Sunday, May 27, 2018
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No class in this action

Ken Lay, the former Enron CEO, and dozens of other business executives under the gun in corporate fraud cases, undoubtedly are rooting hard for legislation being rammed through Congress disguised as tort reform.

A bill that passed the U.S. House of Representatives on June 12 is ostensibly aimed at routing most class-action lawsuits from state courts into the federal judiciary. But the so-called “Class Action Fairness Act” has another, darker purpose.

It includes provisions that would apply retroactively to class-action lawsuits already in progress, allowing targets of pending civil cases, such as Mr. Lay, to put off action for years or potentially get themselves off the hook altogether.

The bill moved through the House without substantive public hearings and a companion measure has been pushed onto the Senate calendar, with Ohio Sen. George Voinovich as a co-sponsor. The rush toward enactment suggests that its backers - virtually all of them Republicans - are more interested in helping their corporate benefactors than in ensuring a fair day in court.

What the House bill would do is grant an automatic right of appeal after a federal judge has certified a class action, and stay all action in a case pending review, a process that could add a year or two to existing cases.

Since certification of a class action signals to the parties that the case has merit, it is at that point that such lawsuits often are settled. An automatic appeal could be used as a delaying tactic or as a bargaining chip by defendants to gain dismissal from a class action.

Ken Lay, named in a $25 billion suit by Enron investors who claim they were swindled by the company's fraud, clearly would benefit.

This newspaper consistently has supported tort reform as a way of discouraging frivolous lawsuits that clog the nation's courts. And class-action suits are often a vehicle for abuse by greedy trial lawyers, who shop for friendly state judges to take up their cause.

But to apply this bill retroactively against legal action already under way strikes us as infringing on the prohibition against ex post facto laws in the United States Constitution.

The Conference of Chief Justices, representing top judicial authorities in all 50 states, says there is no evidence that state courts cannot preside fairly over class action suits.

In addition, the federal courts already have more than enough to do. Criminal and civil caseloads are up significantly, and the system is short nearly 60 judges.

There are plenty of good reasons for reforming the manner in which class action lawsuits are handled in the judicial system. But giving a free pass from civil action to Ken Lay, or any of the other corporate malefactors, is not tort reform by any stretch of the imagination.

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