10 Years After CAFA, the Fairness of Class Actions is Revisited by Newly Proposed Legislation

capitolClass action lawsuits have become a commonplace fixture in the American judicial landscape and carry the force to extract billions of dollars from defendants, many of whom settle once a class is certified due to the costs and risks of litigation, regardless of the merits of the plaintiff’s case.  Ten years ago, Congress tackled several perceived abuses of the class action mechanism by passing the Class Action Fairness Act of 2005 (“CAFA”), which allows defendants to remove certain class actions filed in state court to the more neutral ground of the federal system.  In February, the House Judiciary Committee held a hearing to examine the state of class action litigation and current concerns.  On April 22, 2015, House Judiciary Committee Chairman Bob Goodlatte introduced H.R. 1927, The Fairness in Class Action Litigation Act of 2015, which seeks to further improve the fairness of class actions by imposing limits on a court’s ability to certify classes in which members have not suffered the same types of alleged injury/damages.  The Act also explicitly requires that proof of similarity of alleged damages must be established using admissible evidence at the class certification stage.  H.R. 1927 requires:

No Federal court shall certify any proposed class unless the party seeking to maintain a class action affirmatively demonstrates through admissible evidentiary proof that each proposed class member suffered an injury of the same type and extent as the injury of the named class representative or representatives.

Chairman Goodlatte’s stated goal in introducing the Act: “to supplement the protections afforded to victims in class actions, and further reduce wasteful litigation in our courts.”  Chairman Goodlatte previously expressed his concern regarding the class action abuses that have accompanied the shift from class actions largely being used to effect landmark civil rights advancements to “enterprising plaintiffs’ attorneys seeking money damages on behalf of consumers.”

This proposed legislation comes on the heels of several recent cases in which classes have been certified although many members suffered no injury (See, e.g., our Whirlpool moldy washing machine litigation discussions), and continued uncertainty regarding the extent to which expert evidence proffered during class certification must meet the admissibility standards established by Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786 (1993).  H.R. 1927 would serve defendants by preventing the certification of large classes based only on alleged injury to a small number of members and requiring plaintiffs to supply adequate, admissible proof prior to class certification.  Opponents urge that unintended consequences of the Act will do more harm than good, and the Act is unnecessary given the effectiveness of the courts, CAFA and proposed amendments to federal class action rules that are in the works.  The House Judiciary Committee’s Subcommittee on the Constitution and Civil Justice held a hearing to examine H.R. 1927 on April 29, 2015.

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