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NAMIC Hails Senate Passage of Class Action Reform

WASHINGTON (Feb. 10, 2005)—“The Senate’s passage of class action reform legislation today culminates six years of legislative effort and is of monumental importance,” said National Association of Mutual Insurance Companies (NAMIC) Senior Vice President Federal Affairs David A. Winston. “NAMIC applauds the Administration and Congress for working so quickly this year to stop the current class action crisis and put interstate class actions in federal court, where they logically belong.”

The Senate passed S. 5, The Class Action Fairness Act of 2005 by a vote of 72 to 26 today.

“NAMIC is extremely pleased to see the high priority given to class action reform,” said Winston. “This is the first step toward accomplishing momentous legal reforms in the 109th Congress.”

NAMIC is especially pleased that all amendments were soundly defeated on the Senate floor said Winston.

The legislation allows for the removal of certain interstate class action lawsuits to federal court from state courts if requested by either plaintiffs or defendants. House Majority Leader, Tom DeLay, R-Texas, has announced that the House will take up a clean Senate bill on an expedited basis and pass the Senate bill without amendment. President Bush is expected to sign the measure into law as early as next week.

“We believe the Class Action Fairness Act to be a balanced, sensible bill that addresses the worst abuses of the class action process and rationalizes class action procedures, while preserving plaintiffs’ legal rights and providing additional protections for consumers,” said Winston.

“Due to the dramatic increase in the filing of class action lawsuits in the United States in the last decade – many of which are frivolous – our member companies, as well as other businesses in other industries, have been forced to use more of their valuable resources to conduct their business,” said Winston.

Currently, plaintiffs and their attorneys are taking advantage of a loophole in jurisdictional rules in order to keep large, nationwide class actions out of federal courts where they are more appropriate. The class-action measure would require that most such multi-plaintiff lawsuits be filed in federal court, shifting them away from state courts, some of which have become famous for large settlements with little for class members and big fees for the trial lawyers that filed the cases.

“Not only does this current system expose defendant corporations to the possible bias of a local jury against out-of-state corporations, it often results in contrived settlements that richly reward the named plaintiffs and their attorneys while leaving other class members with worthless coupons,” said Winston.

“We look forward to next week when it is expected that the House will follow the Senate’s lead and the President will sign this bill into law,” stated Winston.

Posted: Thursday, February 10, 2005 12:00:00 AM. Modified: Friday, February 11, 2005 9:31:42 AM.

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