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A class action against Big Tobacco that ended in a $591 million jury verdict in a Louisiana state court would never have been heard in that court had the Class Action Fairness Act—which was signed into law by President George W. Bush on Feb. 18—been in effect when the case was filed, said counsel on both sides. That’s because none of the defendant tobacco companies was domiciled or had its principal place of business in Louisiana, as required by the new law, even though all of the plaintiffs were citizens of Louisiana. Corporate citizenship in the state of a defendant corporation would have been just one of the criteria Louisiana plaintiffs would have had to meet if defendants had sought removal to federal court. To keep it in state court, the plaintiffs would also have had to show that the citizen defendant was an important party who had caused serious injuries and that significant relief was being sought from it. Scott v. American Tobacco Co. Inc., No. 96-8461 (Orleans Parish, La., Dist. Ct.). At least three of the top 25 jury verdicts of 2004, as reported by VerdictSearch, an affiliate of The National Law Journal, were class actions. [See pullout section, Top 100 Verdicts of 2004.] Only one of them, for certain, would have remained a class action had the new law been in effect when the suits were filed. “We would have been out of court, because none of the big tobacco companies are quote-unquote citizens of Louisiana,” said plaintiffs’ lead counsel, Russ M. Herman of New Orleans’ Herman, Herman, Katz & Cotlar, whose verdict was the fifth largest of 2004. A purported nationwide class action brought by and against many of the same parties had been decertified by the 5th U.S. Circuit Court of Appeals days before Scott was filed, explained a tobacco defense attorney, Dorothy Wimberly of New Orleans’ Stone Pigman Walther Wittmann. “Had the new legislation been in place, we would have never been in state court,” Wimberly said. “And we believe we would have prevailed in federal court because we don’t believe the class would have been certified.” The defendants, who will appeal, have not yet filed briefs, but the Class Action Fairness Act is not retroactive. The new law mandates that certain kinds of large cases that could be tried in state court be removed to federal court on a defendant’s motion. These include suits in which less than two-thirds of the plaintiffs are from the state in which the injuries allegedly occurred and where the defendant is sued. That could mean that because of present federal rules, cases implicating the laws of multiple states might not get heard at all, according to critics of the new law who testified before Congress. It would take a class of at least 100 people and at least $5 million at stake for the new rules to kick in. The second-largest jury verdict of 2004, almost $1.3 billion, would not have been affected by the new law. Pickett v. Tyson Fresh Meats Inc., No. A961103N (M.D. Ala.) One plaintiffs’ counsel, David Domina of Domina Law in Omaha, Neb., said that even though his plaintiffs came from many states, since the case was brought in federal court and raised only federal antitrust issues, it would have been unaffected by the new law. The class action law affects only diversity jurisdiction. “Had we sued to remediate claims of only cattle producers in certain states and not the entire nation, then we might have run into problems,” Domina said. “The law will only affect cases that assert state law claims.” Despite the unanimous verdict, the judge set it aside and the plaintiffs appealed. William Baumgartner of the Chicago office of Sidley Austin Brown & Wood, a defense counsel in Pickett, concurred with Domina’s assessment. A California class action brought in state court against a bank, in which the plaintiffs won $75 million-plus $1,000 per class member-may or may not have been affected under the new law. Miller v. Bank of America, No. 99-301917 (San Francisco Super. Ct.). Case law and rules regarding banks may distinguish them from other corporations for purposes of the new law, explained plaintiffs’ lead counsel Thomas Brandi of San Francisco’s Brandi Law Firm. “It’s much too soon to tell how bank class actions will play out,” Brandi noted. A Bank of America official declined to comment.

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