< Back to S. 3123 (106th Congress, 1999–2000)

Text of the Consumer Rights in Federal Class Actions Act of 2000

This bill was introduced on September 27, 2000, in a previous session of Congress, but was not enacted. The text of the bill below is as of Sep 27, 2000 (Introduced).

Source: GPO

S 3123 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.