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House Overwhelmingly Passes Class Action Reform—President Bush Expected to Sign Legislation

NAMIC Applauds Enactment

WASHINGTON (Feb. 17, 2005)––By a vote of 279 to 149 on Thursday, the House of Representatives overwhelming approved S. 5, The Class Action Fairness Act of 2005.

Days after Senate passage, the House soundly defeated all amendments, culminating six years of legislative efforts and paving the way for President Bush to sign this legislation into law.

“NAMIC is extremely pleased and applauds Congress for working so quickly to get this invaluable piece of legislation ready for the President,” said National Association of Mutual Insurance Companies (NAMIC) Senior Vice President of Federal Affairs David A. Winston. “This is the first step toward accomplishing momentous legal reforms in the 109th Congress.”

Winston acknowledged that NAMIC wholeheartedly agrees with President Bush’s statement in his State of the Union address that, “Justice is distorted, and our economy is held back by irresponsible class actions and frivolous asbestos claims.”

Winston said that class action reform legislation would restrict ‘forum shopping’ for plaintiff-friendly jurisdictions with little connection to the parties or to the defendant’s alleged misconduct, by shifting such cases from state to federal court.

Under the current system, a single state court that certifies and decides a multi-state class action—where the plaintiff class is drawn from a multitude of states—can effectively make law for as many as 49 states in addition to its own. Such “regulation through litigation” turns the concept of federalism on its head.

Instead of state sovereignty being threatened by an overreaching federal government, multi-state class actions allow a single state court to impose its regulatory preferences on the rest of the country.

Permitting litigants to transfer multi-state class actions to federal court would solve this problem. Federal judges would still apply the relevant state law, but their national perspective would enable them to do so in a way that respects the prerogatives of the various states represented by class members.

“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.

“We look forward to tomorrow when it is expected that the President will sign this measure into law,” said Winston.

Posted: Thursday, February 17, 2005 12:00:00 AM. Modified: Thursday, February 17, 2005 2:58:54 PM.

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