New Law Will Help Protect Companies from Class Action and "Mass" Litigation Abuse

By Christopher J. Garvey, Joanne M. Gray, Patrick M. Hanlon, U. Gwyn Williams and Julie M. Wade

Originally published February 11, 2005

On February 10, 2005, the U.S. Senate passed Senate Bill 5, the Class Action Fairness Act of 2005 (the "Class Action Fairness Act" or the "Act"), which likely will take effect after swift approval by the House and the President. The Act effects a sweeping overhaul of the current class action litigation system by providing a federal forum for oversight of many class actions and increased judicial scrutiny of settlements and plaintiffs’ counsel fees in such cases. The Act provides important procedural protections for companies targeted by the plaintiffs’ bar in nationwide class action litigation and certain mass litigations consolidated in state court for joint trial, and creates a substantial advantage for companies facing class action litigation. As a result, companies should be poised to take full advantage of the new laws.