[House Report 115-25]
[From the U.S. Government Publishing Office]
115th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 115-25
======================================================================
FAIRNESS IN CLASS ACTION LITIGATION ACT OF 2017
_______
March 7, 2017.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Goodlatte, from the Committee on the Judiciary, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 985]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 985) to amend the procedures used in Federal court
class actions and multidistrict litigation proceedings to
assure fairer, more efficient outcomes for claimants and
defendants, and for other purposes, having considered the same,
reports favorably thereon without amendment and recommends that
the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for the Legislation.......................... 4
Hearings......................................................... 6
Committee Consideration.......................................... 7
Committee Votes.................................................. 7
Committee Oversight Findings..................................... 13
New Budget Authority and Tax Expenditures........................ 13
Congressional Budget Office Cost Estimate........................ 13
Duplication of Federal Programs.................................. 15
Disclosure of Directed Rule Makings.............................. 15
Performance Goals and Objectives................................. 15
Advisory on Earmarks............................................. 15
Section-by-Section Analysis...................................... 16
Changes in Existing Law Made by the Bill, as Reported............ 38
Dissenting Views................................................. 45
Purpose and Summary
Recently, an independent research firm surveyed companies
in 26 countries and found that 80 percent of those that were
subject to a class action lawsuit were U.S. companies, putting
those U.S. companies at a distinct economic disadvantage when
competing with companies worldwide.\1\ The problem of overbroad
class actions, however, does not just affect U.S. companies. It
affects consumers in the United States, who are forced into
lawsuits they do not want to be in. How do we know that? We
know that because the median rate at which consumer class
action members take the compensation offered in a settlement is
an incredibly low two-hundredths of 1%.\2\ That's right--only
the tiniest fraction of consumer class action members bother to
claim the compensation awarded them. That is clear proof that
vastly large numbers of class members are satisfied with the
product they purchased, do not want compensation, and do not
want to be lumped into a gigantic class action lawsuit against
their will.
---------------------------------------------------------------------------
\1\See http://www.nortonrosefulbright.com/files/20150514-2015-
litigation-trends-survey_v24-128746.pdf.
\2\Declaration of Deborah McComb Re Settlement Claims April 21,
2014, at 2, available at http://blogs.reuters.com/alison-frankel/files/
2014/05/duracellclassaction-mccombdeclaration.pdf
---------------------------------------------------------------------------
Federal judges are crying out for Congress to reform the
class action system, which currently allows unscrupulous
lawyers to fill classes with hundreds and thousands of
unmeritorious claims and use those artificially inflated
classes to force defendants to settle the case. As the Supreme
Court has recognized, ``even a small chance of a devastating
loss'' inherent in most decisions to certify a class produces
an ``in terrorem'' effect that often forces settlement
independent of the merits of a case.\3\ Liberal Justice Ruth
Bader Ginsburg has recognized that ``[a] court's decision to
certify a class . . . places pressure on the defendant to
settle even unmeritorious claims.''\4\ Judge Diane Wood of the
Seventh Circuit Court of Appeals (appointed by President
Clinton) has explained that class certification ``is, in
effect, the whole case.''\5\ Then-Chief Judge of the Seventh
Circuit Richard Posner explained that certification of a class
action, even one lacking in merit, forces defendants ``to stake
their companies on the outcome of a single jury trial, or be
forced by fear of the risk of bankruptcy to settle even if they
have no legal liability.''\6\ And in another Seventh Circuit
decision the court wrote:
---------------------------------------------------------------------------
\3\AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1752 (2011);
see also Castano v. American Tobacco Co., 84 F.3d at 746 (5th Cir.
1996) (``[C]lass certification creates insurmountable pressure on
defendants to settle, whereas individual trials would not. The risk of
facing an all-or-nothing verdict presents too high a risk, even when
the probability of an adverse judgment is low.'').
\4\Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559
U.S. 393, 445 n.3 (2010) (Ginsburg, J., dissenting).
\5\Hon. Diane Wood, Circuit Judge, Remarks at the FTC Workshop:
Protecting Consumer Interests in Class Actions (Sept. 13-14, 2004), in
Panel 2: Tools for Ensuring that Settlements are ``Fair, Reasonable,
and Adequate,'' 18 Geo. J. Legal Ethics 1197, 1213 (2005).
\6\In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293, 1299 (7th Cir.
1995).
One possible solution to this problem is requiring
judges to do some threshold level of review of the
merits of a class action before allowing certification
[that is, approval] of a class . . . [I]t is cases like
the one before us that demonstrate precisely why the
courts, and Congress, ought to be on the lookout for
ways to correct class action abuses. Given the
complexity of our legal system, it is impossible to
develop perfect standards for identifying and quickly
disposing of frivolous claims. Inevitably this court
and other courts will be faced with cases that waste
the time and money of everybody. Beyond addressing the
legal claims before us as we would in any ordinary
case, we must frankly identify situations where we
suspect the lawyers, rather than the claimants, are the
only potential beneficiaries.\7\
---------------------------------------------------------------------------
\7\Manistee Apartments, LLC v. City of Chicago, 844 F.3d 630, 635
(7th Cir. 2016). State court judges are also asking for reforms in the
class action system. Recently, a California judicial decision reported
that in a class action consisting of over 230,000 people, only two of
the 230,000 wanted the coupons offered in the class action settlement.
The judge in that case said the case produced ``absolutely no benefit
really to anybody.'' Available at http://www.courts.ca.gov/opinions/
nonpub/G049611.PDF.
So where is all the money going in these cases? To the
lawyers who brought the lawsuits that hardly anyone wanted to
be in.
The provisions included in the Fairness in Class Action
Litigation Act (``FICALA'') would enact much-needed reforms
governing Federal court class action and mass tort multi-
district litigation proceedings. The current class action and
mass action lawsuit system is deeply flawed in many ways:
Class members receive little: Most class actions
(particularly class actions brought on behalf of
consumers) produce no benefits for class members--some
are dismissed by courts, some are voluntarily dismissed
by counsel (with payments made only to counsel), and
some are settled. In consumer cases, very few class
members get any benefit (less than 5% of class members
on average).
Lawyers reap millions in fees: When cases are settled,
the fees for lawyers representing the class take up a
large share of the settlement, typically millions of
dollars per case. Indeed, because so few class members
receive settlement payments in most cases, the amount
paid to lawyers is often many times the amount actually
paid to class members.
Multidistrict litigation has been transformed into a
mechanism for abusive ``mass actions'': Congress
created the multidistrict litigation (``MDL'')
procedure to enable courts to fairly and efficiently
administer individual cases involving the same subject.
But mass tort proceedings using the MDL process have
become magnets for advertising-driven, poorly
investigated (and often patently invalid) personal
injury claims. The resulting massive proceedings, often
largely consisting of claims that should never have
been filed, impose unfair burdens on courts and
defendants and prevent plaintiffs with trial-worthy
claims from timely getting their day in court.
The fundamental problem is that far too many class actions
and mass actions are initiated by opportunistic lawyers, and
litigated primarily for the benefit of those lawyers, with any
actual victims being used as a means of garnering vast fee
awards. Who bears the cost of this litigation system? In the
first instance, the businesses--small and large--that are sued
in these unjustified cases, forced to pay their own legal fees
and, eventually, to pay settlements coerced even in meritless
cases. But ultimately these costs are paid by consumers,
workers, and investors, throughout the economy--because the
diversion of hundreds of millions of dollars away from
productive purposes, as well as the time and attention of
entrepreneurs, means prices are higher, new products are not
brought to market, and new jobs are not created.
Two types of reforms are needed to fix our broken
litigation system: protections against the abuse of consumers
by unscrupulous lawyers, and protections against the filing of
unjustified claims and other abusive litigation practices.
Every single provision of H.R. 985 would maximize recoveries by
deserving victims and weed out unmeritorious claims that would
otherwise siphon off resources from those deserving victims.\8\
And no provision of the bill prevents any claims from being
brought as a class or mass action; the provisions simply set
fair rules for bringing them.
---------------------------------------------------------------------------
\8\Even a Task Force of the American Bar Association has written
that ``When it comes to fees, class counsel and class members have a
fundamental conflict of interest. Every dollar not spent on fees is a
dollar that would go to the class members.'' Report on Contingent Fees
in Class Action Litigation January 11, 2006 Task Force on Contingent
Fees, Tort Trial and Insurance Practice Section of the American Bar
Association, 25 Rev. Litig. 459, 495 (2006).
---------------------------------------------------------------------------
Background and Need for the Legislation
House Judiciary Committee Chairman Bob Goodlatte introduced
the Fairness in Class Action Litigation Act on February 9,
2017.
Two types of reforms are needed to fix our broken
litigation system: protections against the abuse of consumers
by unscrupulous lawyers, and protections against the filing of
unjustified claims and other abusive litigation practices. To
that end, here is what FICALA's provisions do (in the order in
which they appear in the bill, with a more detailed explanation
of each section following this summary in the section entitled
``Section-by-Section Analysis''):
They prohibit Federal courts from certifying for class
treatment an action seeking monetary relief for personal injury
or economic loss absent an affirmative demonstration that each
proposed class member suffered the same type and scope of
alleged injury as the proposed class representative(s).
They prohibit judges from approving class actions in which
any proposed class representative (that is, a named plaintiff
that will be representing everyone else in the class action) is
a relative of, is a present or former employee of, is a present
or former client of, or has any contractual relationship with
the class action lawyer. This prevents incestuous litigation-
factory arrangements that exist today.
They require that, in a class action seeking monetary
relief, a class cannot be certified unless the members of the
class will be identifiable based on objective criteria, not
simply a self-serving declaration, and that there is a
``reliable and administratively feasible mechanism'' for the
court to determine who falls within the class and for
distributing a monetary judgment to members of the class. This
prevents situations we've seen in which classes are certified,
only to find out at the end of the day that victims cannot be
located or do not exist.
They require that class action lawyers should only get paid
after the victims get paid, that the portion of attorneys' fee
awards to class action lawyers should be limited to a
reasonable percentage of the money actually distributed to and
received by the victims, and class action lawyers' fees should
never exceed the total amount of money received by all the
victims. This ensures more compensation goes to victims, and
reasonable amounts (in the discretion of the court) go to
lawyers.
They require that in any Federal court-approved class
action settlement, the plaintiffs' lawyers must provide the
Administrative Office of United States Courts (the ``AO'') with
an accounting of how all money paid by the defendants was
distributed. The AO, in turn, would be charged with publishing
annual aggregate reports on class settlement distributions
derived from these data.
They make clear that a plaintiff cannot certify an
``issue'' class unless the entire claim for relief (not just
the issue standing alone) qualifies for class treatment under
Rule 23. This will prevent, for example, the certification of
huge classes under the common ``issue'' regarding who bought a
product when in fact the relevant inquiry is which of those
purchasers actually suffered any injury.
They require Federal courts to stay expensive discovery
pending resolution of Rule 12 motions (that is, motions to
dismiss for failure to state a claim); motions to strike class
allegations; motions to transfer; and other motions that would
dispose of class allegations unless the court finds that
particularized discovery is necessary to preserve evidence or
to prevent undue prejudice to a party.
They require that any third-party funding agreement be
disclosed to the district court and all parties. That would
allow the district court to take appropriate steps to protect
class members' interests by monitoring the influence of certain
entities that are mere funders, not lawyers, nor parties to the
litigation over lawsuits and help the court ensure victims are
adequately represented.
They provide that class certification decisions are
appealable as of right.
They require Federal courts to consider each plaintiff's
claims separately in assessing Federal jurisdiction over multi-
plaintiff complaints asserting personal injury or wrongful
death claims. The House Judiciary Committee recently reported
out H.R. 725, the ``Innocent Party Protection Act,'' which
prevents opportunistic lawyers from adding local defendants to
a lawsuit simply to keep the case in a preferred state court.
The misjoinder provision in FICALA similarly prevents these
lawyers from adding certain plaintiffs just to keep the case in
state court.
Congress created the multidistrict litigation (``MDL'')
procedure to enable courts to fairly and efficiently administer
individual cases involving the same subject. But mass tort
proceedings using the MDL process have become magnets for
advertising-driven, poorly investigated (and often patently
invalid) personal injury claims. The resulting massive
proceedings, often largely consisting of claims that should
never have been filed, impose unfair burdens on courts and
defendants and prevent plaintiffs with trial-worthy claims from
timely getting their day in court. FICALA requires that for
each lawsuit filed in or transferred to a Federal MDL mass tort
proceeding, plaintiffs' lawyers must submit to the MDL court
evidence that before filing, they properly investigated the
asserted claims. Specifically, they would be required to submit
evidentiary support (including, but not limited to, medical
records) for the factual contentions in each plaintiff's
complaint regarding the alleged injury, the exposure to the
risk that allegedly caused the injury, and the alleged cause of
the injury. Plaintiffs' lawyers would be required to make the
submission within the later of 45 days after the complaint is
filed or transferred to an MDL proceeding. Within 30 days
thereafter, the MDL court would be required to rule on the
sufficiency of the submission. If the MDL court finds a
submission insufficient, the claim must be dismissed without
prejudice. If within 30 days thereafter, the insufficiency is
not corrected, the claim must be dismissed with prejudice.
In enacting the MDL statute, Congress made clear that MDL
courts were supposed to handle pre-trial proceedings only--and
then send the cases back to the courts in which they were
originally filed for trial. But some MDL courts pressure
defendants to settle by insisting on ``bellwether'' trials--
namely, pseudo-trials that supposedly test a claim's
suitability for settlement. Often, however, those trials are
not fair tests of the plaintiffs' claims. Rather, they're
unrepresentative claims hand-picked to maximize attorneys' fees
in a coerced settlement. FICALA therefore affirms Congress's
original intent that MDL proceedings are for pre-trial purposes
only--and that no trial may be conducted by an MDL court unless
all parties consent to a waiver of venue and personal
jurisdiction for that particular trial.
They authorize immediate appellate review of interlocutory
MDL court orders where those rulings may apply to or affect
multiple cases in the MDL proceeding or where immediate review
may materially advance the ultimate termination of the MDL
proceeding.
When the cost-savings economies of scale of an MDL
proceeding are used by class action plaintiffs' lawyers, those
savings should be passed on to the victims, and the savings
enforced by the judges who take over the cases after the pre-
trial MDL proceedings occur. So FICALA requires that in
settlements of Federal court mass tort claims in MDL
proceedings, 80% of all compensation paid must go directly to
claimants.
They make clear that nothing in the bill restricts the
authority of the Judicial Conference and the Supreme Court from
proposing their own rule changes under chapter 131 of title 28
of the U.S. Code, which sets out the procedures under which the
courts themselves can create their own rules.
Finally, they provide that the amendments made by the bill
shall apply on the date of enactment.
Hearings
The Committee on the Judiciary held no hearings on H.R.
985. During the last Congress, the Committee's Subcommittee on
the Constitution and Civil Justice held a hearing on H.R. 1927
on April 29, 2015 (which included some of the provisions
contained in H.R. 985), at which the following witnesses
presented testimony at the hearing: John Beisner, Partner, the
Skadden, Arps, Slate, Meagher, and Flom LLP; Mark A. Behrens,
Shook, Hardy & Bacon; Andrew Trask, McGuire, Woods; and
Alexandra D. Lahav, University of Connecticut School of Law.
Committee Consideration
On February 15, 2017, the Committee met in open session and
ordered the bill H.R. 985 favorably reported, without
amendment, by a rollcall vote of 19 to 12, a quorum being
present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
following rollcall votes occurred during the Committee's
consideration of H.R. 985.
1. An amendment offered by Mr. Conyers to provide an
exception for civil rights claims from the bill's class action
provisions. The amendment was defeated by a rollcall vote of 11
to 14.
ROLLCALL NO. 1
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................ X
Mr. Issa (CA).................................. X
Mr. King (IA).................................. X
Mr. Franks (AZ)................................
Mr. Gohmert (TX)...............................
Mr. Jordan (OH)................................ X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................ X
Mr. Gowdy (SC).................................
Mr. Labrador (ID).............................. X
Mr. Farenthold (TX)............................ X
Mr. Collins (GA)...............................
Mr. DeSantis (FL)..............................
Mr. Buck (CO).................................. X
Mr. Ratcliffe (TX)............................. X
Mr. Bishop (MI)................................
Ms. Roby (AL).................................. X
Mr. Gaetz (FL).................................
Mr. Johnson (LA)............................... X
Mr. Biggs (AZ)................................. X
Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................ X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)........................... X
Mr. Cohen (TN)................................. X
Mr. Johnson (GA)............................... X
Mr. Deutch (FL)................................ X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI)............................. X
Mr. Swalwell (CA).............................. X
Mr. Lieu (CA).................................. X
Mr. Raskin (MD)................................ X
Ms. Jayapal (WA)...............................
Mr. Schneider (IL)............................. X
------------------------
Total...................................... 11 14
------------------------------------------------------------------------
2. An amendment offered by Ms. Jackson Lee to delay the
effective date until the Administrative Office of the U.S.
Courts completes an assessment of the bill's costs on litigants
and the courts. The amendment was defeated by a rollcall vote
of 12 to 17.
ROLLCALL NO. 2
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................ X
Mr. Issa (CA).................................. X
Mr. King (IA).................................. X
Mr. Franks (AZ)................................ X
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................ X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................ X
Mr. Gowdy (SC).................................
Mr. Labrador (ID).............................. X
Mr. Farenthold (TX)............................
Mr. Collins (GA)............................... X
Mr. DeSantis (FL).............................. X
Mr. Buck (CO).................................. X
Mr. Ratcliffe (TX)............................. X
Mr. Bishop (MI)................................
Ms. Roby (AL).................................. X
Mr. Gaetz (FL).................................
Mr. Johnson (LA)............................... X
Mr. Biggs (AZ)................................. X
Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................ X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)........................... X
Mr. Cohen (TN)................................. X
Mr. Johnson (GA)............................... X
Mr. Deutch (FL)................................ X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI)............................. X
Mr. Swalwell (CA).............................. X
Mr. Lieu (CA).................................. X
Mr. Raskin (MD)................................ X
Ms. Jayapal (WA)............................... X
Mr. Schneider (IL)............................. X
------------------------
Total...................................... 12 17
------------------------------------------------------------------------
3. An amendment offered by Mr. Deutch to strike the bill's
stay of discovery provision. The amendment was defeated by a
rollcall vote of 12 to 19.
ROLLCALL NO. 3
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI).................... X
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................ X
Mr. Issa (CA).................................. X
Mr. King (IA).................................. X
Mr. Franks (AZ)................................ X
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................ X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT).............................. X
Mr. Marino (PA)................................ X
Mr. Gowdy (SC).................................
Mr. Labrador (ID).............................. X
Mr. Farenthold (TX)............................
Mr. Collins (GA)............................... X
Mr. DeSantis (FL).............................. X
Mr. Buck (CO).................................. X
Mr. Ratcliffe (TX)............................. X
Mr. Bishop (MI)................................
Ms. Roby (AL).................................. X
Mr. Gaetz (FL).................................
Mr. Johnson (LA)............................... X
Mr. Biggs (AZ)................................. X
Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................ X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)........................... X
Mr. Cohen (TN)................................. X
Mr. Johnson (GA)............................... X
Mr. Deutch (FL)................................ X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI)............................. X
Mr. Swalwell (CA).............................. X
Mr. Lieu (CA).................................. X
Mr. Raskin (MD)................................ X
Ms. Jayapal (WA)............................... X
Mr. Schneider (IL)............................. X
------------------------
Total...................................... 12 19
------------------------------------------------------------------------
4. An amendment offered by Mr. Cicilline to provide an
exception from to bill for actions, to the extent authorized by
law, arising from injury caused by a firearm. The amendment was
defeated by a rollcall vote of 12 to 19.
ROLLCALL NO. 4
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI).................... X
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................ X
Mr. Issa (CA).................................. X
Mr. King (IA).................................. X
Mr. Franks (AZ)................................ X
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................ X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT).............................. X
Mr. Marino (PA)................................ X
Mr. Gowdy (SC).................................
Mr. Labrador (ID).............................. X
Mr. Farenthold (TX)............................
Mr. Collins (GA)............................... X
Mr. DeSantis (FL).............................. X
Mr. Buck (CO).................................. X
Mr. Ratcliffe (TX)............................. X
Mr. Bishop (MI)................................
Ms. Roby (AL).................................. X
Mr. Gaetz (FL).................................
Mr. Johnson (LA)............................... X
Mr. Biggs (AZ)................................. X
Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................ X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)........................... X
Mr. Cohen (TN)................................. X
Mr. Johnson (GA)............................... X
Mr. Deutch (FL)................................ X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI)............................. X
Mr. Swalwell (CA).............................. X
Mr. Lieu (CA).................................. X
Mr. Raskin (MD)................................ X
Ms. Jayapal (WA)............................... X
Mr. Schneider (IL)............................. X
------------------------
Total...................................... 12 19
------------------------------------------------------------------------
5. An amendment offered by Ms. Jayapal to strike the bill's
provision governing issue classes. The amendment was defeated
by a rollcall vote of 12 to 19.
