June 11, 2003

Dear Representative:

We understand that H.R. 1115, legislation to expand the jurisdiction of the federal courts over class action cases, may be brought to the floor of the House in the near future. I am writing to express the views of the ABA regarding class action jurisdiction legislation.

ABA policy adopted by the House of Delegates was developed by an ABA task force composed of a diverse group of sixteen lawyers and judges with expertise in class actions.

The ABA believes that some concerns over class action practice could be addressed by expanded removal and “minimal diversity” federal court jurisdiction. In order to “preserve a balance between legitimate state-court interests and federal-court jurisdictional benefits,” the ABA believes that, in drafting such legislation, such factors as the following should be considered: the aggregate amount in controversy, the number of plaintiffs in the alleged class, the percentage of the class who are citizens or residents in the forum state, whether the defendants are all residents of the forum state, standards for removal and existence of overlapping classes or cases, and how the entire mix of all factors balance legitimate state-court interests and federal-court jurisdictional benefits.

On April 11, 2003, the Senate Judiciary Committee approved its version of class action legislation, S. 274, with amendments offered by Senators Feinstein, Hatch, Kohl and Grassley. The amendments reflected some of the factors set forth by the ABA by providing for a larger $5 million amount in controversy and expanding the exception from federal court jurisdiction for cases based on the forum state’s law in which two thirds of the class members and “the primary defendants” are citizens of that state.

The ABA does not support or oppose specific legislation pending in this Congress. We do, however, encourage Congress to consider all the factors mentioned in the ABA policy as it refines this legislation.

The ABA supports amending the Federal Rules through the Congressionally-enacted, judicial rulemaking process of the Rules Enabling Act. Therefore, we recommend dropping the non-jurisdictional provisions dealing with procedural changes in class-action practice contained in Section 3 of H.R. 1115. Although many of these changes are
appropriate, the new amendments to Rule 23 address similar concerns, and the ABA favors giving the courts an opportunity to apply the new rules. Based on this ABA policy, we also recommend dropping Section 6 of H.R. 1115, providing for interlocutory appeal of grants or denials of class certification as a matter of right, and making a stay automatic. This provision conflicts with the earlier amendments of Rule 23 that make appeals and stays discretionary with the district or appellate court.

Thank you for considering the views of the ABA on this important matter.

Sincerely,

Alfred P. Carlton, Jr.

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