F. Sensenbrenner

Mr. SENSENBRENNER

Mr. SENSENBRENNER. Mr. Chairman, I yield myself such time as I may consume, and I rise in opposition to the amendment. Mr. Chairman, I rise in opposition to this amendment because it confuses discovery orders with factual evidence and appears to give the court discretion to admit unproven facts into evidence. This not only undermines the bill but it undermines the very notion of a fair trial that our judicial system is based upon. There are rules for a fair trial: the right to confront your accuser, a right to a jury in some instances, and a rule that allows both sides to discover information. But there is no precedent in the American legal system for a court to have the authority to simply decide facts without proof. The amendment of the gentlewoman from California (Ms. Waters) proposes to do that. The gentlewoman's amendment strikes at the heart of so many constitutional protections intended to protect the rights of all Americans when they are brought before the court, and it sticks the thumb on the scale of justice against those rights that have been protected both by court rules and statutes, as well as the Constitution of the United States. For that reason, and for that reason alone, it ought to be rejected. But I would like to talk about two things. The other side keeps on talking about Enron, and we will confront that directly. Enron is broke. No matter what comes out of the bankruptcy court, the people that have lost money in their 401(k)s and had employment contracts ripped up and all of that are not going to get very much money out of it. I think that is a given. And that is a shame, and it is something that we are going to have to get into in another forum. But the law is quite clear that the destruction of subpoenaed documents is a criminal obstruction of justice, and this bill does not change that criminal statute. This bill does not deal with the criminal law in any respect whatsoever. If people did do that destroying of documents, as we have read that they did, they should be indicted and prosecuted. And if the jury finds them guilty, they should go to jail and they should go to jail for a long time. But I think they deserve a fair trial just like everybody else who is accused of a crime. Because they happen to be associated with Enron or Arthur Andersen really should not make any difference. Because if we erode the right of a fair trial to those defendants, we have set a precedent that is going to bite the people of this country and this Congress for years and years to come. The way to keep the lid on Pandora's box is to reject the amendment of the gentlewoman from California. Now, the second thing I would like to bring up is let us run the wheel back about 3\1/2\ or 4 years. There were certain e-mails in the Clinton White House that were destroyed after having been subpoenaed by the Committee on Government Reform. Now, under the amendment of the gentlewoman from California, whatever the gentleman from Indiana (Mr. Burton), the chairman of the Committee on Government Reform, thought he was looking for would have been admitted as evidence and as fact and could not be impeached, even though the destroyed e-mails might have had nothing to do with what he put in his subpoena. That is the type of Pandora's box that this misdrafted amendment is opening up. And I think my friends on the other side of the aisle, including the gentlewoman from California and the gentleman from Michigan, who were most eloquent in their defense of the former President, regardless of what the facts were, would have really talked about how unfair a Waters provision would have been relating to those destroyed e-mails. So I think that if it would have been bad as it applied to former President Clinton, it is bad if it applies to Enron or anybody else. We should not open up the Pandora's box. Mr. Chairman, I yield 2 minutes to the gentleman from Utah (Mr. Cannon).

Mr. SENSENBRENNER. Mr. Chairman, I have the text of House Resolution 367 before me, and the relevant part says each such amendment may be offered only in the order printed in the report, may be offered only by a Member designated in the report and shall be divided and controlled by the proponent and opponent. The words ``or a designee'' is not in the rule. It is not in the text of the summary provisions of the resolution in House Report 107-375, but is in a head note.

Mr. SENSENBRENNER. Mr. Chairman, parliamentary inquiry.

Mr. SENSENBRENNER. Mr. Chairman, will the gentleman yield?

Mr. SENSENBRENNER. Mr. Chairman, I yield back the balance of my time.

Mr. SENSENBRENNER. Mr. Chairman, I think this is a very constructive amendment, and we are pleased to support it.

