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Bush Signs Class-Action Changes Into Law

One of the most celebrated of these localities is Madison County, Ill., which Bush visited last month in his campaign to pass the legislation. A White House official last night said Madison County's record as a magnet for dubious class-action cases was one reason Bush was eager to sign the bill as quickly as possible this morning, before leaving for a European trip Sunday morning.

Just since the beginning of the year, the White House official said, there have been 23 class-action suits filed in Madison County -- 19 of them within the past week as lawyers recognized the imminent passage of the bill. The new legislation is not retroactive.

President Bush signs the Class Action Fairness Act of 2005 at a ceremony in the East Room of the White House Friday as members of Congress look on. (Jason Reed - Reuters)

The new legislation removes the "tilt" against defendants by putting them into a federal system where there is a "clearer and more predictable body of law," said Robert C. Weber, a Cleveland lawyer who has defended such corporations as R.J. Reynolds Tobacco Co. against class actions as head of the product-liability practice at the firm of Jones Day. He said the existence of magnet courts such as Madison County's leads to "extortionate settlements" by companies that do not want to risk the unpredictability and expense of going to trial.

Opponents argued to no avail that federal courts are ill-equipped to handle class-action suits, which usually revolve around questions of state consumer protection laws. Federal judges, citing confusion about how laws from multiple states should be applied in cases, often refuse to "certify" a case for hearing in their courts.

Joan Claybrook of the consumer group Public Citizen said these procedural hurdles to class-action cases in the federal system is why business lobbying groups were so eager for the bill's passage. "Many, many class actions will not be brought" under the new rules, she predicted.

She said the largest class-action cases, involving the most expensive potential verdicts, will still find lawyers willing to pursue them, but as a practical matter class actions will no longer be a useful tool for victims seeking redress against credit card companies, insurers or other firms that commit "everyday frauds and deceptions that happen all the time."

Supporters of the measure, however, said that genuinely aggrieved consumers may fare better under the new legislation, which seeks to curb "coupon settlements." Under such settlements, trial lawyers have reaped big fees while consumers get low-value coupons that can be redeemed for more purchases. Under the new law, lawyers in a settlement get fees based only on the number of coupons that are redeemed -- typically a small percentage of the total.

Stanton D. Anderson, who led the Chamber of Commerce's effort to pass the bill, said the addition of Republicans in the Senate after the November elections "made a bigger difference atmospherically," beyond just four votes; opponents seemed to yield hopes for blocking the measure. In fact, the efforts of opponents in recent weeks have been not to defeat the bill but to amend what they regarded as its most objectionable provisions. But even these efforts failed -- largely after an unusual but effective tactical move by House Republican leaders. They announced that they would drop the House's version of the bill and accept the Senate's -- provided the Senate did not weaken the legislation with any amendments.

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