ROLLCALL NO. 5
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI).................... X
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................ X
Mr. Issa (CA).................................. X
Mr. King (IA).................................. X
Mr. Franks (AZ)................................ X
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................ X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT).............................. X
Mr. Marino (PA)................................ X
Mr. Gowdy (SC).................................
Mr. Labrador (ID).............................. X
Mr. Farenthold (TX)............................
Mr. Collins (GA)............................... X
Mr. DeSantis (FL).............................. X
Mr. Buck (CO).................................. X
Mr. Ratcliffe (TX)............................. X
Mr. Bishop (MI)................................
Ms. Roby (AL).................................. X
Mr. Gaetz (FL).................................
Mr. Johnson (LA)............................... X
Mr. Biggs (AZ)................................. X
Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................ X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)........................... X
Mr. Cohen (TN)................................. X
Mr. Johnson (GA)............................... X
Mr. Deutch (FL)................................ X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI)............................. X
Mr. Swalwell (CA).............................. X
Mr. Lieu (CA).................................. X
Mr. Raskin (MD)................................ X
Ms. Jayapal (WA)............................... X
Mr. Schneider (IL)............................. X
------------------------
Total...................................... 12 19
------------------------------------------------------------------------
6. Motion to report H.R. 985 favorably to the House of
Representatives. The motion was agreed to by a rollcall vote of
19 to 12.
ROLLCALL NO. 6
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI).................... X
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................ X
Mr. Issa (CA).................................. X
Mr. King (IA).................................. X
Mr. Franks (AZ)................................ X
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................ X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT).............................. X
Mr. Marino (PA)................................ X
Mr. Gowdy (SC).................................
Mr. Labrador (ID).............................. X
Mr. Farenthold (TX)............................
Mr. Collins (GA)............................... X
Mr. DeSantis (FL).............................. X
Mr. Buck (CO).................................. X
Mr. Ratcliffe (TX)............................. X
Mr. Bishop (MI)................................
Ms. Roby (AL).................................. X
Mr. Gaetz (FL).................................
Mr. Johnson (LA)............................... X
Mr. Biggs (AZ)................................. X
Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................ X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)........................... X
Mr. Cohen (TN)................................. X
Mr. Johnson (GA)............................... X
Mr. Deutch (FL)................................ X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI)............................. X
Mr. Swalwell (CA).............................. X
Mr. Lieu (CA).................................. X
Mr. Raskin (MD)................................ X
Ms. Jayapal (WA)............................... X
Mr. Schneider (IL)............................. X
------------------------
Total...................................... 19 12
------------------------------------------------------------------------
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 985, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 6, 2017.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 985, the
``Fairness in Class Action Litigation Act of 2017.''
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Robert Reese,
who can be reached at 226-2860.
Sincerely,
Keith Hall,
Director.
Enclosure
cc:
Honorable John Conyers, Jr.
Ranking Member
H.R. 985--Fairness in Class Action Litigation Act of 2017.
As ordered reported by the House Committee on the Judiciary
on February 15, 2017.
H.R. 985 would amend the Federal judicial code to update
the standards by which a court determines whether a case meets
the requirements to be heard as a class-action suit. The bill
also would require the Judicial Conference of the United States
to submit an annual report to the Congress on payments from
class-action settlements. Finally, the bill would amend the
procedures that Federal courts use when considering certain
multi-plaintiff claims and multi-district litigation
proceedings.
The effect that H.R. 985 would have on litigation strategy
is uncertain and could lead to an increase or decrease in the
number of cases brought to Federal courts. Based on an analysis
of information from the Administrative Office of the United
States Courts (AOUSC) and research regarding class-actions
suits, CBO estimates that imposing new requirements on the
courts for the consideration of class-action cases would cost
$2 million over the 2018-2022 period; such spending would be
subject to the availability of appropriated funds. Those
additional administrative expenses to determine whether cases
qualify to be considered as class-action suits would be
incurred whether or not overall caseloads increased or
decreased under the bill.
Under the bill, the Judicial Conference would be required
to submit to the Congress an annual report summarizing the
disbursement of settlement payments to class members for all
ongoing class-action settlements. Based on an analysis of
information from the AOUSC on the amount of work necessary to
analyze the relevant data and complete the report, CBO
estimates that implementing this requirement would cost less
than $500,000 over the 2018-2022 period.
Enacting H.R. 985 would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply. CBO
estimates that enacting H.R. 985 would not increase net direct
spending or on-budget deficits in any of the four consecutive
10-year periods beginning in 2028.
H.R. 985 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA) and would not affect
the budgets of state, local, or tribal governments.
H.R. 985 would impose private-sector mandates, as defined
in UMRA, by limiting the timing and amount of fees attorneys
could receive in class-action lawsuits and multi-district
litigation. For example, the bill would:
LProhibit fee awards to attorneys that exceed
the total amount of money distributed to all class
members;
LProhibit the payment of fee awards to
attorneys in class-action cases until the distribution
of any monetary recovery to class members has been
completed; and
LLimit the fees to attorneys in multi-district
proceedings to no more than 20 percent of the total
recovery.
The limits on attorney fees would be a mandate because it
would restrict amounts that attorneys might otherwise be able
to collect from their clients. The direct cost of the mandates
is measured as the annual loss of net income that attorneys
would experience in both pending and future cases. Based on
information from legal scholars about how attorney's fees are
currently structured in such cases and the possible number of
cases that could be affected (some research suggests about
1,000 annually), CBO estimates that the annual cost of the
mandates would exceed the threshold established in UMRA for
private-sector mandates ($156 million in 2017, adjusted
annually for inflation) in each of the first 5 years the
mandates are in effect.
The CBO staff contacts for this estimate are Robert Reese
(for Federal costs) and Paige Piper/Bach (for private-sector
mandates). The estimate was approved by H. Samuel Papenfuss,
Deputy Assistant Director for Budget Analysis.
Duplication of Federal Programs
No provision of H.R. 985 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee estimates that H.R. 985 specifically directs
to be completed no specific rule makings within the meaning of
5 U.S.C. Sec. 551.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
985 will provide greater fairness in class action litigation.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 985 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Sec. 1. Short title; Reference; Table of Contents. Section
1 sets forth the short title of the bill as the ``Fairness in
Class Action Litigation Act of 2017.''
Sec. 2. Purposes. Section 2 sets forth the purposes of the
bill.
Sec. 3. Class Action Procedures.
Class action injury allegations:
(a) IN GENERAL.--A Federal court shall not issue an order
granting certification of a class action seeking monetary
relief for personal injury or economic loss unless the party
seeking to maintain such a class action affirmatively
demonstrates that each proposed class member suffered the same
type and scope of injury as the named class representative or
representatives. (b) CERTIFICATION ORDER.--An order issued
under Rule 23(c)(1)\9\ of the Federal Rules of Civil Procedure
that certifies a class seeking monetary relief for personal
injury or economic loss shall include a determination, based on
a rigorous analysis of the evidence presented, that the
requirement in subsection (a) of this section is satisfied.
---------------------------------------------------------------------------
\9\Rule 23(c)(1) prescribes the rules for Federal court
certification orders.
The purpose of a class action is to provide a fair,
efficient means of litigating like claims, not to provide a way
for unscrupulous lawyers to artificially inflate the size of a
class to extort a larger settlement value for themselves, and
in the process increase the prices of goods and services for
everyone. Claims seeking monetary relief for personal injury or
economic loss should be grouped in classes in which those who
are the most injured receive the most compensation. No one
should be forced into a class action with other uninjured or
minimally injured members, only to see their own compensation
reduced.
Unscrupulous lawyers work the system today in the following
way. They file lawsuits, for example, against a company that
sells a washing machine. Some very small percentage of those
washing machines do not work the way they are supposed to, but
the vast majority of them do. But the lawyers file a class
action lawsuit that includes everyone who ever purchased a
washing machine from the company, even the large number of
people who are completely satisfied with their purchase. When
these lawyers lump injured or non-comparably injured people
into the same class action lawsuit, the limited resources of
the parties are wastefully spent weeding through hundreds of
thousands of class members in order to find those with actual
or significant injuries. That's money that could have been
spent compensating deserving victims. As the Third Circuit
Court of Appeals said in a recent opinion, ``It is unfair to
absent class members if there is a significant likelihood their
recovery will be diluted by fraudulent or inaccurate
claims.''\10\
---------------------------------------------------------------------------
\10\Carrera v. Bayer Corp., 727 F.3d 307, 310 (3d Cir. 2013).
---------------------------------------------------------------------------
Sometimes, because judges do not separate the injured from
the non-injured in class actions early enough in the
proceedings, they end up throwing out settlements because it
turns out hardly any of the class members were harmed, and did
not want compensation. Other times, when judges realize they
have created an overbroad class, they justify their actions by
coming up with novel theories to provide some compensation to
people who are entirely satisfied with the product, and do not
want compensation. Either way, the solution is to direct judges
to determine as best they can, early in the proceedings, which
proposed class members are significantly and comparably
injured, and those who are not, and to treat them accordingly.
That's fair to everyone.
FICALA would simply make clear what already should be clear
to the Federal courts, namely that uninjured class members are
incompatible with Rule 23(b)(3)'s current requirement that
classes should not be certified unless common legal and factual
issues predominate in the class action. This subsection's
requirement that those seeking to bring a class action
``affirmatively demonstrate'' that each proposed class member
suffered the same type and scope of injury as the named class
representatives, as well as its requirement that the Federal
court conduct ``a rigorous analysis'' of the evidence presented
that the requirements of this subsection have been met, are
both drawn from existing Supreme Court precedent.\11\
---------------------------------------------------------------------------
\11\Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350-51 (2011)
(``A party seeking class certification must affirmatively demonstrate
his compliance with the Rule . . . We [have] recognized . . . that
certification is proper only if the trial court is satisfied, after a
rigorous analysis, that the prerequisites of Rule 23(a) have been
satisfied'') (internal quotations and citations omitted).
---------------------------------------------------------------------------
Opponents of the bill may claim this provision will somehow
interfere with the class action process. But this section of
the bill does not prohibit the filing of any class actions at
all. It simply requires that if class actions are filed,
similarly injured people should be grouped with other similarly
injured people in their own class action. Claims seeking
monetary relief for personal injury or economic loss\12\ should
be grouped in classes in which those who are most injured
receive the most compensation. No one should be forced into a
class action with other uninjured or minimally injured members,
only to see their own compensation reduced.
---------------------------------------------------------------------------
\12\Black's Law Dictionary defines ``personal injury'' as ``In a
negligence action, any harm caused to a person, such as a broken bone,
a cut, or a bruise; bodily injury.'' ``Economic loss'' is defined by
Black's Law Dictionary as ``A monetary loss such as lost wages or lost
profits . . . [I]n a products-liability suit, economic loss includes
the cost of repair or replacement of defective property, as well as
commercial loss for the property's inadequate value and consequent loss
of profits or use.''
Conflicts of Interest:
(a) REQUIRED DISCLOSURES.--In a class action complaint, class
counsel shall state whether any proposed class representative
or named plaintiff in the complaint is a relative of, is a
present or former employee of, is a present or former client of
(other than with respect to the class action), or has any
contractual relationship with (other than with respect to the
class action) class counsel. In addition, the complaint shall
describe the circumstances under which each class
representative or named plaintiff agreed to be included in the
complaint and shall identify any other class action in which
any proposed class representative or named plaintiff has a
similar role. (b) PROHIBITION OF CONFLICTS.--A Federal court
shall not issue an order granting certification of any class
action in which any proposed class representative or named
plaintiff is a relative of, is a present or former employee of,
is a present or former client of (other than with respect to
the class action), or has any contractual relationship with
(other than with respect to the class action) class counsel.
(c) DEFINITION.--For purposes of this section, ``relative''
shall be defined by reference to section 3110(a)(3) of title 5,
United States Code.\13\
---------------------------------------------------------------------------
\13\5 U.S.C. Sec. 3110(a)(3) (prohibiting the employment of
relatives by Federal public officials) provides that ```relative'
means, with respect to a public official, an individual who is related
to the public official as father, mother, son, daughter, brother,
sister, uncle, aunt, first cousin, nephew, niece, husband, wife,
father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-
law, sister-in-law, stepfather, stepmother, stepson, stepdaughter,
stepbrother, stepsister, half brother, or half sister.''
Abraham Lincoln left behind pages of notes on a lecture he
was to give to lawyers. They say ``Never stir up litigation. A
worse man can scarcely be found than one who does this. Who can
be more nearly a fiend than he who habitually overhauls the
register of deeds in search of defects in titles, whereon to
stir up strife, and put money in his pocket?''\14\
---------------------------------------------------------------------------
\14\Available at http://quod.lib.umich.edu/l/lincoln/lincoln2/
1:134.1?rgn=div2;view=fulltext.
---------------------------------------------------------------------------
That was Lincoln in the 1850's. Here's Forbes magazine just
a couple years ago:
The lead plaintiff in the 5-Hour case . . . worked in
marketing for a cosmetic surgery center in California.
But in a grueling, 5-hour deposition, [she] admitted
she had been recruited to serve as a plaintiff by her
cousin, who worked for a Texas lawyer[;] had purchased
two bottles of 5-Hour Energy specifically to sue the
manufacturer; had never complained to the company or
sought a refund; and had signed a backdated retainer
agreement with [trial lawyer] Rubinstein [the fellow
seen here at his own deposition] . . . [A]nother one of
Rubinstein's clients . . . admitted she had served as a
plaintiff for Rubinstein in at least four class actions
over products like Swanson pot pies and lipstick . . .
E-mails and other communications 5-Hour's lawyers
uncovered in their suit showed that Rubinstein belonged
to a loose affiliation of lawyers who ran an assembly-
line process of identifying companies to sue and then
helping each other find plaintiffs.\15\
---------------------------------------------------------------------------
\15\Available at http://www.forbes.com/sites/danielfisher/2015/11/
17/collapse-of-5-hour-energy-case-reveals-secrets/#475a827a1aa4.
Lawsuits are supposed to be initiated by truly injured
plaintiffs seeking redress, not invented by lawyers who hunt
for a plaintiff to assert a supposed injury made up by the
lawyer. Few class members bother to collect the payments
available in class action settlements in large part because
they do not feel injured by the supposedly wrongful conduct in
the first place. In too many cases, opportunistic lawyers come
up with an idea for a lawsuit and then search for a person who
has bought the product--or they send a relative or employee to
buy the product--so they'll have someone who can sue on behalf
of a proposed class of all other buyers. No product purchaser
has actually complained or feels cheated. That's a major reason
why so few class members bother to collect the payments
available in class action settlements--they do not feel injured
by the supposedly wrongful conduct in the first place. This
abuse of class actions--lawyer-driven lawsuits--must end.
FICALA therefore requires lawyers to disclose how proposed
class representatives became involved in the class action.
Further, it prohibits class actions in which any proposed class
representative (that is, a named plaintiff that will be
representing everyone else in the class action) is a relative
of, is a present or former employee of, is a present or former
client of, or has any contractual relationship with the class
---------------------------------------------------------------------------
action lawyer.
Class Member Benefits:
(a) DISTRIBUTION OF BENEFITS TO CLASS MEMBERS.--A Federal court
shall not issue an order granting certification of a class
action seeking monetary relief unless the class is defined with
reference to objective criteria and the party seeking to
maintain such a class action affirmatively demonstrates that
there is a reliable and administratively feasible mechanism (a)
for the court to determine whether putative class members fall
within the class definition and (b) for distributing directly
to a substantial majority of class members any monetary relief
secured for the class.
Because the whole purpose of class actions is to redress
the injuries sustained by class members, the system should
ensure that any benefits obtained in such cases can actually be
delivered to those class members. And it should ensure that
class members, not their lawyers, get most of those benefits.
Consequently, FICALA's section on ``Class member benefits''
includes the following provisions: a requirement that, in a
class action seeking monetary relief, a class cannot be
certified unless counsel can demonstrate that there is a
``reliable and administratively feasible mechanism'' for the
court to identify who falls within the class (through something
other than a self-serving declaration) and for distributing any
monetary award that's obtained to a substantial majority of the
class members. In short, counsel have to demonstrate that the
use of the class action device in a particular controversy
would actually serve the purpose of compensating class members
for their alleged injuries, if the class proves its case.
As one appeals court judge (nominated by President Obama)
wrote in his dissent in a recent class action case, ``The chief
difficulty we confront in this case arises from the fact that
some of the members of the class have not suffered the . . .
injury upon which this entire case is predicated [and that]
could constitute as many as 24,000 consumers who would have no
valid claim against the defendants under the state [] laws even
if the named plaintiffs win on the merits.''\16\ He went on to
chastise the other judges who allowed the class action to
proceed, writing ``if the district court does not identify a
culling method to ensure that the class, by judgment, includes
only members who were actually injured, this court has no
business simply hoping that one will work.''\17\
---------------------------------------------------------------------------
\16\In re Nexium Antitrust Litigation, 777 F.3d 9, 32-33 (1st Cir.
2015) (Kayatta, Circuit Judge, dissenting).
\17\Id. at 35.
---------------------------------------------------------------------------
Some courts of appeals have imposed this sort of
``ascertainability'' requirement.\18\ But other courts, such as
the Ninth Circuit, have rejected this rule.\19\ America needs a
rule that ensures class actions are used only where they will
serve to actually get compensation to class members, where
deserved. Cases that do nothing more than get lawyers lots of
money are not consistent with the legitimate purposes of class
actions. FICALA would establish that rule.
---------------------------------------------------------------------------
\18\See Carrera v. Bayer Corp., 727 F. 3d 300, 305, 306 (3d Cir.
2013) (``Many courts and commentators have recognized that an essential
prerequisite of a class action, at least with respect to actions under
Rule 23(b)(3), is that the class must be currently and readily
ascertainable based on objective criteria . . . If class members are
impossible to identify without extensive and individualized fact-
finding or `mini-trials,' then a class action is inappropriate.'')
(also holding that a plaintiff seeking class certification ``must show,
by by a preponderance of the evidence, that the class is `currently and
readily ascertainable based on objective criteria,' and the trial court
must evaluate this showing by employing a ``rigorous analysis.'').
Several other Circuits have joined that view. See In re Nexium
Antitrust Litig., 777 F.3d 9 (1st Cir. 2015); Brecher v. Republic of
Argentina, 806 F.3d 22 (2d Cir. 2015), EQT Prod. Co. v. Adair, 764 F.3d
347 (4th Cir. 2014); Karhu v. Vital Pharmaceuticals, Inc.,--Fed.
App'x--, 2015 WL 3560722, at *2-3 (11th Cir 2015).
\19\See Rikos v. Procter & Gamble Co., 799 F.3d 497, 525 (6th Cir.
2015); Mullins v. Direct Digital, LLC, 795 F.3d 654, 658 (7th Cir.
2015); and Brieseno v. Conagra Foods, Inc., __ F.3d __ (9th Cir., Jan.
3, 2017).
(b) ATTORNEYS' FEES IN CLASS ACTIONS.--(1) FEE DISTRIBUTION
TIMING.--In a class action seeking monetary relief, no
attorneys' fees may be determined or paid pursuant to Rule
23(h) of the Federal Rules of Civil Procedure or otherwise
until the distribution of any monetary recovery to class
members has been completed. (2) FEE DETERMINATIONS BASED ON
MONETARY AWARDS.--Unless otherwise specified by Federal
statute, if a judgment or proposed settlement in a class action
provides for a monetary recovery, the portion of any attorneys'
fee award to class counsel that is attributed to the monetary
recovery shall be limited to a reasonable percentage of any
payments directly distributed to and received by class members.
In no event shall the attorneys' fee award exceed the total
amount of money directly distributed to and received by all
class members. (3) FEE DETERMINATIONS BASED ON EQUITABLE
RELIEF.--Unless otherwise specified by Federal statute, if a
judgment or proposed settlement in a class action provides for
equitable relief,\20\ the portion of any attorneys' fee award
to class counsel that is attributed to the equitable relief
shall be limited to a reasonable percentage of the value of the
equitable relief, including any injunctive relief.\21\
---------------------------------------------------------------------------
\20\Black's Law Dictionary (10th ed. 2014) defines ``equitable
remedy'' as ``A remedy, usu. a nonmonetary one such as an injunction or
specific performance, obtained when available legal remedies, usu.
monetary damages, cannot adequately redress the injury.''
\21\Black's Law Dictionary (10th ed. 2014) defines ``injunction''
as ``A court order commanding or preventing an action.''