Mr. SENSENBRENNER. Mr. Chairman, I yield myself the balance of my time. Mr. Chairman, there has been an awful lot of hyperbole that is floating around this Chamber from those who are opposed to this legislation. First of all, the legislation does not diminish any cause of action that anybody may have, either as an individual or member of a class. So if they have a cause of action and the right to sue now, if this bill becomes law, they will still have that cause of action and that right to sue. So what is the beef? What this bill does do is it provides fairness. I think the biggest example of how unfair the State court system can be involves the Mississippi case that has been referred to several times previously, where the hometown judge in Mississippi approved a class action settlement that gave Mississippi residents as much as 18 times more than residents of other States. That is what the Federal court diversity citizenship jurisdiction that was put into the Constitution was designed to prevent. This bill changes the way diversity is defined so that the abuses that the Framers were concerned about in 1787 can be prevented in class action lawsuits that they never thought would ever arise in this country. So that is what we are dealing with here. What we are dealing with here also is a better way of having the courts review the fairness of noncash settlements. We have heard an awful lot about the coupons, where people end up having to buy the same product of the company that injured them, or the same service of the company that injured them. It seems to me that if somebody injured me enough to go to court and file a lawsuit and try it, if I won my lawsuit, I ought not to be forced to go back to the same company that caused the problem to begin with. This bill provides for increased scrutiny to protect consumers against that. Mr. Chairman, I think that the hyperbole we are hearing from the people who are opposed to this bill really is designed to try to get the attention of this body and the American public away from what is in the bill. All I would ask while we continue debating this bill and the amendments is for the opponents to read the bill, because most of the complaints that they have are really not present in this legislation.

Mr. SENSENBRENNER. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from Michigan (Mr. Rogers).

Mr. SENSENBRENNER. Mr. Chairman, I yield myself 15 seconds. Mr. Chairman, this bill does not take away a cause of action that any member of a class has. All of the class action suits that the gentleman from Texas has talked about could still be filed and litigated, but litigated fairly. Mr. Chairman, I yield 3 minutes to the gentleman from California (Mr. Cox).

Mr. SENSENBRENNER. Mr. Chairman, I yield myself 1 minute. I deeply regret my friend from Washington has not read the bill. This bill has nothing to do with Enron, and it specifically states that claims like the Enron claim are not covered by the differing jurisdictional provisions of this. The Enron claim involves tax law, Federal tax law where the jurisdiction is in the Federal courts. It involves securities law, Federal securities law where the jurisdiction is in the Federal courts. On page 14 of the amendment in the nature of a substitute, this bill's jurisdictional aspect is exempt from the internal affairs or governance of a corporation that arises under or by virtue of the laws of a State in which such corporation or business enterprise is incorporated or organized. So everything that the gentleman from Washington has said relating to Enron is simply not true under the terms of the bill. Now, finally, that would be the case if Enron were not in bankruptcy. Because they are in bankruptcy, all claims are presented to the Federal bankruptcy court. Mr. Chairman, I would say to the gentleman from Washington, please read the bill.

Mr. SENSENBRENNER. Mr. Chairman, I yield 1 minute to the gentleman from Virginia (Mr. Goodlatte).

Mr. SENSENBRENNER. Mr. Chairman, do the three gentlemen that the gentleman mentioned live in Texas?

Mr. SENSENBRENNER. Mr. Chairman, if the gentleman will yield further, if they all live in Texas, the case is not removable because there is not diversity.

Mr. SENSENBRENNER. Mr. Chairman, parliamentary inquiry.

Mr. SENSENBRENNER. Mr. Chairman, I believe that the rule that was adopted, House Resolution 367, requires that amendments may be offered only by the Member designated in the report and not by a designee. Am I correct?

Mr. SENSENBRENNER. Mr. Chairman, parliamentary inquiry.

Mr. SENSENBRENNER. Mr. Chairman, under the rule, which amendment may be offered now?

Mr. SENSENBRENNER. Mr. Chairman, I call for regular order.

Mr. SENSENBRENNER. Mr. Speaker, on that I demand the yeas and nays.

Mr. SENSENBRENNER. Mr. Chairman, I yield myself 30 seconds. Mr. Chairman, one of the most intriguing documents, legal documents, that has arisen in the American continent was the Constitution of the Confederacy, which was basically based on the whole notion of States' rights. It allowed States through their legislative bodies to nullify decisions made by the Federal courts and their effect within their boundaries, and even to remove Federal officials like Federal judges and postmasters and the like. Listening to the gentleman from North Carolina, I think he would have done quite well in their Congress. Mr. Chairman, I yield 4 minutes to the gentleman from Virginia (Mr. Moran).

