Illinois pols, reformers react to class action reform

Steve Stanek Feb. 24, 2005, 7:16am

"There are still alot of state classes," said Mike Pope of Chicago's McDermott, Will & Emery.

U.S. Rep. John Shimkus (R-Collinsville) voted "yes."

With a few strokes of his pen Feb. 18, President George W. Bush signed into law an act which Congressman John Shimkus (R-Collinsville) described as "a bill that most people believe is a major tort reform that will go down in history as making a big difference."

One day earlier -- the day Congress passed the bill and sent it to Bush for his signature -- Congressman Jerry Costello (D-Belleville) explained his support by saying, "I have voted against class action reform legislation in the past because the bills before us were one way -- with no input from members with different views. The legislation passed today, while not perfect, is the result of bipartisan negotiations and is an important improvement over previous bills."

If the Class Action Fairness Act works as intended, most class action lawsuits will go to federal courts instead of state courts, where certain jurisdictions, including Madison and St. Clair Counties, have become notorious as overly friendly to plaintiffs and hostile to defendants.

The Class Action Fairness Act strikes at "venue shopping," the practice of plaintiff lawyers searching across the country to file a case in the most favorable state jurisdiction.

Class actions that seek more than $5 million would have to be tried in federal court. An exception would be allowed when at least two-thirds of the class members live in the same state.

Because of this exception, one of the most notorious class action cases in recent years -- which in 2003 resulted in a $10.1 billion judgment against cigarette maker Phillip Morris -- would have been allowed in state court.

That case, involving thousands of Illinois residents, was decided in Madison County. It is now under appeal.

Rule 225 would go farther

This is why the proposed Rule 225 in Illinois remains important, despite the new federal law, said Michael Pope, a Chicago attorney who helped draft it.

Earlier this month a committee of the Illinois Supreme Court heard arguments for and against the proposed rule, which would require that a judge determine a class-action lawsuit is the "superior" method to resolve a dispute before certifying the case. It would also suggest that a class action be rejected if it substantially involves parties in other states or the laws of other states.

"This is definitely important. There are still a lot of state classes," Pope said.

Rey Becker, vice president of the Property Casualty Insurers Association of America, agreed that Rule 225 remains important for Illinois.

"Congress and the president have spoken on how class actions ought to be handled," Becker said. "Clearly, you've got this proposal, which brings into relief that Illinois is out of step with most other states. All Rule 225 is doing is trying to highlight that fact and say, before you can certify a class, you should examine whether a class action is the best use of the court's time and resources and is fair to plaintifffs and defendants. That's how it's done in federal courts."

Rule 225 is based on a federal rule, which Becker said most states follow to some degree, "and a lot of courts even in Illinois follow it."

Becker, Pope and other critics of the Madison and St. Clair courts say judges in these counties often ignore the rule and certify too many cases as class actions.

Ed Murnane, president of the Illinois Civil Justice League, said there is still a need for Rule 225 even if most class action cases end up in federal court, because venue shopping could occur within the state.

"The Phillip Morris case would not have been affected by the new federal law, because all of the plaintiffs were in Illinois," Murnane said. "In this case it should have been filed in the county where most of the plaintiffs reside, which would have been Cook County."

He said members of the state Supreme Court Rules Committee "weren't particularly friendly" to those who spoke in favor of Rule 225.

"I think the state Supreme Court is going to have to decide whether the new federal law solves some of the problems that led to the proposed Rule 225," Murnane said.

The committee has no deadline for sending a recommendation to the state supreme court and no obligation to publicize its recommendation. The state justices could accept or reject the recommendation.

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