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115th Congress    }                                    {        Report
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                    {        115-25

======================================================================



 
            FAIRNESS IN CLASS ACTION LITIGATION ACT OF 2017

                                _______
                                

 March 7, 2017.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Goodlatte, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 985]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 985) to amend the procedures used in Federal court 
class actions and multidistrict litigation proceedings to 
assure fairer, more efficient outcomes for claimants and 
defendants, and for other purposes, having considered the same, 
reports favorably thereon without amendment and recommends that 
the bill do pass.











                                CONTENTS

                                                                   Page

Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     4
Hearings.........................................................     6
Committee Consideration..........................................     7
Committee Votes..................................................     7
Committee Oversight Findings.....................................    13
New Budget Authority and Tax Expenditures........................    13
Congressional Budget Office Cost Estimate........................    13
Duplication of Federal Programs..................................    15
Disclosure of Directed Rule Makings..............................    15
Performance Goals and Objectives.................................    15
Advisory on Earmarks.............................................    15
Section-by-Section Analysis......................................    16
Changes in Existing Law Made by the Bill, as Reported............    38
Dissenting Views.................................................    45

                          Purpose and Summary

    Recently, an independent research firm surveyed companies 
in 26 countries and found that 80 percent of those that were 
subject to a class action lawsuit were U.S. companies, putting 
those U.S. companies at a distinct economic disadvantage when 
competing with companies worldwide.\1\ The problem of overbroad 
class actions, however, does not just affect U.S. companies. It 
affects consumers in the United States, who are forced into 
lawsuits they do not want to be in. How do we know that? We 
know that because the median rate at which consumer class 
action members take the compensation offered in a settlement is 
an incredibly low two-hundredths of 1%.\2\ That's right--only 
the tiniest fraction of consumer class action members bother to 
claim the compensation awarded them. That is clear proof that 
vastly large numbers of class members are satisfied with the 
product they purchased, do not want compensation, and do not 
want to be lumped into a gigantic class action lawsuit against 
their will.
---------------------------------------------------------------------------
    \1\See http://www.nortonrosefulbright.com/files/20150514-2015-
litigation-trends-survey_v24-128746.pdf.
    \2\Declaration of Deborah McComb Re Settlement Claims April 21, 
2014, at 2, available at http://blogs.reuters.com/alison-frankel/files/
2014/05/duracellclassaction-mccombdeclaration.pdf
---------------------------------------------------------------------------
    Federal judges are crying out for Congress to reform the 
class action system, which currently allows unscrupulous 
lawyers to fill classes with hundreds and thousands of 
unmeritorious claims and use those artificially inflated 
classes to force defendants to settle the case. As the Supreme 
Court has recognized, ``even a small chance of a devastating 
loss'' inherent in most decisions to certify a class produces 
an ``in terrorem'' effect that often forces settlement 
independent of the merits of a case.\3\ Liberal Justice Ruth 
Bader Ginsburg has recognized that ``[a] court's decision to 
certify a class . . . places pressure on the defendant to 
settle even unmeritorious claims.''\4\ Judge Diane Wood of the 
Seventh Circuit Court of Appeals (appointed by President 
Clinton) has explained that class certification ``is, in 
effect, the whole case.''\5\ Then-Chief Judge of the Seventh 
Circuit Richard Posner explained that certification of a class 
action, even one lacking in merit, forces defendants ``to stake 
their companies on the outcome of a single jury trial, or be 
forced by fear of the risk of bankruptcy to settle even if they 
have no legal liability.''\6\ And in another Seventh Circuit 
decision the court wrote:
---------------------------------------------------------------------------
    \3\AT&T; Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1752 (2011); 
see also Castano v. American Tobacco Co., 84 F.3d at 746 (5th Cir. 
1996) (``[C]lass certification creates insurmountable pressure on 
defendants to settle, whereas individual trials would not. The risk of 
facing an all-or-nothing verdict presents too high a risk, even when 
the probability of an adverse judgment is low.'').
    \4\Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 
U.S. 393, 445 n.3 (2010) (Ginsburg, J., dissenting).
    \5\Hon. Diane Wood, Circuit Judge, Remarks at the FTC Workshop: 
Protecting Consumer Interests in Class Actions (Sept. 13-14, 2004), in 
Panel 2: Tools for Ensuring that Settlements are ``Fair, Reasonable, 
and Adequate,'' 18 Geo. J. Legal Ethics 1197, 1213 (2005).
    \6\In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293, 1299 (7th Cir. 
1995).

