Honorable William Frist Majority Leader 461 Dirksen Senate Office Building United States Senate Washington, DC 20510 Honorable Tom Daschle Minority Leader 509 Hart Senate Office Building United States Senate Washington, DC 20510 June 3, 2003 Dear Senators Frist and Daschle: We are professors of constitutional law, civil procedure, and other subjects, at law schools across the nation. We are writing this letter because of grave concerns over the so-called "Class Action Fairness Act" (S. 274) and its House counterpart (H.R. 1115), specifically the effect these bills would have on the administration of justice in the United States and on the ability of American consumers, small businesses, and others to obtain relief for injuries done to them. We also have serious questions about the constitutionality of the Act. We urge the Senate to reject this legislation. Practical Effect of Enacting the Bill into Law As approved by the Senate Judiciary Committee, S. 274 would result in transferring to the federal courts jurisdiction over most class actions filed in state courts, under state law. The Federal courts do not have the resources to administer justice to both their present dockets and the large number of complex state-court cases that would be added if S. 274 or its House counterpart were to become law. Passage of the bill would lead to significant delays in all the business of the federal courts, harming the ability of the federal courts to decide cases that only they can decide, or in which there is a strong federal interest. Enactment of the Bill Would Harm the Ability of Plaintiffs to Obtain Justice We believe that several specific provisions in the bill would be very unwise. The federal courts have responded to claims of abuse in class-action procedures by studying the claims, inviting comments from bar associations, attorneys and others, carefully considering the comments, proposing Medicare Modernization Act rules, receiving comments on the Medicare Modernization Act s, and fine-tuning their proposals. If a reform is inadequate to meet the need, they can propose refinements. A substantial set of changes to Rule 23, the class action rule, are expected to go into effect on December 1, 2003, in the event that Congress does not direct otherwise. All of these changes were made pursuant to the Rules Enabling Act, the process Congress created to try to keep politics out of the process of setting rules for the judiciary. Sec. 3 of S. 274 would override some of these changes, and eliminate the ability of the Advisory Committee on the Civil Rules to deal with others. If it is enacted in its present form, the rulemaking process would become politicized, and lobbyists’ demands would replace the careful consideration now given to these matters. In the event that Congress deems it necessary to legislate as to areas traditionally covered by court rules, we urge that the legislation be as limited as possible, that this part of the legislation be in the form of rules rather than freestanding statutes, and that the legislation expressly preserve the ability of the Advisory Committee on the Federal Rules, the U.S. Judicial Conference, and the Supreme Court to amend the new rules or procedures to the extent necessary to accomplish their purposes more effectively or to cure any unanticipated problems. Congress would, as always, have the final say under the Rules Enabling Act. The administration of justice would also be harmed by removing much of the ability of state courts to construe their own laws. Many important questions are most likely to arise when the stakes make it worthwhile to litigate them, i.e., in class actions or other large cases. When the case is removed to federal court, the federal court cannot give a definitive interpretation of state law, but can only predict what the state supreme court would find state law to be, if the state supreme court had the same case. If there are other cases from other parts of the country against the same defendant, even without any overlapping classes, the Judicial Panel on Multidistrict Litigation may assign the case—and the task of interpreting state law—to a federal court thousands of miles away. Not every state has adopted procedures allowing a federal court to certify state-law questions so there may be no practical means by which a federal court in Topeka, for example, may be able to obtain guidance as to the law of California. A further unwarranted provision in S. 274 would allow a defendant to remove state-law cases filed against it in the courts of its own home state, where it chose to be incorporated or chose to have its principal place of business. This type of removal has long been considered an abuse, and is forbidden by current law. Equally troubling is a provision in S. 274 that allows removal of a case at any time. This would give a defendant the power to yank a case away from a state-court judge who has properly issued pretrial rulings the defendant does not like, and would encourage a level of forum-shopping never before seen in this country. Moreover, this provision would allow an unscrupulous defendant, anxious to put off the day of judgment so that more assets can be hidden, to remove a case on the eve of a state-court trial, resulting in an automatic delay of months or even years before the case can be tried in federal courts. The House bill creates an even further opportunity for delay, by overruling Rule 23(f)’s provision for obtaining permission from a court of appeals to appeal a class certification ruling, and providing for a right to trigger an automatic appeal and for an automatic stay of discovery while the appeal is pending, even if there is no legal basis for an appeal. Lack of Justification for a Remedy This Sweeping We understand that the supporters of the bill base its justification on assertions that the courts in one or two counties in the United States have too freely granted class certifications in some cases. The bill is not limited to curing claimed abuses in one or two counties, but applies equally to the 3,066 counties(1)in which there is not even a claimed problem. In general, courts have been very responsive to complaints of abuses, and have instituted corrective measures, such as allowing petitions for interlocutory appeal from orders granting or denying class certification. The Federal courts have adopted Rule 23(f) of the Federal Rules of Civil Procedure, and many State courts have followed suit. The need for a state court to interpret the law of a different state has never been seen as an adequate justification for removal. Article III of the Constitution does not recognize this as a basis for federal-court jurisdiction and the Full Faith and Credit clause already requires state courts to accord respect to the laws of their sister states. As a practical matter, state courts frequently have to interpret the law of different states even in individual cases properly brought in state courts. This is part of the normal business of the state courts, not a reason for federal jurisdiction. Constitutional Issues There is substantial cause to doubt the constitutionality of a massive transfer of state-court cases to federal courts. This transfer would effectively substitute federal-court Rule 23 class certification standards for the class certification standards set forth in the statutes, court rules, and case law of the various states. Unbelievably, such a substitution would provide for dismissal of cases that do not meet the federal standards even though they may meet the standards of the states, and even though the standards of the states may meet every requirement of due process. The Supreme Court has not devoted nearly as much attention to construing the Tenth Amendment to the Constitution as it has devoted to the Eleventh Amendment, but passage of S. 274 or its House counterpart may change that comparative lack of attention. Similarly, the "minimal diversity" trigger for removal under S. 274 and its House counterpart creates an untested and unprecedented expansion of diversity jurisdiction under Article III of the Constitution. Congress certainly has the power to expand diversity jurisdiction to reach cases in which one party on one side of a case is diverse from any adverse party, see 28 U.S.C. § 1335(a)(1) (the interpleader statute). There is, however, substantial cause to doubt the constitutionality of these bills’ approach, in which diversity is based on the citizenship of any potential class members. We say “potential” because the bill allows removal of a case before the state court has even decided that the case should go forward as a class action, or what the scope of the class should be. While class members are to be protected by the court, and while their rights may be determined by the class action, they are not full parties to the action. Prior to the determination of liability and a proceeding on class members’ individual remedies, unless they intervene and become parties, they do not individually have the right to take discovery from the defendants, to file motions in court, to question witnesses, to introduce evidence, or even to take an appeal from an adverse ruling. Yet, under this legislation they would be allowed to remove a complex state law class action into federal court. At the very least, litigation over the constitutionality of the bill is likely to embroil the courts for years and is yet a further reason to oppose the enactment of this misguided legislation. We urge you to consider our concerns about the unwarranted changes this legislation mandates as well as the very troubling aspects of the legislation that undermine fair administration of justice in the federal and state judicial systems in the United States. Respectfully submitted,