Mr. Chairman, I have amendment at the desk. Mr. Chairman, the manager's amendment makes several technical changes to the bill, none of which alter its basic policy, but all of which add clarity to the bill where necessary. First, in the…
Mr. Chairman, I have amendment at the desk.
Mr. Chairman, the manager's amendment makes several technical changes to the bill, none of which alter its basic policy, but all of which add clarity to the bill where necessary.
First, in the section of the bill governing conflicts of interest, this amendment strikes the prohibition on the use of the same class counsel if the named plaintiff is a present or former client or has a contractual relationship with the class counsel. In some instances, those restrictions may unduly limit the availability of class counsel or class representatives, so this amendment would remove them. It also clarifies that nothing in the conflicts of interest section of the bill applies to securities class actions, which have their own provisions for selection of class representatives and counsel elsewhere in the U.S. Code. The same exemption for securities class actions is made to the stay of discovery section of the bill because, again, securities class actions have their own discovery stay provisions elsewhere in the U.S. Code.
Second, the amendment makes technical changes to the misjoinder section of the bill, making clear it applies only to civil actions commenced in State court and subsequently removed to Federal court, and that a Federal court can retain jurisdiction over claims that are so related to each other that they form part of the same case and controversy under Article III of the Constitution, and the plaintiff consents to the removal of the claim.
Third, the amendment extends from 30 days to 90 days the amount of time for Federal courts to review the sufficiency of the allegations verification submissions made in the section on multidistrict litigation. The amendment also makes clear that a particular case may not be tried in a multidistrict proceeding unless all parties in that particular case consent--not all parties in the entire multidistrict proceeding. And it also makes clear in the section providing that the claimant shall not receive less than 80 percent of any monetary recovery, that such section does not alter the claimant's obligations to satisfy liens on the recovery--that is, debts owed to the Federal Government or to private insurers--for medical services received by the claimant for the treatment of the injuries alleged in the litigation. So, for example, if a person took a medicine and alleges he suffered injury as a result, a Federal program may
have paid for the treatment of the injury. If the person gets a settlement of his claim, it would include money for those medical services that should be paid back to the Federal Government. The revision makes clear that the satisfaction of such liens should come out of the 80 percent received by the claimant. The amendment also makes clear that the authorization for appeals from orders in MDL proceedings is limited to cases seeking redress for personal injury.
Mr. Chairman, I urge my colleagues to join me in supporting these clarifying and improving amendments, and I reserve the balance of my time.
Mr. Chairman, I yield back the balance of my time.
Mr. Chairman, I claim the time in opposition to the amendment.
Mr. Chairman, this amendment should be defeated. Abraham Lincoln left behind pages of notes on a lecture he was to give to lawyers. They say: ``Never stir up litigation. A worse man can scarcely be found than one who does this. Who can be more nearly a fiend than he who habitually overhauls the register of deeds in search of defects in titles, whereon to stir up strife and put money in his pocket?''
That was Lincoln in the 1850s. Here is Forbes Magazine just a couple of years ago:
The lead plaintiff in the 5-Hour case . . . worked in
marketing for a cosmetic surgery center in California. But in
a grueling 5-hour deposition, she admitted she had been
recruited to serve as a plaintiff by her cousin, who worked
for a Texas lawyer; had purchased two bottles of 5-Hour
ENERGY specifically to sue the manufacturer; had never
complained to the company or sought a refund; and had signed
a backdated retainer agreement with the trial lawyer,
Rubinstein, the fellow seen here at his own deposition. . . .
Another one of Rubinstein's clients . . . admitted she had
served as a plaintiff for Rubinstein in at least four class
actions over products like Swanson pot pies and lipstick. . .
. Emails and other communications 5-Hour's lawyers uncovered
in their suit showed that Rubinstein belonged to a loose
affiliation of lawyers who ran an assembly-line process of
identifying companies to sue and then helping each other find
plaintiffs.
Lawsuits are supposed to be initiated by truly injured plaintiffs seeking redress, not invented by lawyers who hunt for a plaintiff to assert a supposed injury made up by the lawyer.
Few class members bother to collect the payments available in class action settlements, in large part because they don't feel injured by the supposedly wrongful conduct in the first place.
In too many cases, trial lawyers come up with an idea for a lawsuit and then search for a person who has bought the product, or they send a relative or employee to buy the product so they will have someone who can sue on behalf of a proposed class of all other buyers. No product purchaser has actually complained or feels cheated; it is just lawyers in pursuit of money. That is a major reason why so few class members bother to collect the payments available in class action settlements. They don't feel injured by the supposedly wrongful conduct in the first place.