        One possible solution to this problem is requiring 
        judges to do some threshold level of review of the 
        merits of a class action before allowing certification 
        [that is, approval] of a class . . . [I]t is cases like 
        the one before us that demonstrate precisely why the 
        courts, and Congress, ought to be on the lookout for 
        ways to correct class action abuses. Given the 
        complexity of our legal system, it is impossible to 
        develop perfect standards for identifying and quickly 
        disposing of frivolous claims. Inevitably this court 
        and other courts will be faced with cases that waste 
        the time and money of everybody. Beyond addressing the 
        legal claims before us as we would in any ordinary 
        case, we must frankly identify situations where we 
        suspect the lawyers, rather than the claimants, are the 
        only potential beneficiaries.\7\
---------------------------------------------------------------------------
    \7\Manistee Apartments, LLC v. City of Chicago, 844 F.3d 630, 635 
(7th Cir. 2016). State court judges are also asking for reforms in the 
class action system. Recently, a California judicial decision reported 
that in a class action consisting of over 230,000 people, only two of 
the 230,000 wanted the coupons offered in the class action settlement. 
The judge in that case said the case produced ``absolutely no benefit 
really to anybody.'' Available at http://www.courts.ca.gov/opinions/
nonpub/G049611.PDF.

    So where is all the money going in these cases? To the 
lawyers who brought the lawsuits that hardly anyone wanted to 
be in.
    The provisions included in the Fairness in Class Action 
Litigation Act (``FICALA'') would enact much-needed reforms 
governing Federal court class action and mass tort multi-
district litigation proceedings. The current class action and 
mass action lawsuit system is deeply flawed in many ways:

        Class members receive little: Most class actions 
        (particularly class actions brought on behalf of 
        consumers) produce no benefits for class members--some 
        are dismissed by courts, some are voluntarily dismissed 
        by counsel (with payments made only to counsel), and 
        some are settled. In consumer cases, very few class 
        members get any benefit (less than 5% of class members 
        on average).

        Lawyers reap millions in fees: When cases are settled, 
        the fees for lawyers representing the class take up a 
        large share of the settlement, typically millions of 
        dollars per case. Indeed, because so few class members 
        receive settlement payments in most cases, the amount 
        paid to lawyers is often many times the amount actually 
        paid to class members.

        Multidistrict litigation has been transformed into a 
        mechanism for abusive ``mass actions'': Congress 
        created the multidistrict litigation (``MDL'') 
        procedure to enable courts to fairly and efficiently 
        administer individual cases involving the same subject. 
        But mass tort proceedings using the MDL process have 
        become magnets for advertising-driven, poorly 
        investigated (and often patently invalid) personal 
        injury claims. The resulting massive proceedings, often 
        largely consisting of claims that should never have 
        been filed, impose unfair burdens on courts and 
        defendants and prevent plaintiffs with trial-worthy 
        claims from timely getting their day in court.

    The fundamental problem is that far too many class actions 
and mass actions are initiated by opportunistic lawyers, and 
litigated primarily for the benefit of those lawyers, with any 
actual victims being used as a means of garnering vast fee 
awards. Who bears the cost of this litigation system? In the 
first instance, the businesses--small and large--that are sued 
in these unjustified cases, forced to pay their own legal fees 
and, eventually, to pay settlements coerced even in meritless 
cases. But ultimately these costs are paid by consumers, 
workers, and investors, throughout the economy--because the 
diversion of hundreds of millions of dollars away from 
productive purposes, as well as the time and attention of 
entrepreneurs, means prices are higher, new products are not 
brought to market, and new jobs are not created.
    Two types of reforms are needed to fix our broken 
litigation system: protections against the abuse of consumers 
by unscrupulous lawyers, and protections against the filing of 
unjustified claims and other abusive litigation practices. 
Every single provision of H.R. 985 would maximize recoveries by 
deserving victims and weed out unmeritorious claims that would 
otherwise siphon off resources from those deserving victims.\8\ 
And no provision of the bill prevents any claims from being 
brought as a class or mass action; the provisions simply set 
fair rules for bringing them.
---------------------------------------------------------------------------
    \8\Even a Task Force of the American Bar Association has written 
that ``When it comes to fees, class counsel and class members have a 
fundamental conflict of interest. Every dollar not spent on fees is a 
dollar that would go to the class members.'' Report on Contingent Fees 
in Class Action Litigation January 11, 2006 Task Force on Contingent 
Fees, Tort Trial and Insurance Practice Section of the American Bar 
Association, 25 Rev. Litig. 459, 495 (2006).
---------------------------------------------------------------------------

