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One of the legal devices used by US campaigners to challenge companies on their social and environmental performance has been weakened.
The Class Action Fairness Act, which passed swiftly through the US Senate and the House of Representatives and has now been signed by president George W. Bush, will shift most large class action lawsuits out of state courts and into the federal courts.
The effect, say business leaders and other observers, will be to curb class action lawsuits that damage reputations, such as the one recently settled by Unocal relating to its operations in Burma. Because state courts are generally considered more sympathetic to plaintiffs, some lawyers believe that fewer class action lawsuits will be brought against companies.
Class action specialist Allan King, of the US law firm Littler Mendelson, said the main impact was likely to be on ‘consumer-oriented lawsuits against business, such as product liability or environmental protection claims’.
The Class Action Fairness Act, which passed swiftly through the US Senate and the House of Representatives and has now been signed by president George W. Bush, will shift most large class action lawsuits out of state courts and into the federal courts.
The effect, say business leaders and other observers, will be to curb class action lawsuits that damage reputations, such as the one recently settled by Unocal relating to its operations in Burma. Because state courts are generally considered more sympathetic to plaintiffs, some lawyers believe that fewer class action lawsuits will be brought against companies.
Class action specialist Allan King, of the US law firm Littler Mendelson, said the main impact was likely to be on ‘consumer-oriented lawsuits against business, such as product liability or environmental protection claims’.
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