This abuse of the class action lawyer-driven lawsuits must end. The base bill, therefore, requires lawyers to disclose how proposed class representatives became involved in the class action. Further, it prohibits class actions in which any proposed class representative, that is, a named plaintiff that will be representing everyone else in the class action, is a relative of or an employee of the class action lawyer.
Further clarifications making clear that this provision will not apply to present or former clients of, or those who have had any contractual relationship with, class counsel have already been made to the bill in the manager's amendment. The only prohibition that remains in the bill is the bar on class counsel using a relative or employee as a class representative. Clearly, that shouldn't be permitted.
The class representative is supposed to be representing the class interests, to independently ``be the client'' for the class, and tell counsel what to do. That independence will be gone if the class representative is a relative or employee of the class counsel. This amendment should be defeated.
Mr. Chairman, I yield back the balance of my time.
Mr. Chairman, I claim the time in opposition to the amendment.
Mr. Chairman, this amendment should be defeated.
Insofar as a class action seeks equitable relief, that is, the nonmonetary relief, including any injunctive relief that seeks to stop the defendant from doing something wrong, the portion of any class action lawyer's fee should be limited to a reasonable percentage of the value of that relief as determined by the court.
This provision won't affect fee awards in civil rights cases because both the monetary and equitable relief attorney's fees provision in this bill are qualified with the initial phrase, ``unless otherwise specified by Federal statute.''
The Civil Rights Attorney's Fee Award Act of 1976 allows a court, in its discretion, to award reasonable attorney's fees as part of the costs to a prevailing party in Federal civil rights lawsuits, including cases brought under 28 U.S.C. section 1983, the statute most commonly used to assert civil rights claims. Consequently, this bill won't affect attorney's fees in civil rights class actions at all.
Regarding other equitable relief cases that don't involve civil rights claims, Federal courts routinely determine the value of intangible relief such
as equitable or injunctive relief for purposes of determining whether the amount in controversy requirement--currently, $75,000 to get into court--is met.
A majority of courts consider only the value of the injunctive relief from the plaintiff's perspective or viewpoint. Some courts determine the jurisdictional amount by evaluating the claim from the perspective of the party seeking Federal court jurisdiction. Others have adopted the ``either viewpoint'' rule, which allows the court to look to either the plaintiff's or the defendant's viewpoint in establishing the amount in controversy in cases seeking some form of injunctive relief.
The bottom line is that, under this bill, Federal courts will be able to use either approach in deciding the value of the injunctive relief provided to class members; and generally speaking, counsel should be paid on the basis of what lawyers actually deliver to their clients.
This base bill, of course, does not alter in any way the relief that would be granted to equitable relief class action members. It only limits the fees attorneys would receive to a reasonable percentage of the value of what the class members actually received. So all this amendment would do would be to put more money in the hands of lawyers and less in the hands of victims.
I urge my colleagues to oppose this amendment, and I reserve the balance of my time.
Mr. Chairman, constitutional rights are priceless, but attorney's fees have to be set by the court. Who else is going to set them in those cases?
I want to correct the gentleman, again, on this point about section 1983 cases because this bill says very clearly: unless otherwise specified by Federal statute.
So this bill is not affected by the very example that he cites because that is something that is otherwise specified by Federal statute.
Mr. Chairman, I urge my colleagues to oppose this needless and harmful amendment, and I yield back the balance of my time.
Mr. Chairman, I claim time in opposition to the amendment.
Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, this amendment should be rejected. The discovery process--the pretrial process in a lawsuit in which trial lawyers demand documents and other things from the people they are suing-- imposes huge costs on defendants, particularly because of the astronomical costs associated with the discovery of electronic information, such as emails.
Law Technology News has reported that the total cost of electronic discovery rose from $2 billion in 2006 to $2.8 billion in 2009 and estimated that the total cost would rise 10 to 15 percent annually over the next few years. In a more recent case study of Fortune 500 companies, the RAND Institute found that the median total cost for electronic discovery among participants totaled $1.8 million per case.
These costs are asymmetric. While defendants typically are subject to gigantic discovery costs, because they are large organizations possessing large amounts of data, plaintiffs have little information in their possession, and, therefore, are subject to a very small financial burden during the discovery process.
Moreover, discovery conducted before a motion to dismiss is decided is unfair. Why should defendants bear the burden of paying for discovery before a complaint is held legally sufficient, especially when the threat of huge costs may coerce an unjustified settlement?
