Class actions may be brought for a variety of reasons, from plaintiffs who have been injured by pharmaceutical drugs, defective products, or asbestos poisoning to those non-physical injuries such as workplace discrimination. The class action mechanism is a cornerstone of American jurisprudence, allowing ordinary citizens to litigate against much larger parties and corporations that they would otherwise not be able to afford to fight. However, the fundamentals of class action suits may be changing soon.
Last week, the United States House of Representatives passed a legislative proposal that would potentially place severe restraints on class action lawsuits. The Fairness in Class Action Litigation Act of 2017 states that its purposes are threefold: 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. While these purposes seem benign enough, the body of its text can be interpreted to suggest that the bill’s true purpose is to constrain the powers of class action lawsuits and mass tort litigation.
What Does the Fairness in Class Action Litigation Act Propose
The bill seeks to limit class certification to actions that affirmatively demonstrate each proposed class member “suffered the same type and scope of injury” as the class representative. Proponents argue that this provision will preclude recovery of uninjured plaintiffs. However, the appropriate degree of similarity among class members is undefined, and due to the innate differences between members, will likely be subject to interpretation. Opponents of the bill have argued that the courts already conduct a rigorous analysis to determine whether plaintiffs meet class certification requirements. In fact, in Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 (2016), the Supreme Court recently upheld the use of representative samples to establish plaintiffs’ injuries and defendants’ liabilities, suggesting that parties may enjoy the benefits of class actions despite varying damages. Inevitably, most injuries will affect class members differently, i.e., a perscription drug can cause varying side effects to each plaintiff. From a practical standpoint, ascertaining whether plaintiffs suffered from “the same type and scope of injury” may prove to be difficult.
In addition, the Act bars attorneys from suing on behalf of relatives, employees, present or former clients, and any other individual with whom counsel has any contractual relationship. This would prevent class members from retaining an attorney who had previously represented them in a past matter. Proponents argue that the courts already monitor conflict of interest issues via procedural and ethical requirements and that such a constraint will threaten a client’s ability to freely choose counsel.
Finally, the Act places constraints on the distribution of monetary relief to class members and counsel. The bill proposes that federal courts shall not issue an order granting certification of a class action seeking monetary relief unless the class affirmatively demonstrates “a reliable and administratively feasible mechanism” to determine whether the members fall within the class definition and to directly distribute monetary relief to a substantial majority. Referred to as the “ascertainability requirement,” this provision resolves a split among the circuit courts, as some courts apply a less rigorous standard. Similar to the class certification requirement, this provision creates an additional hurdle for plaintiffs to overcome in order to constitute a valid class.
Likewise, attorneys representing the class also face greater restrictions in obtaining fees. In order to receive attorneys’ fees, counsel must distribute all monetary relief to the class members, and then must submit an accounting of such distribution to the Federal Judicial Center and the Director of the Administrative Office of the United States Courts. No attorneys’ fees shall be paid until the accounting has been submitted. In addition, the Act limits attorneys’ fees to a “reasonable percentage of any payments directly distributed to and received by class members” and prohibits the distribution of attorneys’ fees that exceed the total amount of money distributed to class members. In terms of equitable relief, attorneys are similarly limited to a “reasonable percentage of the value of the equitable relief.” The format for calculating a reasonable percentage is unclear. Proponents of the bill argue that the provision governing attorneys’ fees will promote transparency, particularly in regard to the accounting requirement. However, the limitations on attorneys’ fees will make class action lawsuits a massive gamble and financial risk for law firms. Especially in terms of cases that request equitable relief, such as civil rights claims, there appears to be little guidance as to what constitutes a “reasonable percentage.” Consequently, many individuals may be left with no other feasible way to enforce their rights.
The Act provides that “all discovery and other proceedings shall 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…” Any stay of discovery is likely to create an undue delay and prolong litigation. In addition, staying discovery during the pendency of a motion can stalwart the very issue the motion seeks to address in the first place.
The Act also places limitations on multi-district litigation, which occurs when multiple lawsuits concerning the same issues in different districts are consolidated under one district. Under the proposed bill, plaintiffs in multi-district litigation suits would have to submit evidence of their injuries within 45 days of their case being transferred to the multidistrict proceeding.
A New Role for Experts
If the Fairness in Class Action Litigation Act becomes law, expert witnesses will be given a new, and in many ways, more important role in class action litigation. Because the bill is predicted to increase motion practice and prolong the time it will take to litigate the claim, experts can be of service at various stages of the process. Due to the heightened class certification requirement, class members need to prove that they all suffered from the same type and scope of injury. Proving similarities between plaintiffs’ injuries is a daunting task, which will undoubtedly need the assistance of an expert to establish. For example, in personal injury cases, medical experts can determine the type of injuries sustained. Particularly in regard to more complex physical injuries, i.e., a toxic tort case where each plaintiff manifests different symptoms, a medical expert can identify a root cause of each injury to establish a common denominator between all the plaintiffs.
Likewise, the “ascertainability requirement” demands that a reliable and administratively feasible mechanism determines whether plaintiffs fall within the class definition and if the monetary relief can be distributed to a substantial majority. Due to the heightened scrutiny of what constitutes a class, experts will likely be needed to create the “mechanism” that accurately identifies each plaintiff and whether they sufficiently meet such definition. In addition, if such a substantial similarity between plaintiffs is required, damages experts may be needed at various stages of the litigation to establish not just the total damages, but also the specifics of each plaintiff’s award.
The Fairness in Class Action Litigation Act of 2017 will certainly change the course of class actions in the United States. While there is no way to predict exactly how the legislation will unfold, it is likely to result in prolonged litigation. As such, experts will play a vital role in providing their expertise along the way of this new, uncharted path.