Mr. SENSENBRENNER. Mr. Chairman, I yield myself 1 minute. Unfortunately, my colleague, the gentlewoman from Texas (Ms. Jackson- Lee), has missed the boat on a lot of the points. First of all, I wonder how her Texas constituents would feel if the Enron class action lawsuit was filed in the Mississippi court that acted like the hometown umpire in one class action suit and gave residents of Mississippi who are members of the class 18 times more recompense than residents of other States? I think she would be the first one to come into this Congress and say that that is an outrage and that we ought to provide the protection of the Federal court for people who live outside of Mississippi. This bill does that. Secondly, the plaintiffs in the Enron class action lawsuit chose Federal Court to file their class action lawsuits. What is the beef? Thirdly, because Enron has filed for bankruptcy, all claims against Enron are heard in the Federal Bankruptcy Court under the constitutional provision that the Congress adopts a bankruptcy law. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from Arizona (Mr. Flake).

Mr. SENSENBRENNER. Mr. Speaker, I rise in opposition to the motion to recommit. Mr. Speaker, this is not the usual motion to recommit that this House considers at the end of legislation. Those motions direct the committee of jurisdiction to report the legislation back to the House forthwith with an amendment. The motion to recommit of the gentleman from Texas omits the word ``forthwith,'' and that means that if this motion is adopted, the bill will go back to the Committee on the Judiciary and will come out sometime in the future to be brought up under another rule where the House will spend another day listening to the same arguments that we have debated and rejected repeatedly through the amendment process. So for that reason alone, the motion to recommit should be rejected. Now, secondly, litigation resulting from a massive terrorist attack is precisely the type of complex legislation envisioned to be decided in our Federal courts. That type of litigation involves multiple parties from different districts asserting multiple laws, but having the same set of facts that the court will decide. The House has already dealt with this issue when, earlier last year, it passed H.R. 860 by voice vote. This was supported by Members on both sides of the aisle and unanimously reported by the Committee on the Judiciary. This legislation is known as the multi-multi-multi bill, which is in direct response to air crash cases and multiple tort cases such as a terrorist attack, and it directs which Federal court those types of cases can be consolidated in. So the House has already dealt with that issue. The amendment is unnecessary because it does not require the bill to be brought back forthwith. It is a sneaky way to attempt to kill the bill by referring it to the committee, and I would urge Members to oppose this motion simply to get rid of this issue and to send it on its way to the other body. Mr. Speaker, I yield the balance of the time to the gentleman from Virginia (Mr. Goodlatte).

Mr. SENSENBRENNER. Mr. Chairman, I yield 4 minutes to the gentleman from Virginia (Mr. Goodlatte) who is the author of the bill.