The Manual for Complex Litigation (4th ed. 2004)\22\ is a
treatise published by the Federal Judicial Center, which is
operated by the Federal judiciary. It was written by a group of
well-respected judges, most of whom are still active. Section
21.71 of the Manual states as follows: ``Compensating counsel
for the actual benefits conferred on the class members is the
basis for awarding attorney fees. The fundamental focus is the
result actually achieved for class members. That approach is
premised on finding a tangible benefit actually obtained by the
class members . . . In cases involving a claims procedure or a
distribution of benefits over time, the court should not base
the attorney fee award on the amount of money set aside to
satisfy potential claims. Rather, the fee awards should be
based only on the benefits actually delivered.'' However, for
the most part, Federal courts are not following this directive.
Congress needs to enforce what the some Federal courts are not
enforcing.
---------------------------------------------------------------------------
\22\Available at http://www.fjc.gov/public/home.nsf/
autoframe?openagent&url_l=/public/home.nsf/inavgeneral?openpage&url_r=/
public/home.nsf/pages/524.
---------------------------------------------------------------------------
Taking a step back, it's important to realize that in class
actions, no one asks the class members if they want a lawsuit
brought on their behalf. Lawyers can sue for them without
getting their permission. And there's good reason to suspect
most people do not want to be part of most of these cases.
According to a sworn declaration of a professional who
administers class action settlements, the median rate at which
consumer class action members take the compensation offered in
a settlement is an incredibly low 0.023 percent.\23\
---------------------------------------------------------------------------
\23\Declaration of Deborah McComb Re Settlement Claims April 21,
2014, at 2, available at http://blogs.reuters.com/alison-frankel/files/
2014/05/duracellclassaction-mccombdeclaration.pdf.
---------------------------------------------------------------------------
That's right--only the tiniest fraction of a percent of
consumer class action members bother to claim the compensation
awarded them. Another study of the limited publicly available
distributions to class members for cases filed in or removed to
Federal court in 2009 found that ``few class members ever even
see those paltry benefits--particularly in consumer class
actions. Unfortunately, because information regarding the
distribution of class action settlements is rarely available,
the public almost never learns what percentage of a settlement
is actually paid to class members. But of the six cases in our
[2009] data set for which settlement distribution data was
public, five delivered funds to only miniscule percentages of
the class: 0.000006%, 0.33%,1.5%, 9.66%, and 12%. Those results
are consistent with other available information about
settlement distribution in consumer class actions.''\24\
Further examples can be found in that report's Appendix A.
---------------------------------------------------------------------------
\24\Available at http://blogs.reuters.com/alison-frankel/files/
2013/12/mayerbrownclassaction
study.pdf.
---------------------------------------------------------------------------
What that means is that the primary beneficiaries of
consumer class actions are the lawyers--not the allegedly
injured class members. Lawyers tend to reap millions, while the
alleged victims get little or nothing. Here are a few examples:
The Subway sandwich chain was sued in a class action
because trial lawyers complained their ``foot-long'' subs
usually were not a full foot-long. As part of the settlement,
Subway agreed to pay small amounts to the ten class
representatives, but the millions of other class members
received nothing. Not a dime. Meanwhile, the lawyers were
awarded $520,000 in fees.\25\ The settlement was appealed to
the Seventh Circuit Court of Appeals. During oral arguments in
September, 2016, Judge Diane Sykes remarked that ``[a] class
action that seeks only worthless benefits for the class should
be dismissed out of hand. . . . That's what should have
happened here. . . . This is a racket.''\26\
---------------------------------------------------------------------------
\25\In re Subway Footlong Sandwich Marketing and Sales Practices
Litigation, MDL No. 13-02439, available at http://
www.wied.uscourts.gov/sites/wied/files/documents/Subway%20MDL%
20Final%20'settlement%20Approval%20Order.pdf.
\26\See http://www.abajournal.com/magazine/article/
subway_sandwich_class_action.
---------------------------------------------------------------------------
The Coca Cola Company was sued in a class action lawsuit
for allegedly implying in its advertising that a product called
``vitaminwater'' was healthy.\27\ Class members received zero
dollars in the settlement. The lawyers were awarded $1.2
million in fees.
---------------------------------------------------------------------------
\27\Volz v. Coca Cola Co., No. 1:10-cv-00879 (S.D. Ohio 2014).
---------------------------------------------------------------------------
In Lane v. Facebook, Inc., which arose out of alleged
privacy violations by Facebook, the company agreed to settle
the case by spending $6.5 million to establish a new charity
called the Digital Trust Foundation (``DTF'') whose purpose was
to educate users on protection of identity and personal
information online. Facebook agreed to pay class counsel $3
million. Zero dollars were paid to class members. The Ninth
Circuit affirmed this deal, but in a withering dissent, Judge
Kleinfeld observed that ``Facebook users who had suffered
damages . . . got no money, not a nickel from the defendants .
. . [while] [c]lass counsel, on the other hand, got
millions.''\28\ While the U.S. Supreme Court declined to review
the Facebook settlement,\29\ Chief Justice Roberts issued an
unusual statement with respect to the Court's denial of
certiorari, stating that these charitable donation provisions
(also known as cy pres awards) are a ``growing feature'' of
class action settlements that warranted monitoring.\30\
---------------------------------------------------------------------------
\28\Lane v. Facebook, Inc., 696 F.3d 811, 828 (9th Cir. 2013)
(Kleinfeld, J., dissenting).
\29\See Marek v. Lane, 134 S. Ct. 8 (2013).
\30\Id. at 9.
---------------------------------------------------------------------------
The class action system is supposed to primarily benefit
victims, not lawyers. Class action lawyers should only get paid
after the victims get paid, and FICALA requires just that in
the subsection entitled ``Fee Distribution Timing.'' Also, the
portion of attorneys' fee awards to class action lawyers should
be limited to a reasonable percentage of the money actually
distributed to and received by the victims, and class action
lawyers' fees should never exceed the total amount of money
received by all the victims. FICALA requires that as well in
the subsection entitled ``Fee Determinations Based on Monetary
Awards.''
Insofar as a class action seeks equitable relief (that is,
non-monetary relief, including any injunctive relief that seeks
to stop the defendant from doing something wrong), the portion
of any class action lawyers' fee award should be limited to a
reasonable percentage of the value of that relief, as
determined by the court. FICALA requires that in the subsection
entitled ``Fee Determinations Based on Equitable Relief.''
This provision will not affect fee awards in civil rights
cases because both the monetary and equitable relief attorneys'
fees provisions in FICALA are qualified with the initial phrase
``Unless otherwise specified by Federal statute.'' The Civil
Rights Attorney's Fee Award Act of 1976, 42 U.S.C.
Sec. 1988,\31\ allows a court, in its discretion, to award
reasonable attorneys' fees as part of the costs to a prevailing
party in Federal civil rights lawsuits, including cases brought
under 28 U.S.C. Sec. 1983--the statute most commonly used to
assert civil rights claims. Consequently, FICALA will not
affect attorneys' fees in civil rights class actions at all.
---------------------------------------------------------------------------
\31\42 U.S.C. Sec. 1988 provides that ``(b) Attorney's fees. In any
action or proceeding to enforce a provision of sections 1981, 1981a,
1982, 1983, 1985, and 1986 of this title, title IX of Public Law 92-318
[20 U.S.C.A. Sec. 1681 et seq.], the Religious Freedom Restoration Act
of 1993 [42 U.S.C.A. Sec. 2000bb et seq.], the Religious Land Use and
Institutionalized Persons Act of 2000 [42 U.S.C.A. Sec. 2000cc et
seq.], title VI of the Civil Rights Act of 1964 [42 U.S.C.A. Sec. 2000d
et seq.], or section 13981 of this title, the court, in its discretion,
may allow the prevailing party, other than the United States, a
reasonable attorney's fee as part of the costs, except that in any
action brought against a judicial officer for an act or omission taken
in such officer's judicial capacity such officer shall not be held
liable for any costs, including attorney's fees, unless such action was
clearly in excess of such officer's jurisdiction. (c) Expert fees. In
awarding an attorney's fee under subsection (b) of this section in any
action or proceeding to enforce a provision of section 1981 or 1981a of
this title, the court, in its discretion, may include expert fees as
part of the attorney's fee.''
---------------------------------------------------------------------------
Regarding other equitable relief cases that do not involve
civil rights claims, Federal courts routinely determine the
value of intangible relief such as equitable or injunctive
relief for purposes of determining whether the amount in
controversy requirement (currently $75,000 to get into Federal
court) is met.\32\ A majority of courts consider only the value
of the injunctive relief from the plaintiff's perspective or
viewpoint.\33\ Some courts determine the jurisdictional amount
by evaluating the claim from the perspective of the party
seeking Federal court jurisdiction.\34\ Others have adopted the
``either viewpoint'' rule, which allows the court to look to
either the plaintiff's or the defendant's viewpoint in
establishing the amount in controversy in cases seeking some
form of injunctive relief.\35\ The bottom line is that, under
FICALA, Federal courts will be able to use any method they deem
best for reasonably assessing reasonable attorneys' fee awards
in equitable relief class action settlements. This provision,
of course, does not alter in any way the relief that would be
granted to civil rights class action members, or to any other
equitable relief class action members.
---------------------------------------------------------------------------
\32\See Packard v. Provident Nat'l Bank, 994 F.2d 1039, 1050 (3d
Cir. 1993) (valuing right to enjoin bank from charging fees);
Massachusetts State Pharm. Ass'n v. Federal Prescription Serv., 431
F.2d 130, 131 (8th Cir. 1970) (valuing right to enjoin solicitation of
business).
\33\See 14AA Fed. Prac. & Proc. Juris. Sec. 3703 (4th ed.) (April
2016 Update).
\34\See id.
\35\See id.
Money Distribution Data:
(a) SETTLEMENT ACCOUNTINGS.--In any settlement of a class
action that provides for monetary benefits, the court shall
order class counsel to submit to the Director of the Federal
Judicial Center and the Director of the Administrative Office
of the United States Courts an accounting of the disbursement
of all funds paid by the defendant pursuant to the settlement
agreement. The accounting shall state the total amount paid
directly to all class members, the actual or estimated total
number of class members, the number of class members who
received payments, the average amount (both mean and median)
paid directly to all class members, the largest amount paid to
any class member, the smallest amount paid to any class member
and, separately, each amount paid to any other person
(including class counsel) and the purpose of the payment. In
stating the amounts paid to class members, no individual class
member shall be identified. No attorneys' fees may be paid to
class counsel pursuant to Rule 23(h)\36\ of the Federal Rules
of Civil Procedure until the accounting has been submitted. (b)
ANNUAL SETTLEMENT DISTRIBUTION REPORTS.--Commencing not later
than 12 months after the date of enactment of this Act, the
Judicial Conference of the United States, with the assistance
of the Director of the Federal Judicial Center and the Director
of the Administrative Office of the United States Courts, shall
annually prepare and transmit to the Committees on the
Judiciary of the Senate and the House of Representatives for
public dissemination a report summarizing how funds paid by
defendants in class actions have been distributed, based on the
settlement accountings submitted pursuant to subsection (a).
---------------------------------------------------------------------------
\36\Rule 23(h) sets out the rules for the award of attorneys' fees
in class actions.
Here's the way attorneys' fees in class actions generally
work. Assume that to settle a class action, a defendant agrees
to pay up to $10 million--$10 to each of one million purported
class members. Under current practice, the court may award the
class counsel $2.5 million (25% of the maximum potential
settlement amount) without waiting to find out how much money
actually gets to class members themselves. The court may award
more or less, but 25% is a frequently used percentage. If, as
usually happens, only 2.5% of the class members (2,500 persons)
claim their settlement payments (for a total of $25,000), the
attorneys will receive 100 times the cash received by all class
members combined: $2.5 million to the lawyers, $25,000 to all
of the allegedly injured consumers.
Because lawyers and Federal courts are not required to make
public exactly how class action settlement funds are
distributed, and to whom, and in what amounts, the public and
Congress is largely in the dark regarding the extent of
potential abuses. To remedy that situation, FICALA requires
that in any Federal court-approved class action settlement, the
trial lawyers must provide the Administrative Office of United
States Courts (the ``AO'') with an accounting of how all money
paid by the defendants was distributed. The AO, in turn, would
be charged with publishing annual aggregate reports on class
settlement distributions derived from these data. This data
would show whether class actions are actually providing
benefits to class members.
This would let the public and Congress know what comes out
of its class action litigation system. Transparency in this
regard would be particularly helpful in exposing the extent of
the abuse of so-called cy pres awards. Class actions include
large numbers of consumers who were satisfied with the product
or service at issue and therefore have zero motivation to
obtain compensation. In response to this growing reality in
consumer class actions, many courts have resorted to cy pres,
the practice of distributing money in class actions that is not
claimed by real people to third-party charities that supposedly
work in the interest of the public in the abstract. While the
use of cy pres in class action settlements has benefited
numerous organizations, the practice is troubling because it
raises serious questions about the purpose of the class action
device. As one court put it, ``[t]here is no indirect benefit
to the class from the defendant's giving the money to someone
else.''\37\ And as the Third Circuit Court of Appeals stated in
another case, ``inclusion of a cy pres distribution may
increase a settlement fund, and with it attorneys' fees,
without increasing the direct benefit to the class.''\38\ And
cy pres diminishes any incentive to identify class members
since the lawyer will receive the same amount of fees even if
hardly anyone gets any compensation.
---------------------------------------------------------------------------
\37\Mirfasihi v. Fleet Mortg. Corp., 356 F.3d 781, 784 (7th Cir.
2004).
\38\In re Baby Prods. Antitrust Litig., Nos. 12-1165, et al., 708
F.3d 163, 173 (3d Cir. 2013), available at http://
www2.ca3.uscourts.gov/opinarch/121165p.pdf.
---------------------------------------------------------------------------
In sum, consumers in many class action lawsuits are not
receiving any benefits. Rather, the bulk of the money ends up
going to lawyers and uninjured third-party organizations, or
both. Given this troubling trend, Congress should help at least
expose the extent of this abuse by requiring transparency in
the allocation of class action settlement funds, including cy
pres awards.
Issues Classes:
(a) IN GENERAL.--A Federal court shall not issue an order
granting certification of a class action with respect to
particular issues pursuant to Rule 23(c)(4) of the Federal
Rules of Civil Procedure unless the entirety of the cause of
action from which the particular issues arise satisfies all the
class certification prerequisites of Rule 23(a) and Rule
23(b)(1), Rule 23(b)(2), or Rule 23(b)(3). (b) CERTIFICATION
ORDER.--An order issued under Rule 23(c)(4) of the Federal
Rules of Civil Procedure that certifies a class with respect to
particular issues shall include a determination, based on a
rigorous analysis of the evidence presented, that the
requirement in subsection (a) of this section is satisfied.
Rule 23 of the Federal Rules of Civil Procedure--and the
Supreme Court's recent interpretations of Rule 23 in Wal-Mart
Stores, Inc. v. Dukes and Comcast Corp. v. Behrend--recognize
that class actions are an exception to the ordinary rules of
litigation, and that the class action system may be used only
when the Rule's requirements are satisfied, particularly that
issues common to all class members predominate over
individualized issues that must be resolved on a plaintiff-by-
plaintiff basis. Some lower courts, however, encouraged by
opportunistic lawyers, are circumventing these rulings by
permitting the certification of so-called ``issues classes'' in
which a single legal or factual issue may be determined for the
whole class even though the claims are dominated by
individualized issues that require case-by-case evaluations.
As the U.S. Court of Appeals for the Fifth Circuit
explained in a case called Castano,\39\ ``Reading [R]ule
23(c)(4) as allowing a court to sever issues . . . would
eviscerate the predominance requirement of [R]ule 23(b)(3); the
result would be automatic certification in every case where
there is a common issue, a result that could not have been
intended.''
---------------------------------------------------------------------------
\39\84 F.3d 734 (5th Cir. 1996).
---------------------------------------------------------------------------
That unintended result has manifested itself in the
decisions of some courts, which have certified class actions to
resolve general ``issues'' regarding a product when the result
is to create a huge class in which the vast majority of class
members have no complaint against the product.
In some circuits, class certification is ordered over the
issue of whether the product was defective before there was any
evaluation of whether the class members actually experienced a
problem with their products. That's incompatible with Rule
23(b), which requires that ``questions of law or fact common to
class members predominate over any questions affecting only
individual members, and that a class action is superior to
other available methods for fairly and efficiently adjudicating
the controversy.'' Issues of law or fact cannot be held in
common by a class if the class consists largely of people who
do not have any injuries at all, and consequently have no legal
or factual basis for being in the class.
Congress must ensure that class action standards are not
circumvented through the use of ``issues classes.'' The
subsection of FICALA entitled ``Issues classes'' therefore
makes clear--as the Fifth Circuit made clear in Castano--that
plaintiffs' attorneys cannot certify an ``issue'' class unless
the entire claim for relief (not just the issue standing alone)
qualifies for class treatment under Rule 23.
Stay of Discovery:
In any class action, all discovery and other proceedings shall
be stayed 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, unless the court finds
upon the motion of any party that particularized discovery is
necessary to preserve evidence or to prevent undue prejudice to
that party.
The discovery process (the pre-trial process in a lawsuit
in which parties demand documents and other things from other
parties in the lawsuit) imposes huge costs on litigants--
particularly because of the astronomical costs associated with
the discovery of electronic information, such as emails. Law
Technology News has reported that the total cost of electronic
discovery rose from $2 billion in 2006 to $2.8 billion in 2009
and estimated that the total cost would rise ten to fifteen
percent annually over the next few years.\40\ In a more recent
case study of Fortune 500 companies, the RAND Institute found
that the median total cost for electronic discovery among
participants totaled $1.8 million per case.\41\ And these costs
are asymmetric: while defendants typically are subject to
gigantic discovery costs, because they are large organizations
possessing large amounts of data, plaintiffs have little
information in their possession and therefore are subject to a
relatively small financial burden during the discovery process.
Moreover, discovery conducted before a motion to dismiss is
decided is unfair: why should defendants bear the burden of
paying for discovery before a complaint is held legally
sufficient, especially when the threat of huge costs may coerce
an unjustified settlement?
---------------------------------------------------------------------------
\40\George Socha & Tom Gelbmann, Climbing Back: Revenue Climbing
Back for EDD Industry, Law Tech. News (Aug. 1, 2010), http://
www.law.com/jsp/lawtechnologynews/PubArticle
LTN.jsp?id=1202463900292.
\41\See Nicholas Pace & Laura Zakaras, Rand Institute for Civil
Justice, Where the Money Goes: Understanding Litigant Expenditures for
Producing Electronic Discovery, 17 (2012); see also Laura Hunt,
Trending: Proportionality in Electronic Discovery in Common Law
Countries and the United States' Federal and State Courts, 43 U. Balt.
L. Rev. 279, 279 (2014) (similar).
---------------------------------------------------------------------------
The reality for most civil litigation is that the
defendants' obligation to bear these exorbitant discovery costs
incentivizes unscrupulous plaintiffs' attorneys to serve
burdensome discovery requests on defendants with zero downside
risk to themselves. As Professor Martin Redish has explained,
``the fact that a party's opponent will have to bear the
financial burden of preparing the discovery response actually
gives litigants an incentive to make discovery requests, and
the bigger the expense to be borne by the opponent, the bigger
the incentive to make the request.''\42\ And because defendants
seek to avoid these exorbitant costs, discovery is all too
often used as a weapon to coerce settlement of claims,
regardless of their merit.\43\ Even the Supreme Court has
recognized this problem, lamenting that ``the threat of
discovery expense will push cost-conscious defendants to settle
even anemic cases before reaching'' trial.\44\
---------------------------------------------------------------------------
\42\Martin H. Redish, Electronic Discovery and the Litigation
Matrix, 51 Duke L.J. 561, 603 (2001).
\43\See John H. Beisner, Discovering a Better Way: The Need for
Effective Civil Litigation Reform, 60 Duke L.J. 547, 549 (2010)
(``Plaintiffs' attorneys routinely burden defendants with
costly discovery requests and engage in open-ended `fishing
expeditions' in the hope of coercing a quick settlement.'').
\44\Bell Atl. Corp. v. Twombly, 550 U.S. 544, 559 (2007).
---------------------------------------------------------------------------
For example, assume that a defendant moves to dismiss a
class action because it does not assert any valid claims. Under
current law, plaintiffs' attorneys can serve massive discovery
requests that force defendants to spend $10 million to collect
the requested documents. A rational decision for that defendant
is to settle the case for millions, even if, 4 months later,
the court grants the motion to dismiss, finding the class
claims to be totally without merit. That's because, without a
stay in discovery, the defendants will in the meantime have
been required to spend all or part of the $10 million costs
complying with the discovery requests--for, it turns out, no
legitimate reason. Trial lawyers pursue discovery in this
circumstance primarily in an effort to pressure the defendant
to settle invalid claims.
