S.B. 2062, the Class Action Fairness Act of 2004, faces a strong battle in Congress, amidst a tight legislative schedule.

The Automotive Service Association (ASA) is a longtime supporter of class action reform. The U.S. House of Representatives passed H.B. 1115, the Class Action Fairness Act of 2003, in June of that year. The Senate has been struggling since that time with companion legislation, S.B. 2062, the Class Action Fairness Act of 2004. Senate struggles began Feb. 10 of this year when the bill was first introduced. An attempt by Senate leaders was made to move the bill in May but was withdrawn due to lack of support to end debate or for cloture (60 votes).

With this congressional session's clock ticking fast, Congress is set to recess by July 23 for the Democratic and Republican conventions. Congress will also have a one-week break during this same period for the Fourth of July. It will return in September for a brief period prior to the elections. If class action reform does not move prior to the summer break, it is unlikely it will be addressed favorably by this Congress.

Senate Majority Leader Bill Frist, R-Tenn., is making a strong run to complete the bill prior to July 4 but there are major hurdles. Senate Democratic leaders recently blocked an attempt to cut off debate and move to final consideration of S.B. 2062. Similar legislation had eight Democratic senators to end debate and move the legislation earlier in the Congress. The coalition for 60 votes is fragile. Without Democratic support, the bill will not move. Sponsors of the legislation have crafted a compromise with Sens. Christopher Dodd, D-Conn., Charles Schumer, D-N.Y., and Mary Landrieu, D-La.

The Senate will now consider defense authorization legislation and take another look at class action reform later this summer. There still may be time to move the bill.

Since the House has passed class action reform and the president is supportive of reform legislation, Senate consideration is of key importance to the small business community.

As introduced, the legislation includes major changes for class action cases. The bill:

• Amends the federal judicial code to specify the calculation of contingent and other attorney's fees in proposed class action settlements that provide for the award of coupons to class members.
• Prohibits a federal district court from approving (1) a proposed coupon settlement absent a finding that the settlement is fair, reasonable and adequate; (2) a proposed settlement involving payments to class counsel that would result in a net monetary loss to class members, absent a finding that the loss is substantially outweighed by nonmonetary benefits; (3) a proposed settlement that provides greater sums to some class members solely because they are closer geographically to the court.
• Specifies requirements for notices of proposed settlements.
• Grants district courts original jurisdiction of any civil action in which the matter in controversy exceeds $5 million, exclusive of interest and costs, and is between citizens of different states, or citizens of a state and a foreign state or its citizens or subjects.
• Lists those factors pursuant to which a district court may decline to exercise jurisdiction over a class action, and specifies those circumstances in which a district court must decline jurisdiction.
• Sets forth provisions governing the removal of interstate class actions to federal district court and the review on appeal of remand orders.
• Directs the Judicial Conference of the United States to report on class action settlements, incorporating recommendations for best court practices to ensure fairness for class members and appropriate fees for counsel.

ASA's legislative objectives are very clear that "ASA supports federal and state tort reform." Of particular importance is the jurisdictional issue of the federal courts. Many in the small business community believe some states are too sympathetic to class action initiatives.

ASA believes the small business community has a narrow window for class action reform this year. It is important that repairers contact their senators asking that they support an immediate vote on S.B. 2062.

To find out more about contacting your U.S. senator regarding class action reform, please go to the ASA legislative Web site at www.TakingTheHill.com.

Bob Redding is the Automotive Service Association's Washington, D.C., representative. He is a member of several federal and state advisory committees involved in the automotive industry. For more information about the legislative activities of ASA, visit www.TakingTheHill.com.

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