Fairer Class Action

Small-business lobbies are hailing a bill that will make it harder to win a class-action lawsuit.

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The Class Action Fairness Act of 2003, sponsored by Iowa Sen. Charles Grassley (below), enables businesses being sued to move suits to more skeptical federal courts from state courts. Currently, plaintiffs often file cases in Texas and Florida, where "magnet courts" have a record of awarding massive damages. The bill is also good for entrepreneurs, reformers say, because small businesses often get swept up as co-defendants in class-action suits. Walter K. Olson, a senior fellow at the Manhattan Institute, says plaintiffs strategically target small companies early in a case because they often settle quickly. The settlement money is then used to finance class-action litigation against a defendant with deeper pockets. President Bush, who prided himself on tort reform when he was governor of Texas, has said he would sign the bill, which the House of Representatives passed in June.