[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 3123 Introduced in Senate (IS)]
106th CONGRESS
2d Session
S. 3123
To provide for Federal class action reform.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
September 27 (legislative day, September 22), 2000
Mr. Grams introduced the following bill; which was read twice and
referred to the Committee on the Judiciary
_______________________________________________________________________
A BILL
To provide for Federal class action reform.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Consumer Rights in Federal Class
Actions Act of 2000''.
SEC. 2. FEDERAL CLASS ACTION REFORM.
(a) In General.--Part V of title 28, United States Code, is amended
by inserting after chapter 113 the following:
``CHAPTER 114--FEDERAL CLASS ACTIONS
``Sec.
``1711. Definitions.
``1712. Application.
``1713. Pleading requirements and notification of class upon
settlements.
``Sec. 1711. Definitions
``In this chapter, the term--
``(1) `class' means a group of persons that comprise
parties to a civil action brought by 1 or more representative
persons;
``(2) `class action' means a civil action filed pursuant to
rule 23 of the Federal Rules of Civil Procedure;
``(3) `class member' means a person that falls within the
definition of the class;
``(4) `class counsel' means the attorneys representing the
class in a class action; and
``(5) `proposed settlement' means a settlement agreement
regarding a class action that is subject to court approval and
would be binding on the class.
``Sec. 1712. Application
``This chapter shall apply to all plaintiff class actions filed in
or removed to Federal court, except any such class action solely
involving--
``(1) claims concerning a covered security as defined under
section 16(f)(3) of the Securities Act of 1933 and section
28(f)(5)(E) of the Securities Exchange Act of 1934;
``(2) claims that relate to the internal affairs or
governance of a corporation or other form of business
enterprise and arises under or by virtue of the laws of the
State in which such corporation or business enterprise is
incorporated or organized; or
``(3) claims that relate to the rights, duties (including
fiduciary duties), and obligations relating to or created by or
pursuant to any security (as defined under section 2(a)(1) of
the Securities Act of 1933 and the regulations issued
thereunder).
``Sec. 1713. Pleading requirements and notification of class upon
settlement
``(a) Pleading Requirements.--The complaint in a class action shall
include a disclosure of the recovery sought for class members and the
anticipated attorney's fees including an explanation of how any
attorney's fees will be calculated.
``(b) Settlement Requirements.--
``(1) In general.--Not later than 10 days after a proposed
settlement in a class action is filed in court, the class
counsel shall provide notice to class members of a proposed
settlement agreement, written in plain, easily understood
language, informing the members of--
``(A) the benefits that will accrue to the class
due to the settlement;
``(B) the rights that class members will lose or
waive through the settlement;
``(C) obligations that will be imposed on the
defendants by the settlement;
``(D) the dollar amount of any attorney's fee class
counsel will be seeking, or if not possible, a good
faith estimate of the dollar amount of any attorney's
fee class counsel will be seeking;
``(E) an explanation of how any attorney's fee will
be calculated and funded; and
``(F) the right of any class member to enter
comments as a part of the court record not later than
60 days after receiving notice about the proposed
settlement.
The court may not accept or reject the settlement agreement
before the expiration of the period provided in subparagraph
(F).
``(2) Settlements involving coupons or recovery from a
class fund.--If a proposed settlement involves a coupon or
requires a class member to obtain a recovery from a fund set
aside for the class, the defendant shall provide the court
and class members with regular reports (not more than 90 days apart) as
to how many members of the class are participating in the settlement.
The reports required by this paragraph shall be posted on the Internet
by the defendant and continue until expiration of the coupons, in the
event of a coupon settlement, or until disposition of the fund, in the
event of a class fund. The Internet website address for the reports
shall be made part of the court record and shall be printed in all
notices to class members.''.
(b) Technical and Conforming Amendment.--The table of chapters for
part V of title 28, United States Code, is amended by inserting after
the item relating to chapter 113 the following:
``114. Federal Class Actions................................... 1711''.
SEC. 3. REPORT ON ACTUAL PARTICIPATION OF CLASS MEMBERS IN SETTLEMENTS.
(a) Findings.--Congress finds that--
(1) there have been abuses of class action lawsuits whereby
few members of the class pursue and benefit from the
settlement;
(2) use of surveys by plaintiffs' attorneys to determine
utilization of settlements are often biased;
(3) judges often do not examine written comments sent in by
class members who may dispute the settlement or need for the
action; and
(4) attorney's fees are often based on inaccurate
information regarding how many class members actually
participate in the settlement.
(b) Report.--Not later than 12 months after the date of enactment
of this Act, the Judicial Conference of the United States, with the
assistance of the Director of the Federal Judicial Center and the
Director of the Administrative Office of the United States Courts,
shall prepare and transmit to the Committees on the Judiciary of the
Senate and the House of Representatives a report on class action
settlements.
(c) Content.--The report under subsection (b) shall contain--
(1) a recommendation for a method to measure actual class
member utilization of settlement funds or coupons, with regular
reporting requirements;
(2) recommendations on the best practices that courts can
use to ensure that proposed class action settlements are fair
to the class members that the settlements are supposed to
benefit;
(3) recommendations on the best practices that courts can
use to ensure that--
(A) the fees and expenses awarded to counsel in
connection with a class action settlement appropriately
reflect the extent to which counsel succeeded in
obtaining full redress for the injuries alleged and the
time, expense, and risk that counsel devoted to the
litigation;
(B) the fees and expenses awarded to counsel
accurately reflect the utilization of class action
settlements by class members, class member comments
received, and review of actual usage of similar
previous settlements as indicators of what attorney's
fees should be; and
(C) the class members on whose behalf the
settlement is proposed are the primary beneficiaries of
the settlement; and
(4) the actions that the Judicial Conference of the United
States has taken and intends to take toward having the Federal
judiciary implement any or all of the recommendations contained
in the report.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S9389-9390)
Read twice and referred to the Committee on the Judiciary.
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