Congress addressed this very same issue 20 years ago in the
context of securities class actions. It found in the House
Report for the Private Securities Litigation Reform Act that
``[t]he cost of discovery often forces innocent parties to
settle frivolous securities class actions,'' and enacted a
provision limiting discovery prior to a decision resolving the
legal sufficiency of the complaint. The rationale underlying
that legislation applies equally to class actions outside the
securities context, and Congress should enact the same
provision for class actions generally. Consequently, the
subsection of FICALA entitled ``Stay of discovery'' would stop
the use of discovery to coerce unjustified settlements by
requiring Federal courts to stay discovery pending resolution
of Rule 12 motions (that is, motions to dismiss for failure to
state a claim); motions to strike class allegations; motions to
transfer; and other motions that would dispose of class
allegations unless the court finds that particularized
discovery is necessary to preserve evidence or to prevent undue
prejudice to a party.\45\
---------------------------------------------------------------------------
\45\Examples of ``undue prejudice'' could relate to the potential
loss or spoliation of evidence, such as situations in which, unless
documents are collected they may be destroyed. There may also be
circumstances in which witnesses may become unavailable (due to health,
or leaving employment). There could also be class actions in which
emergency injunctive relief is being sought where discovery might be
justifiable. This provision mirrors 15 U.S.C. Sec. 78u-4(b)(3)(B),
which relates to private securities litigation and provides that ``In
any private action arising under this chapter, all discovery and other
proceedings shall be stayed during the pendency of any motion to
dismiss, unless the court finds upon the motion of any party that
particularized discovery is necessary to preserve evidence or to
prevent undue prejudice to that party.''
Third-Party Litigation Funding Disclosure:
In any class action, class counsel shall promptly disclose in
writing to the court and all other parties the identity of any
person or entity, other than a class member or class counsel of
record, who has a contingent right to receive compensation from
any settlement, judgment, or other relief obtained in the
action.
An agreement for third-party funding of a class action was
recently ordered produced by a Federal court in a case
involving an oil rig explosion off the Nigerian coast. Under
this agreement, a third-party funder agreed to provide
financing to counsel for prosecuting a putative class action
seeking damages for individuals allegedly incurring economic
loss. There are provisions in the agreement that clearly reveal
the third-party funder's influence over the case. For example,
the agreement refers to a ``Project 0Plan'' for the litigation
developed by counsel and the funder, with restrictions on the
ability of the class action lawyer to deviate from it,
particularly with respect to hiring only certain, identified
experts. According to the same document, the funder agreed to
provide class counsel with financing, and in exchange the class
action lawyer committed, in the event of a recovery, to repay
that amount plus a ``Success Fee'' (to the extent recovered) of
six times the financed amount to be paid from attorneys' fees--
plus 2% of the total amount recovered by the putative class
members. That last part is very important, because counsel are
agreeing to hand over class member money without telling the
class members or getting their permission. FICALA would require
in every such case the disclosure of this sort of information,
which is information the court needs in deciding whether the
class representative is adequate, which involves determining
who is really running the show.
This case underscores that the issue of funder control over
litigation strategy is particularly troublesome in putative
class actions. As Judge Susan Illston (of the Northern District
of California) explained in ordering the disclosure of the
third-party litigation funding arrangement at issue in that
litigation, the ``funding agreement is relevant to the adequacy
[of representation] determination [required for class
certification] and should be produced to [the] defendant.''\46\
Judge Illston's concerns proved well-founded. In addition to
the provisions described above, the funding agreement provides
that the lawyers shall endeavor to ``recover the maximum
possible Contingency Fee,''\47\ a requirement that may conflict
with class member interests.
---------------------------------------------------------------------------
\46\Gbarabe v. Chevron Corp., No. 14-cv-00173-SI, 2016 U.S. Dist.
LEXIS 103594, at *6 (N.D. Cal. Aug. 5, 2016).
\47\Gbarabe Litigation Funding Agreement, para. 3.1.3 (emphasis
added).
---------------------------------------------------------------------------
Another example of substantial control by a funder was the
elaborate funding agreement used in litigation against Chevron
filed in an Ecuadorian court alleging environmental
contamination in Ecuador. The litigation was financed in part
by $4 million from Burford, one of the largest third-party
financing companies in the world. The funding agreement at
issue in that case ``provide[d] control to the Funders''
through the ``installment of `Nominated Lawyers'''--lawyers
``selected by the Claimants with the Funder's approval.''\48\
In addition to exerting control, it was clear that the
Nominated Lawyers, who among other things controlled the purse
strings and served as monitors, supervised the costs and course
of the litigation.\49\ In 2014, the U.S. District Court for the
Southern District of New York ruled\50\ that the $9.5 billion
Ecuadorian judgment was the product of fraud and racketeering
activity, finding it unenforceable.
---------------------------------------------------------------------------
\48\Maya Steinitz, The Litigation Finance Contract, 54 Wm. & Mary
L. Rev. 455, 472 (2012) (emphasis added).
\49\Id.
\50\Available at http://www.theamazonpost.com/wp-content/uploads/
Chevron-Ecuador-Opinion-3.4.14.pdf.
---------------------------------------------------------------------------
These kinds of provisions inappropriately vest the funder
with substantial control over key litigation decisions,
undermining the primacy of the attorney-client relationship. In
addition, these arrangements also undermine the adequacy of
representation requirement under Rule 23, which requires that
attorneys adequately represent the interests of class members
in order to advance a case as a class action. One way to ensure
that these concerns are addressed is to require disclosure of
these arrangements at the outset of civil litigation. Indeed,
the U.S. District Court for the Northern District of California
has now issued a rule mandating the disclosure of such
information in all class and representative actions,\51\
providing an important precedent for making the practice more
transparent.
---------------------------------------------------------------------------
\51\Ben Hancock, Northern District, First in Nation, Mandates
Disclosure of Third-Party Funding in Class Actions, The Recorder, Jan.
23, 2017, http://www.therecorder.com/id=120277
7487488/Northern-District-First-in-Nation-Mandates-Disclosure-of-
ThirdParty-Funding-in-Class-
Actions?slreturn=20170101100404.
---------------------------------------------------------------------------
In these situations, the third-party funders of the lawsuit
do not represent the interests of the class members. They're in
the lawsuits solely to make money for themselves, possibly
including taking money away from the victims' own recovery. A
lawyer should not be allowed to enter into secret agreements
signing away the class members' funds. Consequently, the
subsection of FICALA entitled ``Third-party litigation funding
disclosure'' requires that any such third-party funding
agreement be disclosed to the district court and all parties.
That would allow the district court to take appropriate steps
to protect class members' interests.
Appeals:
A court of appeals shall permit an appeal from an order
granting or denying class-action certification under Rule 23 of
the Federal Rules of Civil Procedure.
The certification decision in a class action as a practical
matter disposes of the case, because virtually every case in
which a class is certified is settled. That's why Federal
judges consistently characterize class certification as ``in
effect, the whole case.''\52\ But district courts' class
certification decisions are not automatically appealable.
Federal Rule of Civil Procedure 23(f) gives Federal courts of
appeals discretionary authority to grant permission to appeal a
class certification ruling. A study of class certification
appeals filed over 7 years (from October 31, 2006 through
December 31, 2013) found that less than 25% of the petitions to
appeal were granted--a one-third decline in the grant rate from
the prior 8-year period.\53\ And the grant rate varied
dramatically among the circuits, from 5.4% to 46.4%.\54\
Importantly, a significant share of district court decisions
are reversed--more than one-third.\55\
---------------------------------------------------------------------------
\52\Hon. Diane Wood, Circuit Judge, Remarks at the FTC Workshop:
Protecting Consumer Interests in Class Actions (Sept. 13-14, 2004), in
Panel 2: Tools for Ensuring that Settlements are ``Fair, Reasonable,
and Adequate,'' 18 Geo. J. Legal Ethics 1197, 1213 (2005). As Justice
Ruth Bader Ginsburg has also explained, ``[a] court's decision to
certify a class . . . places pressure on the defendant to settle even
unmeritorious claims.'' Shady Grove Orthopedic Assocs., P.A. v.
Allstate Ins. Co., 559 U.S. 393, 445 n.3 (2010) (Ginsburg, J.,
dissenting).
\53\Skadden, Arps, Slate, Meagher & Flom LLP, Study Reveals US
Courts of Appeal Are Less Receptive to Reviewing Class Certification
Rulings at 1 (April 2014), available at https://www.skadden.-com/sites/
default/files/publications/Study_Reveals_US_Courts_of%20Appeal_Are_
Less_Receptive_to_Reviewing_Class_Certification_Rulings.pdf.
\54\Id. at 1-2.
\55\Id.
---------------------------------------------------------------------------
The provision in the bill is even-handed, as it allows an
appeal as of right of a class certification decision, whether
that decision went against the plaintiff or the defendant.
Promoting correctness and uniformity of class certification
decisions is essential given the critical role of certification
in these lawsuits. And the differing treatment based on
geographic location is something Congress should remedy.
Consequently, FICALA's appeals provision helps ensure the
correctness of class action certification rulings by providing
that class certification decisions are appealable as of right.
Getting class certification questions correctly decided is
essential to fixing the current class action system, and that
will not happen unless appellate courts weigh in.
Sec. 4. Misjoinder of Plaintiffs in Personal Injury and Wrongful Death
Actions.
(d) MISJOINDER OF PLAINTIFFS IN PERSONAL INJURY AND WRONGFUL
DEATH ACTIONS.--(1) This subsection shall apply to any civil
action in which--(A) two or more plaintiffs assert personal
injury or wrongful death claims; (B) the action is removed on
the basis of the jurisdiction conferred by section 1332(a)\56\;
and (C) a motion to remand is made on the ground that one or
more defendants are citizens of the same State as one or more
plaintiffs. (2) In deciding the remand motion in any such case,
the court shall apply the jurisdictional requirements of
section 1332(a) to the claims of each plaintiff individually,
as though that plaintiff were the sole plaintiff in the action.
(3) The court shall sever the claims that do not satisfy the
jurisdictional requirements of section 1332(a) and shall remand
those claims to the State court from which the action was
removed. The court shall retain jurisdiction over the claims
that satisfy the jurisdictional requirements of section
1332(a).
---------------------------------------------------------------------------
\56\28 U.S.C. Sec. 1332(a) is the general Federal diversity statute
that sets out the criteria cases must meet in order to be heard in a
Federal court. It provides as follows: ``(a) The district courts shall
have original jurisdiction of all civil actions where the matter in
controversy exceeds the sum or value of $75,000, exclusive of interest
and costs, and is between--(1) citizens of different States; (2)
citizens of a State and citizens or subjects of a foreign state, except
that the district courts shall not have original jurisdiction under
this subsection of an action between citizens of a State and citizens
or subjects of a foreign state who are lawfully admitted for permanent
residence in the United States and are domiciled in the same State; (3)
citizens of different States and in which citizens or subjects of a
foreign state are additional parties; and (4) a foreign state, defined
in section 1603(a) of this title, as plaintiff and citizens of a State
or of different States.''
Congress enacted the Class Action Fairness Act in 2005 to
address a serious problem: certain ``magnet'' state courts were
handling many (if not most) class actions with national
ramifications, effectively dictating results for residents of
all 50 states. Now, the same problem has arisen with mass tort
claims, claims in which lots of individual lawsuits are joined
together into one big one.
Aggressive trial lawyers are managing to establish what are
effectively full-blown, nationwide mass tort proceedings in
state courts by designing their lawsuits with the goal of
preventing removal of their cases to Federal court. They do
this by adding parties to defeat diversity jurisdiction, even
though the claims should be subject to Federal diversity
jurisdiction. A few state courts have effectively become
national mass tort courts, deciding cases with no relationship
to the venue. The principal reason lawyers can engage in this
abusive practice is that the Federal courts are divided on
whether to adopt the fraudulent misjoinder doctrine--the
principle that in assessing Federal subject matter
jurisdiction, Federal courts should not defer to plaintiffs'
grouping of multiple claims in a single complaint if the
apparent purpose is to avoid Federal jurisdiction, and instead
conduct a jurisdictional analysis on a case-by-case basis,
making sure that cases in which the real parties in interest
are from different states have a Federal forum for their
dispute.\57\
---------------------------------------------------------------------------
\57\Compare Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1360
(11th Cir. 1996) (applying fraudulent misjoinder doctrine) with In re
Prempro Prods. Liab. Litig., 591 F.3d 613 (8th Cir. 2010) (declining to
adopt or reject fraudulent misjoinder doctrine).
---------------------------------------------------------------------------
Congress needs to prevent abusive mass action litigation by
ensuring Federal court jurisdiction over nationwide mass tort
proceedings. That is why FICALA's section on misjoinder
codifies the fraudulent misjoinder doctrine in the mass tort
context by requiring Federal courts to consider each
plaintiff's claims separately in assessing Federal jurisdiction
over multi-plaintiff complaints asserting personal injury or
wrongful death claims. The House Judiciary Committee recently
reported out H.R. 725, the Innocent Party Protection Act, which
prevents lawyers from adding local defendants with the same
citizenship as the plaintiff to a lawsuit simply to keep the
case in a preferred state court. The fraudulent misjoinder
provision in FICALA similarly prevents lawyers from adding
plaintiffs with the same citizenship as the out-of-state
defendant to a mass torts case simply to keep the case in state
court. This provision addresses the flip side of the same coin.
In Tapscott v. MS Dealer Service Corp., the Eleventh
Circuit held that a district court had jurisdiction over a
lawsuit removed to Federal court where certain parties were
``egregious[ly] misjoined and ``ha[d] no real connection'' to
each other.\58\ Relying on this doctrine, a number of courts
have applied fraudulent misjoinder where plaintiffs attempt to
join their factually dissimilar personal injury claims in a
single action in an attempt to defeat diversity
jurisdiction.\59\ But many others have not, including Federal
courts in California, based largely on the fact that the Ninth
Circuit has never expressly adopted the fraudulent misjoinder
doctrine.\60\ A recent study of more than 2,900 cases filed
against companies in Los Angeles and San Francisco counties
between 2010 and 2016 found that the cases involved 25,000
individual plaintiffs, and that only 10.1% of the plaintiffs
were California residents.\61\ The remaining 89.9%--
representing over 20,000 individual plaintiffs--were residents
of another state.\62\ This provision of FICALA would prevent
such abuse.
---------------------------------------------------------------------------
\58\Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1360 (11th
Cir. 1996), abrogated on other grounds by Cohen v. Office Depot, Inc.,
204 F.3d 1069, 1076 (11th Cir. 2000).
\59\See, e.g., In re Propecia (Finasteride) Prod. Liab. Litig.,
Nos. 12-MD-2331 (JG) (VVP), 12-CV-2049 (JG) (VVP), 2013 U.S. Dist.
LEXIS 117375, at *71 (E.D.N.Y. May 17, 2013) (``[T]he court concludes
that the doctrine of fraudulent misjoinder should be applied to the
claims here. There is no basis for joining, in a single action, fifty-
four plaintiffs from twenty-four jurisdictions who purchased different
products at different times from unidentified sources.''), adopted,
2013 U.S. Dist. LEXIS 118155 (E.D.N.Y. June 6, 2013).
\60\In re Boston Sci. Corp., 2015 U.S. Dist. LEXIS 133665, at *4.
\61\See Ryan Tacher, Civil Justice Ass'n of Cal., Out-of-State
Plaintiffs: Are Out-of-State Plaintiffs Clogging California Courts? 2
(2016), http://cjac.org/what/research/CJAC_Out_of_
State_Plaintiffs_Exec_Summary.pdf.
\62\Id.
---------------------------------------------------------------------------
Two cases provide good illustrations of the need for this
misjoinder provision. Bancroft v. Bayer Corp.\63\ involved a
products liability lawsuit filed in St. Clair County, Illinois
(adjoining the notorious Madison County). The complaint joined
the claims of 45 plaintiffs, one of whom (and apparently only
one) was a co-citizen of the defendant. Other plaintiffs came
from all over the country. The defendant removed, asserting
fraudulent misjoinder under the Eleventh Circuit's decision in
Tapscott v. MS Dealer Service Corp.,\64\ but the district court
rejected Tapscott and refused to adopt the fraudulent
misjoinder doctrine. The Bancroft case shows how current law
allows plaintiffs to defeat removal that is otherwise proper by
finding a single plaintiff among many (here, one out of 45) who
is a co-citizen of the defendant. The misjoinder provision of
the bill would allow the defendant to remove the 44 plaintiffs'
claims that individually satisfy all the requirements for
diversity jurisdiction.
---------------------------------------------------------------------------
\63\2010 WL 148628 (S.D. Ill. Jan. 13, 2010).
\64\77 F.3d 1353 (11th Cir. 1996).
---------------------------------------------------------------------------
An even more recent egregious illustration is Jones v.
Bayer Corp.\65\ In Jones, 99 plaintiffs filed a single lawsuit
in the Circuit Court of St. Louis, Missouri, asserting products
liability claims against Bayer and other defendants. The number
99 was hardly a coincidence; with fewer than 100 plaintiffs,
the defendants could not remove the case under the ``mass
action'' provision of the Class Action Fairness Act. The
defendants argued for removal under Sec. 1332(a), but the
plaintiffs' lawyers anticipated that and made sure 3 of the 99
plaintiffs were co-citizens with one or more of the corporate
defendants. The district court rejected the defendants' attempt
to invoke the fraudulent misjoinder doctrine and ordered remand
even though the case (minus the 3 co-citizen defendants)
belonged in Federal court. The misjoinder provision in the bill
would remedy that.
---------------------------------------------------------------------------
\65\2016 WL 7230433 (E.D. Mo. Dec. 14, 2016).
---------------------------------------------------------------------------
Sec. 5. Multidistrict Litigation Proceedings Procedures.
Allegations Verification:
(i) ALLEGATIONS VERIFICATION.--In any coordinated or
consolidated pretrial proceedings conducted pursuant to
subsection (b), counsel for a plaintiff asserting a claim
seeking redress for personal injury whose civil action is
assigned to or directly filed in the proceedings shall make a
submission sufficient to demonstrate that there is evidentiary
support (including but not limited to medical records) for the
factual contentions in plaintiff's complaint regarding the
alleged injury, the exposure to the risk that allegedly caused
the injury, and the alleged cause of the injury. The submission
must be made within the first 45 days after the civil action is
transferred to or directly filed in the proceedings. That
deadline shall not be extended. Within 30 days after the
submission deadline, the judge or judges to whom the action is
assigned shall enter an order determining whether the
submission is sufficient and shall dismiss the action without
prejudice if the submission is found to be insufficient. If a
plaintiff in an action dismissed without prejudice fails to
tender a sufficient submission within the following 30 days,
the action shall be dismissed with prejudice.
Congress created multi-district litigation ``MDL''
proceedings as a special Federal legal procedure designed to
speed the process of handling complex cases when ``civil
actions involving one or more common questions of fact are
pending in different districts.''\66\ The Judicial Panel on
Multidistrict Litigation decides whether cases should be
consolidated under MDL, and if so, where the cases should be
transferred. Cases subject to MDL are sent from one court,
known as the transferor, to another, known as the transferee,
for all pretrial proceedings and discovery. If a case is not
settled or dismissed in the transferee court, it is remanded
(that is, sent back) to the transferor court for trial. The MDL
proceedings concept, however, has become subject to great
abuse.
---------------------------------------------------------------------------
\66\28 U.S.C. Sec. 1407.
---------------------------------------------------------------------------
Last year, one Federal MDL judge--Chief Judge Clay Land of
the U.S. District Court for the Middle District of Georgia--
became so disgusted with the breakdown of the MDL process as it
exists today that he issued an opinion that included the
following comments:
Some lawyers seem to think that their cases will be
swept into the MDL where a global settlement will be
reached, allowing them to obtain recovery without the
individual merit of their case being scrutinized as
closely as it would if it proceeded as a separate
individual action. This attitude explains why many
cases are filed . . . with so little pre-filing
preparation that counsel apparently has no idea whether
or how she will prove causation. . . . [B]ased on
fifteen years on the Federal bench and a front row seat
as an MDL transferee judge [I am] convinced that MDL
consolidation for products liability actions does have
the unintended consequence of producing more new case
filings of marginal merit in Federal court, many of
which would not have been filed otherwise.\67\
---------------------------------------------------------------------------
\67\Order, In re Mentor Corp. (MDL Docket No. 2004, 4:08-MD-2004
(CDL)), Document 1039 (filed September 7, 2016) (U.S. District Judge
Clay D. Land, M.D.Ga.).
When a mass tort MDL proceeding is created, a helter-
skelter ``gold rush'' ensues. Opportunistic lawyers launch
advertising campaigns that result in the rapid filing of poorly
investigated--and often frivolous or fraudulent--claims that
otherwise would never have been filed. As Chief Judge Land
noted in his decision, ``The MDL [here] began with twenty-two
cases. Due to subsequent tag along transfers, it exploded to
more than 850 cases, which explosion appears to have been
fueled, at least in part, by an onslaught of lawyers television
solicitations.''\68\ The allegation verification provisions of
FICALA would help change that.
---------------------------------------------------------------------------
\68\Order, In re Mentor Corp. (MDL Docket No. 2004, 4:08-MD-2004
(CDL)), Document 1039 (filed September 7, 2016) (U.S. District Judge
Clay D. Land, M.D.Ga.).
