One day after the House passed it, President Bush signed the Class Action Fairness Act (S. 5) into law. House passage by a 279-149 vote followed passage one week earlier by the Senate.

The key provision in the bill redirects many class action lawsuits from state courts into the federal court system. It is intended to curtail what is known as “venue shopping” in which lawyers bring large national class action suits in more favorable state courts. The bill establishes federal authority over interstate cases in which plaintiffs’ claims are over $5 million in the aggregate, while maintaining exclusive state authority over strictly intrastate cases.

“The Class-Action Fairness Act of 2005 marks a critical step toward ending the lawsuit culture in our country,” President Bush said as he signed the bill. “The bill will ease the needless burden of litigation on every American worker, business and family.”

What It Means to Agents:  Supporters, including many in the insurance industry, contend that the bill will limit “lawsuit abuse,” which they maintain drives up the costs of doing business. Opponents had argued that the measure unfairly restricts the ability of consumers to sue for damages caused by defective products, fraud in the marketplace or discrimination.

February 23, 2005