CLASS ACTION JURISDICTION ACT HEARINGS BEFORE THE SUBCOMMITTEE ON IMPROVEMENTS IN JUDICIAL MACHINERY OF THE COMMITTEE ON THE JUDICIARY NINETY-FIRST CONGRESS FIRST SESSION ON S. 1980 TO IMPROVE JUDICIAL MACHINERY BY PROVIDING FEDERAL JURISDICTION FOR CERTAIN TYPES OF CLASS ACTIONS, AND FOR OTHER PURPOSES 39-2810 JULY 28 AND 29, 1969 Printed for the use of the Committee on the Judiciary U.S. GOVERNMENT PRINTING OFFICE WASHINGTON: 1970 COMMITTEE ON THE JUDICIARY JAMES O. EASTLAND, Mississippi, Chairman JOHN L. MCCLELLAN, Arkansas EDWARD M. KENNEDY, Massachusetts QUENTIN N. BURDICK, North Dakota ROMAN L. HRUSKA, Nebraska SUBCOMMITTEE ON IMPROVEMENTS IN JUDICIAL MACHINERY JOHN L. MCCLELLAN, Arkansas ROMAN L. HRUSKA, Nebraska M. ALBERT FIGINSKI, Chief Counsel (II) Opening statement: Tydings, Hon. Joseph D., U.S. Senator from Mary- land, chairman, Subcommittee on Improvements in Judicial Machinery. 1, 49 Angevine, Erma, executive director, Consumer Federation of America Garrity, Paul G., deputy director, National Consumer Law Center.. Grant, Hon. Bess Myerson, commissioner for consumer affairs for Greilsheimer, James G., Federal Bar Council Knauer, Hon. Virginia, Special Assistant to the President for Consumer Affairs (accompanied by Hanford, Elizabeth, executive director of APPENDIXES Black, Charles L., Jr., Luce professor of jurisprudence, Yale Law Black, Charles L., Jr., Luce professor of jurisprudence, Yale Kripke, Homer, professor of law, New York University School B. Resolutions: Consumer Law Seminar dated June 20, 1969. National Council of Senior Citizens, Inc., dated June 7, 1969. Denenberg, Herbert S., Loman professor of property and liability insurance, Wharton School of Finance and Com- Vestal, Allen D., Murray professor of law, College of Law, Appendix II-Cases: Page Spear v. H. V. Greene, 140 N.E. 795 (Mass. 1923). Daar v. Yellow Cab Co., 433 P. 2d. 732, 63 Cal Rptr. 724 (1967) – Holstein v. Montgomery Ward, No. 68 CH 275 (Ill. Cir. Ct. 1968) - Appendix III-Articles: 117 131 145 157 183 Cohn, The New Federal Rules of Civil Procedure, 54 Geo. L. J. 1204, 1213-1228 (1966) - - - - . 188 Dole, Consumer Class Actions Under the Uniform Deceptive Trade 197 Dole, Consumer Class Actions Under Recent Consumer Credit Legislation, 44 N.Y.U.L. Rev. 80 (1969)__ 232 Frankel, Some Preliminary Observations Concerning Civil Rule 23, 43 F.R.D. 39 (1968). Kaplan, Continuing Work of the Civil Committee: 1966 Amendments of the Federal Rules of Civil Procedure, 81 Harv. L. Rev. 356, 379-400, 414-16 (1967) 265 280 Rice, Consumer Transaction Problems 48 B. U. L. Rev. 559, 579-83 (1968). 309 Simeone, Class Suits under the Codes, 7 West. Res. L. R. 5 (1955). 312 352 Appendix IV-Miscellaneous: Editorial, Des Moines, Iowa Register, May 31, 1969. 395 395 408 National Institute for Education in Law and Poverty, Handbook on 421 Report of the National Advisory Commission on Civil Disorders, 224 (New York Times Ed. 1968). 478 Text and memorandum on New York City Consumer Protection Act of 1969__ 481 SUBCOMMITTEE ON IMPROVEMENTS IN JUDICIAL MACHINERY OF THE COMMITTEE ON THE JUDICIARY, Washington, D.C. The subcommittee met, pursuant to notice, at 10:05 a.m., in room 6226, New Senate Office Building, Senator Joseph D. Tydings (chairman of the subcommittee) presiding. Present: Senators Tydings, and Thurmond. Also present: M. Albert Figinski, chief counsel; Lee M. Miller, deputy counsel; George Penry, minority counsel, and F. Glen Smith, minority staff. Senator TYDINGS. The subcommittee will come to order. Today we begin hearings on S. 1980, the Class Action Jurisdiction Act. This act is designed to make consumer rights meaningful by providing a judicial forum in which they can be effectively protected. It is a commonplace observation that effective consumer remedies have not kept pace with the increasing recognition of consumer rights in this Nation. Despite the intensified campaign in recent years against those who defraud and deceive consumers, despite movements in many States to set up consumer councils, and despite the increasing awareness of consumer problems, the defrauded consumer has very little chance of actually obtaining satisfactory relief. Neither administrative regulation nor individual private lawsuits adequately protect consumer rights. Administrative budgets and personnel are limited and, in some cases, the statutory structure or powers of an agency may actually inhibit its effectiveness. Lawsuits are costly. In many instances the financial loss to a single consumer is not large enough to make individual litigation practicable. But while the cost of an individual suit may be prohibitive, many persons acting as a defrauded class could afford to enforce their individual rights. A consumer class action compensates for a single consumer's inability to litigate a small loss by enabling one or more representatives of a group of consumers with similar injuries to place the group injury in issue. The aggregate group claim is generally large enough to make it possible to obtain private counsel on reasonable terms. It is also worth noting that the mere existence of an effective class action remedy may serve to deter fraudulent conduct. The potential defendant is forced to consider not only the possible economic loss from a class action but also the visibility, publicity, and public reaction that could result. |