million is at stake, the case would go to federal court.

Consumer groups and trial lawyers fought against the bill, but lost their struggle when Republicans gained seats in last fall's elections and Democrats defected on the issue.

"The House of Representatives joined the Senate in sending a clear message to the nation: the rights of large corporations that take advantage of seniors, low-wage workers and local communities are more important than the rights of average American citizens," said Helen Gonzales of USAction, a liberal, pro-consumer activist group.

Changing the legal system -- including class-action, medical malpractice and asbestos injury lawsuits -- has been a priority of Bush, the GOP and businesses. They have criticized what they see as a litigation crisis that enables lawyers to reap huge profits while businesses and consumers are stuck with the bill.

Bush and other Republicans say greedy lawyers have taken advantage of the state class-action suit system by filing frivolous cases in places where they know they can win big dollar verdicts. Meanwhile, those lawyers' clients get only small sums or coupons giving them discounts for products of the company they just sued, GOP lawmakers contend.

House Majority Whip Roy Blunt, R-Missouri, said that moving those cases to federal court will ensure that state judges will no longer "routinely approve settlements in which the lawyers receive large fees and the class members receive virtually nothing."

But Democrats say Republicans just want to protect corporations from taking responsibility for their wrongdoing by keeping them clear of state courts that might issue multimillion-dollar verdicts against them.

Federal courts are expected to allow fewer large class-action suits to go forward, which Democrats say means more businesses will get away with wrongdoing and fewer ordinary people will be protected.

"It's the final payback to the tobacco industry, to the asbestos industry, to the oil industry, to the chemical industry at the expense of ordinary families who need to be able go to court to protect their loved ones when their health has been compromised," said Rep. Ed Markey, D-Massachusetts. "And these people are saying that your state isn't smart enough, your jurors aren't smart enough" to hear those cases.

The bill also would limit lawyers' fees in settlements where plaintiffs get discounts on products instead of financial settlements. The measure links the fees to the coupon's redemption rate or the actual hours spent working on a case.

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William Jennings Bryan