                Background and Need for the Legislation

    House Judiciary Committee Chairman Bob Goodlatte introduced 
the Fairness in Class Action Litigation Act on February 9, 
2017.
    Two types of reforms are needed to fix our broken 
litigation system: protections against the abuse of consumers 
by unscrupulous lawyers, and protections against the filing of 
unjustified claims and other abusive litigation practices. To 
that end, here is what FICALA's provisions do (in the order in 
which they appear in the bill, with a more detailed explanation 
of each section following this summary in the section entitled 
``Section-by-Section Analysis''):
    They prohibit Federal courts from certifying for class 
treatment an action seeking monetary relief for personal injury 
or economic loss absent an affirmative demonstration that each 
proposed class member suffered the same type and scope of 
alleged injury as the proposed class representative(s).
    They prohibit judges from approving 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, is a present or former employee of, is a present 
or former client of, or has any contractual relationship with 
the class action lawyer. This prevents incestuous litigation-
factory arrangements that exist today.
    They require that, in a class action seeking monetary 
relief, a class cannot be certified unless the members of the 
class will be identifiable based on objective criteria, not 
simply a self-serving declaration, and that there is a 
``reliable and administratively feasible mechanism'' for the 
court to determine who falls within the class and for 
distributing a monetary judgment to members of the class. This 
prevents situations we've seen in which classes are certified, 
only to find out at the end of the day that victims cannot be 
located or do not exist.
    They require that class action lawyers should only get paid 
after the victims get paid, that the portion of attorneys' fee 
awards to class action lawyers should be limited to a 
reasonable percentage of the money actually distributed to and 
received by the victims, and class action lawyers' fees should 
never exceed the total amount of money received by all the 
victims. This ensures more compensation goes to victims, and 
reasonable amounts (in the discretion of the court) go to 
lawyers.
    They require that in any Federal court-approved class 
action settlement, the plaintiffs' lawyers must provide the 
Administrative Office of United States Courts (the ``AO'') with 
an accounting of how all money paid by the defendants was 
distributed. The AO, in turn, would be charged with publishing 
annual aggregate reports on class settlement distributions 
derived from these data.
    They make clear that a plaintiff cannot certify an 
``issue'' class unless the entire claim for relief (not just 
the issue standing alone) qualifies for class treatment under 
Rule 23. This will prevent, for example, the certification of 
huge classes under the common ``issue'' regarding who bought a 
product when in fact the relevant inquiry is which of those 
purchasers actually suffered any injury.
    They require Federal courts to stay expensive 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.
    They require that any third-party funding agreement be 
disclosed to the district court and all parties. That would 
allow the district court to take appropriate steps to protect 
class members' interests by monitoring the influence of certain 
entities that are mere funders, not lawyers, nor parties to the 
litigation over lawsuits and help the court ensure victims are 
adequately represented.
    They provide that class certification decisions are 
appealable as of right.
    They require Federal courts to consider each plaintiff's 
claims separately in assessing Federal jurisdiction over multi-
plaintiff complaints asserting personal injury or wrongful 