The reality for most civil litigation is that the defendants' obligation to bear these exorbitant discovery costs incentivizes plaintiffs to serve burdensome discovery requests on defendants with zero downside risk to themselves. As professor Martin Redish has explained: ``The fact that a party's opponents will have to bear the financial burden of preparing the discovery response actually gives litigants an incentive to make discovery requests, and the bigger expense to be borne by the opponent, the bigger incentive to make the request.''
Because defendants seek to avoid these exorbitant costs, discovery is all too often used as a weapon to coerce settlement of claims regardless of their
merit. Even the Supreme Court has recognized this problem, lamenting that the threat of discovery expense will push cost-conscious defendants to settle even anemic cases before reaching trial.
For example, assume that a defendant moves to dismiss a class action because it doesn't assert any valid claims. Under current law, the named plaintiff can serve massive discovery requests that force defendants to spend $10 million to collect the requested documents. A rational decision for that defendant is to settle the case for millions, even if 4 months later the court grants the motion to dismiss, finding the class claims to be totally without merit. That is because, without a stay in discovery, the defendants will, in the meantime, have been required to spend all or part of the $10 million costs complying with the discovery requests for, it turns out, no legitimate reason. Trial lawyers pursue discovery in this circumstance primarily in an effort to pressure the defendant to settle invalid claims.
The subsection of the bill entitled ``Stay of discovery'' would stop the use of discovery to coerce unjustified settlements by requiring Federal courts to stay discovery pending resolution of rule 12 motions--that is, motions to dismiss for failure to state a claim-- motions to strike class allegations, motions to transfer, and other motions that would dispose of class allegations unless the court finds that particularized discovery is necessary to preserve evidence or to prevent undue prejudice to a party.
Mr. Chairman, this amendment should be defeated, and I reserve the balance of my time.
Mr. Chairman, the gentleman will be pleased to know that tomorrow we will consider on the floor of this House legislation that, under rule XI, would impose mandatory sanctions on attorneys who engage in the type of activity he just described. That is an abuse as well. It will be covered by that legislation. But this legislation is appropriate to make sure that justice is done in class action litigation.
Mr. Chairman, I urge my colleagues to oppose this amendment, and I yield back the balance of my time.
Mr. Chairman, I claim the time in opposition to the amendment.
Mr. Chairman, this amendment would subject certain class members to unfair treatment and should be rejected.
The purpose of a class action is to provide a fair means of evaluating like
claims, not to provide a means of artificially inflating the size of a class to extort a larger settlement value. Exempting a subset of cases from the bill, as this amendment would do, would serve only to incentivize the creation of artificially large classes to extort larger and unfair settlements from innocent parties for the purpose of disproportionately awarding uninjured parties.
Why should only the claimants covered by the amendment be subject to particularly unfair treatment by being allowed to be forced into a class action with other uninjured or minimally injured members, only to see their own compensation reduced? This does a disservice to those claimants. Yet, that is exactly what this amendment would do.
Regardless of the subject matter, class action plaintiffs are increasingly inclined to include fraud claims in their complaints. If they are suing about an allegedly defective product, they will add fraud claims, alleging that the manufacturer committed fraud by not disclosing the defect. If they are suing for a breach of contract, they will add fraud allegations, saying that the defendant didn't disclose the alleged breach, and so on and so forth.
Thus, this amendment would effectively gut the entire bill, since, to avoid its important reforms, class action lawyers would simply add fraud claims to their complaints, as they are increasingly prone to do in any event.
Regarding the Volkswagen case, some opponents have urged that, if enacted, the base bill would have prevented the filing of the class actions related to the Volkswagen diesel emission controversy. Those assertions are false.
This bill's injury provision would be readily satisfied in the VW cases, as class members presumably would argue that they have been injured by their purchase of vehicles with noncompliant emission systems.
Further, if the scope or type of injury differed among class members, separate class actions could be filed for each group, as actually occurred with respect to differing models in the Volkswagen MDL proceeding.
The bill's requirement about class representative disclosures would be easily satisfied. Many class members are interested in the litigation and presumably ready to serve as conflict-free class representatives who would not run afoul of these provisions.
The bill's ascertainability provisions would pose no obstacles because vehicle registration records would provide reliable class member lists and counsel could easily demonstrate a method to get any relief to class members.
Requiring that payment of counsel fees await distribution of class benefits and that fees reflect a reasonable percentage of benefits actually received by class members would not impede bringing such cases.
The cases would be litigated without resort to issues classes. Disclosure of any third-party litigation funding of the class actions wouldn't preclude such cases. The provision doesn't prohibit such funding. Only disclosure is required. Staying discovery while motions to dismiss are pending also poses no roadblock.
