Wednesday, March 15, 2017

GOP Closer to Tort Reform to Kill Class Actions

Republicans are pushing Tort Reform Bills aimed at restricting what's sometimes is called the Litigation Industry.

It has been 12 years since one of these measures succeeded. But with President Trump now in the White House, Pro-Business Groups see an opening for a series of Bills moving through the House that would discourage Class Actions and generally make it harder to sue business. And it is an issue the President has experience with.

Three Bills, each of which would make life tougher for Plaintiffs' Lawyers, were scheduled for votes by the full House in March. Several more more are in the Legislative pipeline. White House passage is a virtual certainty. Senate presents a bigger challenge.

With a 52-48 Majority, Republicans would need to find eight Democratic votes to reach 60 and avoid a potential filibuster. Lisa Rickard, President of the Institute for Legal Reform, the U.S. Chamber of Commerce Legal arm, says the Chamber and other Business Advocates are focusing attention on 10 Democrats in Red States who are up for Reelection in 2018, including Bob Casey Jr. of Pennsylvania, Heidi Heitkamp of North Dakota, and Joe Manchin of West Virginia.

Plaintiffs' Advocates predicts the Legislation will stall in the Senate with little or no Democratic support. These bills are driven by the U.S. Chamber of Commerce and the largest corporations, who want to escape responsibility for hurting people or other business, says Pamela Gilbert, a Consumer Attorney in Washington.

The broadest Bill, sponsored by Virginia Republican Bob Goodlatte, Chairman of the House Judiciary Committee, would make it harder in several ways to bring Class Actions. The measure would bar Plaintiffs' Firms from repeatedly representing the same Client in Class Actions. The most obvious targets are Prominent Law Firms that represents Plaintiffs in Securities Suits. Such Firms routinely represents Institutional Investors in multiple Cases over time. Professor John Coffee Jr. of Columbia Law School wrote on his Blue Sky Blog that the restriction seems either a death sentence for the large plaintiffs' firm or the end of large public pension funds serving as lead plaintiff.

Statistics on Class Actions are sparse, partly because there's no central clearinghouse for State Cases. But numbers are gathered for Federal Securities Cases. Plaintiffs filed a record 270 Federal Class Action Securities Cases in 2016, 44% more than the historical average of 188 filings from 1997 to 2015, according to Cornerstone Research.

Another part of Goodlatte's Bill would allow Class Action to move forward only when a Judge certifies that all Plaintiffs have suffered the same type and scope of injury. Imposing such obligations at the outset of a Case would encourage more preliminary skirmishing and deter some Class Actions from getting off the ground.

Yet another section of Goodlatte's Bill would restrict Plaintiffs' Attorneys' fee to a percentage of the amount actually distributed to the Class. That would effectively kill off suits that seek a change in Corporate Behavior and pay Class Members little or nothing in damages. The idea is to eliminate class actions that don't make any sense from the start, says John Beisner, a partner with Skadden, Arps, Slate, Meagher & Flom, a large Corporate Law Firm.

Of course, Lawsuits that don't Make Sense to a defendant are often the height of reasonableness to the other side.

Fairness in Class Action Litigation Act of 2017 (H.R. 985)

Among the changes that would be:

- Limiting certification in cases claiming personal injury or economic loss to classes in which all members suffered the same “type and scope of injury.”

- Prohibiting relatives and present or former clients of class counsel from serving as class representatives.

- Prohibiting certification of a class unless there is “objective” evidence that the relief can actually be distributed to a “substantial majority” of class members by “administratively feasible” means.

- In class actions seeking monetary relief, prohibiting the determination or payment of any attorneys’ fees to class counsel until after the distribution of monetary relief to the class members has been completed.

- Confining attorneys’ fees for class counsel to a “reasonable percentage” of the value of the monetary or equitable relief actually received by actual class members, and prohibiting the award of attorneys’ fees attributable to monetary relief in any amount greater than the amount of “money” distributed to class members.

- Requiring an accounting for every class settlement (with various data points concerning payment to class members and class counsel), with the resulting data being provided to federal officials and ultimately to Congress.

- Prohibiting certification of “issue classes” unless the entirety of the cause of action is properly certifiable under Rules 23(a) and (b).

- Requiring in any class action that all discovery be stayed during the pendency of any motion to transfer, dismiss or strike class allegations.

- Permitting appeals as of right (as opposed to the current permissive appeal process) from orders granting or denying class certification.

- Permitting removal to federal court of multiple plaintiff personal injury or wrongful cases, so long as one plaintiff satisfies diversity jurisdiction requirements (and allowing severance and remand only as to the claims of those plaintiffs that do not).

- Requiring plaintiffs in MDL proceedings, at the outset of the case, to make an evidentiary submission to the MDL judge in support of their claim, and authorizing dismissal without prejudice of claims lacking a sufficient evidentiary basis.

- Prohibiting an MDL transferee court from conducting a trial in any case transferred to it, in the absence of consent from all parties to the case.

- Allowing for permissive interlocutory appeals from orders entered in MDL proceedings, upon a showing that the appeal may materially advance the ultimate termination of one or more of the actions in the MDL.

- Allowing a permissive interlocutory appeal of an order granting or denying remand to state court of any action in an MDL proceeding; such application to appeal must be made within 14 days after the order of remand is entered.

- Requiring that personal injury plaintiffs with cases in MDL proceedings receive at least 80 percent of any monetary recovery in their case (whether by settlement or judgment).

The House passed Legislation today to put new Restrictions on Class Action Lawsuits. The Fairness in Class Action Litigation Act (H.R. 985) was approved 220-201. It requires proof that each proposed Member of a class Action Suit has the same extent of injuries before a federal Court can certify it.

The Innocent Party Protection Act also passed the House by a 224-194 vote today. The Legislation, introduced by Rep. Ken Buck (R-Colo.), prevents Attorneys from joining additional defendants to a Lawsuit to keep the case in a State Court that’s friendlier to the Plaintiff.

NYC Wins When Everyone Can Vote! Michael H. Drucker
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