House Bill Would Significantly Change Class Actions and Multidistrict Proceedings in Federal CourtMarch 23, 2017 – Articles
On March 9, 2017, the U.S. House of Representatives passed the Fairness in Class Action Litigation Act of 2017 (H.R. 985). The bill, introduced by House Judiciary Committee Chairman Bob Goodlatte (R-Va.), proposes significant changes to the procedures used in federal court class actions and multidistrict litigation proceedings in an attempt to “assure fairer, more efficient outcomes for claimants and defendants.” The bill now moves to the U.S. Senate, where an earlier, similarly-named proposal stalled last year after passing the House.
Along with attempting to “assure fair and prompt recoveries for class members and multidistrict litigation plaintiffs with legitimate claims,” the bill aims to “diminish abuses in class action and mass tort litigation that are undermining the integrity of the U.S. legal system.” To accomplish this, the bill mandates the following changes to class action procedures in federal court:
- Requires all class members to have suffered the “same type and scope of injury”;
- Requires disclosure of any relationship between class counsel and class representatives;
- Requires class members be ascertainable as a prerequisite for class certification;
- Delays payment of class counsel’s fees until after settlement distribution is complete;
- Ties calculation of class counsel fees to the actual payout to class members;
- Ties calculation of fees in injunctive classes to the value of injunctive relief;
- Requires class counsel to report settlement data before recovering fees;
- Limits issue class certification to situations where the entire case meets certification requirements;
- Stays all discovery during the pendency of any motion to transfer, motion to dismiss, motion to strike class allegations, or other motion to dispose of the class allegations;
- Requires disclosure of third-party funders supporting the class; and
- Allows immediate appeals from orders granting or denying class certification.
The bill also includes new mandates on plaintiffs in consolidated multidistrict litigation proceedings in federal court. These changes include:
- Addressing misjoinder of plaintiffs in personal injury and wrongful death actions;
- Requiring plaintiffs in multidistrict litigation proceedings to provide evidentiary support of their injuries and causes;
- Requiring all parties to agree to trial in any specific multidistrict litigation case; and
- Ensuring at least 80 percent of recovery obtained in any multidistrict litigation proceeding goes to the plaintiffs in that action.
The bill passed the House by a 220-201 vote, which was split almost entirely down party lines (no Democrats voted for the bill and only 14 Republicans voted against it). Proponents of the bill argue that the proposed changes will ensure absent class members, not plaintiffs’ attorneys, benefit from class actions, while those opposed claim the sweeping provisions will cut off court access for consumers, workers, investors and civil rights plaintiffs. If enacted, the bill would apply to pending as well as future litigation and would be the most significant class action legislation since the Class Action Fairness Act of 2005. Considerably, those reforms were passed the last time Republicans controlled both chambers of Congress and the White House, making passage of the bill appear more likely here than the last time around.
Dinsmore attorneys are continuing to track the bill as it awaits action in the Senate and are available to discuss any questions you may have regarding the proposed legislation.