Mr. Chairman, again, I urge my colleagues to defeat this gutting amendment, and I reserve the balance of my time.
Mr. Chairman, I would just say to the gentleman that there is nothing in this bill that would restrict access to class actions based upon fraud claims. And in fact, this bill is designed to maximize the recovery for those fraud victims, rather than lining the pockets of attorneys.
Mr. Chairman, I urge my colleagues to oppose the amendment, and I yield back the balance of my time.
Mr. Chairman, I claim the time in opposition.
Mr. Chairman, with great deference and respect to my friend and colleague, the ranking member, this amendment would subject certain class members to unfair treatment and, thus, should be rejected.
First, the bill's provisions on type and scope of injury only apply to proposed classes ``seeking monetary relief for personal injury or economic loss.'' Insofar as civil rights cases do not seek money damages, they are completely unaffected by the bill and would proceed just as they do today.
However, if money damages are sought by a proposed class, then, of course, they should be subject to the procedures in the bill. The purpose of a class action is to provide a fair means of evaluating like claims, not to provide a means of artificially inflating the size of a class to extort a larger settlement value.
Exempting a subset of money damage cases from the bill, as this amendment would do, would serve only to incentivize the creation of artificially large classes to extort larger and unfair settlements from innocent parties for the purpose of disproportionately awarding uninjured parties.
Any claims seeking monetary relief for personal injury or economic loss should be grouped in classes in which those who are the most injured receive the most compensation. Why should civil rights claimants seeking money damages be subject to particularly unfair treatment by being allowed to be forced into a class action with other uninjured or minimally injured members, only to see their own compensation reduced? That does a disservice to those claimants. Yes, that is exactly what this amendment would do.
Further, the bill's provision on attorneys' fees won't affect fee awards in civil rights cases at all because both the monetary and equitable relief attorneys' fees provision in the bill are qualified with the initial phrase ``unless otherwise specified by Federal statute.''
The Civil Rights Attorney's Fee Award Act of 1976 allows a court, in its discretion, to award reasonable attorneys' fees as part of the costs to a prevailing party in Federal civil rights lawsuits, including cases brought under 28 U.S.C. section 1983, the statute most commonly used to assert civil rights claims.
Consequently, this bill will not affect attorneys' fees in civil rights class actions at all, including, of course, cases brought under the Americans with Disabilities Act, which has its own attorneys' fees provision.
The conflicts of interest provision reflects a valid concern in all class actions. The courts need to know how the named plaintiffs came to be involved in class actions in all types of cases to ensure there aren't conflicts and that the due process rights of all class members are protected.
The issues class provision won't disrupt the manner in which civil rights cases are normally litigated. Discovery stays while dispositive motions are pending won't disrupt civil rights cases. Like any other case, the plaintiffs need to show they have a facially valid complaint before discovery should commence.
Disclosure of third-party funding is no less important in civil rights cases than in other class actions. The appeals provision benefits both plaintiffs and defendants, giving either side the right to appeal if class certification is granted or denied.
I urge all my colleagues to oppose this amendment, which would set back the just causes of civil rights claimants.
Mr. Chairman, I yield back the balance of my time.
Mr. Speaker, I rise in opposition to the motion.
Mr. Speaker, the base bill contains provisions that allow all claims to go forward as class actions and also maximize awards to deserving victims.
Why would anyone want to single out safe drinking water victims for adverse treatment and deny them the benefits of the base bill that would maximize any recovery they might receive in a class action?
This motion to recommit would do that, and it should be defeated.
In closing, let me say that we know that only the tiniest fraction of consumer class action members ever bother to claim the compensation awarded them in a settlement. That is clear proof that the vast majority--the vast large numbers of class members are satisfied with the product they purchased. They don't want compensation. They don't want to be lumped into gigantic class action lawsuits.
Federal judges are crying out for the Congress to reform the class action system, which currently allows trial lawyers to file classes with hundreds and thousands of unmeritorious claims and use those artificially inflated classes to force defendants to settle the case.
As I have recounted, some class action settlements have left lawyers with millions in fees while the alleged victims receive absolutely nothing.
This bill prevents people from being forced into class actions with other uninjured or minimally injured members, only to have the compensation of injured parties reduced. It requires that lawyer fees be limited to a reasonable percentage of the money injured victims actually receive.
I urge my colleagues to join me in opposing this motion to recommit and supporting this bill on behalf of the consumers and injured parties everywhere.
Mr. Speaker, I yield back the balance of my time.