United States: A Not-So-Modest Proposal: Class Action Changes Could Have Big Impact

Last Updated: March 23 2017
Article by Ben V. Seessel, Christine A. Stoddard and Kristin A. Shepard

Like many things these days, the legal landscape is changing. One target is class action litigation. Some important new proposals have the potential to dramatically alter class actions in the near future. In particular, these changes would impact class certification and the settlement process.

Rule 23 Amendments

First, a spate of amendments may bring changes to Federal Rule of Civil Procedure 23. The comment period on the amendments closed on February 15th and the changes are expected to be adopted, with an effective date of December 1, 2018. Specifically, the amendments include a variety of changes regarding class settlement and notice. The new proposal's greatest impact would be on class settlement objectors, governed by Rule 23(e)(5). The proposed amendment seeks to prevent bad faith objections by requiring objectors to state the grounds for their objection with specificity. Objectors would also be required to state whether the objection applies only to themselves, to the whole class, or to a portion of the class. The amendment deletes the rule's current language requiring court approval for the withdrawal of an objection. Instead, the new rule would require approval for payment to an objector or his counsel in connection with either the withdrawal of an objection or the abandonment of an appeal of a judgment approving a settlement. These changes seek to prevent objectors from interfering with settlements merely to obtain a payoff.

Under the new proposal, Rule 23(c)(2)(B), which governs notice for 23(b)(3) classes, would allow for notice to be given not only via mail, but also electronic or other appropriate means. The new rule would also clarify that Rule 23(e)(1) notice to a proposed settlement class would trigger the opt-out period, in conformance with common practice. Additionally, Rule 23(e)(1) would be amended to require parties to give the court sufficient information to determine whether to order notice, and an amendment to Rule 23(f) would clarify that an order to send notice to the class is not appealable. The new amendments would also alter Rule 23(e)(2), which requires a court to determine whether a settlement is "fair, reasonable and adequate" before approval. The new rule would list factors for the court to consider in making this determination, including the adequacy of representation and relief, whether all class members are treated equitably, and if the settlement was the product of arm's length negotiations. Although meant to provide guidance to courts, the list would not eliminate the various approval factors courts have already developed for this purpose.

Fairness in Class Action Litigation Act

Meanwhile, a bill pending before Congress could result in even more sweeping reforms. The Fairness in Class Action Litigation Act ("FICALA"), H.R. 985, proposed by Rep. Bob Goodlatte (R-Va), seeks to "assure fair and prompt recoveries for class members and multidistrict litigation plaintiffs with legitimate claims" while also "diminish[ing] abuses in class action and mass tort litigation." To that end, the bill sets stricter requirements for class certification. For example, it requires a party seeking to certify a class for monetary relief to affirmatively demonstrate that each putative class member suffered the same type and scope of injury as the named plaintiff. It also restricts who can serve as class representatives, prohibiting such individuals from having familial, employment, or contractual relationships with class counsel and compelling disclosures about potential conflicts of interest in that regard. It also creates a heightened ascertainability standard by requiring that a class be defined with reference to objective criteria, and that the party seeking certification demonstrate that a reliable and feasible method exists both to identify class members and to distribute any monetary relief.

Additionally, FICALA places restrictions on the certification of issue classes and requires a mandatory stay of discovery pending motions to dismiss, transfer, or strike class allegations, unless "necessary to preserve evidence or to prevent undue prejudice." The bill also requires disclosure of third-party litigation funding agreements, and, importantly, gives parties a mandatory right to appeal class certification orders.

Like the Rule 23 changes, the bill also affects class settlements. In particular, it seeks to provide class members a meaningful amount of any judgment or settlement by limiting attorney's fees to a reasonable percentage of payments distributed to class members, not to exceed the total amount distributed to the class, as well as preventing attorneys from receiving fees before class members are paid. Under FICALA, information about the distribution of settlement funds must also be reported to the Federal Judicial Center and Director of the Administrative Office of the U.S. Courts. Finally, the bill incorporates various changes to the multidistrict litigation process.

Unsurprisingly, reaction to the bill has been mixed; though some, like the American Association for Justice, have claimed the bill rolls back consumer protection and civil rights, others such as the U.S. Chamber of Commerce have praised FICALA for its ability to protect both businesses and consumers from abusive lawsuits that result in increased prices and fewer jobs. Although the House passed the bill on March 9th, its fate in the Senate is uncertain. Republicans, most of whom support the bill, control the Senate 52-48, but the close split means the vote could swing either way. Indeed, a less expansive proposal by Rep. Goodlatte died in the Senate last year. If adopted as drafted, FICALA would usher in a wave of changes that could have a significant impact on class actions in the future.

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.

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
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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