New Republican bill would gut class actions, not improve them

While Democrats have been busy reacting to the administration’s blockbuster-of-the-day, Republicans have been quietly working in Congress to alter procedural laws that allow consumers, employees, citizens, and others to challenge corporate and government wrongdoing.

Last week, Republicans on the House Judiciary Committee voted to introduce H.R. 985, the Fairness in Class Action Litigation Act of 2017, a bill that would undermine class actions and other mass lawsuits by a set of deceptively labeled procedural reforms.

{mosads}What better way to accomplish the legislative ends of the business lobby, while the executive branch offers an endless stream of diversions, than to tinker with procedure? “I’ll let you write the substance,” John Dingell Jr., the longest-serving member of Congress in history, once said, “you let me write the procedure, and I’ll screw you every time.”

The bill says that its goal is to “assure fair and prompt recoveries for class members and multi-district litigation plaintiffs with legitimate claims.” But no plaintiff with a legitimate claim would favor this legislation. The bill’s provisions read like a wish list for corporate defendants. Rather than offer ways to distinguish meritorious from non-meritorious claims, or to distinguish fair from unfair settlements, the bill erects obstacles to reduce the chance that corporations and government actors will be held accountable for wrongdoing.

The federal class action rule, Federal Rule of Civil Procedure 23, permits class actions only if stringent requirements have been met. Under the existing rule, which has been interpreted and refined by courts for decades, plaintiffs must prove that the number of claimants is too large to handle by standard techniques, that the claims share common questions, and that class representatives are typical and will adequately represent the class members.

For money damages class actions, plaintiffs must prove that common questions predominate over individual questions, and they must convince the judge that a class action is the superior way to resolve the dispute.

The courts, particularly the Supreme Court, have interpreted Rule 23 strictly. Many observers think that the pendulum already has swung too far toward restricting the use of class actions for litigating group claims.

The bill, rather than leave well enough alone, adds new layers of restrictions. It requires that plaintiffs prove that each class member suffered the same “type and scope” of injury, a tall order in discrimination cases and other worthy class actions. It requires that plaintiffs demonstrate a mechanism for identifying each class member, an impossible task in many consumer class actions, and unnecessary for achieving justice.

The bill forbids any class representative who was previously a client of the class lawyer, thus standing in the way of institutional investors hiring experienced lawyers in securities class actions. It prohibits payment of attorney’s’ fees until after all class members have been paid, a ludicrous proposal in a world where, appropriately, class remedies may last for half a century or more.

Beyond these burdens on class actions, the bill makes various changes to the procedures for multi-district litigation — the dominant form of mass litigation in federal court — to reduce the ability of plaintiffs’ lawyers to collect their contractual fees and to reduce the ability of judges to move the cases toward resolution.

Class actions, to be sure, need improvement. In particular, the lawyers who dominate class action practice too often get away with settlements that enrich themselves rather than provide meaningful benefits for class members. Critical observers, including myself, have urged judges to intervene more aggressively to prevent self-serving conduct by class action lawyers.

Judges increasingly take this responsibility to heart, and a number of courts recently have struck down settlements that failed to provide real benefits for class members.

But to say that class actions have problems is not to say that we would be better off without them. At their best, class actions empower plaintiffs to pursue claims that have legal merit but cannot efficiently be litigated on an individual basis.

Class actions remain an essential tool for consumers, investors, employees, and others to fight corporate wrongdoing. And they remain an essential tool for citizens, voters, inmates, immigrants, and others to challenge government conduct.

We are all consumers, and many of us are investors and employees. We are citizens, voters, inmates, or immigrants. In a host of capacities, we are all potential victims of wrongdoing by corporations and government entities.

In other words, we are all prospective class members in lawsuits where our interests are at stake but where individual litigation is unrealistic.

A genuine effort to clean up class actions would benefit us in this capacity. But a crass effort to gut class actions — which is the only fair way to describe H.R. 985 — harms all of us.

Howard M. Erichson is a tenured Professor of Law at Fordham Law School, where he teaches civil procedure, complex litigation, torts, and legal ethics. He has written extensively on the problems of class actions and other mass litigation.

The views expressed by contributors are their own and are not the views of The Hill.