United States: Big Changes Could Be Coming In Class Action Litigation

On February 10, 2017, U.S. Rep. and House Judiciary Committee Chairman, Bob Goodlatte (R-Va), introduced a new version of his Fairness in Class Action Litigation Act of 2017 (H.R. 985) (the "Act").  The Act, while bearing the same name as legislation introduced by Rep. Goodlatte in the last Congress, is more aggressive than its predecessor in its attempt to cut down on lawyer-driven suits, ensure that legitimate plaintiffs' interests are properly placed ahead of class counsel's interest in securing large fee awards, and diminish other abuses of the class action system.  While the Act has yet to be voted on by the House of Representatives or the Senate, the House Judiciary Committee approved the bill on February 15, 2017 and there is growing support for the legislation from the United States Chamber of Commerce, among other organizations.  If approved in its current form, the Act would implement the following major class action reforms: 

  • All class members must have suffered the same "type and scope" of injury.  The Act would limit certification of class actions only to those suits where the court has determined, after a "rigorous analysis of the evidence presented," that each member of the proposed class has suffered the same "type and scope of injury as the named class representative." This would be a major departure from the current framework, which permits certification of classes even where there is wide variety of injuries across class members, including some with no monetary damage at all. 
  • Class counsel must disclose conflicts of interest to the court.  The Act would require class counsel to disclose, in the complaint, whether any proposed class representative or named plaintiff (i) is related to class counsel, (ii) has ever been employed by class counsel, (iii) has ever been a client of class counsel on another matter, or (iv) has any contractual relationship with class counsel other than with respect to the class action suit at issue.  If the answer to any of these questions is "yes," class certification must be denied.  This provision is designed to prevent plaintiffs' lawyers from recruiting family members, employees and serial plaintiffs to serve as named plaintiffs in manufactured, unmeritorious class action suits. 
  • Class representatives must demonstrate, as a condition precedent to class certification, that there is a reliable and feasible method for distributing any recovery to the class members.  Under the current framework, a class representative seeking class certification bears the burden of establishing that its method for identifying class members is reliable and administratively feasible.  The Act would keep these requirements in place, but also require the class representative to affirmatively demonstrate that it has a reliable and administratively feasible method "for distributing directly to a substantial majority of class members any monetary relief secured for the class." 
  • Discovery is automatically stayed during the pendency of a motion to transfer or dispositive motion.  Taking a page from the Private Securities Litigation Reform Act of 1995 ("PSLRA"), which imposes an automatic stay of discovery and all other proceedings in securities class actions during the pendency of a motion to dismiss, the Act would automatically stay all discovery and other proceedings during the pendency of a motion to transfer, 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 PSLRA contains the exact same exception to its automatic stay and, as a result, much of the case law interpreting the PSLRA's exception for "particularized discovery" would likely be applied in determining whether to grant an exception to the discovery stay for class actions generally under the Act.
  • Attorneys' fees must be proportionate to the recovery and may not be paid until all class members have been paid.  The Act would prohibit the determination or payment of attorneys' fees to class counsel until all class members have been paid their monetary distribution. It would also limit class counsel's fee awards to a reasonable percentage of payments actually made to the class members (or, if equitable relief only is obtained, to a reasonable percentage of the value of the equitable relief).  Class counsel would not be permitted to recover fees in excess of the amount actually distributed to class members.
  • Settlement data would be made available to Congress.  In cases where a class-wide settlement for money damages is reached, the Act would prohibit the payment of attorneys' fees to class counsel until class counsel submits an accounting to the Federal Judicial Center and the Administrative Office of the United States Courts, which discloses: (i) the total amount paid by the defendant directly to all class members; (ii) the actual or estimated total number of class members; (iii) the average amount paid directly to all class members; (iv) the largest amount paid to any class member; and (v) the smallest amount paid to any other person (including class counsel) and the purpose of the payment.  This data would be compiled by the Judicial Conference of the United States and presented, on an annual basis, to the congressional judiciary committees.
  • Class counsel must disclose third-party litigation funding.  The Act would require class counsel to promptly disclose to the court and all other parties the identity of any third party, other than a class member or counsel of record, who has a contingent right to receive compensation from any settlement, judgment or other relief obtained.  This provision, which is designed to reveal who really is driving the litigation and the reasons therefor, is likely to draw a sharp response from those in the burgeoning litigation funding business.
  • Personal injury plaintiffs in MDL proceedings must satisfy an initial evidentiary hurdle.  The Act would require any personal injury plaintiff whose action has been coordinated or consolidated in a multi-district litigation proceeding to make a submission to the court within 45 days of the case's coordination or consolidation, sufficient to demonstrate that there is evidentiary support for the factual contentions in the complaint regarding the alleged injury, the exposure to the risk that caused that injury and the alleged cause of the injury.  Within 30 days of that submission, the court would be required to rule on whether the submission is sufficient and, if it is not, the plaintiff's action would be dismissed without prejudice.  The plaintiff would then have 30 days to remedy the deficiencies in her submission, failing which the action would be dismissed with prejudice.
  • Parties would be statutorily entitled to appeal class certification decisions as of right.  Currently, the Circuit Courts of Appeals have discretion in deciding whether to accept appeals of class certification orders under Federal Rule of Civil Procedure 23(f).  The Act would remove that discretion and give litigants an absolute right to appeal the granting or denial of a class certification order.  This is the one provision of the Act that could be a double-edged sword for defendants: on the one hand, it would entitle them to an immediate appeal of an order granting class certification; on the other hand, plaintiffs who are denied class certification would likely use the appeal as of right mechanism as a way to put settlement pressure on defendants.

We will keep an eye on further developments as the Act moves its way through Congress.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
23 Jan 2019, Speaking Engagement, New York, United States

New York partner Rich Martinelli will be a featured panelist during the Society of Physician Engineers' event, "Intellectual Property Law & Tax Credits for Life Science Companies."

29 Jan 2019, Speaking Engagement, New York, United States

Please join Orrick partner Jay Jurata at this year's Joint NGMN and ITU Conference on January 29-30 in Geneva, Switzerland.

27 Feb 2019, Conference, Las Vegas, United States

Partner John Narducci will be discussing The Impact of the Tax Reform Act on Valuations at ABI’s Valcon 2019 Conference.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions