New Orleans attorney Wendell Gauthier says proposed federal legislation could effectively end class actions as a means of keeping corporate America accountable.

Wendell Gauthier has frequently been called the king of the class action. An attorney with Metairie's Gauthier, Downing, LaBarre, Beiser & Dean, Gauthier has been on the cutting edge of mass torts for years, gaining notoriety for his recent roles in high-profile litigation against the tobacco and handgun industries.

But if certain lobbyists and legislators — including most of his home state's congressional delegation — have their way, Gauthier and other attorneys like him will no longer hold the keys to the class action kingdom.

On Sept. 23, the U.S. House of Representatives passed House Resolution 1875 (also known as the Interstate Class Action Jurisdiction Act), a bill that tightens restrictions on whether state courts can hear arguments in class action cases. The bill, whose companion resolution currently sits in a Senate committee awaiting action, forces state court judges to transfer most of their class actions to federal courts, a move with severe repercussions for the very types of class actions Gauthier — and the . state of Louisiana — have become known for in recent years.

Currently, Louisiana is reaping the benefits of a class action brought by 40 states' attorney generals against the tobacco industry, a suit whose success is largely credited to Gauthier's efforts on behalf of individual smokers.

The House vote was heavily partisan, with only 18 Democrats crossing over to vote in favor of the Republican-backed legislation. Chris John of Crowley was among that number; while he declined to comment on the vote, John's name does appear on the U.S. House of Representatives web site as one of the bill's more than a dozen co-sponsors. And of the Louisiana delegation, all but New Orleans' Bill Jefferson, who was absent, voted in favor of the measure.

Jefferson says he would have voted against the bill if he hadn't been at home campaigning in the governor's race. "I believe people ought to have access to courts," he says, "and I believe they ought to have a chance to bring an action in state court, which they are more familiar with, which is right around the corner and whivh is probably going to have a chance to get these cases up and done a whole lot faster than the federal court system."

Proponents of the bill, which include business interests like the United States Chamber of Commerce, Philip Morris and the Chemical Manufacturers Association, say all it does is remedy a system easily manipulated by trial lawyers. Too many class actions belong in federal court already, they argue, but are "shopped" around by class action attorneys to find a state court with the most sympathetic hearing. All this legislation does, according to the bill's House sponsor Rep. Bob Goodlatte of Virginia, is remove class actions to federal jurisdiction where they belong.

But opponents — from the, Louisiana Trial Lawyers Association and its national parent organization, the Association of Trial Lawyers of America, to a broad coalition of consumer rights groups to the Chief Justice of the U.S. Supreme Court — fear a lose-lose situation. Removing the majority of class actions to federal courts, they warn, will only add to the burden of an already overtaxed federal court system — a system that historically has demonstrated a lower tolerance for consumer-oriented litigation such as the class action. Accordingly, they say, the legislation would make it far more difficult for aggrieved citizens to successfully file class actions — sometimes a citizen's only course of redress against large corporations.

President Clinton has said he will veto the bill should it pass in the Senate this session. Yet neither side of the debate has lowered its volume. Ask about the details of the legislation and you are likely to hear heated rhetoric instead. "[This legislation] just means you're not going to end up in some narrow state court with a judge who has narrow political considerations," says Rep. David Vitter of Metairie, who serves on the House Judiciary Committee and voted in favor of the measure. Democratic Rep. Sheila Jackson-Lee of Texas, on the other hand, calls the bill "a sealed, locked, closed and forever impenetrable door to justice."

All Over the Map

"Normally, the intention of class actions was [to bring a case] when it was not economically feasible to bring a lawsuit for one person, in small claims where [a number of] people were affected only to the tune of $100 or so," Gauthier says. "They have become, however, a vehicle to make industry and companies that make products aware of their responsibility to the public."

As such, over the past decade, the number of class actions filed has grown continually. Supporters of the legislation say the statutes governing class actions are not properly set up to deal with today's type of litigation.

For one thing, every state has a different standard, for certifying a lawsuit as a class action. The definition of what is necessary to constitute a class action in Louisiana might not be the same as in Wyoming. And what a state court calls a class action might not be what a federal court calls a class action.

Secondly, once a class action is certified by a court, jurisdiction over the case is decided solely by looking at the pool of plaintiffs. If any one plaintiff is from the same state as the defendant, the case remains in state court — no matter if all other named plaintiffs live across the country. Federal courts only have jurisdiction when all plaintiffs are residents of a state different from that of the defendants.

Because the statutes are written so loosely, says Vitter, litigation that belongs in a federal court sometimes stays in a state court. "Over the past 20 years, there have been a series of national class action lawsuits that, by any reasonable standards, have been national in scope and not local in any sense of the word," he says. "[This difference in standards] has invited trial lawyers to shop for the best state court in the country and to look for the most favorable treatment."

H.R. 1875 would change that by expanding federal jurisdiction over these types of cases and removing class actions to federal court whenever any one plaintiff and the defendant are citizens of different states:

Rep. Bob Goodlatte of Virginia, who authored the legislation, declined through a spokesperson to comment for this story, and offered instead a statement released on his Web site. "This much-needed bipartisan legislation corrects a serious flaw in the federal jurisdiction statutes," the statement reads. "At present, statutes forbid federal courts from hearing interstate class actions — the lawsuits that involve more money and touch more Americans than virtually any other litigation pending in the American legal system. Federal courts were designed by the framers of the Constitution to handle large cases that crossed state boundaries. This measure puts these suits in the federal jurisdiction where they belong."

