Tire and rubber product manufacturers have joined with other business interests in backing legislation before the House and Senate to change the conduct of class-action lawsuits.
Consumer groups staunchly oppose the bills, insisting they would sharply limit the rights of injured parties to seek redress against corporations that make defective products.
The Class Action Fairness Act of 2003 was introduced in the Senate Feb. 4 and in the House of Representatives March 6. The bill would establish what proponents call a ``consumer class action bill of rights'' to ensure plaintiffs in class-actions receive their rightful compensation.
While recognizing the importance and value of class actions, the bill's preamble identifies what it calls common abuses in the current class action system. These include unduly large fees to plaintiffs' attorneys at the expense of the plaintiffs themselves; unjustifiably high damages paid to certain plaintiffs; and the publication of confusing notices that prevent class members from fully understanding or exercising their rights under the class action.
Under the bill's provisions, a court may not approve a proposed settlement involving non-cash benefits to class members unless it holds a hearing on the agreement's fairness and makes a written ruling that it is equitable to all parties.
The bill forbids higher payments to plaintiffs who live close to the court, or to plaintiffs who serve as class representatives in the case. It contains ``Plain English Requirements'' for all class action notifications.
Also, it gives federal district courts automatic jurisdiction over any class action that entails more than $2 million worth of claims, thus preventing ``venue shopping'' on the part of plaintiffs' attorneys for courts that give favorable decisions to class action plaintiffs.
The Rubber Manufacturers Association, which issued a March 18 statement praising the legislation, is a member of the American Tort Reform Association, a coalition that seeks congressional reform of a wide range of product liability and class action issues.
``The class-action lawsuits system is being abused by trial lawyers,'' Ann Wilson, RMA senior vice president-government, said in a press release. ``In many cases, lawyers walk away with millions while their clients get coupons.''
The new bill is identical to legislation introduced last year that the Tire Industry Association supported, noted Becky MacDicken, TIA director of government affairs.
``This is something we completely support,'' she said. ``With the national epidemic of lawsuits, something needs to be done with our court system, and this legislation would help immensely.''
On the opposite side, three major consumer groups-Consumers Union, the Consumer Federation of America and the U.S. Public Interest Research Group-jointly sent an open letter to the Senate Feb. 5 urging all senators to oppose the legislation.
Since most state class actions would fail to meet federal class action standards, consumers would be left with two choices, the groups said. The first-filing individual actions-would be unwieldy and overwhelm state courts. The second-filing an amended class certification in state court-would again be subject to transfer to federal court.