Mr. SENSENBRENNER. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I rise in strong support of H.R. 2341, the Class Action Fairness Act of 2002. Last August, The Washington Post Editorial Board wrote that ``no portion of the American civil justice system is more of a mess than the world of class actions. None is in more desperate need of policymakers' attention.'' Mr. Chairman, the Post almost got it right, except that the world of class action litigation is not a mess, it is a joke. The examples speak for themselves: An airline price-fixing settlement produced $16 million in attorneys' fees that only provided a $25 credit for class members, if they purchased an additional airline ticket for more than $250. The Bank of Boston accounting settlement, which resulted in $8.5 million in attorneys' fees but actually cost class members around $80 apiece. And if that was not bad enough, the plaintiffs' attorneys in this settlement actually sued the class members for an additional $25 million. In Mississippi, an asbestos settlement rewarded class members from Mississippi as much as 18 times more than class members from other States. In another case, a class action settlement against Cheerios over food additives produced $2 million in attorneys' fees and class members only received coupons for more Cheerios. While these settlements are a disgrace to the American legal system, H.R. 2341 takes important steps to restore its dignity. First, it would implement necessary safeguards against these and other unwieldy settlements that give lawyers millions of dollars in fees and individual class members a small fraction of any settlement or award. Secondly, it would expand Federal diversity jurisdiction over interstate class actions to help curb the serious abuses that continue to take an enormous toll on our society. A quick examination of the class action world reveals that the scales of justice are unable to balance the interests of class action lawyers and their clients. Currently, attorneys lump thousands and sometimes millions of speculative claims into one class action and then race to any available State courthouse in the hopes of a rubber stamp settlement. Too often these settlements result in millions of dollars of attorneys' fees and a mere pittance or coupons for class members in exchange for an agreement not to sue in the future. While these class actions serve no public policy or benefit to class members, they are an enormous windfall for their attorneys. In addition, because most State and Federal procedural rules require the class members affirmatively opt out of the lawsuit, there are many instances where people are dragged into class actions and do not know how to get out. The only available advice is supposedly contained in extremely complicated class action notices. Mr. Chairman, this system does not protect the interests of class members. While case after case demonstrates how greedy attorneys use abusive class action settlements to game the system at the expense of their clients, this bill provides long-needed protections to prevent this from happening in the future. A consumer class action bill of rights would prohibit the payment of bounties to class representatives, bar the approval of unreasonable net-loss settlements, and establish a plain-English requirement for settlement notices which clarify class members' rights. Additionally, H.R. 2341 would require greater scrutiny of coupon settlements and settlements involving out-of-state class members. With the filing of State court class actions having increased a thousand percent over the last 10 years, the current system has transformed certain State courts into the epicenter for class action abuse. It is widely known that there are a handful of State courts notorious for processing even the most speculative of class actions. These courts end up rendering judgments that make national law and bind people from all 50 States. This is exactly what diversity jurisdiction in our Federal courts was intended to prevent. The bill would rectify this situation by updating antiquated Federal jurisdictional rules and providing our Federal courts with jurisdiction over large interstate class actions. Currently, the Federal Rules provide Federal court jurisdiction for disputes dealing with Federal laws and disputes based upon complete diversity. That means that all plaintiffs and defendants are residents of different States and that every plaintiff's claim is valued at $75,000 or more. As a result, Federal courts have jurisdiction over lawsuits between people from two different States for just over $75,000 but do not have jurisdiction for national class actions worth billions of dollars. Instead, these massive lawsuits are being processed in various county courts throughout the country. The bill establishes a new minimal diversity standard for class actions, requiring that any plaintiff and any defendant are residents of different States and that the aggregate of all claims is at least $2 million. While the bill does not require that all interstate class actions be filed in Federal court, those that do satisfy this minimal diversity requirement may be removed to Federal court. However, the bill also excludes class actions dealing with one State, that are against a State, or consist of less than 100 class members, and all securities and corporate governance litigation. Mr. Chairman, the Federal court is where these cases belong. The Federal courts are equipped and practiced in handling complex, interstate cases, unlike many of the county courts that have been the source of rampant class action abuse. In addition, Federal courts are trained to balance various State laws in similar complex legislation. This Congress has already endorsed this notion when it designated a single Federal district court to resolve all litigation relating to the September 11 attacks and possible future litigation under the terrorism reinsurance legislation. Finally, Mr. Chairman, it is important to note that the cost of class action abuses are not limited to the parties of these settlements. They are shared by the American consumer. Because potential liability of a class action is so enormous and unpredictable under the current system, most defendants are willing to settle regardless of the merit. The cost is then passed off to the consumer in the form of higher prices for goods and services. This burdens the American economy and creates unneeded threats against America's ingenuity. Also, Mr. Chairman, these lawsuits pose a threat to the security of America's retirement plans. While class action liability can be enormous, news of these lawsuits on Wall Street can drive down a particular stock by as much as 8 to 10 points in a day. For someone depending upon a steady return on their invested retirement plan, this drop should be extremely alarming. The bottom line is that H.R. 2341 is a common-sense approach to promote national litigation efficiency and fairness to all potential plaintiffs. I urge my colleagues to support this legislation. Mr. Chairman, I reserve the balance of my time.

Mr. SENSENBRENNER. Mr. Chairman, will the gentleman yield?