Not surprisingly, a number of large corporations spent millions lobbying in support of H.R. 1875. A study by consumer advocate group Public Citizen estimates that corporations such as Phillip Morris, General Motors, Pfizer and Bank of America have pumped over $85 million into pro-H.R. 1875 campaign contributions and lobbying efforts over the past five years.

"Though it didn't pass by much, the reason H.R. 1875 made it through the House was because big business can afford more influence than advocacy groups," says Frank Clemente, director of Public Citizen's Congress Watch program, the lobbying arm of the consumer rights organization founded by Ralph Nader.

Finding a Back Door

Big business is definitely behind this bill, says Gauthier. "Everyone keeps saying this is a business interests' bill, but it's not," he says. "It's big, major corporations that are behind this. There aren't any mom-and-pop corporations worried about this bill. What happened is they saw tobacco and Dow Corning get hit — and now American Home Products (the makers of controversial diet drug fen-phen) — and corporate America got together and said, 'Hey, let's take this vehicle away.'"

The problem with removing class actions to federal court, say attorneys, is that federal courts are much less likely to view these types of cases sympathetically.

Tom Bantle, Public Citizen's legislative counsel, says that, in his experience, many federal judges usually defer to state judges anyway on these types of matters, particularly when they deal with new areas of the law or areas of the law that are changing, such as tobacco and gun litigation. "What this [bill] does is really put a damper on class actions because federal judges won't strike out on new ground the way state courts have," he says. "And we feel that's the reason behind the bill. The corporate folks think the federal courts are less likely to move in new directions."

New Orleans attorney Stephen Murray Sr. agrees with that assessment. "This legislation clearly moves the vast majority of class actions from state courts to federal courts, where they historically do not get a very favorable response," says Murray, a former adjunct professor at the Tulane University School of Law and featured speaker at a symposium on class actions scheduled at the university in March. "The practical effect of this is fewer class actions and fewer consumer actions, which in turn means less opportunity for victims to seek redress and have a successful outcome. The legislation doesn't mandate it, but that's the practical effect."

The bill, Murray and Gauthier agree, provides a "backdoor immunity" for companies by jeopardizing the chances of a class action even getting heard. "If they start removing class actions to federal courts, it could mean the end of class actions," Gauthier says. "And if there's no retribution, if companies can do whatever they want, then the corporate mentality is that the only thing is the bottom line."

Vitter disagrees that removing class actions from state courts is a de facto death sentence, insisting that federal court is where they belong. "You still have to prosecute and argue the case in federal court," he says. "I don't see how it's immunity of any kind."

But, says Murray, everyone lobbying for this bill knows federal courts view class actions less sympathetically and this legislation sends a certain kind of message to corporate America: "Wrongdoers get a free ride. If industry can contrive a way to take a small amount of money from a vast number of people, then they can do it with virtual impunity."

Additionally, class actions that survive a federal judge and actually make it on to the docket will face crippling delays and red tape. "The federal court system is stretched to the limit as it is," he says. "We are not appointing judges fast enough (64 federal benches are currently unoccupied) and filings are going up. The system is in distress already. [This legislation] makes no sense at all unless the object is to deny access to redress."

Gauthier sees the current legislation as the latest entry in a long line of increasingly dangerous pot shots at trial lawyers. "They've spent 14 years vilifying trial lawyers in this country, but the only thing that keeps corporate America in line is the threat of a lawsuit," Gauthier says. "I'm convinced that if a company could make a cereal with arsenic in it and profit for 30 years before anyone found out about it, then some would. The only thing these companies fear is financial retribution. The class action is meant to curb corporate America's appetite for profiting with an illegal product. They don't fear their regulatory agencies; they fear economic loss. That's the only thing that is going to keep them from running amok."

Much Ado About Nothing

Ed Sherman, dean of the Tulane University Law School, has observed with interest the debate over the Interstate Class Action Jurisdiction Act. In March, the Tulane Law Review will present a symposium titled "Class Actions in the Gulf," which will examine the phenomenon of increased class actions in Texas, Alabama and Louisiana — something Sherman attributes to the preponderance of industry in all three states. In addition to Stephen Murray, featured speakers include Louisiana Attorney General Richard Ieyoub and Alabama Attorney General Bill Pryor, an avowed opponent of class actions who refused to have his state participate in the tobacco litigation. The currently proposed litigation, however, will play only a small part in the symposium, he says.

"This is certainly not the first time this has happened," he says. "There have been attempts for the last 10 years to cut back on class actions, but they haven't been successful in Congress." According to Sherman, the statutes governing class actions must be changed, and the Supreme Court Advisory Committee has, so far, declined to change those rules.

As for this particular bill, Sherman sees little merit in the actual legislation. "This is a political move," he says. "It's hard to find a principle here except that you have a lot of industry deciding that this is the way to proceed against class actions."

The argument that attorneys "forum shop" for a favorable state court is not valid, he says. "Obviously, industry wants to stop that," he says. "But, actually, that's perfectly legal. It's allowed. Any kind of case you try can be tried in any number of courts as long as you meet jurisdiction standards."

He does, however, see why industry would try this tack. The federal judiciary, says Sherman, is significantly more conservative after 12 years of appointments by Reagan and Bush. "That's why [corporations] hope they will be able to get into federal courts," he says.

It all might eventually be a moot point anyway. "Here in Louisiana, there was an opinion two years ago that is more restrictive as to what qualifies as a class action," Sherman points out. "States are cutting back on their own."

Simply because this particular piece of legislation fails, predicts Sherman, don't expect it to be the last try. "It's a struggle of giants," he says.