Issues & Overview Class Action Fairness Act Becomes Law: President Bush Made The Difference

Tuesday, March 1, 2005 - 01:00

Victor E. Schwartz
Shook, Hardy & Bacon
L.L.P.

After almost seven years of effort, on February 18, 2005, the Class Action
Fairness Act (CAFA) became law. President Bush made the difference by making
class action reform a major issue and easy-to-understand. Passing over
technicalities of class actions, President Bush focused on people who were hurt
by the present system.

For example, he focused on Alita Ditkowsky of Commack, New York, who received
a $50 coupon to buy a product she disliked, while class action attorneys reaped
$20 million in fees. CAFA requires judges to scrutinize coupon settlements, and
plaintiffs' lawyers can only obtain fee credit from coupons that are actually
redeemed. At the core of the bill is placing interstate class actions in
unbiased federal courts. President Bush made this fact loud and clear.

The success of CAFA also reflected a united business community. All major
business groups put aside differences and worked to achieve a successful goal.

A hidden factor in the success is that the plaintiffs' bar was actually
divided on the issue. Greedy class action lawyers often took the bread out of
the mouths of individual practitioners. The individual practitioner saw his or
her client disappear into a 5,000- or 10,000-member or larger class action.
Surprise beneficiaries of CAFA will be those individual lawyers who once again
can practice their craft by giving attention and service to a known client.

It is probably worthwhile to preserve some of the outrageous arguments made
against the bill, such as the specious statement that the bill merely represents
a triumph of business over the so-called "little guy." Average citizens will be
helped by the bill. Phony coupon settlements will be at an end. Class actions
will be handled in a fair and balanced manner by federal courts. Those who cried
wolf about CAFA will be reminded of their earlier statements when future civil
justice reforms are introduced in the halls of the U.S. Congress.

CAFA will substantially reduce litigation tourism in class actions, but this
unfair process of people suing where they do not live, do not work or were not
hurt will still continue with individual cases. The American Tort Reform
Association's "Judicial Hellholes" remain a powerful magnet for such claims.
H.R. 420, the Lawsuit Abuse Reduction Act (LARA), will put an end to this type
of litigation tourism and finish the important job begun in the successful
effort to enact CAFA. It deserves your strong support.

There is an old Washington expression, "success has many fathers (and
mothers) and failure is an orphan." President Bush deserves the most credit for
this success, but so do those who publish and read The Metropolitan
Corporate Counsel
who helped support CAFA .