death claims. The House Judiciary Committee recently reported 
out H.R. 725, the ``Innocent Party Protection Act,'' which 
prevents opportunistic lawyers from adding local defendants to 
a lawsuit simply to keep the case in a preferred state court. 
The misjoinder provision in FICALA similarly prevents these 
lawyers from adding certain plaintiffs just to keep the case in 
state court.
    Congress created the multidistrict litigation (``MDL'') 
procedure to enable courts to fairly and efficiently administer 
individual cases involving the same subject. But mass tort 
proceedings using the MDL process have become magnets for 
advertising-driven, poorly investigated (and often patently 
invalid) personal injury claims. The resulting massive 
proceedings, often largely consisting of claims that should 
never have been filed, impose unfair burdens on courts and 
defendants and prevent plaintiffs with trial-worthy claims from 
timely getting their day in court. FICALA requires that for 
each lawsuit filed in or transferred to a Federal MDL mass tort 
proceeding, plaintiffs' lawyers must submit to the MDL court 
evidence that before filing, they properly investigated the 
asserted claims. Specifically, they would be required to submit 
evidentiary support (including, but not limited to, medical 
records) for the factual contentions in each plaintiff's 
complaint regarding the alleged injury, the exposure to the 
risk that allegedly caused the injury, and the alleged cause of 
the injury. Plaintiffs' lawyers would be required to make the 
submission within the later of 45 days after the complaint is 
filed or transferred to an MDL proceeding. Within 30 days 
thereafter, the MDL court would be required to rule on the 
sufficiency of the submission. If the MDL court finds a 
submission insufficient, the claim must be dismissed without 
prejudice. If within 30 days thereafter, the insufficiency is 
not corrected, the claim must be dismissed with prejudice.
    In enacting the MDL statute, Congress made clear that MDL 
courts were supposed to handle pre-trial proceedings only--and 
then send the cases back to the courts in which they were 
originally filed for trial. But some MDL courts pressure 
defendants to settle by insisting on ``bellwether'' trials--
namely, pseudo-trials that supposedly test a claim's 
suitability for settlement. Often, however, those trials are 
not fair tests of the plaintiffs' claims. Rather, they're 
unrepresentative claims hand-picked to maximize attorneys' fees 
in a coerced settlement. FICALA therefore affirms Congress's 
original intent that MDL proceedings are for pre-trial purposes 
only--and that no trial may be conducted by an MDL court unless 
all parties consent to a waiver of venue and personal 
jurisdiction for that particular trial.
    They authorize immediate appellate review of interlocutory 
MDL court orders where those rulings may apply to or affect 
multiple cases in the MDL proceeding or where immediate review 
may materially advance the ultimate termination of the MDL 
proceeding.
    When the cost-savings economies of scale of an MDL 
proceeding are used by class action plaintiffs' lawyers, those 
savings should be passed on to the victims, and the savings 
enforced by the judges who take over the cases after the pre-
trial MDL proceedings occur. So FICALA requires that in 
settlements of Federal court mass tort claims in MDL 
proceedings, 80% of all compensation paid must go directly to 
claimants.
    They make clear that nothing in the bill restricts the 
authority of the Judicial Conference and the Supreme Court from 
proposing their own rule changes under chapter 131 of title 28 
of the U.S. Code, which sets out the procedures under which the 
courts themselves can create their own rules.
    Finally, they provide that the amendments made by the bill 
shall apply on the date of enactment.