---------------------------------------------------------------------------
Because of the lack of screening of these mass tort claims,
they are taking over the Federal court system. Astoundingly,
there are around 120,000 lawsuits pending in those MDL
proceedings. That's 35% of all civil lawsuits currently pending
in all Federal courts nationwide (which number about 342,000).
FICALA would correct that problem by making plaintiffs' counsel
demonstrate up front that they've performed an adequate
investigation of each claim before filing it.
Many claims filed in MDL proceedings are bogus: there is no
apparent evidence of injury or exposure to the alleged risk. As
MDL Judge Land noted, MDL proceedings encourage ``case filings
of marginal merit''--cases ``that otherwise could not be filed
if they had to stand on their own.''\69\ In the silica
litigation, Judge Janis Graham Jack oversaw an MDL proceeding
encompassing thousands of lawsuits alleging that plaintiffs had
been harmed by breathing in crystalline silica, a substance
similar to sand, but smaller. She wrote, ``Because of silica's
widespread use, some plaintiffs' lawyers viewed it as the
source of the next big mass tort'' after asbestos.\70\ But in
the end, Judge Jack, who presided over the silica MDL
proceeding, recommended that all but one of the 10,000 claims
on the MDL docket should be dismissed on remand because the
diagnoses were fraudulently prepared.\71\ In a sharp ruling
finding litigation screening fraud, Judge Jack resolved that
the ```epidemic' of some 10,000 cases of silicosis `is largely
the result of misdiagnosis''' and that ``the failure of the
challenged doctors to observe the same standards for a `legal
diagnosis' as they do for a `medical diagnosis' renders their
diagnoses . . . inadmissible[.]''\72\ According to Judge Jack,
``the diagnoses were . . . manufactured for money,''\73\ and
``in [the] hopes of extracting mass nuisance-value settlements
because [defendants] are financially incapable of examining the
merits of each individual claim in the usual manner.''\74\
---------------------------------------------------------------------------
\69\In re Mentor Corp. Obtape Transobturator Sling Prods. Liab.
Litig., MDL No. 2004, slip op. at 4 (M.D. Ga. Sept. 17, 2016).
\70\Julie Creswell, Testing for Silicosis Comes Under Scrutiny in
Congress, N.Y. Times, Mar. 8, 2006, http://www.nytimes.com/2006/03/08/
business/08silica.html?pagewanted=print&_r=0.
\71\Victor E. Schwartz et al., Getting the Sand Out of the Eyes of
the Law: The Need for a Clear Rule for Sand Suppliers in Texas after
Humble Sand & Gravel, Inc. v. Gomez, 37 St. Mary's L.J. 283, 291
(2006).
\72\In re Silica Prods. Liab. Litig., 398 F. Supp. 2d 563, 632, 634
(S.D. Tex. 2005) (citation omitted).
\73\Id. at 635.
\74\Lester Brickman, The Use of Litigation Screenings in Mass
Torts: A Formula for Fraud?, 61 SMU L. Rev. 1221, 1316 n.512 (2008)
(quoting In re Silica, 398 F. Supp. 2d at 676).
---------------------------------------------------------------------------
Meritless claims are clogging the system, diverting
judicial attention away from more valid claims. And because
they create the misimpression that thousands have been injured,
they create improper, indiscriminate pressure on defendants to
settle. Thus, as Chief Judge Land observed, there is a need for
``approaches that weed out non-meritorious cases early,
efficiently, and justly.''\75\
---------------------------------------------------------------------------
\75\Order, In re Mentor Corp. (MDL Docket No. 2004, 4:08-MD-2004
(CDL)), Document 1039 (filed September 7, 2016) (U.S. District Judge
Clay D. Land, M.D.Ga.).
---------------------------------------------------------------------------
The allegations verification provision of FICALA is just
such an approach. It would require that for each lawsuit filed
in or transferred to a Federal MDL mass tort proceeding,
plaintiffs' lawyers must submit to the MDL court evidence that
before filing, they properly investigated the asserted claims.
Specifically, they would be required to submit evidentiary
support (including, but not limited to, medical records) for
the factual contentions in each plaintiff's complaint regarding
the alleged injury, the exposure to the risk that allegedly
caused the injury, and the alleged cause of the injury.
Trial Prohibition:
(j) TRIAL PROHIBITION.--In any coordinated or consolidated
pretrial proceedings conducted pursuant to subsection (b),\76\
the judge or judges to whom actions are assigned by the
Judicial Panel on Multidistrict Litigation may not conduct any
trial in any civil action transferred to or directly filed in
the proceedings unless all parties to the civil action consent
to trial of the specific case sought to be tried.
---------------------------------------------------------------------------
\76\28 U.S.C. Sec. 1407(b) sets out the procedures for MDL
proceedings, providing that ``Such coordinated or consolidated pretrial
proceedings shall be conducted by a judge or judges to whom such
actions are assigned by the judicial panel on multidistrict litigation.
For this purpose, upon request of the panel, a circuit judge or a
district judge may be designated and assigned temporarily for service
in the transferee district by the Chief Justice of the United States or
the chief judge of the circuit, as may be required, in accordance with
the provisions of chapter 13 of this title. With the consent of the
transferee district court, such actions may be assigned by the panel to
a judge or judges of such district. The judge or judges to whom such
actions are assigned, the members of the judicial panel on
multidistrict litigation, and other circuit and district judges
designated when needed by the panel may exercise the powers of a
district judge in any district for the purpose of conducting pretrial
depositions in such coordinated or consolidated pretrial proceedings.''
28 U.S.C. Sec. 1407(a), which authorizes MDL proceedings,
explicitly states that ``When civil actions involving one or
more common questions of fact are pending in different
districts, such actions may be transferred to any district for
coordinated or consolidated pretrial proceedings.'' The
repeated use of the word ``pretrial'' throughout the rest of
Sec. 1407 makes clear that trials are not authorized to be
conducted by MDL courts. But while the MDL statute provides
only for consolidated pre-trial proceedings, some MDL courts
pressure defendants to agree to so-called ``bellwether''
trials--namely, pseudo-trials that supposedly test a claim's
suitability for settlement--in order to pressure a settlement
in the case. Often, however, those trials are not fair tests of
the plaintiffs' claims because they consist of claims hand-
picked by plaintiffs' counsel that do not fairly represent the
claims of all the plaintiffs in the MDL proceedings.
In enacting the MDL statute, Congress made clear that MDL
courts were supposed to handle pre-trial proceedings only--and
then send the cases back to the courts in which they were
originally filed for trial: ``Each action so transferred shall
be remanded by the panel at or before the conclusion of such
pretrial proceedings to the district from which it was
transferred unless it shall have been previously
terminated.''\77\ The MDL trial prohibition in FICALA would
prevent the unfair, improper use of the MDL process to deprive
defendants of their due process right to individual trials by
affirming Congress's original intent that MDL proceedings are
for pre-trial purposes only--and that no trial may be conducted
by an MDL court unless all parties consent to a waiver of venue
and personal jurisdiction for that particular trial.
---------------------------------------------------------------------------
\77\28 U.S.C. Sec. 1407(a).
Review of Orders:
(k) REVIEW OF ORDERS.--(1) IN GENERAL.--The Court of Appeals
having jurisdiction over the transferee district shall permit
an appeal to be taken from any order issued in the conduct of
coordinated or consolidated pretrial proceedings conducted
pursuant to subsection (b),\78\ provided that an immediate
appeal from the order may materially\79\ advance the ultimate
termination of one or more civil actions in the proceedings.
(2) REMAND ORDERS.--Notwithstanding section 1447(e),\80\ a
court of appeals may accept an appeal from an order issued in
any coordinated or consolidated proceedings conducted pursuant
to subsection (b) granting or denying a motion to remand a
civil action to the State court from which it was removed if
application is made to the court of appeals within 14 days
after the order is entered.
---------------------------------------------------------------------------
\78\28 U.S.C. Sec. 1407(b) sets out the procedures for MDL
proceedings, providing that ``Such coordinated or consolidated pretrial
proceedings shall be conducted by a judge or judges to whom such
actions are assigned by the judicial panel on multidistrict litigation.
For this purpose, upon request of the panel, a circuit judge or a
district judge may be designated and assigned temporarily for service
in the transferee district by the Chief Justice of the United States or
the chief judge of the circuit, as may be required, in accordance with
the provisions of chapter 13 of this title. With the consent of the
transferee district court, such actions may be assigned by the panel to
a judge or judges of such district. The judge or judges to whom such
actions are assigned, the members of the judicial panel on
multidistrict litigation, and other circuit and district judges
designated when needed by the panel may exercise the powers of a
district judge in any district for the purpose of conducting pretrial
depositions in such coordinated or consolidated pretrial proceedings.''
\79\Black's Law Dictionary (10th ed. 2014) defines ``material'' as
``Of such a nature that knowledge of the item would affect a person's
decision-making; significant; essential.''
\80\28 U.S.C. Sec. 1447(d), which will become Sec. 1447(e) if
FICALA becomes law, states ``An order remanding a case to the State
court from which it was removed is not reviewable on appeal or
otherwise, except that an order remanding a case to the State court
from which it was removed pursuant to section 1442 or 1443 of this
title shall be reviewable by appeal or otherwise.'' The text of FICALA
makes clear that discretionary review by an appeals court of
jurisdictional remand rulings by an MDL court are authorized,
notwithstanding the prohibitions on such review in 28 U.S.C.
Sec. 1447(d).
Some MDL judges have issued questionable rulings on pivotal
issues that are not subject to immediate appellate review,
including the admissibility of expert evidence and the
appropriateness of multi-plaintiff trials. Given the high
stakes of these cases, and the likelihood of a coerced
settlement based on incorrect legal rulings, interlocutory
review is critical. Moreover, greater appellate court attention
to mass tort MDL proceedings is warranted, because these
proceedings now encompass more than 35% of all civil cases
pending in the Federal court system nationwide.
Indeed, MDL courts have sometimes forced defendants to
proceed with consecutive trials without the benefit of
appellate review, even though the same judicial errors will
likely be repeated. For example, in In re E. I. du Pont de
Nemours & Co., the MDL judge recognized that ``some issues on
appeal may impact the cases that are not yet tried in th[e]
MDL.''\81\ Nonetheless, the court refused to stay further
trials pending the resolution of the appeal, reasoning that
bellwether ``trials are meant not only for determination of the
rights and obligations of the litigants, but for a special
purpose . . . information gathering that may lead to a global
settlement.''\82\ But that does not make sense, because if the
information gathered is a result of uncorrected legal errors,
then any resulting settlement is tainted.
---------------------------------------------------------------------------
\81\In re E. I. du Pont de Nemours & Co., MDL 2433, 2016 U.S. Dist.
LEXIS 43337, at *1198 (S.D. Ohio Mar. 29, 2016).
\82\Id. at *1198-99.
---------------------------------------------------------------------------
To help prevent these problems, the ``review of orders''
provision in FICALA would authorize immediate appellate review
of interlocutory MDL court orders where immediate review may
materially advance the ultimate conclusion of one or more cases
in the MDL proceeding.
Ensuring Proper Recovery for Plaintiffs:
(l) ENSURING PROPER RECOVERY FOR PLAINTIFFS.--The claimants in
any civil action asserting a claim for personal injury
transferred to or directly filed in coordinated or consolidated
pretrial proceedings conducted pursuant to subsection (b)\83\
shall receive not less than 80 percent of any monetary recovery
obtained in that action by settlement, judgment or otherwise.
The judge or judges to whom the coordinated or consolidated
pretrial proceedings have been assigned shall have jurisdiction
over any disputes regarding compliance with this requirement.
---------------------------------------------------------------------------
\83\28 U.S.C. Sec. 1407(b) sets out the procedures for MDL
proceedings, providing that ``Such coordinated or consolidated pretrial
proceedings shall be conducted by a judge or judges to whom such
actions are assigned by the judicial panel on multidistrict litigation.
For this purpose, upon request of the panel, a circuit judge or a
district judge may be designated and assigned temporarily for service
in the transferee district by the Chief Justice of the United States or
the chief judge of the circuit, as may be required, in accordance with
the provisions of chapter 13 of this title. With the consent of the
transferee district court, such actions may be assigned by the panel to
a judge or judges of such district. The judge or judges to whom such
actions are assigned, the members of the judicial panel on
multidistrict litigation, and other circuit and district judges
designated when needed by the panel may exercise the powers of a
district judge in any district for the purpose of conducting pretrial
depositions in such coordinated or consolidated pretrial proceedings.''
When the cost-savings economies of scale are achieved by
trial lawyers in an MDL proceeding, those savings should be
passed on to the victims. But unfortunately, mass tort
litigation matters suffer from the same problem as class
actions: lawyers manipulate the system to take an unfair share
of settlement payments. Even though trial lawyers may be
handling thousands of copycat individual cases asserting
similar personal injury or wrongful death claims and theories--
and thereby realizing substantial economies of scale--they
still demand a 33-40% fee, which is standard for a standalone
case, but a huge windfall when the lawyer is handling a large
number of copycat mass tort cases under the streamlined MDL
process.
The provision of FICALA entitled ``Ensuring Proper Recovery
for Plaintiffs'' therefore requires that in settlements of
Federal court mass tort claims in MDL proceedings, 80% of all
compensation paid must go directly to claimants, regardless of
what the lawyer-client fee arrangement may provide. Plaintiffs'
lawyers who file lawsuits do not operate in a free market
environment. Instead, they have the unique ability to simply
give another party a piece of paper--a legal complaint--which
requires the other party to spend money in their defense,
regardless of the merits of the complaint against them, or else
risk a default judgment for not defending themselves.
Unscrupulous lawyers can then simply point out to the parties
served that the costs of paying off the lawyers will be less
than the costs of the other parties' defending themselves. And
so innocent parties served with complaints are pressured to
settle.
The Supreme Court has also noted the institutionally
coercive role lawyers are allowed to play in society, stating
in one case ``As an officer of the court, a member of the bar
enjoys singular powers that others do not possess; by virtue of
admission, members of the bar share a kind of monopoly granted
only to lawyers. . . . [A]s an officer of the court, a lawyer
can cause persons to drop their private affairs and be called
as witnesses in court, and for depositions and other pretrial
processes that, while subject to the ultimate control of the
court, may be conducted outside courtrooms. The license granted
by the court requires members of the bar to conduct themselves
in a manner compatible with the role of courts in the
administration of justice.''\84\
---------------------------------------------------------------------------
\84\In re Snyder, 472 U.S. 634, 644 (1985).
---------------------------------------------------------------------------
This understanding has a long history in America. Indeed,
fear that the legal profession would abuse its power to
generate lawsuits led to limits on attorneys' fees in all the
states at the Founding of our country. In 1778, in Virginia,
attorneys' fees were fixed by statute in the General Court and
the High Court of Chancery depending on the nature of the
action.\85\ Delaware had its own unique method for reducing
litigiousness. In 1793, Delaware passed the Act for Regulating
and Establishing Fees providing that for all pleadings in an
action subsequent to a declaration, the fee would be one cent
for every written line, twelve words to a line.\86\
---------------------------------------------------------------------------
\85\9 Statutes at Large of Virginia 529 (Hening ed. 1823).
\86\2 Laws of the State of Delaware 1116, c. 27 (1797).
---------------------------------------------------------------------------
Given the unique power of lawyers filing lawsuits to coerce
settlements, it's reasonable to require that when lawyers use
the Federal MDL system to consolidate multiple, identical
claims while streamlining their own lawsuit costs, Federal
rules should require them to pass along those savings to
victims. Because if they do not, the MDL system will continue
to incentivize lawyers to treat it less as a means of
efficiently resolving claims for victims, and more as a means
of allowing unscrupulous lawyers to increase their coercive
settlement leverage and thereby pad their own bank accounts.
Sec. 6. Rulemaking Authority of Supreme Court and Judicial Conference.
This section makes clear that nothing in the bill restricts
the authority of the Judicial Conference and the Supreme Court
to propose their own rule changes under chapter 131 of title 28
of the U.S. Code, which sets out the procedures under which the
courts themselves can create their own rules.
Sec. 7. Effective Date.
This section provides that the amendments made by the bill
shall apply on the date of enactment.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
TITLE 28, UNITED STATES CODE
* * * * * * *
PART IV--JURISDICTION AND VENUE
* * * * * * *
CHAPTER 87--DISTRICT COURTS; VENUE
* * * * * * *
Sec. 1407. Multidistrict litigation
(a) When civil actions involving one or more common
questions of fact are pending in different districts, such
actions may be transferred to any district for coordinated or
consolidated pretrial proceedings. Such transfers shall be made
by the judicial panel on multidistrict litigation authorized by
this section upon its determination that transfers for such
proceedings will be for the convenience of parties and
witnesses and will promote the just and efficient conduct of
such actions. Each action so transferred shall be remanded by
the panel at or before the conclusion of such pretrial
proceedings to the district from which it was transferred
unless it shall have been previously terminated: Provided,
however, That the panel may separate any claim, cross-claim,
counter-claim, or third-party claim and remand any of such
claims before the remainder of the action is remanded.
(b) Such coordinated or consolidated pretrial proceedings
shall be conducted by a judge or judges to whom such actions
are assigned by the judicial panel on multidistrict litigation.
For this purpose, upon request of the panel, a circuit judge or
a district judge may be designated and assigned temporarily for
service in the transferee district by the Chief Justice of the
United States or the chief judge of the circuit, as may be
required, in accordance with the provisions of chapter 13 of
this title. With the consent of the transferee district court,
such actions may be assigned by the panel to a judge or judges
of such district. The judge or judges to whom such actions are
assigned, the members of the judicial panel on multidistrict
litigation, and other circuit and district judges designated
when needed by the panel may exercise the powers of a district
judge in any district for the purpose of conducting pretrial
depositions in such coordinated or consolidated pretrial
proceedings.
(c) Proceedings for the transfer of an action under this
section may be initiated by--
(i) the judicial panel on multidistrict litigation
upon its own initiative, or
(ii) motion filed with the panel by a party in any
action in which transfer for coordinated or
consolidated pretrial proceedings under this section
may be appropriate. A copy of such motion shall be
filed in the district court in which the moving party's
action is pending.
The panel shall give notice to the parties in all actions in
which transfers for coordinated or consolidated pretrial
proceedings are contemplated, and such notice shall specify the
time and place of any hearing to determine whether such
transfer shall be made. Orders of the panel to set a hearing
and other orders of the panel issued prior to the order either
directing or denying transfer shall be filed in the office of
the clerk of the district court in which a transfer hearing is
to be or has been held. The panel's order of transfer shall be
based upon a record of such hearing at which material evidence
may be offered by any party to an action pending in any
district that would be affected by the proceedings under this
section, and shall be supported by findings of fact and
conclusions of law based upon such record. Orders of transfer
and such other orders as the panel may make thereafter shall be
filed in the office of the clerk of the district court of the
transferee district and shall be effective when thus filed. The
clerk of the transferee district court shall forthwith transmit
a certified copy of the panel's order to transfer to the clerk
of the district court from which the action is being
transferred. An order denying transfer shall be filed in each
district wherein there is a case pending in which the motion
for transfer has been made.
(d) The judicial panel on multidistrict litigation shall
consist of seven circuit and district judges designated from
time to time by the Chief Justice of the United States, no two
of whom shall be from the same circuit. The concurrence of four
members shall be necessary to any action by the panel.
(e) No proceedings for review of any order of the panel may
be permitted except by extraordinary writ pursuant to the
provisions of title 28, section 1651, United States Code.
Petitions for an extraordinary writ to review an order of the
panel to set a transfer hearing and other orders of the panel
issued prior to the order either directing or denying transfer
shall be filed only in the court of appeals having jurisdiction
over the district in which a hearing is to be or has been held.
Petitions for an extraordinary writ to review an order to
transfer or orders subsequent to transfer shall be filed only
in the court of appeals having jurisdiction over the transferee
district. There shall be no appeal or review of an order of the
panel denying a motion to transfer for consolidated or
coordinated proceedings.
(f) The panel may prescribe rules for the conduct of its
business not inconsistent with Acts of Congress and the Federal
Rules of Civil Procedure.
(g) Nothing in this section shall apply to any action in
which the United States is a complainant arising under the
antitrust laws. ``Antitrust laws'' as used herein include those
acts referred to in the Act of October 15, 1914, as amended (38
Stat. 730; 15 U.S.C. 12), and also include the Act of June 19,
1936 (49 Stat. 1526; 15 U.S.C. 13, 13a, and 13b) and the Act of
September 26, 1914, as added March 21, 1938 (52 Stat. 116, 117;
15 U.S.C. 56); but shall not include section 4A of the Act of
October 15, 1914, as added July 7, 1955 (69 Stat. 282; 15
U.S.C. 15a).
