United States: New Political Climate May Lead To Class Action Changes

Last Updated: April 24 2017
Article by Brian C. Fries, William Beck and Elizabeth D. Hatting

The election of a Republican President, along with a Republican U.S. Congress, and the election of a Republican Missouri Governor, combined with a Republican state legislature, are all spurring potential changes on the respective class action landscapes.

Federal Priorities

At the federal level, House Judiciary Committee Chairman Bob Goodlatte (R-Va.) introduced the "Fairness in Class Action Litigation Act of 2017," which is intended to "assure fairer, more efficient outcomes for claimants and defendants, and for other purposes." The bill further recites its purpose to "(1) assure fair and prompt recoveries for class members and multidistrict litigation plaintiffs with legitimate claims; (2) diminish abuses in class action and mass tort litigation that are undermining the integrity of the U.S. legal system; and (3) restore the intent of the framers of the United States Constitution by ensuring Federal court consideration of interstate controversies of national importance consistent with diversity jurisdiction principles."

Rep. Goodlatte was an author of the Class Action Fairness Act enacted in 2005 and led another effort at class action reform in 2015, which did not succeed. The 2017 bill passed the House Judiciary Committee by a vote of 19 to 12. Here is a summary of the bill's main points:

  • Class Certification Must be Based on the Same Type and Scope of Injury: The proposed amendment requires uniformity of injury in class actions seeking monetary relief for personal injuries or economic loss. Under the proposed amendment, each proposed class member must have "suffered the same type and scope of injury as the named class representative or representatives." These requirements go beyond the current requirements that the class representative is a "typical" and "adequate" representative, and that common questions "predominate" over individual questions. The bill also requires that any class certification order for injury or loss must include a determination "based on a rigorous analysis of the evidence presented" that the above uniformity requirement was met. This would likely result in discouraging lawsuits where class members have a wide variety of damages, including some with no damages at all. If enacted, the bill's language will also likely lead to judicial interpretation of its breadth.
  • Explicit Ascertainability Requirement: The bill makes uniform a requirement that plaintiffs affirmatively demonstrate there is "a reliable and administratively feasible mechanism" for the court to determine if the proposed class members are within the class definition, and how funds can be distributed directly to a substantial majority of the class members. In essence, all class members must be ascertainable. Ascertainability is already a class certification requirement, although its application and the standard courts apply varies by circuit.
  • Attorneys' Fees: In what could be a significant change for some class actions, the bill provides that no attorneys' fees will be paid until after the distribution of all monetary recovery to class members, and further mandates that any fee must be based upon the actual issuance of any payments directly distributed to and received by the class members, and not what theoretically could be paid. Further, "[i]n no event shall the attorneys' fee award exceed the total amount of money directly distributed to and received by all class members." This provision could be a significant change in some cases where fees are based on the potential payment to class members, and not the actual payments or claims made. For equitable cases, fees will be limited to "a reasonable percentage in the value of the equitable relief, including any injunctive relief."
  • Reporting of Funds Paid: The bill also contains an administrative reporting requirement to the Federal Judicial Center and the Administrative Office of the United States Courts. Class counsel would be required to report the total amount paid to all class members, the actual or estimated total number of class members, the number of class members who received payment, the average amount paid, the largest amount paid to any class member, each amount paid to any other person (including counsel) and the purpose of the payments. Until the reporting is complete, no attorneys' fees can be paid.
  • Conflicts of Interest: The bill requires that class counsel state in the complaint whether any class representative or named plaintiff "is a relative of, is a present or former employee of, is a present or former client (other than with respect to the class action), or has any contractual relationship with (other than with respect to the class action) class counsel." The bill also requires recitation in the complaint of the circumstances under which the class representative or named plaintiff agreed to serve in such role, along with any previous similar roles. If enacted, this provision creates an interesting issue for repeat plaintiffs, in that they could not use the same counsel in subsequent lawsuits.
  • Discovery Stay: In a significant procedural change, the bill would mandate that all discovery 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 motion by any other party that particularized discovery is necessary to preserve evidence or to prevent undue prejudice to the party.
  • Appeals: The bill would require the Court of Appeals to "permit an appeal from an order granting or denying class action certification under Rule 23 of the Federal Rules of Civil Procedure." Currently, an appeal is permissive.
  • Third-Party Funding Disclosure: The bill would require class counsel to disclose in writing to the court and other parties the identity of any person or entity (other than class counsel or class members) who has a contingent right to compensation from the case.

Changes in the Missouri Merchandising Practices Act (MMPA)

Newly elected Missouri Gov. Eric Greitens made it a point in his opening inauguration remarks to say that the MMPA needs to be changed. In making his statement, he was critical of certain cases in Missouri and their pro-plaintiff results. The MMPA is often the basis of class actions and a tort reform target.

Senate Bill 5 has already been proposed in the Missouri legislature by Senate President Pro Tem Ron Richard. It is an aggressive bill, which would substantially change the MMPA, and plaintiffs' ability to bring class actions under the MMPA (along with other tort reform provisions). Among the initial proposed MMPA changes in the bill are exemptions for regulated businesses (most businesses fall within this category), more onerous requirements for class members (not just class representatives), defined elements of recoverable damages, objective proof of damages requirement for each class member, uniformity of damages requirement among class members in a class action and significant restrictions on recoverable attorneys' fees. The current version of the bill also makes all changes retroactive and applicable to currently filed cases. If enacted, certain provisions of the bill would certainly be challenged in the courts.

Both bills still have a ways to go before enactment, but their early release indicates they are a priority for the coming year. Look for further updates from Lathrop & Gage as they progress through the legislative process.

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.

Authors
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
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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.

Disclaimer

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.

General

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