On February 18, 2005, President Bush Signed The Class Action Fairness Act Of 2005

By Theodore A. Pinnock, Esq.

Pinnock & Wakefield

Pinnock & Wakefield Have 10 Years Of Experience Litigating Class Actions In The Federal Court

On February 18, 2005, President Bush signed the Class Action Fairness Act of 2005. The Act gives new rules for federal and state class action lawsuits. 

A class action lawsuit is where one person or a small group of people sue Defendants on behalf of a large group. The person or people are called class representatives and the large is called class members.  The class representatives sue businesses or government entities for violation of laws injuring class members. The businesses or government entities sued are called Defendants. Class representatives hire lawyers called Class Counsel to bring the suit.  Class Counsel may settle for all class members for coupons, money or other relief plus attorneys’ fees and costs.   Each State has rules governing Class Action lawsuits.  In the Federal Courts Class Action lawsuits are governed by Rule 23 of the Federal Rules of Civil Procedure.

Class Counsel may file suit in one State Court while affecting the rights of class members and defendants in other States.  The Class Action Fairness Act of 2005’s purpose is to ensure fair treatment of class members and defendants who are not residents of the State where the class action is filed. The Act makes it easier to go to federal court after being sued in State Court where a class action is claimed.  It is presumed by the Act’s authors that the Federal Courts can provide more consistent class action decisions than State Courts where non-residents are involved.

The Act compliments the existing Rule 23(e) of the Federal Rules of Civil Procedure. Under Rule 23 (e) the court must approve a class settlement. Under existing Federal Law Class action settlements are entered into by parties to a case after careful negotiation has produced agreement on their precise terms.

The Act seeks to ensure coupon settlements have value and attorneys’ fee awards are fair.  Under the Act if a proposed settlement in a class action provides for a recovery of coupons to a class member, the portion of any attorney's fee award to class counsel that is attributable to the award of the coupons shall be based on the value to class members of the coupons that are redeemed.

The Act specifies requirements for serving notices of proposed settlements on appropriate State and Federal officials.  Also, it prohibits making an order giving final approval to a proposed settlement earlier than 90 days after such service. Further, the Act allows class members to refuse compliance with settlement agreements or consent decrees absent notice.

The Act give district courts original jurisdiction of any civil action in which the matter in controversy exceeds $5 million, exclusive of interest and costs, and that is between citizens of different States, or citizens of a State and a foreign State or its citizens or subjects.

The Act applies to any civil action commenced on or after the date of enactment of this Act.

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