                                Hearings

    The Committee on the Judiciary held no hearings on H.R. 
985. During the last Congress, the Committee's Subcommittee on 
the Constitution and Civil Justice held a hearing on H.R. 1927 
on April 29, 2015 (which included some of the provisions 
contained in H.R. 985), at which the following witnesses 
presented testimony at the hearing: John Beisner, Partner, the 
Skadden, Arps, Slate, Meagher, and Flom LLP; Mark A. Behrens, 
Shook, Hardy & Bacon; Andrew Trask, McGuire, Woods; and 
Alexandra D. Lahav, University of Connecticut School of Law.

                        Committee Consideration

    On February 15, 2017, the Committee met in open session and 
ordered the bill H.R. 985 favorably reported, without 
amendment, by a rollcall vote of 19 to 12, a quorum being 
present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
following rollcall votes occurred during the Committee's 
consideration of H.R. 985.
    1. An amendment offered by Mr. Conyers to provide an 
exception for civil rights claims from the bill's class action 
provisions. The amendment was defeated by a rollcall vote of 11 
to 14.

                             ROLLCALL NO. 1
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Smith (TX).................................              X
Mr. Chabot (OH)................................              X
Mr. Issa (CA)..................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................
Mr. Gohmert (TX)...............................
Mr. Jordan (OH)................................              X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................
Mr. Labrador (ID)..............................              X
Mr. Farenthold (TX)............................              X
Mr. Collins (GA)...............................
Mr. DeSantis (FL)..............................
Mr. Buck (CO)..................................              X
Mr. Ratcliffe (TX).............................              X
Mr. Bishop (MI)................................
Ms. Roby (AL)..................................              X
Mr. Gaetz (FL).................................
Mr. Johnson (LA)...............................              X
Mr. Biggs (AZ).................................              X
 
Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................      X
Mr. Cohen (TN).................................      X
Mr. Johnson (GA)...............................      X
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI).............................      X
Mr. Swalwell (CA)..............................      X
Mr. Lieu (CA)..................................      X
Mr. Raskin (MD)................................      X
Ms. Jayapal (WA)...............................
Mr. Schneider (IL).............................      X
                                                ------------------------
    Total......................................     11      14
------------------------------------------------------------------------


    2. An amendment offered by Ms. Jackson Lee to delay the 
effective date until the Administrative Office of the U.S. 
Courts completes an assessment of the bill's costs on litigants 
and the courts. The amendment was defeated by a rollcall vote 
of 12 to 17.

                             ROLLCALL NO. 2
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Smith (TX).................................              X
Mr. Chabot (OH)................................              X
Mr. Issa (CA)..................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................              X
Mr. Jordan (OH)................................              X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................
Mr. Labrador (ID)..............................              X
Mr. Farenthold (TX)............................
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
Mr. Buck (CO)..................................              X
Mr. Ratcliffe (TX).............................              X
Mr. Bishop (MI)................................
Ms. Roby (AL)..................................              X
Mr. Gaetz (FL).................................
Mr. Johnson (LA)...............................              X
Mr. Biggs (AZ).................................              X
 
Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................      X
Mr. Cohen (TN).................................      X
Mr. Johnson (GA)...............................      X
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI).............................      X
Mr. Swalwell (CA)..............................      X
Mr. Lieu (CA)..................................      X
Mr. Raskin (MD)................................      X
Ms. Jayapal (WA)...............................      X
Mr. Schneider (IL).............................      X
                                                ------------------------
    Total......................................     12      17
------------------------------------------------------------------------


    3. An amendment offered by Mr. Deutch to strike the bill's 
stay of discovery provision. The amendment was defeated by a 
rollcall vote of 12 to 19.

                             ROLLCALL NO. 3
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................              X
Mr. Smith (TX).................................              X
Mr. Chabot (OH)................................              X
Mr. Issa (CA)..................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................              X
Mr. Jordan (OH)................................              X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................              X
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................
Mr. Labrador (ID)..............................              X
Mr. Farenthold (TX)............................
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
Mr. Buck (CO)..................................              X
Mr. Ratcliffe (TX).............................              X
Mr. Bishop (MI)................................
Ms. Roby (AL)..................................              X
Mr. Gaetz (FL).................................
Mr. Johnson (LA)...............................              X
Mr. Biggs (AZ).................................              X
 
Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................      X
Mr. Cohen (TN).................................      X
Mr. Johnson (GA)...............................      X
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI).............................      X
Mr. Swalwell (CA)..............................      X
Mr. Lieu (CA)..................................      X
Mr. Raskin (MD)................................      X
Ms. Jayapal (WA)...............................      X
Mr. Schneider (IL).............................      X
                                                ------------------------
    Total......................................     12      19
------------------------------------------------------------------------


    4. An amendment offered by Mr. Cicilline to provide an 
exception from to bill for actions, to the extent authorized by 
law, arising from injury caused by a firearm. The amendment was 
defeated by a rollcall vote of 12 to 19.

                             ROLLCALL NO. 4
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................              X
Mr. Smith (TX).................................              X
Mr. Chabot (OH)................................              X
Mr. Issa (CA)..................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................              X
Mr. Jordan (OH)................................              X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................              X
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................
Mr. Labrador (ID)..............................              X
Mr. Farenthold (TX)............................
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
Mr. Buck (CO)..................................              X
Mr. Ratcliffe (TX).............................              X
Mr. Bishop (MI)................................
Ms. Roby (AL)..................................              X
Mr. Gaetz (FL).................................
Mr. Johnson (LA)...............................              X
Mr. Biggs (AZ).................................              X
 
Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................      X
Mr. Cohen (TN).................................      X
Mr. Johnson (GA)...............................      X
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI).............................      X
Mr. Swalwell (CA)..............................      X
Mr. Lieu (CA)..................................      X
Mr. Raskin (MD)................................      X
Ms. Jayapal (WA)...............................      X
Mr. Schneider (IL).............................      X
                                                ------------------------
    Total......................................     12      19
------------------------------------------------------------------------


    5. An amendment offered by Ms. Jayapal to strike the bill's 
provision governing issue classes. The amendment was defeated 
by a rollcall vote of 12 to 19.

