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Law professor: Bill targeting class action abuse simply would improve certification compliance

By Jessica Karmasek | Feb 4, 2016


WASHINGTON (Legal Newsline) - A class action reform bill currently making its way through Congress isn’t that radical, one legal expert says.

Jason Johnston, a law professor at University of Virginia who teaches courses on contracts, economic regulation and torts, among others, said the aim of the bill, H.R. 1927 or the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2015, is something that’s already expected of federal court judges.

Johnston, who is currently working on a study of consumer class actions, explained that, at the certification stage, federal judges need to make sure common issues predominate.

“If they don’t do that, then they shouldn’t certify the class, plain and simple,” he said. “The problem is, while most of these judges take their jobs seriously, there are a lot who don’t. So they have a class certified when it probably really shouldn’t.

“And I think that’s what this bill is trying to get at. In that sense, it’s important.”

In December, the class action reform bill was merged with a bill that targets the asbestos injury compensation system. Last month, after hours of debate and the rejection of several Democrat-proposed amendments, the Republican-controlled House passed the mega-bill 211-188. Sixteen Republicans voted against the bill. No Democrat voted for it.

The legislation aims to reform the current federal class action lawsuit framework by requiring uninjured parties to be part of separate class action lawsuits than those parties experiencing more extensive injuries.

“Only those people who share injuries of the same type and extent should be part of a class action lawsuit,” House Judiciary Committee Chairman Bob Goodlatte, R-Va., said when introducing the bill in April.

According to data from the Administrative Office of the U.S. Courts, the legislation could reduce the number of class action lawsuits filed and the number of plaintiffs in them, but also could increase the administrative burden on the courts.

Johnston shot down arguments by the bill’s opponents that it makes nearly all class actions impossible to bring.

“I’ve heard that some argue this might make it more difficult to bring, for example, civil rights lawsuits,” he said. “But I don’t see why that would be the case. Even in a civil rights class action, if someone has suffered discrimination in some form, again, as a judge, I’m supposed to ensure that everyone in the class has suffered that same type of discrimination.”

The bill basically will end up weeding out those frivolous, or weak, class actions, he said.

“I can’t even tell you how many cases I’ve seen where people haven’t suffered an injury, much less the same one,” Johnston said of his current study, which takes a look at consumer class actions filed in the U.S. District Court for the Northern District of Illinois.

Johnston agreed with proponents that such overbroad, no-injury class actions typically only result in big paydays for attorneys, often leaving classes with next to nothing.

“The big concrete economic effect (of the bill) is on the trial bar,” he said. “Plaintiffs attorneys make a lot of money on these class actions, but they generate very little in terms of monetary payouts for the class.

“So the trial bar could lose a lot of money if this passes.”

But, of course, it won’t, Johnston said.

He said if it passes the Senate, it won’t be overwhelmingly. And the White House already has threatened to veto the bill.

“The trial bar is one of the biggest contributors to Senate and Presidential campaigns,” Johnston noted.

Indeed, Senate Democratic Leader Harry Reid could end up killing it, given his own ties to plaintiffs’ firms. According to OpenSecrets.org -- an online resource for federal campaign contributions and lobbying data -- six of Reid’s top seven, and eight of his top 12, political donors in the 2014 cycle were plaintiffs’ firms with significant asbestos action.

Stacey Slaughter, a partner at the Minneapolis and New York offices of Robins Kaplan LLP, said she expects the measure to pass the Senate -- largely along party lines, similar to the House vote.

Slaughter, whose firm represents clients on both sides of the legislation, said the bill has its pluses and minuses.

Proponents, she said, argue that the measure will separate class members who are actually injured from those who are not, making compensation and recovery fair.

Critics, she pointed out, contend the legislation simply makes it easier for a company to avoid liability to all its victims.

However, plaintiffs attorneys tend to target smaller firms, Johnston said. And the settlements can be “devastating,” he said.

“The question is, are these lawsuits that effective? The trial bar argues that their fees are justified because these class action settlements deter this type of behavior by other companies,” he said. “But I can’t say that’s the case. So far, from the case I’ve studied, I would say no. I haven’t seen anything that has shown a change in behavior on the part of defendants.

“So then the question is, if they’re compensating classes properly and not deterring defendants, then why are these attorneys getting millions?”

Johnston said he expects the bill, if vetoed by President Barack Obama, to be introduced again in the near future.

“Bills like this will continue to be put forth in Congress,” he said, confidently.

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

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