Last month, Representative Robert Goodlatte (R-Va.) introduced the Fairness in Class Action Litigation Act of 2017 (H.R. 985). If it becomes law, it would bring about significant changes in class action and multidistrict litigation (MDL) practice in multiple areas.
Multidistrict litigation is the consolidation of many plaintiffs’ cases from federal district courts around the country into one federal district court to streamline discovery and pre-trial proceedings, and to conduct bellwether trials. A bellwether trial is a preliminary, or “test” trial ordered by the federal court overseeing an MDL. These trials test jury reaction to a case or cases selected as representative of the MDL plaintiff pool. The outcome of an MDL’s bellwether trials may encourage an appropriate group settlement of all cases consolidated under that MDL.
The Judicial Panel on Multi-District Litigation (JPML) in Washington, D.C., which is comprised of seven federal district court judges, decides whether to consolidate certain cases with other similar cases. The JPML also decides to which court and judge to transfer the cases. Once the MDL is formed, all federal cases nationwide must be transferred and/or filed directly into the MDL.
In an MDL, each plaintiff’s lawsuit remains independent. No plaintiff is required to take a settlement as part of a class. If a plaintiff is unable to settle his or her case through the MDL, they may return to their local federal court for additional proceedings or trial. In a class-action lawsuit, all plaintiffs are part of one single lawsuit and are subject to the group settlement and/or trial strategy of the lawyers representing the entire class.
The Act, as proposed, consists of seven sections that would add comprehensive provisions to the existing Class Action Fairness Act (CAFA) and the statute governing MDL procedures. Among the changes that would be:
- Limiting certification in cases claiming personal injury or economic loss to classes in which all members suffered the same “type and scope of injury.”
- Prohibiting relatives and present or former clients of class counsel from serving as class representatives.
- Prohibiting certification of a class unless there is “objective” evidence that the relief can actually be distributed to a “substantial majority” of class members by “administratively feasible” means.
- In class actions seeking monetary relief, prohibiting the determination or payment of any attorneys’ fees to class counsel until after the distribution of monetary relief to the class members has been completed.
- Confining attorneys’ fees for class counsel to a “reasonable percentage” of the value of the monetary or equitable relief actually received by actual class members, and prohibiting the award of attorneys’ fees attributable to monetary relief in any amount greater than the amount of “money” distributed to class members.
- Requiring an accounting for every class settlement (with various data points concerning payment to class members and class counsel), with the resulting data being provided to federal officials and ultimately to Congress.
- Prohibiting certification of “issue classes” unless the entirety of the cause of action is properly certifiable under Rules 23(a) and (b).
- Requiring in any class action that all discovery be stayed during the pendency of any motion to transfer, dismiss or strike class allegations.
- Permitting appeals as of right (as opposed to the current permissive appeal process) from orders granting or denying class certification.
- Permitting removal to federal court of multiple plaintiff personal injury or wrongful cases, so long as one plaintiff satisfies diversity jurisdiction requirements (and allowing severance and remand only as to the claims of those plaintiffs that do not).
- Requiring plaintiffs in MDL proceedings, at the outset of the case, to make an evidentiary submission to the MDL judge in support of their claim, and authorizing dismissal without prejudice of claims lacking a sufficient evidentiary basis.
- Prohibiting an MDL transferee court from conducting a trial in any case transferred to it, in the absence of consent from all parties to the case.
- Allowing for permissive interlocutory appeals from orders entered in MDL proceedings, upon a showing that the appeal may materially advance the ultimate termination of one or more of the actions in the MDL.
- Allowing a permissive interlocutory appeal of an order granting or denying remand to state court of any action in an MDL proceeding; such application to appeal must be made within 14 days after the order of remand is entered.
- Requiring that personal injury plaintiffs with cases in MDL proceedings receive at least 80 percent of any monetary recovery in their case (whether by settlement or judgment).