March 31, 2017

House passes class action legislation despite strong opposition from ABA, Judicial Conference

The House passed a bill March 9 that would circumvent the traditional judicial rulemaking process and amend the Federal Rules of Civil Procedure to severely limit the ability of victims who have suffered a legitimate harm to seek justice collectively in a class action lawsuit.

H.R. 985, which passed 220-201 with one voting present, is opposed by the ABA, the Judicial Conference of the United States, numerous legal and consumer organizations, and groups representing veterans and servicemembers. Proponents maintain, however, that something must be done to eliminate abuses of the system and curtail frivolous class action lawsuits.

The bill would amend Rule 23, which was adopted in 1966 to govern class certifications and has been amended several times using the Rules Enabling Act, the time-proven process established by Congress for amending the federal rules. As part of the Rules Enabling process, the Judicial Conference, the policymaking body for the courts, is currently considering changes to the class action rule, and the ABA is urging Congress to wait and see the results of that process.

During House debate on the legislation, Rep. Jamie Raskin (D-Md.) highlighted the ABA and Judicial Conference opposition to H.R. 985. He called attention to the association’s specific concerns about advancing comprehensive class action reform without a hearing to examine all of the complicated issues involved.

Those concerns and other problems with the bill were expressed in a March 8 letter sent to all members of the House by ABA Governmental Affairs Director Thomas M. Susman, who emphasized that the current screening process, under which plaintiffs must meet rigorous threshold standards to proceed with a class action case, is working. He explained that a recent study by the Federal Judicial Center found that only 25 percent of diversity actions filed as class actions resulted in class certification motions, nine percent settled, and none went to trial.

“If proponents of this legislation are concerned about frivolous class action cases, and believe that screening can be even more effective through rule changes, those changes should be proposed and considered utilizing the Rules Enabling process,” he said.

The ABA opposes provisions in H.R. 985 that would mandate that no federal court shall “certify any proposed class seeking monetary relief for personal injury or economic loss unless the party seeking to maintain such a class action affirmatively demonstrates that each proposed class member suffered the same type and scope of injury” as the named class representative(s).

“This requirement places a nearly insurmountable burden for people who have suffered personal injury or economic loss at the hands of large institutions with vast resources, effectively barring them from bringing class actions,” Susman wrote. He added that “making it harder for victims to utilize class actions could add to the burdens of our court system by forcing aggrieved parties to file suit in smaller groups, or individually.”

Back to the March 2017 Washington Letter