Lawsuit Limits Become Law

(CBS/AP)  President Bush on Friday signed a bill that he says will curtail multimillion-dollar class action lawsuits against companies and "marks a critical step toward ending the lawsuit culture in our country."

The legislation aims to discourage multimillion-dollar class-action lawsuits by having federal judges take them away from state courts, a victory for conservatives who hope it will lead to other lawsuit limits. The president has described class-action suits as often frivolous, and businesses complain that state judges and juries have been too generous to plaintiffs.

"This bill helps fix the system," Mr. Bush said in the East Room of the White House, his first bill signing ceremony this year. "Congress has done its duty."

"Class action lawsuits aren't going away," says CBSNews.com Legal Analyst Andrew Cohen. "They are still going to be filed and some of them are going to be successful. But the premise of the new law is that there will be fewer such lawsuits filed, fewer accepted by judges, and lower damage awards even if the plaintiffs ultimately win."

But during the brief ceremony, Mr. Bush repeatedly described the bill as just a beginning in his drive to place much broader restraints on the American legal system.

"We're making important progress toward a better legal system," he said. "There's more to do. ... We have a responsibility to confront frivolous lawsuits head-on."

Under the legislation, class-action suits seeking $5 million or more would be heard in state court only if the primary defendant and more than one-third of the plaintiffs are from the same state. But if fewer than one-third of the plaintiffs are from the same state as the primary defendant, and more than $5 million is at stake, the case would go to federal court.

Consumer groups and trial lawyers fought against the bill, but lost their struggle when Republicans gained seats in last fall's elections and Democrats defected on the issue.

"The House of Representatives joined the Senate in sending a clear message to the nation: the rights of large corporations that take advantage of seniors, low-wage workers and local communities are more important than the rights of average American citizens," said Helen Gonzales of USAction, a liberal, pro-consumer activist group.