(h) Notwithstanding the provisions of section 1404 or
subsection (f) of this section, the judicial panel on
multidistrict litigation may consolidate and transfer with or
without the consent of the parties, for both pretrial purposes
and for trial, any action brought under section 4C of the
Clayton Act.
(i) Allegations Verification.--In any coordinated or
consolidated pretrial proceedings conducted pursuant to
subsection (b), counsel for a plaintiff asserting a claim
seeking redress for personal injury whose civil action is
assigned to or directly filed in the proceedings shall make a
submission sufficient to demonstrate that there is evidentiary
support (including but not limited to medical records) for the
factual contentions in plaintiff's complaint regarding the
alleged injury, the exposure to the risk that allegedly caused
the injury, and the alleged cause of the injury. The submission
must be made within the first 45 days after the civil action is
transferred to or directly filed in the proceedings. That
deadline shall not be extended. Within 30 days after the
submission deadline, the judge or judges to whom the action is
assigned shall enter an order determining whether the
submission is sufficient and shall dismiss the action without
prejudice if the submission is found to be insufficient. If a
plaintiff in an action dismissed without prejudice fails to
tender a sufficient submission within the following 30 days,
the action shall be dismissed with prejudice.
(j) Trial Prohibition.--In any coordinated or consolidated
pretrial proceedings conducted pursuant to subsection (b), the
judge or judges to whom actions are assigned by the Judicial
Panel on Multidistrict Litigation may not conduct any trial in
any civil action transferred to or directly filed in the
proceedings unless all parties to the civil action consent to
trial of the specific case sought to be tried.
(k) Review of Orders.--
(1) In general.--The Court of Appeals having
jurisdiction over the transferee district shall permit
an appeal to be taken from any order issued in the
conduct of coordinated or consolidated pretrial
proceedings conducted pursuant to subsection (b),
provided that an immediate appeal from the order may
materially advance the ultimate termination of one or
more civil actions in the proceedings.
(2) Remand orders.--Notwithstanding section
1447(e), a court of appeals may accept an appeal from
an order issued in any coordinated or consolidated
proceedings conducted pursuant to subsection (b)
granting or denying a motion to remand a civil action
to the State court from which it was removed if
application is made to the court of appeals within 14
days after the order is entered.
(l) Ensuring Proper Recovery for Plaintiffs.--The claimants
in any civil action asserting a claim for personal injury
transferred to or directly filed in coordinated or consolidated
pretrial proceedings conducted pursuant to subsection (b) shall
receive not less than 80 percent of any monetary recovery
obtained in that action by settlement, judgment or otherwise.
The judge or judges to whom the coordinated or consolidated
pretrial proceedings have been assigned shall have jurisdiction
over any disputes regarding compliance with this requirement.
* * * * * * *
CHAPTER 89--DISTRICT COURTS; REMOVAL OF CASES FROM STATE COURTS
* * * * * * *
Sec. 1447. Procedure after removal generally
(a) In any case removed from a State court, the district
court may issue all necessary orders and process to bring
before it all proper parties whether served by process issued
by the State court or otherwise.
(b) It may require the removing party to file with its
clerk copies of all records and proceedings in such State court
or may cause the same to be brought before it by writ of
certiorari issued to such State court.
(c) A motion to remand the case on the basis of any defect
other than lack of subject matter jurisdiction must be made
within 30 days after the filing of the notice of removal under
section 1446(a). If at any time before final judgment it
appears that the district court lacks subject matter
jurisdiction, the case shall be remanded. An order remanding
the case may require payment of just costs and any actual
expenses, including attorney fees, incurred as a result of the
removal. A certified copy of the order of remand shall be
mailed by the clerk to the clerk of the State court. The State
court may thereupon proceed with such case.
(d) Misjoinder of Plaintiffs in Personal Injury and
Wrongful Death Actions.--
(1) This subsection shall apply to any civil action
in which--
(A) two or more plaintiffs assert personal
injury or wrongful death claims;
(B) the action is removed on the basis of
the jurisdiction conferred by section 1332(a);
and
(C) a motion to remand is made on the
ground that one or more defendants are citizens
of the same State as one or more plaintiffs.
(2) In deciding the remand motion in any such case,
the court shall apply the jurisdictional requirements
of section 1332(a) to the claims of each plaintiff
individually, as though that plaintiff were the sole
plaintiff in the action.
(3) The court shall sever the claims that do not
satisfy the jurisdictional requirements of section
1332(a) and shall remand those claims to the State
court from which the action was removed. The court
shall retain jurisdiction over the claims that satisfy
the jurisdictional requirements of section 1332(a).
[(d)] (e) An order remanding a case to the State court from
which it was removed is not reviewable on appeal or otherwise,
except that an order remanding a case to the State court from
which it was removed pursuant to section 1442 or 1443 of this
title shall be reviewable by appeal or otherwise.
[(e)] (f) If after removal the plaintiff seeks to join
additional defendants whose joinder would destroy subject
matter jurisdiction, the court may deny joinder, or permit
joinder and remand the action to the State court.
* * * * * * *
PART V--PROCEDURE
* * * * * * *
CHAPTER 114--CLASS ACTIONS
* * * * * * *
Sec. 1716. Class action injury allegations
(a) In General.--A Federal court shall not issue an order
granting certification of a class action seeking monetary
relief for personal injury or economic loss unless the party
seeking to maintain such a class action affirmatively
demonstrates that each proposed class member suffered the same
type and scope of injury as the named class representative or
representatives.
(b) Certification Order.--An order issued under Rule
23(c)(1) of the Federal Rules of Civil Procedure that certifies
a class seeking monetary relief for personal injury or economic
loss shall include a determination, based on a rigorous
analysis of the evidence presented, that the requirement in
subsection (a) of this section is satisfied.
Sec. 1717. Conflicts of interest
(a) Required Disclosures.--In a class action complaint,
class counsel shall state whether any proposed class
representative or named plaintiff in the complaint is a
relative of, is a present or former employee of, is a present
or former client of (other than with respect to the class
action), or has any contractual relationship with (other than
with respect to the class action) class counsel. In addition,
the complaint shall describe the circumstances under which each
class representative or named plaintiff agreed to be included
in the complaint and shall identify any other class action in
which any proposed class representative or named plaintiff has
a similar role.
(b) Prohibition of Conflicts.--A Federal court shall not
issue an order granting certification of any class action in
which any proposed class representative or named plaintiff is a
relative of, is a present or former employee of, is a present
or former client of (other than with respect to the class
action), or has any contractual relationship with (other than
with respect to the class action) class counsel.
(c) Definition.--For purposes of this section, ``relative''
shall be defined by reference to section 3110(a)(3) of title 5,
United States Code.
Sec. 1718. Class member benefits
(a) Distribution of Benefits to Class Members.--A Federal
court shall not issue an order granting certification of a
class action seeking monetary relief unless the class is
defined with reference to objective criteria and the party
seeking to maintain such a class action affirmatively
demonstrates that there is a reliable and administratively
feasible mechanism (a) for the court to determine whether
putative class members fall within the class definition and (b)
for distributing directly to a substantial majority of class
members any monetary relief secured for the class.
(b) Attorneys' Fees in Class Actions.--
(1) Fee distribution timing.--In a class action
seeking monetary relief, no attorneys' fees may be
determined or paid pursuant to Rule 23(h) of the
Federal Rules of Civil Procedure or otherwise until the
distribution of any monetary recovery to class members
has been completed.
(2) Fee determinations based on monetary awards.--
Unless otherwise specified by Federal statute, if a
judgment or proposed settlement in a class action
provides for a monetary recovery, the portion of any
attorneys' fee award to class counsel that is
attributed to the monetary recovery shall be limited to
a reasonable percentage of any payments directly
distributed to and received by class members. In no
event shall the attorneys' fee award exceed the total
amount of money directly distributed to and received by
all class members.
(3) Fee determinations based on equitable relief.--
Unless otherwise specified by Federal statute, if a
judgment or proposed settlement in a class action
provides for equitable relief, the portion of any
attorneys' fee award to class counsel that is
attributed to the equitable relief shall be limited to
a reasonable percentage of the value of the equitable
relief, including any injunctive relief.
Sec. 1719. Money distribution data
(a) Settlement Accountings.--In any settlement of a class
action that provides for monetary benefits, the court shall
order class counsel to submit to the Director of the Federal
Judicial Center and the Director of the Administrative Office
of the United States Courts an accounting of the disbursement
of all funds paid by the defendant pursuant to the settlement
agreement. The accounting shall state the total amount paid
directly to all class members, the actual or estimated total
number of class members, the number of class members who
received payments, the average amount (both mean and median)
paid directly to all class members, the largest amount paid to
any class member, the smallest amount paid to any class member
and, separately, each amount paid to any other person
(including class counsel) and the purpose of the payment. In
stating the amounts paid to class members, no individual class
member shall be identified. No attorneys' fees may be paid to
class counsel pursuant to Rule 23(h) of the Federal Rules of
Civil Procedure until the accounting has been submitted.
(b) Annual Settlement Distribution Reports.--Commencing not
later than 12 months after the date of enactment of this Act,
the Judicial Conference of the United States, with the
assistance of the Director of the Federal Judicial Center and
the Director of the Administrative Office of the United States
Courts, shall annually prepare and transmit to the Committees
on the Judiciary of the Senate and the House of Representatives
for public dissemination a report summarizing how funds paid by
defendants in class actions have been distributed, based on the
settlement accountings submitted pursuant to subsection (a).
Sec. 1720. Issues classes
(a) In General.--A Federal court shall not issue an order
granting certification of a class action with respect to
particular issues pursuant to Rule 23(c)(4) of the Federal
Rules of Civil Procedure unless the entirety of the cause of
action from which the particular issues arise satisfies all the
class certification prerequisites of Rule 23(a) and Rule
23(b)(1), Rule 23(b)(2), or Rule 23(b)(3).
(b) Certification Order.--An order issued under Rule
23(c)(4) of the Federal Rules of Civil Procedure that certifies
a class with respect to particular issues shall include a
determination, based on a rigorous analysis of the evidence
presented, that the requirement in subsection (a) of this
section is satisfied.
Sec. 1721. Stay of discovery
In any class action, all discovery and other proceedings
shall be stayed 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, unless the court
finds upon the motion of any party that particularized
discovery is necessary to preserve evidence or to prevent undue
prejudice to that party.
Sec. 1722. Third-party litigation funding disclosure
In any class action, class counsel shall promptly disclose
in writing to the court and all other parties the identity of
any person or entity, other than a class member or class
counsel of record, who has a contingent right to receive
compensation from any settlement, judgment, or other relief
obtained in the action.
Sec. 1723. Appeals
A court of appeals shall permit an appeal from an order
granting or denying class-action certification under Rule 23 of
the Federal Rules of Civil Procedure.
* * * * * * *
Dissenting Views
H.R. 985, the ``Fairness in Class Action Litigation Act of
2017,'' represents the latest attempt to tilt the civil justice
playing field in favor of corporate defendants and to deny
consumers and members of the public access to justice. The bill
aims to eliminate the use of class actions by imposing numerous
new and unnecessary requirements for the certification and
consideration of class action lawsuits and also by creating new
onerous requirements for multidistrict litigation. In addition,
the bill amends the remand statute in a way that could make it
easier for defendants to have certain personal injury and
wrongful death actions be heard in Federal court.
Class actions are a critical tool for allowing those
injured by corporate wrongdoing to receive some measure of
justice by making it economically feasible to pursue claims
that are too small or too burdensome to pursue on an individual
basis, but are nonetheless meritorious. Class actions are also
an important enforcement mechanism and are particularly vital
in consumer protection, civil rights, antitrust, personal
injury, and employment cases. Finally, they promote the
efficient consideration of numerous cases raising substantially
the same factual and legal questions, thereby lessening burdens
on courts. By making most class actions very difficult if not
impossible to pursue, H.R. 985 undermines these important
goals.
H.R. 985 is highly problematic for many reasons. To begin
with, the bill is a solution in search of a problem because it
appears to be based on the false premise--offered with no
supporting evidence--that Federal courts are routinely failing
to comply with the rigorous requirements for certifying class
actions specified in Federal Rule of Civil Procedure 23.
Indeed, the false notion that many class actions and
multidistrict proceedings are somehow inherently fraudulent or
improper is implicit throughout the bill. In fact, what
proponents appear to be concerned with is not the fact that the
requirements of class certification and multidistrict
litigation are unfair, but that they are not skewed decisively
in corporate defendants' favor.
In addition, H.R. 985 undermines the core purpose of class
actions and multidistrict litigation, which is to ensure
efficiency in the disposition of numerous but substantially the
same claims or factual questions and to provide access to
courts for parties that, individually, would not have the
incentive or resources to pursue otherwise meritorious claims.
Rather, the bill's numerous, vague or impossible-to-meet
certification and other requirements will only foster more
litigation, increase burdens and costs that would fall
disproportionately on plaintiffs, and allow more opportunities
for corporate defendants to have a case dismissed or to engage
in dilatory tactics. Also, its attorneys' fee and ``conflict of
interest'' provisions aimed specifically at class counsel
appear designed to make it harder for plaintiffs to obtain
legal representation in the first place.
Finally, the bill would substantially and needlessly
increase resource burdens on the Federal courts, significantly
reduce judicial discretion in many respects, and unnecessarily
circumvent the careful and thorough Rules Enabling Act process
for amending Federal civil procedure rules.\1\ In fact, the
Judicial Conference of the United States reports that it has
been ``studying class action for the last five years'' and
``has considered many of the issues addressed in H.R. 985.''\2\
Accordingly, the Judicial Conference ``strongly urge[s]
Congress not to amend the class action procedures found in Rule
23 outside the Rules Enabling Act process.''\3\
---------------------------------------------------------------------------
\1\28 U.S.C. Sec. Sec. 2071 et seq. (2017).
\2\Letter from Daniel G. Campbell, U.S. District Judge, D. Ariz.,
Chair, Comm. on Rules of Practice and Procedure, & John D. Bates, U.S.
District Judge, D.D.C., Chair, Advisory Comm. on Civil Rules, Judicial
Conference of the United States, to Bob Goodlatte (R-VA), Chair, H.
Comm. on the Judiciary (Feb. 14, 2017) (on file with H. Comm. on the
Judiciary Democratic staff) [hereinafter ``Judicial Conference
Letter''].
\3\Id.
---------------------------------------------------------------------------
We are also concerned that the Majority has failed to
accord any deliberative process to this legislation, which was
introduced only days before the Committee considered it for
markup. No hearings have been held this Congress and the
version of the bill considered last Congress only consisted of
one section of H.R. 985. Indeed, the Committee's markup of H.R.
985 represented the first vetting of any kind for most of these
provisions. In its opposition to this measure, the American Bar
Association correctly notes the many shortcomings of
``advancing comprehensive class action reform without a hearing
to examine all the complicated issues involved with so many
rule changes.''\4\
---------------------------------------------------------------------------
\4\Letter from Thomas M. Susman, Director, Governmental Affairs
Office, American Bar Association to Bob Goodlatte (R-VA), Chair, H.
Comm. on the Judiciary (Feb. 14, 2017) (on file with H. Comm. on the
Judiciary Democratic staff) [hereinafter ``ABA Letter''].
---------------------------------------------------------------------------
In recognition of these many concerns, numerous labor,
consumer rights, and public interest groups oppose H.R. 985,
including the AFL-CIO, the Alliance for Justice, the American
Antitrust Institute, the Center for Science in the Public
Interest, Consumer Federation of America, Consumers Union, the
Committee to Support the Antitrust Laws, the NAACP, the
National Association of Consumer Advocates, the National
Consumer Law Center, the National Employment Law Project,
Public Citizen, Public Justice, and the Southern Poverty Law
Center.\5\ The bill is also opposed by a coalition of 121 civil
rights groups as well as a coalition of 37 disability rights
groups.\6\ In addition, the Obama Administration threatened to
veto legislation last Congress that consisted of just one
section of H.R. 985 because ``it would impair the enforcement
of important Federal laws [and] constrain access to the
courts.''\7\ Finally, Professor Arthur Miller, the Nation's
foremost scholar of Federal civil practice and procedure, wrote
in opposition to this earlier iteration of the bill because it
violated the central mandate of the class action device, which
is to promote judicial efficiency through the use of class
representatives to establish injury on behalf of all similarly
situated. Rather than addressing these concerns, the current
version of H.R. 985 greatly exacerbates them.
---------------------------------------------------------------------------
\5\Letter from 72 consumer rights, public interest, and labor
groups to Bob Goodlatte (R-VA), Chair, & John Conyers, Jr. (D-MI),
Ranking Member, H. Comm. on the Judiciary (Feb. 14, 2017) (on file with
H. Comm. on the Judiciary Democratic staff) [hereinafter ``Groups
Letter'']; Letter from the National Association of Shareholder &
Consumer Attorneys to Paul Ryan, Speaker of the House, et al. (Feb. 16,
2017) (on file with H. Comm. on the Judiciary Democratic staff); Letter
from National Association of Consumer Advocates to Bob Goodlatte (R-
VA), Chair, & John Conyers, Jr. (D-MI), Ranking Member, H. Comm. on the
Judiciary (Feb. 15, 2017) (on file with H. Comm. on the Judiciary
Democratic staff).
\6\Letter from 121 civil rights groups to Bob Goodlatte (R-VA),
Chair, & John Conyers, Jr. (D-MI), Ranking Member, H. Comm. on the
Judiciary (Feb. 15, 2017) (on file with H. Comm. on the Judiciary
Democratic staff) [hereinafter ``Civil Rights Letter'']; Undated letter
from 37 disability rights groups to Bob Goodlatte (R-VA), Chair, & John
Conyers, Jr. (D-MI), Ranking Member, H. Comm. on the Judiciary (on file
with H. Comm. on the Judiciary Democratic staff) [hereinafter
``Disability Rights Letter''].
\7\Executive Office of the President, Office of Management and
Budget, Statement of Administration Policy on H.R. 1927, the ``Fairness
in Class Action Litigation and Furthering Asbestos Claim Transparency
Act of 2015,'' Jan. 6, 2016.
---------------------------------------------------------------------------
For the foregoing reasons and those discussed below, we
must respectfully oppose H.R. 985.
DESCRIPTION AND BACKGROUND
DESCRIPTION
H.R. 985 would impose a series of new and burdensome
statutory requirements for the certification and consideration
of class actions. In addition, with respect to multidistrict
litigation, it would, among other things, impose a heightened
burden on plaintiffs in personal injury actions to demonstrate
evidentiary support for their factual allegations. Finally, the
bill amends the remand statute to require Federal courts in
diversity cases involving two or more plaintiffs in personal
injury or wrongful death cases to consider each plaintiff
separately when determining whether they have met the
requirements of the Federal diversity statute. All of these
provisions will have the effect of fueling increased litigation
and costs for plaintiffs with the apparent goal of dissuading
future plaintiffs from filing suit, even when they have
meritorious claims. The following described provisions will be
the primary focus of these views.
Section 3(a) amends chapter 114 of title 28 of the United
States Code by adding after section 1715 several new sections
governing class actions. For example, new section 1716 would
prohibit a Federal court from certifying any proposed class
seeking monetary relief for personal injury or economic loss
unless the party seeking the class action proves that each
proposed class member suffered the same type and scope of
injury as the putative class representative. The terms
``economic loss'' and ``scope of injury'' are undefined.
Section 1716 further requires a court, in issuing a class
certification order for any class subject to subsection 2(a),
to also certify that the requirements of subsection 2(a) have
been met ``based on a rigorous analysis of the evidence
presented[.]''
New section 1717 prohibits a Federal court from certifying
any class action in which a proposed class representative or
named plaintiff is a relative of, a present or former client of
(other than with respect to the class action), a present or
former employee of, or has any contractual relationship (other
than with respect to the class action) with class counsel.
Section 1717 requires that in a class action complaint, the
attorney for the class representative or named plaintiff
disclose the existence of such a relationship, describe the
circumstances under which each class representative or named
plaintiff agreed to be included in the complaint, and identify
any other class action to which the class representative or
named plaintiff has a similar role.
New section 1718 imposes an ``ascertainability''
requirement for class action certification. Specifically, it
prohibits class certification unless ``the class is defined
with reference to objective criteria and the party seeking to
maintain such a class action affirmatively demonstrates that
there is a reliable and administratively feasible mechanism (a)
for the court to determine whether putative class members fall
within the class definition and (b) for distributing directly
to a substantial majority of class members any monetary relief
secured for the class.'' The bill offers no guidance as to the
meaning of terms such as ``reference to objective criteria,''
``affirmatively demonstrates,'' ``reliable and administratively
feasible mechanism,'' and ``substantial majority.'' There is
currently a circuit split on whether such a standard as would
be codified in new section 1718--which reflects the most
corporate-defendant friendly view--should be imposed.
Section 1718(b)(1) prohibits attorneys' fees from being
determined or paid until any monetary recovery is distributed
to all class members, even when it is impossible to identify or
find all class members. This provision contains no ``good
faith'' or ``honest efforts'' exception, nor does it impose a
graduated scheme, such as partial payment of fees pending
complete payment to class members. Rather, it takes an
absolutist approach, leaving open the real possibility that
many class counsel will not be paid at all.
