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House Bill Seeks to Hamstring Class Action Lawsuits

House Republicans are considering a new bill that could drastically curtail class action litigation. The proposed law, the Fairness in Class Action Litigation Act of 2017, was introduced earlier this month by Congressman Bob Goodlatte of Virginia, the current chair of the House Judiciary Committee.

The bill would enact several major changes to the way class actions are currently litigated, including by limiting attorney's fees and narrowing the types of plaintiffs that can be grouped in a class. Needless to say, it's not winning much support from the plaintiffs bar.

FCALA Proposes Major Class Action Changes

The FCALA seeks to reign in class actions by making several major changes to how such lawsuits proceed. First, it would limit class certification to plaintiffs who had all "suffered the same type and scope of injury" and require courts to ascertain that only injured plaintiffs recover. Currently, it's not uncommon for uninjured plaintiffs to be included in a class at the certification stage, particularly when, in large cases, the full extent of class members are unknown.

The bill would also restrict who class action lawyers could represent. They'd no longer be able to sue on behalf of family or employees, for one. But they'd also be prevented from litigating on behalf of current clients, as well.

Finally, the law would institute greater checks on class action attorney's fees. Attorney's fees wouldn't be paid out until all class members had been paid, and such fees would be based on the amount of money directly distributed to class members. In multi district litigation, fees would be limited to 20 percent of the recovery.

Law Faces Strong Criticism

The act states that its goal is to "assure fair and prompt recoveries" and "diminish abuses in class action and mass tort litigation," noble goals, surely. But its provisions have raised the ire of plenty of plaintiffs lawyers and consumer advocates.

Barring the use of repeat clients, for example, could keep institutional investors from relying on proven attorneys for securities and antitrust litigation. NYU law professor Samuel Issacharoff tells Reuters' Alison Frankel that the law would be "a significant disruption of the attorney-client relationship." Howard Erichson, of Fordham Law School, describes the restrictions on class certification as imposing "an impossible task in many consumer class actions, and unnecessary for achieving justice."

The bill, though, probably isn't going anywhere soon. The last major piece of class action reform, the Class Action Fairness Act of 2005, was adopted when Republicans, like now, controlled both the Congress and Presidency. The FCALA is more extreme in its reforms, but it still has a decent chance of advancing.

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