The Fairness In Class Action Litigation Act Would Restrict Court Access And Deny Justice To Consumers

Last week the U.S. House of Representatives passed the Fairness in Class Action Litigation Act (“FCALA”) by a vote of 220 to 201.[1]  While one of the bill’s authors gives lip-service to “keep[ing] the door of justice open for the American consumer,” the bill’s actual text contains numerous provisions that would increase litigation costs and delay the resolution of claims.[2]  For example, Section 1721 imposes a stay of discovery “during the pendency of any motion to transfer, motion to dismiss, motion to strike class allegations, or other motion to dispose of the class allegations.”  Discovery is often necessary at the pleadings stage because conspiracies, such as those alleged in price-fixing cases, are self-concealing, and defendants often destroy evidence of their wrongdoing.  Those same defendants will then argue that plaintiffs bring baseless claims.  Similarly, Section 1718(b) creates a difficult, if not impossible, administrative burden by requiring all settlement funds be distributed prior to “determin[ing]” attorneys’ fees, while simultaneously requiring that attorneys’ fees be based on “a reasonable percentage of any payments directly distributed to and received by class members.”  These provisions make the calculation of this percentage impossible, because they require a complete distribution prior to the determination of any fees. 

Class actions have created substantial benefits for consumers who could bring individual claims.  Examples include Volkswagen’s $14.7 billion settlement to resolve claims over falsifying vehicle emission tests (click here), Toyota’s $1.1 billion settlement to resolve claims over its vehicles issues with sudden acceleration (click here), and a collective (and increasing) $604 million in settlements by various automotive parts manufacturers to resolve claims for price-fixing and bid-rigging (click here).  FCALA will frustrate the process that made these settlements possible, thus either delaying or denying relief to millions of consumers.  As many courts have recognized, “[t]he realistic alternative to a class action is not 17 million individual suits, but zero.”  Carnegie v. Household Int'l, Inc., 376 F.3d 656, 661 (7th Cir. 2004).     

[1]           To see the current text of this bill (H.R. 985) click here, and to see the Judiciary Committee Report click here .   

[2]           To see Chairman Goodlatte’s remarks, click here.