Section 1718(b)(2) specifies that in class actions where a
judgment or proposed settlement provides for monetary recovery,
attorneys' fee awards must be limited to ``a reasonable
percentage of any payments directly distributed to and received
by class members'' and, in no case may the fee award exceed the
total amount of money distributed to and received by all class
members. Section 1718(b)(3) similarly limits attorneys' fees in
cases seeking equitable relief to ``a reasonable percentage of
the value of the equitable relief, including any injunctive
relief.'' The bill fails to offer any guidance as to what would
constitute a ``reasonable percentage'' as used in the foregoing
subsections, nor is there any guidance regarding how to
monetize equitable relief. Moreover, there is no ``good faith''
or ``honest efforts'' exception from the prohibition on payment
of attorneys' fees where an attorney makes honest and
exhaustive efforts to find all class members, but is unable to
do so, thereby potentially resulting in an unduly harsh
outcome.
New section 1719, among other things, prohibits the payment
of attorneys' fees to class counsel until they submit certain
information regarding the distribution of monetary awards and
settlements to the Federal Judicial Center and the
Administrative Office of the United States Courts. As with the
attorneys' fee provision in section 1718, there is no ``good
faith'' or ``honest efforts'' exception from the prohibition on
attorneys' fees being paid for less-than-full compliance with
this requirement.
New section 1720 prohibits a Federal court from certifying
a class action with respect to particular issues unless the
entire cause of action from which the particular issues arise
satisfies all of the class certification requirements of Rule
23. Under current law in all circuits, such ``issue'' class
actions need not satisfy all of the certification requirements
of Rule 23.
New section 1721 provides that in any class action,
discovery must be stayed whenever any motion to transfer,
motion to dismiss, motion to strike class allegations, or other
motion to dispose of class allegations, is pending. Discovery
is not stayed when any party files a motion asking the court to
find that ``particularlized discovery is necessary to preserve
evidence or to prevent undue prejudice to that party.'' The
bill does not define or provide guidance as to the meaning of
the terms ``particularlized discovery'' and ``undue
prejudice.'' Under current law, a court has discretion whether
to stay discovery in response to a motion. This provision
effectively makes a stay on discovery the default outcome
absent certain circumstances that are not well defined.
New section 1723 provides for mandatory appeal from an
order granting or denying class certification. Current Rule
23(f) already provides for discretionary appeals from such
orders, but at any rate any appeal must be made within 14 days
of the order.
Section 4 of the bill amends the remand statute, 28 U.S.C.
Sec. 1447, by adding a new subsection (d). New subsection
1447(d)(1) applies to any civil action with two or more
plaintiffs alleging personal injury or wrongful death claims
where the action is removed to Federal court on the basis of
diversity jurisdiction and a motion to remand is made on the
ground that one or more defendants is a citizen of the same
state as one or more plaintiffs.
Subsection 1447(d)(2) requires a court considering a remand
motion to apply the diversity statute's various requirements
for establishing diversity jurisdiction to each plaintiffs'
claims individually, as if each plaintiff was the sole
plaintiff in the civil action. Subsection 1447(d)(3) requires a
court, in such circumstances, to sever claims and remand to
state court only the claims of those plaintiffs that do not
meet the diversity statute's requirements. The practical effect
could be to make it easier to establish diversity jurisdiction
in multi-plaintiff cases involving personal injury or wrongful
death claims, increasing the number of diversity cases in
Federal court where diversity might otherwise be defeated
because of the lack of complete diversity.
Section 5 of the bill adds new subsections to 28 U.S.C.
Sec. 1407, which governs multidistrict litigation. Section
1407(b) provides that a judge or judges may be assigned by the
Judicial Panel on Multidistrict Litigation to preside over
coordinated or consolidated pretrial proceedings in cases where
civil actions involving one or more common questions of fact
are pending in different districts. Proposed new section
1407(i) requires that, in any such proceeding involving redress
for personal injury, plaintiff's counsel must make a submission
``sufficient to demonstrate that there is evidentiary support
(including but not limited to medical records) for the factual
contentions in plaintiff's complaint regarding the alleged
injury, the exposure to the risk that allegedly caused the
injury, and the alleged cause of the injury.''
Additionally, section 1407(i) requires that such submission
be made within 45 days after the civil action is transferred to
or filed in the consolidated pretrial proceedings, with no
extensions. The presiding judge must, within 30 days of the
submission deadline, determine whether the submission is
``sufficient'' and must dismiss the action without prejudice if
it is not. If a plaintiff whose action is dismissed does not
tender a ``sufficient'' submission within 30 days following
dismissal, the action must be dismissed with prejudice. The
bill does not provide any guidance as to what would constitute
a ``sufficient'' submission to ``demonstrate . . . evidentiary
support'' for factual contentions regarding an alleged injury.
New section 1407(i) essentially codifies a practice that some
courts use at their discretion in certain cases. This provision
would essentially mandate that every court impose this standard
in every personal injury multidistrict proceeding.
New subsection 1407(l) requires that claimants in a
multidistrict proceeding receive no less than 80 percent of any
monetary recovery obtained by judgment, settlement, or
otherwise. It also provides judges assigned to the
multidistrict proceeding with jurisdiction over any disputes
regarding compliance with this requirement. In essence, this
provision codifies a 20 percent cap on attorneys' contingency
fees, which may present an insurmountable disincentive for
counsel to undertake such litigation. It also overrides state
laws governing such fees in personal injury and wrongful death
cases. Moreover, the provision fails to define or offer any
guidance as to how the 80 percent monetary recovery is to be
calculated or who qualifies as a ``claimant'' under this
provision.
Section 7 of the bill provides, among other things, that
its provisions will apply to any civil action pending on the
date of enactment.
BACKGROUND
H.R. 985 pertains to class actions and multidistrict
litigation. A class action is a type of lawsuit filed by one or
more individuals on behalf of a larger group of people. Class
actions can be beneficial to consumers and courts. They are
beneficial to consumers because they give a potentially large
group of individuals who are injured in the same manner by the
same defendants the ability to hold the wrongdoers accountable.
Class actions make it economically feasible for these
plaintiffs to seek justice for smaller, but not
inconsequential, injuries in areas as diverse as products
liability, wage and hour litigation, and employment
discrimination. As a result, class actions help level the
playing field between injured consumers and powerful corporate
defendants. They also help promote private enforcement of
public policy, particularly when there is large-scale wrong-
doing by an institutional actor.\8\
---------------------------------------------------------------------------
\8\For outlines of the policy reasons supporting the existence of
the class action mechanism, see Fairness in Class Action Litigation Act
of 2015: Hearing on H.R. 1927 Before the Subcomm. on the Constitution
and Civil Justice of the H. Comm. on the Judiciary, 114th Cong. (2015)
[hereinafter ``Subcommittee Hearing''] (statement of Alexandra Lahav,
Joel Barlow Professor, University of Connecticut Law School, at 2); The
State of Class Actions Ten Years After The Enactment of the Class
Action Fairness Act: Hearing Before the Subcomm. on the Constitution
and Civil Justice of the H. Comm. on the Judiciary, 114th Cong. (2015)
[hereinafter ``CAFA Hearing''] (statement of Patricia W. Moore,
Professor of Law, St. Thomas University School of Law, at 2).
---------------------------------------------------------------------------
Additionally, class actions can be beneficial for courts
because they promote judicial efficiency. The class action is
an efficient mechanism to deal with what would otherwise be a
large number of small and repetitive cases involving common
legal and factual questions. Through class certification,
courts can consolidate similar cases and conserve judicial
resources.\9\
---------------------------------------------------------------------------
\9\Id.
---------------------------------------------------------------------------
Federal Rule of Civil Procedure 23 governs class actions
filed in Federal courts. Rule 23(a) specifies four
prerequisites necessary for the certification of a class:
(1) Lthe class is so numerous that joinder of all
members is impracticable;
(2) Lthere are questions of law or fact common to the
class;
(3) Lthe claims or defenses of the representative
parties are typical of the claims or defenses of the
class; and
(4) Lthe representative parties will fairly and
adequately protect the interests of the class.\10\
---------------------------------------------------------------------------
\10\Fed. R. Civ. P. 23(a).
Additionally, Rule 23(b) specifies the findings that a court
must make prior to certifying a class action, assuming that the
requirements of Rule 23(a) have been met. These findings
include, among other things, whether the prosecution of
separate actions by or against individual class members would
create the risk of inconsistent or varying adjudications,
whether the party opposing the class has acted or refused to
act on grounds that apply generally to the class such that
relief would be appropriate for the class as a whole, and
whether common questions of law or fact predominate over any
other questions affecting only individual class members and
that a class action would be superior to other methods of
adjudicating the controversy fairly and efficiently.\11\
---------------------------------------------------------------------------
\11\Fed. R. Civ. P. 23(b). Rule 23 contains a number of other
provisions that are not relevant to this bill.
---------------------------------------------------------------------------
Multidistrict litigation is a Federal legal procedure
allowing cases that have one or more common factual questions
to be consolidated and transferred from one court, the
transferor, to another court, the transferee, ``for the
convenience of parties and witnesses'' and to ``promote the
just and efficient conduct of such actions.''\12\ The Judicial
Panel on Multidistrict Litigation decides whether cases should
be consolidated and transferred.\13\ Cases are sent from one
court to another for all pretrial proceedings and discovery and
are remanded to the transferor court at or before the
conclusion of such proceedings.\14\ Proceedings for transfer
may be initiated by the Judicial Panel on its own initiative or
by a motion filed with the Panel by any party.\15\
---------------------------------------------------------------------------
\12\28 U.S.C. Sec. 1407(a) (2017) (``When civil actions involving
one or more common questions of fact are pending in different
districts, such actions may be transferred to any district for
coordinated or consolidated pretrial proceedings.'').
\13\Id.
\14\Id.
\15\Id. at Sec. 1407(c)(i)-(ii).
---------------------------------------------------------------------------
CONCERNS WITH H.R. 985
I. H.R. 985 IS A SOLUTION IN SEARCH OF A PROBLEM
There is no need for H.R. 985 because plaintiffs already
must satisfy many rigorous requirements in order to pursue a
class action, and the bill's proponents offer no evidence that
the Federal courts systematically fail to apply these
standards. As explained above, Rule 23 requires plaintiffs
seeking class action certification to make substantial
showings, including commonality of factual and legal questions
and typicality of the putative representative's claims compared
to those of putative class members. Moreover, case law
demonstrates that the Federal courts vigorously enforce Rule
23's requirements. Pursuing a class action also requires
extensive discovery and motion practice, which mandate a
significant expenditure of time and resources. H.R. 985 would
only make these procedural hurdles even more burdensome and
potentially cost-prohibitive. Indeed, the real aim of the bill
does not seem to be to make class actions fairer, but to tilt
the playing field decisively in defendants' favor.
Much of the initial justification of this bill from the
114th Congress was based on the false notion that too many
class actions were fraudulent or otherwise improper because
most putative class members suffered no actual injury. In
support of this allegation, the bill's proponents cited
``benefit of the bargain'' cases and cases asserting statutory
damages for violations of consumer protection statutes. In
fact, however, these are not ``no injury'' cases. As Professor
Alexandra Lahav explained in testimony before the Subcommittee
on the Constitution and Civil Justice in the 114th Congress,
plaintiffs in such cases have suffered a real injury. In
``benefit of the bargain'' cases, for instance, plaintiffs have
suffered financial injury in the form of paying a price for
what turned out to be a defective product that is, in reality,
worth less than what the plaintiff bargained for. Similarly, in
many state consumer protection statutes, and in civil rights,
employment, or privacy statutes, the injury, while very real,
is difficult to quantify in monetary terms. Legislatures,
therefore, set statutory damage levels to simplify the process
of quantifying damages, to deter corporate wrongdoing, and to
encourage access to the courts.
Other than proposed new section 1716, the Judiciary
Committee has held no hearing on any of the other provisions of
H.R. 985. As a result, none of these provisions or the
purported justifications for them has ever been vetted by our
Committee. For instance, the bill's proponents offer absolutely
no evidence warranting H.R. 985's so-called ``conflict of
interest'' provision, which prohibits class certification where
a class representative or named plaintiff is a relative of,
current or former client of, current or former employee of, or
has a contractual relationship with the plaintiffs' counsel. We
are unaware of any justification supporting the implication
that such relationships are per se problematic. As it is,
courts must exercise judgment as to whether a particular
relationship with class counsel poses a conflict of interest
pursuant to Rule 23(a)(4), which requires a court to consider
whether class counsel ``will fairly and adequately protect the
interests of the class.''\16\
---------------------------------------------------------------------------
\16\Fed. R. Civ. P. 23(a)(4). Professor John C. Coffee, Jr. of
Columbia Law School has written that H.R. 985's conflict of interest
provision arguably is unconstitutional, as the Fifth Amendment's Due
Process Clause has been interpreted to preclude the government in a
civil case from unreasonably interfering with a citizen's choice of
hired counsel. John C. Coffee, Jr., How Not to Write a Class Action
``Reform'' Bill, The CLS Blue Sky Blog, Feb. 21, 2017, available at
http://clsbluesky.law.columbia.edu/2017/02/21/how-not-to-write-a-class-
action-reform-bill/.
---------------------------------------------------------------------------
II. H.R. 985 UNDERMINES THE ABILITY OF PLAINTIFFS TO PURSUE MOST CLASS
ACTIONS AND MULTIDISTRICT LITIGATION BY IMPOSING NUMEROUS BURDENSOME
REQUIREMENTS
H.R. 985 presents many obstacles to the pursuit of class
actions and multidistrict litigation. These include: (1)
requiring that a putative class representative prove that every
class member suffered the ``same type and scope of injury;''
(2) requiring a putative class representative to ascertain all
class members at the certification stage; (3) effectively
eliminating courts' ability to certify ``issue'' class actions;
(4) a default stay of discovery in response to any motion to
dispose of class allegations absent a finding by a court on the
need for ``particularized'' discovery in certain circumstances;
(5) providing for mandatory appeal from any order granting or
denying a motion for class certification; (6) imposing a
significant threshold of proof and draconian deadlines on
plaintiffs and courts in multidistrict personal injury
litigation, and (7) imposing harsh attorneys' fee and
``conflict of interest'' provisions aimed specifically at class
counsel. Taken together, these provisions undermine the core
purpose of class actions and multidistrict litigation, which is
to provide for efficiency in the disposition of numerous, but
substantially the same claims or factual questions and to
provide access to courts for parties that, individually, would
not have the incentive or resources to pursue otherwise
meritorious claims.
A. LSection 1716 Imposes Impossible Standard to Establish Same Type and
Scope of Injury
H.R. 985's requirement that a plaintiff show that, for
class actions seeking monetary relief for personal injury or
economic loss, each proposed class member suffered the exact
same ``type and scope'' of injury would be virtually impossible
to meet as a practical matter, especially for many types of
claims where the exact ``scope'' of an injury, such as in
antitrust, employment discrimination, or privacy matters,
cannot be measured with any precision. Moreover, by requiring a
putative class representative to make such showings at the
certification stage--a nascent stage of litigation, before
there has been any substantial discovery--H.R. 985 effectively
requires a decision on the merits before trial and before
appropriate class members can even be identified, an extremely
difficult if not impossible standard to meet.
To prove injury, a plaintiff would have to prove the
alleged violation that caused the injury for each possible
class member--i.e., litigation on the merits. As Professor
Arthur Miller, the Nation's foremost expert of Federal practice
and procedure, noted in a letter in opposition to prior
legislation that was nearly identical to H.R. 985's proposed
section 1716:
[the] core function of a class representative is to try
to establish injury on behalf of similarly situated
persons. Thus the bill effectively wipes out Rule 23,
under which class representatives litigate common
questions on behalf of the class. The represented
persons are absent until after entry of a judgment that
binds them, at which point (upon a favorable judgment)
they are asked to come forward to prove their damages.
Until that time, the identity of many of the class
members is unknown, indeed possibly even
unknowable.\17\
---------------------------------------------------------------------------
\17\Letter from Arthur R. Miller, University Professor, New York
University School of Law, to Trent Franks (R-AZ), Chair, & Steve Cohen
(D-TN), Ranking Member, Subcomm. on the Constitution and Civil Justice
of the H. Comm. on the Judiciary (Apr. 27, 2015) (on file with H. Comm.
on the Judiciary Democratic staff) [hereinafter ``Miller Letter''].
Professor Miller further noted that the Supreme Court has
rejected the notion that a class representative must first
establish that it will win on the merits in order to obtain
class certification.\18\ He observed that class membership does
not equate to entitlement to damages, a distinction that H.R.
985's proponents appear deliberately to be trying to blur.\19\
---------------------------------------------------------------------------
\18\Miller Letter at 3.
\19\Id.
---------------------------------------------------------------------------
Other civil procedure experts concur. For example,
Professor John C. Coffee, Jr., wrote that this provision only
adds unnecessary ``ambiguity'' to current law, noting that
``under this proposed standard, a person who suffered a
slightly different economic or personal injury from the class
representative might have to be excluded'' from a class.\20\
Professor Elizabeth Chamblee Burch wrote that ``this proposal
demands a degree of similarity that is both ill defined and
unnecessary,'' and noted that the Supreme Court held last year
that ``parties should be able to enjoy the benefits of class
actions even when damages vary'' and that ``[p]ersonal injury
and economic losses will inevitably affect class members
differently.''\21\ Professor Myriam Gilles noted that ``it is
impossible to exclude zero-damage plaintiffs from a class
because `many of the members of the class may be unknown, or if
they are known still the facts bearing on their claims may be
unknown.'''\22\ Moreover, excluding ``zero-damage plaintiffs
from class actions . . . serves no policy purpose'' because the
``presence of uninjured members within a defined class does not
increase the aggregate damages that the defendant must
pay.''\23\ Also, ``the `scope' requirement would eliminate
damages class actions, period'' because ``the amount of damage
always (or almost always) varies across class members.''\24\
---------------------------------------------------------------------------
\20\Memorandum Regarding A Brief and Selective Overview of the
``Fairness in Class Action Litigation Act of 2017'' from John C.
Coffee, Jr., Adolf A. Berle Professor of Law, Columbia Law School, to
Democratic Staff, H. Comm. on the Judiciary Democratic Staff, at 1-2
(Feb. 13, 2017) [hereinafter ``Coffee Memo''].
\21\Letter from Elizabeth Chamblee Burch, Charles H. Kirbo Chair of
Law, The University of Georgia School of Law, to Democratic Staff, H.
Comm. on the Judiciary, at 1 (Feb. 13, 2017) [hereinafter ``Burch
Letter''].
\22\Letter from Myriam Gilles, Vice Dean, & Paul R. Verkuil
Research Chair Professor of Law, Benjamin N. Cardozo Law School, to
Democratic Staff, H. Comm. on the Judiciary, at 2 (Feb. 13, 2017)
(quoting Kohen v. Pacific Inv. Mgmt. Co. LLC, 571 F.3d 672, 677 (7th
Cir. 2009)) [hereinafter ``Gilles Letter''].
\23\Id.
\24\Id. at 3.
---------------------------------------------------------------------------
The American Bar Association, writing in opposition to H.R.
985, noted that the ``same type and scope of injury''
requirement ``places a nearly insurmountable burden for people
who have suffered personal injury or economic loss at the hands
of large institutions with vast resources, effectively barring
them from bringing class actions.''\25\ Similarly, a coalition
of 121 civil rights groups observed that at the class
certification stage of a civil rights class action, ``it is
frequently impossible to identify all of the victims or the
precise nature of each of their injuries'' and that ``even if
this information were knowable, class members' injuries would
not be `the same,''' thereby precluding most civil rights class
actions were this requirement to be enacted.\26\ Indeed, as
another coalition of consumer rights, labor, environmental, and
public interest groups explained, ``virtually never does every
member of the class suffer the same `scope' of injury from the
same wrongdoing''' and that this requirement ``alone would
sound the death knell for most class actions.''\27\
---------------------------------------------------------------------------
\25\ABA Letter.
\26\Civil Rights Letter.
\27\Groups Letter.
---------------------------------------------------------------------------
B. LSection 1718(a)'s Ascertainability Requirement Has Been Rejected by
Most Courts for Good Reason
Proposed section 1718(a) creates a statutory
``ascertainability'' requirement in money damages class
actions, under which a plaintiff must identify every class
member in order to obtain class certification, a virtual
impossibility in most consumer cases where individual claims
may be small, where consumers who purchased a product at issue
may not come forward or may not have kept a receipt or other
evidence of purchase. The kind of rigid ``ascertainability''
requirement contained in H.R. 985 has been debated among the
Federal courts of appeals, and most courts of appeals have
rejected it. This provision essentially codifies the more
corporate-defendant-friendly view that classes are
ascertainable at the certification stage, with the practical
effect that in many small-claim consumer cases, where class
members are inherently difficult to identify, defendants can
escape liability because the class is not ascertainable even if
there is overwhelming evidence of the defendant's
wrongdoing.\28\ Moreover, section 1718(a)'s vague requirement
that the class be ``defined with reference to objective
criteria'' and that the putative class representative
``affirmatively demonstrate[] that there is a reliable and
administratively feasible mechanism'' for the court to
determine whether putative class members fall within the class
and for distributing monetary relief to a substantial majority
of such class members is unnecessary, cumbersome, costly, and
invites further litigation over their meaning.
