United States: Class Action Reform And The "Fairness In Class Action Act"

While the Congressional legislative agenda has taken a back seat in the headlines lately, the fact remains that there still is an agenda, and it includes class action reform.

The agenda item of interest is H.R. 985, the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2017 (the "Fairness in Class Action Act") which would also lead to multi-district litigation (MDL) reform. With class actions posing a major threat to corporate bottom lines, and MDLs a large driver of litigation in federal courts (the current MDL listing includes numerous OEMs and suppliers), the automotive industry has a vested interest in how class action and MDL reform plays out.

The Fairness in Class Action Act passed the House in March and is currently awaiting action by the Senate Judiciary Committee.  While that committee appears preoccupied at the moment, any realistic scenario for the next almost two years will involve Republican control of both houses of Congress and the White House, with litigation reform a priority, and the  Fairness in Class Action Act is a useful preview to see what steps Washington may take to pare back these mass actions.

In today's post, we take a look at how the Fairness in Class Action Act would reshape class actions in federal court.  Class actions are often won and lost at the certification stage: class actions can turn from a manageable dispute with one plaintiff into a "bet-your-company" lawsuit with thousands based on a single certification order.  The Fairness in Class Action Act takes several steps to make these orders tougher for class action plaintiffs to get—some of the key ones are explained here.

Mandating Ascertainability

One of the conflicts among federal appeals courts is to what extent plaintiffs seeking to bring a class action have to show that members of the class are "ascertainable."  This essentially asks how hard a court will have to work to decide whether a given party is in fact a member of a class the plaintiffs seek to certify.  Some courts have taken the approach that the standard is a low one, and that all plaintiffs need to show is that there are objective criteria that can be used to determine class membership.  Other courts take this requirement a step further, and demand that plaintiffs also show that there is an "administratively feasible" step for determining membership on a class-wide basis.  For some cases, this can be the difference between certifying a class, creating huge exposure for a defendant, and not certifying a class—such as where a plaintiff suing tire and automobile manufacturers cannot point to an easy way to determine which potential class members actually experienced a flat tire, even though standing by itself, getting a flat tire could be an objective criteria.

The Fairness in Class Action Act would resolve this split, by adopting the more restrictive definition: mandating that any plaintiff seeking to certify a class show that "there is a reliable and administratively feasible mechanism" for both determining class membership and for distributing any monetary relief to the class.  This would, in practice, largely require plaintiffs seeking to certify a class to point to a database, list, or other source of information that could be used to show class membership, and remove the ability of courts to rely on methods like self-certification.  For product liability and fraud actions in particular, this kind of reform would sharply curtail plaintiffs' ability to certify class actions.

Class Member Injury

Another requirement for classes under the Fairness in Class Action Act is that plaintiffs show that "each proposed class member suffered the same type and scope of injury as the named class representative."  Any certification order in a case seeking "monetary relief for personal injury or economic loss" would need to include "a determination, based on a rigorous analysis of the evidence presented, that" this requirement was met.

This requirement would be another major shake-up for the class action bar: currently, some courts hold that the "possibility or indeed inevitability" that some class members may not have been injured by the defendants does not defeat certification.  These courts would likely need to change course should the Fairness in Class Action Act (or something like it) pass: shrugging off the "inevitability" of uninjured class members is inconsistent with requiring plaintiffs to show that each class member "suffered the same type and scope of injury" as the named plaintiff.

Appeals From Class Certification

Currently, the rules governing class certification do not require appeals courts to entertain appeals taken from class certification decisions: instead, appeals courts "may permit an appeal from an order granting or denying class-action certification."  In practice, appeals courts take these appeals in specific situations, such as where the appeals court believes that the certification order effectively ended the litigation, or where there is a novel legal question the appeals court feels a need to address quickly.  Of course, a business's appetite for risk and determination of whether it is willing to roll the dice on a $100 million class action may not align with three judges' idea of whether certification effectively ends a case.

The Fairness in Class Action Act would change this approach.  Instead of leaving appeals of class certification decisions up for discretionary review, the Act would make appeals of class certification rulings—whether a grant or a denial of class certification—available as of right.  Thus, rather than face situations in which a certified class and the prospect of trial and a major judgment, combined with a denial of appeals court review, forces a defendant's hand into settlement, there will always be a crack at review of a certification decision.

Mandatory Discovery Stays

Another step taken to reduce the costs of class actions—while it would not necessarily make class certification more difficult like the steps above—is a mandatory stay of discovery during the pendency of certain motions, like motions to dismiss or motions to strike class allegations.  While discovery frequently does not ramp up during motions to dismiss at the outset of the case, the statutory language is not limited to motions to dismiss at the pleadings stage: such motions filed while discovery is ongoing would presumably also stay discovery.  These could take the form of motions to dismiss based on a lack of injury (a rash of these motions were filed in pending cases after the Supreme Court's Spokeo decision), or of motions to strike the class allegations after the pleadings are closed, but before discovery is complete.  Staying discovery while these motions are pending forestalls the ability of plaintiffs to impose discovery costs on defendants and leverage outsized individual settlements, even as defendants fight whether the case should be a class action in the first place.

MDLs and the Fairness in Class Action Act

In our next post, we take a look at the Act's application to MDLs, and how these unwieldy creatures may be reformed.

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
Lewis Roca Rothgerber Christie LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Lewis Roca Rothgerber Christie LLP
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