WASHINGTON (Legal Newsline) - A bill that aims to weed out unmeritorious class action claims may be up for a vote this week.

According to the U.S. House of Representatives website, the Fairness in Class Action Litigation Act of 2017 is among a handful of legal reform bills that may be considered by the House this week.

House Judiciary Chairman Bob Goodlatte, R-Va., reintroduced the bill last month. His office could not comment on when, specifically, a vote would be held, and neither could the judiciary committee office.

The office of House Majority Leader Kevin McCarthy, R-Calif., also did not return messages seeking comment on a specific timeline. In the House, majority party leadership decides which bills the House will consider and in what order.

Goodlatte’s bill already has moved through the judiciary committee, with a vote of 19-12.

It appears the newest version of the Fairness in Class Action Litigation Act has been, or will be, merged with Furthering Asbestos Claim Transparency, or FACT, Act of 2017, and is expected to be looked at by the House Committee on Rules Wednesday. The class action bill previously was introduced in April 2015 and combined with the FACT Act in January 2016.

The House passed last year’s Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act, or H.R. 1927, by a vote of 211-188. Additional hearings were held by the Senate, but ultimately it failed to move on the legislation.

Former President Barack Obama would have vetoed the bill had it passed the Senate.

“Class action suits were designed to address legitimate claims. These suits were supposed to level the playing field for consumers and businesses alike to have access to a fair and just system to address their grievances,” Goodlatte said in a statement following H.R. 985’s markup and approval last month.

 

“Today, the class action litigation system has morphed into an expensive enterprise where lawyers are often the only winners, and American businesses and consumers are the losers. Frivolous class action lawsuits are costing parties millions of dollars, and trial lawyers often profit at the expense of deserving victims.”

Goodlatte was one of the authors of the Class Action Fairness Act, which was enacted in 2005.

“Over 10 years ago, I authored the Class Action Fairness Act, which was signed into law to curb abuses in the class action litigation system. Since then, lawyers have been able to find loopholes in the law, and new measures are required to protect innocent individuals and businesses who have become the victims of frivolous suits,” he said last month.

“When baseless claims come into our courtrooms, the real losers are hardworking Americans. Today’s action addresses the abuses within our class action litigation system, and keeps baseless class action suits away from innocent parties, while still keeping the doors to justice open for parties with real and legitimate claims.”

When CAFA was up for a vote in the Senate -- nearly 12 years ago -- a number of leading Democrats voted in favor of the reform legislation, including and most notably Charles Schumer of New York, Ken Salazar of Colorado, Jack Reed of Rhode Island, Chris Dodd of Connecticut, Dianne Feinstein of California and then-Sen. Barack Obama of Illinois.

Some lawmakers argued at the time that CAFA would be “devastating” and hurt everyday Americans.

“Passage of this legislation would be particularly devastating for civil rights cases and labor law cases,” Rep. John Conyers, D-Mich., said in February 2015. “As the Lawyers Committee For Civil Rights Under The Law explained, ‘The consequences of the legislation for civil rights class actions… will be astounding and, in our view, disastrous. Redirecting state law class actions to the federal courts will choke federal court dockets and delay or foreclose the timely and effective determination of federal (civil rights) cases.”’

Rep. Linda Sanchez, D-Calif., had similar concerns.

“This bill erects a nearly insurmountable barrier for everyday Americans, who have been hurt or wronged, to have their day in court,” she said at the time.

Among the Fairness in Class Action Litigation Act’s reforms, it requires that classes consist of members with the same type and scope of injury.

Also under the proposed legislation, uninjured or non-comparably injured parties can still join class actions, but must do so separately from parties that experienced more extensive injury.

The bill contains additional provisions to:

- Prohibit judges from approving class actions in which the lawyer representing the class is a relative of a party in the class action lawsuit;

- Require that class action lawyers should only get paid after the victims get paid; and

- Order any third-party funding agreement be disclosed to the district court.

It has become commonplace for third-party funders to pay the owner of a civil claim upfront in return for the claim owner’s promise to convey a portion of the potential recovery.

This brings tax advantages for both the third-party funders and class action plaintiffs attorneys, allowing them to defer tax liability on the monetary advancement until the claim pays off while the funders deduct expenses and pay taxes on profit accrued at the lower capital-gains rate.

However, these agreements routinely are entered confidentially.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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