---------------------------------------------------------------------------
\28\Plaintiffs' counsel typically define class members in terms of
people harmed by the defendant's conduct, employ a mix of subjective
and objective criteria, and invoke criteria dependent on the merits.
Plaintiffs' counsel often revise their class definition after receiving
class discovery from defendants. Burch Letter at 2 and fn.2.
---------------------------------------------------------------------------
C. LSection 1720 Will Have a Particularly Devastating Impact on Civil
Rights Class Actions
Proposed section 1720 in H.R. 985 further threatens to
undermine class actions, particularly in civil rights cases.
This provision would prohibit certification of ``issue'' class
actions unless the entire cause of action meets all of Rule
23's class action certification requirements, changing current
law dramatically and effectively barring or at least severely
limiting issue class actions. Rule 23(c)(4) provides that
``when appropriate, an action may be brought or maintained as a
class action with respect to particular issues.''\29\
Currently, all Federal circuit courts read Rule 23(c)(4) to
permit courts to certify a class for the limited purpose of
deciding an issue common to a group of plaintiffs within a case
even when the putative class has not yet been certified. This
allows a court, for example, to decide the issue of liability
only, rather than also consider damages and other questions in
the case. Being able to decide common questions within a case
while allowing other issues to be decided on an individual
basis would be in keeping with one of the purposes of class
actions, namely, promoting judicial efficiency. Yet, as
Professor Gilles noted, H.R. 985 ``would abolish such issue
classes'' using an approach that ``is maximalist and harsh''
and not justified by any evidence that defendants' due process
rights are threatened by the use of issue classes.\30\
---------------------------------------------------------------------------
\29\Fed. R. Civ. P. 23(c)(4).
\30\Gilles Letter at 7.
---------------------------------------------------------------------------
In particular, making issue class actions harder to pursue
would have an especially adverse impact on civil rights class
actions, which depend on issue class actions to a greater
extent than other kinds of claims. Doing so would have a
devastating impact on race and gender class actions that often
can only be maintained as to particular issues such as
liability. Requiring that an entire cause of action be
certified as a class before any common issue can be decided
will have the practical effect of denying many such plaintiffs
their day in court, where it may not be practicable for
individual plaintiffs to pursue individual cases on their own.
As a coalition of civil rights groups has written in opposition
to H.R. 985, ``the bill's limitation on `issue classes' will
impede the enforcement of civil rights laws'' because such
classes ``can promote both efficiency and fairness'' by
allowing ``class certification for the core question of
liability (often a complex proceeding).''\31\
---------------------------------------------------------------------------
\31\Civil Rights Letter at 2.
---------------------------------------------------------------------------
For the foregoing reasons, and, in particular, because of
the potentially disproportionate impact that this provision
would have on civil rights cases, including legal challenges to
President Donald Trump's Executive Order banning refugees and
travelers from certain majority-Muslim countries,
Representative Pramila Jayapal (D-WA) offered an amendment to
strike the bill's ``issue classes'' provision. The Committee,
however, rejected her amendment by a party-line vote of 12 to
19.
D. LSection 1721's Default Stay of Discovery Will Exponentially
Increase Litigation
Proposed section 1721 in H.R. 985 would needlessly extend
class action litigation, which is already an expensive and
cumbersome process. The provision would stay discovery and
other proceedings while any motion to dispose of the class
allegations is pending, including motions to strike class
allegations, motions to dismiss, and motions to transfer unless
the court finds, on motion of a party, that ``particularlized
discovery'' is needed to preserve evidence or to prevent undue
prejudice to that party. Currently, motions to stay discovery
may be granted at the discretion of the district court. Section
1721 appears to significantly reduce this discretion, making a
stay mandatory unless a party can either show the need to
preserve evidence, notwithstanding the potential absence of any
discovery up to that point in the case, or satisfy the vague
standard that it would suffer ``undue prejudice.'' Even under
such circumstances, discovery can only be ``particularized,''
though the bill provides no guidance as to what this term means
in this context. The effect of this provision would be to
increase litigation burdens and costs on plaintiffs, provide
another opportunity for corporate defendants to engage in
dilatory tactics by filing multiple motions each of which would
trigger a stay of discovery and litigation over whether
discovery should then be permitted, and dissuade future
plaintiffs from pursuing meritorious claims.
As Professor Coffee wrote, the bill's stay of discovery
``provision can easily be exploited by defendants to delay
class litigation indefinitely by making each of these motions
[to dispose of class allegations] in seriatim fashion.
Predictably, motions will follow motions in order to delay
discovery.''\32\ Professor Burch noted that this ``proposal
will unduly prolong litigation that is already protracted'' and
``would make it difficult for the court and the parties to
conduct discovery and make informed decisions about whether to
certify the class.''\33\
---------------------------------------------------------------------------
\32\Coffee Memorandum at 5.
\33\Burch Letter at 5.
---------------------------------------------------------------------------
For the foregoing reasons, Representative Ted Deutch (D-FL)
offered an amendment to strike the bill's stay of discovery
provision. The Committee, however, rejected the amendment by a
party-line vote of 12 to 19.
E. LSection 1723's Mandatory Right of Appeal Provides More Chances for
Delay and Increases Burdens and Costs
Proposed new section 1723 establishes a mandatory right of
appeal to a Federal court of appeals of the grant or denial of
a motion to certify a class. Under current Rule 23(f), such
appeals may be heard at the discretion of the appeals court and
must be filed within 14 days of the entry of such order.\34\ As
with most other provisions in H.R. 985, this mandatory appeal
provision would give defendants yet another opportunity to
delay consideration of class actions and thereby further
increase litigation burdens and costs for plaintiffs.
---------------------------------------------------------------------------
\34\Fed. R. Civ. P. 23(f).
---------------------------------------------------------------------------
F. LThe Bill Imposes Unreasonable Restrictions on Class Counsel
Various provisions in H.R. 985 appear intended to target
class counsel and threaten the ability of plaintiffs to obtain
legal representation in class actions. For instance, several
provisions, including proposed sections 1718(b) and 1719, would
delay the payment of any attorneys' fees under certain strict
conditions or until class counsel complies with certain
settlement information accounting requirements, respectively.
These provisions, which do not apply to defense counsel, appear
to be unduly harsh and aimed at discouraging lawyers from
taking the risk of representing class action plaintiffs by
creating a strong financial disincentive.
Section 1718(b)(1) delays payment of attorneys' fees until
all monetary recovery has been paid to class members. Yet some
class settlements may take many years to distribute, and under
this provision, plaintiffs' counsel would have to wait
potentially years before receiving any payment. Moreover, as
discussed earlier, sometimes it is simply impossible to
identify all class members. Under this provision, which makes
no exception for honest, good faith efforts by class counsel to
identify and ensure payment to all class members, it is
possible that counsel will not be paid at all. While ensuring
class members are paid is an important goal, H.R. 985's
proponents appear to be more interested in disincentivizing
plaintiffs' lawyers, rather than fashioning a reasonable
solution, such as an interim fee distribution or some other
less draconian approach.
Similarly, although section 1718(b)(2) limits payments to
class counsel to a reasonable percentage of the class members'
monetary recovery, it fails to account for situations where
funds may remain because class members may be difficult to
identify, monetary awards are too small to distribute to
individual class members, or funds are simply unclaimed. As
with other provisions, this ambiguity could lead to further
litigation and increased costs, as well as disincentivizing
attorneys from representing class plaintiffs.
A similar concern arises with respect to section
1718(b)(3), which applies a similar ``reasonable percentage''
standard in cases where the class members are awarded or agree
to equitable relief, such as in many civil rights cases. In
these cases, there is the additional ambiguity of determining
how to monetize equitable relief for purposes of determining a
reasonable attorneys' fee award, further heightening concerns
about the ability of plaintiffs to obtain adequate legal
representation in such cases.
Finally, the already-discussed ``conflict of interest''
provision of section 1717(b) would deny class certification in
all cases where the class representative or named plaintiff is
a relative of, present or former client of, present or former
employee of, or has a contractual relationship with the class
counsel, without exception. This unnecessary provision wrongly
assumes that all of these relationships raise impermissible
conflicts of interest per se and, based on this false premise,
effectively denies plaintiffs the right to choose their
counsel.
H.R. 985's class action provisions aimed at class counsel
will have a particularly adverse impact on civil rights
plaintiffs. As civil rights organizations opposing H.R. 985
note, the bill's ``reasonable percentage of equitable relief''
standard is arbitrary and unworkable.\35\ These organizations
rightly ask ``how is a judge to determine the cash value of an
integrated school, a well-operating foster care system, the
deinstitutionalization of individuals with disabilities, or
myriad other forms of equitable relief secured by civil rights
class actions?''\36\ The ultimate result, they explain, is that
``[n]on-profit organizations cannot bear the risk of these long
and expensive cases if, at the end, their fees are calculated
under this incoherent and capricious standard. Indeed, the bill
creates an incentive for defendants to prolong the litigation
so as to make it economically impossible for plaintiffs'
attorneys to continue to prosecute the litigation.''\37\
---------------------------------------------------------------------------
\35\Civil Rights Letter at 3.
\36\Id.
\37\Id.; see also Disability Rights Letter at 1 (``By severely
limiting attorneys' fees in cases seeking only injunctive relief, [H.R.
985] would remove class actions as an essential tool for those who seek
to improve the systems that serve people with disabilities.'').
---------------------------------------------------------------------------
For the foregoing reasons, Ranking Member John Conyers, Jr.
(D-MI) offered an amendment that would have exempted all civil
rights cases from H.R. 985's class action provisions. The
Committee, however, rejected his amendment by a party-line vote
of 11 to 14.
The bill's various class action provisions would similarly
stifle the ability of plaintiffs in a wide spectrum of cases to
pursue justice. For instance, those injured by fraudulent
conduct, including the former students of Trump University who
sued President Donald Trump for allegedly bilking thousands of
dollars out of students while never providing the University's
advertised educational services, would effectively be precluded
from having their day in court. To address this particular
shortcoming of the bill, Representative Hank Johnson (D-GA)
offered an amendment that would have exempted all fraud cases
from all of the bill's class action provisions. The Committee,
however, rejected this amendment as well by voice vote.
G. LSection 4's Remand Provisions Would Unnecessarily Burden Federal
Courts
Section 4 of the bill would amend the remand statute, 28
U.S.C. Sec. 1447, to add a new provision that applies: (1) in
personal injury or wrongful death cases; (2) where there are
two or more plaintiffs; (3) the case has been removed to
Federal court on the basis of diversity jurisdiction; and (4) a
motion to remand the case is made on the ground that one or
more plaintiffs is a citizen of the same state as one or more
defendants. In such a case, the court deciding the remand
motion must apply the requirements of the Federal diversity
statute\38\ to the claims of each plaintiff individually and
remand only those claims of the plaintiff that does not satisfy
the diversity statute's requirements.
---------------------------------------------------------------------------
\38\28 U.S.C. Sec. 1332(a) (2017). Under this provision, in order
for a Federal court to exercise diversity jurisdiction over what would
otherwise be a state law case, there must be at least $75,000 amount in
controversy and the plaintiff and the defendant must be citizens of
different states.
---------------------------------------------------------------------------
While it is unclear exactly what problem the bill's
sponsors intend for this provision to address, it seems that in
cases where one plaintiff is a citizen of the same state as one
defendant and another plaintiff is a citizen of a different
state as that defendant, this provision would make it easier
for defendants to keep at least one of the plaintiffs' cases in
Federal court, even if the plaintiffs assert the same legal
claims arising from the same set of operative facts. This would
seem to unnecessarily burden Federal courts with parallel
consideration of a case at the same time that a proceeding on
the same facts and legal claims takes place in state court.
H. LSection 5's Multidistrict Litigation Evidentiary Support
Requirement Is Unreasonable and Unjustified and Its Arbitrary
Cap on Attorneys' Fees Could Undermine the Ability of
Plaintiffs to Obtain Representation
Section 5 of the bill amends 28 U.S.C. Sec. 1407, the
statutory provision governing multidistrict litigation. Under
that provision, cases in different districts raising common
issues of fact may be transferred to a designated judge or
judges for pretrial proceedings. H.R. 985 would add a new
section 1407(i) requiring plaintiffs to produce proof of their
allegations early on in such proceedings. Specifically, it
requires that plaintiffs in personal injury cases make a
submission ``sufficient to demonstrate that there is
evidentiary support (including but not limited to medical
records) for the factual contentions in plaintiff's complaint
regarding the alleged injury, the exposure to the risk that
allegedly caused the injury, and the alleged cause of the
injury'' within the extremely strict deadline of 45 days after
the civil action is transferred to or filed in the consolidated
pretrial proceedings, with no extensions. The presiding judge
must, within 30 days of the submission deadline, determine
whether the submission is ``sufficient'' and must dismiss the
action without prejudice if it is not. If the action is
dismissed, a plaintiff would then have only 30 days to make a
``sufficient'' submission or the case must be dismissed with
prejudice.
This provision places a significant burden on plaintiffs to
prove their allegations to a considerable degree at the
beginning of their case, denying them the ability to further
develop their claims through the discovery process. It also
codifies a procedure that some courts have adopted in some
cases, but, as with the ``ascertainability'' requirement, there
is no consensus among courts as to whether it is even
appropriate to impose such a high burden at such an early stage
on plaintiffs.\39\
---------------------------------------------------------------------------
\39\Professor Burch further notes that, in addition to denying
courts the necessary flexibility to adapt case management orders to
specific circumstances, this provision may also raise federalism
concerns to the extent that it conflicts with state law that may not
require an allegation of specific cause of harm. Burch Letter at 6-7.
---------------------------------------------------------------------------
New section 1407(j) would prohibit trials in multidistrict
proceedings unless all the parties consent. This provision may
be aimed at preventing ``bellwether trials,'' or trials of
randomly selected cases in multidistrict litigation to test the
parties' arguments and help to resolve the overall litigation.
The requirement that all parties consent to trial means that it
is unlikely that any such cases would go to trial, meaning
further cost and delay for plaintiffs.
Section 5 would also add a new section 1407(l) to title 28,
United States Code, which would require that 80 percent of any
monetary recovery in personal injury multidistrict litigation
be paid to plaintiffs, effectively codifying a 20 percent cap
on attorneys' contingent fees in personal injury multidistrict
litigation. By codifying a 20 percent cap on attorneys'
contingency fees, this provision may present an insurmountable
disincentive for counsel to undertake such litigation. It also
may conflict with state laws governing such fees in personal
injury and wrongful death cases. The provision is also
ambiguous in some respects, leaving unclear, for example, who
would pay for experts or reimburse insurers on plaintiffs'
medical bills. It is not even clear who might be a ``claimant''
entitled to part of the 80 percent of the monetary recovery. As
with other provisions in the bill, this ambiguity opens the
door to more litigation, cost, and delay.
I. LH.R. 985's Will Impose New Burdens on Pending Cases
Section 7 makes the bill's various provisions applicable to
all cases pending on the date of enactment. In this way, the
bill unjustly changes class action and other procedural rules
on cases in the midst of litigation, burdening plaintiffs with
new requirements they had no way of preparing for.
Given the tremendous costs and increased burdens of the
bill's various provisions on litigants and courts,
Representative Sheila Jackson Lee (D-TX) offered an amendment
to delay the bill's effective date until the Administrative
Office of the United States Courts completed an assessment of
the costs the bill would impose on litigants and the courts.
The Committee, however, rejected this sensible amendment by a
party-line vote of 12 to 17.
Because the bill would impose onerous requirements on
plaintiffs and effectively make much civil litigation cost-
prohibitive in Federal court, Representative David Cicilline
(D-RI) offered an amendment that would have exempted from the
entire bill all civil actions, to the extent permitted by law,
concerning injuries caused by a firearm. The Committee,
however, rejected this amendment by a party-line vote of 12 to
19.
III. H.R. 985 WOULD STRAIN LIMITED JUDICIAL RESOURCES, OVERRIDE
JUDICIAL DISCRETION, AND CIRCUMVENT THE RULES ENABLING ACT PROCESS
H.R. 985 would strain already-limited judicial resources.
Without doubt, the bill's numerous new and vaguely-worded
standards would foster extensive litigation to resolve their
meaning and application. This would be in addition to the
already resource-intensive process that courts must follow when
considering class action certification motions. For instance,
as Professor Coffee noted, the bill's mandatory appeal
provision alone could substantially increase the burdens on
appellate courts possibly by as much as five-fold because
appeals courts currently permit relatively few appeals under
Rule 23(f).\40\ Similarly, the automatic third-party litigation
funding disclosure requirement in proposed section 1722 will
needlessly burden Federal courts by creating more chances for
discovery disputes.
---------------------------------------------------------------------------
\40\Coffee Memorandum at 6.
---------------------------------------------------------------------------
The bill also significantly reduces judicial discretion in
a number of ways. For example, its stay of discovery provision
significantly reduces the discretion that courts currently have
to stay, or to allow, discovery in response to a motion.
Similarly, the bill's mandatory appeal provision adds to the
burden of appellate courts while taking away their authority to
determine when an appeal of a class certification order might
be warranted. Likewise, the bill's ``conflict of interest''
provision denies courts any discretion to determine whether
certain relationships actually pose a conflict of interest,
imposing instead a per se rule requiring denial of class
certification if certain relationships exist between class
counsel and a named plaintiff or class representative. Finally,
the bill's multidistrict litigation provision imposes draconian
deadlines on both plaintiffs and courts to make determinations
about the sufficiency of a plaintiff's factual allegations,
with no ``good cause'' or other exception to allow a court some
flexibility in setting deadlines. It also requires dismissal by
the court if it makes certain findings, rather than leaving
that decision to the court's discretion.
Finally, H.R. 985 circumvents the highly prudential and
deliberative Rules Enabling Act process, a process that
reflects input not only from the Federal judiciary, but also
from other interested parties and the public generally.\41\ In
fact, the Judicial Conference of the United States is in the
midst of a multi-year study of Rule 23 that ``has considered
many of the issues addressed in H.R. 985.''\42\ Accordingly,
the Conference has ``strongly urge[d] Congress not to amend the
class action procedures found in Rule 23.''\43\ Although H.R.
985 includes a provision stating that nothing in the bill
should be interpreted to prohibit the Supreme Court or the
Judicial Conference from using the Rules Enabling Act process,
the measure nonetheless clearly circumvents that process.
Indeed, several provisions contained in H.R. 985, such as the
bill's ``ascertainability'' standard and its changes to
consideration of ``issue'' class actions, have already been
considered and rejected by the Advisory Committee on Civil
Rules as part of the Judicial Conference's consideration of
Rule 23 amendments.
---------------------------------------------------------------------------
\41\28 U.S.C. Sec. Sec. 2071 et seq. (2017).
\42\Judicial Conference Letter.
\43\Id.
---------------------------------------------------------------------------
CONCLUSION
H.R. 985 purports to help plaintiffs, but it will in fact
deny plaintiffs any justice by greatly diminishing the
availability of class actions and multidistrict litigation. The
bill's proponents offer no credible evidence that such
draconian legislation is needed and, in the absence of any
hearing to assess most of the bill's provisions, the
justifications for those provisions are unclear at best. If
anything, the bill is so skewed in favor of corporate
defendants' interests that the obvious inference is that its
aim is to rig the procedural rules governing class actions and
multidistrict litigation to ensure defendant-friendly outcomes
rather than to guarantee fairness or address abuses. In
addition, H.R. 985's various requirements are so vague or
impossible to meet that they would provide numerous
opportunities for defendants to engage in dilatory tactics,
raising litigation costs and burdens for plaintiffs to the
point of dissuading future plaintiffs from even filing suit.
Finally, the bill would substantially and needlessly increase
resource burdens on the Federal courts, significantly reduce
judicial discretion in many respects, and unnecessarily
circumvent the Rules Enabling Act process.
For all of the foregoing reasons, we respectfully dissent
and we urge our colleagues to oppose H.R. 985.
Mr. Conyers, Jr.
Mr. Nadler.
Ms. Lofgren.
Ms. Jackson Lee.
Mr. Cohen.
Mr. Johnson, Jr.
Mr. Deutch.
Mr. Gutierrez.
Ms. Bass.
Mr. Richmond.
Mr. Jeffries.
Mr. Cicilline.
Mr. Swalwell.
Mr. Lieu.
Mr. Raskin.
Ms. Jayapal.
[all]