The proliferation of frivolous lawsuits and class action claims has imposed a serious burden on
businesses and consumers. Liability costs for businesses now rank second behind health
insurance, and it is estimated that an American family of four pays a $3,236 annual "tort tax," in
the form of higher prices for products and services.
In February, Congress passed, and President Bush signed into law, S. 5, the Class Action
Fairness Act of 2005. The legislation:
- amends the procedures governing class action lawsuits to ensure fairer outcomes for both
class members and defendants,
- puts an end to "forum shopping," a practice in which lawyers or plaintiffs file actions in
courts which they believe will be most sympathetic to their views, by giving federal
courts jurisdiction over certain class-action lawsuits, and
- preserves that ability to keep truly local cases in state courts.