                             ROLLCALL NO. 5
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................              X
Mr. Smith (TX).................................              X
Mr. Chabot (OH)................................              X
Mr. Issa (CA)..................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................              X
Mr. Jordan (OH)................................              X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................              X
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................
Mr. Labrador (ID)..............................              X
Mr. Farenthold (TX)............................
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
Mr. Buck (CO)..................................              X
Mr. Ratcliffe (TX).............................              X
Mr. Bishop (MI)................................
Ms. Roby (AL)..................................              X
Mr. Gaetz (FL).................................
Mr. Johnson (LA)...............................              X
Mr. Biggs (AZ).................................              X
 
Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................      X
Mr. Cohen (TN).................................      X
Mr. Johnson (GA)...............................      X
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI).............................      X
Mr. Swalwell (CA)..............................      X
Mr. Lieu (CA)..................................      X
Mr. Raskin (MD)................................      X
Ms. Jayapal (WA)...............................      X
Mr. Schneider (IL).............................      X
                                                ------------------------
    Total......................................     12      19
------------------------------------------------------------------------


    6. Motion to report H.R. 985 favorably to the House of 
Representatives. The motion was agreed to by a rollcall vote of 
19 to 12.

                             ROLLCALL NO. 6
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................      X
Mr. Sensenbrenner, Jr. (WI)....................      X
Mr. Smith (TX).................................      X
Mr. Chabot (OH)................................      X
Mr. Issa (CA)..................................      X
Mr. King (IA)..................................      X
Mr. Franks (AZ)................................      X
Mr. Gohmert (TX)...............................      X
Mr. Jordan (OH)................................      X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................      X
Mr. Marino (PA)................................      X
Mr. Gowdy (SC).................................
Mr. Labrador (ID)..............................      X
Mr. Farenthold (TX)............................
Mr. Collins (GA)...............................      X
Mr. DeSantis (FL)..............................      X
Mr. Buck (CO)..................................      X
Mr. Ratcliffe (TX).............................      X
Mr. Bishop (MI)................................
Ms. Roby (AL)..................................      X
Mr. Gaetz (FL).................................
Mr. Johnson (LA)...............................      X
Mr. Biggs (AZ).................................      X
 
Mr. Conyers, Jr. (MI), Ranking Member..........              X
Mr. Nadler (NY)................................              X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................              X
Mr. Cohen (TN).................................              X
Mr. Johnson (GA)...............................              X
Mr. Deutch (FL)................................              X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI).............................              X
Mr. Swalwell (CA)..............................              X
Mr. Lieu (CA)..................................              X
Mr. Raskin (MD)................................              X
Ms. Jayapal (WA)...............................              X
Mr. Schneider (IL).............................              X
                                                ------------------------
    Total......................................     19      12
------------------------------------------------------------------------


                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 985, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, March 6, 2017.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 985, the 
``Fairness in Class Action Litigation Act of 2017.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Robert Reese, 
who can be reached at 226-2860.
            Sincerely,
                                                Keith Hall,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member




       H.R. 985--Fairness in Class Action Litigation Act of 2017.

      As ordered reported by the House Committee on the Judiciary 
                         on February 15, 2017.




    H.R. 985 would amend the Federal judicial code to update 
the standards by which a court determines whether a case meets 
the requirements to be heard as a class-action suit. The bill 
also would require the Judicial Conference of the United States 
to submit an annual report to the Congress on payments from 
class-action settlements. Finally, the bill would amend the 
procedures that Federal courts use when considering certain 
multi-plaintiff claims and multi-district litigation 
proceedings.
    The effect that H.R. 985 would have on litigation strategy 
is uncertain and could lead to an increase or decrease in the 
number of cases brought to Federal courts. Based on an analysis 
of information from the Administrative Office of the United 
States Courts (AOUSC) and research regarding class-actions 
suits, CBO estimates that imposing new requirements on the 
courts for the consideration of class-action cases would cost 
$2 million over the 2018-2022 period; such spending would be 
subject to the availability of appropriated funds. Those 
additional administrative expenses to determine whether cases 
qualify to be considered as class-action suits would be 
incurred whether or not overall caseloads increased or 
decreased under the bill.
    Under the bill, the Judicial Conference would be required 
to submit to the Congress an annual report summarizing the 
disbursement of settlement payments to class members for all 
ongoing class-action settlements. Based on an analysis of 
information from the AOUSC on the amount of work necessary to 
analyze the relevant data and complete the report, CBO 
estimates that implementing this requirement would cost less 
than $500,000 over the 2018-2022 period.
    Enacting H.R. 985 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply. CBO 
estimates that enacting H.R. 985 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2028.
    H.R. 985 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of state, local, or tribal governments.
    H.R. 985 would impose private-sector mandates, as defined 
in UMRA, by limiting the timing and amount of fees attorneys 
could receive in class-action lawsuits and multi-district 
litigation. For example, the bill would:

         LProhibit fee awards to attorneys that exceed 
        the total amount of money distributed to all class 
        members;

         LProhibit the payment of fee awards to 
        attorneys in class-action cases until the distribution 
        of any monetary recovery to class members has been 
        completed; and

         LLimit the fees to attorneys in multi-district 
        proceedings to no more than 20 percent of the total 
        recovery.

    The limits on attorney fees would be a mandate because it 
would restrict amounts that attorneys might otherwise be able 
to collect from their clients. The direct cost of the mandates 
is measured as the annual loss of net income that attorneys 
would experience in both pending and future cases. Based on 
information from legal scholars about how attorney's fees are 
currently structured in such cases and the possible number of 
cases that could be affected (some research suggests about 
1,000 annually), CBO estimates that the annual cost of the 
mandates would exceed the threshold established in UMRA for 
private-sector mandates ($156 million in 2017, adjusted 
annually for inflation) in each of the first 5 years the 
mandates are in effect.
    The CBO staff contacts for this estimate are Robert Reese 
(for Federal costs) and Paige Piper/Bach (for private-sector 
mandates). The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

                    Duplication of Federal Programs

    No provision of H.R. 985 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that H.R. 985 specifically directs 
to be completed no specific rule makings within the meaning of 
5 U.S.C. Sec. 551.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
985 will provide greater fairness in class action litigation.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 985 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
    Sec. 1. Short title; Reference; Table of Contents. Section 
1 sets forth the short title of the bill as the ``Fairness in 
Class Action Litigation Act of 2017.''
    Sec. 2. Purposes. Section 2 sets forth the purposes of the 
bill.
    Sec. 3. Class Action Procedures.

Class action injury allegations:
(a) IN GENERAL.--A Federal court shall not issue an order 
granting certification of a class action seeking monetary 
relief for personal injury or economic loss unless the party 
seeking to maintain such a class action affirmatively 
demonstrates that each proposed class member suffered the same 
type and scope of injury as the named class representative or 
representatives. (b) CERTIFICATION ORDER.--An order issued 
under Rule 23(c)(1)\9\ of the Federal Rules of Civil Procedure 
that certifies a class seeking monetary relief for personal 
injury or economic loss shall include a determination, based on 
a rigorous analysis of the evidence presented, that the 
requirement in subsection (a) of this section is satisfied.
---------------------------------------------------------------------------
    \9\Rule 23(c)(1) prescribes the rules for Federal court 
certification orders.

    The purpose of a class action is to provide a fair, 
efficient means of litigating like claims, not to provide a way 
for unscrupulous lawyers to artificially inflate the size of a 
class to extort a larger settlement value for themselves, and 
in the process increase the prices of goods and services for 
everyone. 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. No one 
should be forced into a class action with other uninjured or 
minimally injured members, only to see their own compensation 
reduced.
    Unscrupulous lawyers work the system today in the following 
way. They file lawsuits, for example, against a company that 
sells a washing machine. Some very small percentage of those 
washing machines do not work the way they are supposed to, but 
the vast majority of them do. But the lawyers file a class 
action lawsuit that includes everyone who ever purchased a 
washing machine from the company, even the large number of 
people who are completely satisfied with their purchase. When 
these lawyers lump injured or non-comparably injured people 
into the same class action lawsuit, the limited resources of 
the parties are wastefully spent weeding through hundreds of 
thousands of class members in order to find those with actual 
or significant injuries. That's money that could have been 
spent compensating deserving victims. As the Third Circuit 
Court of Appeals said in a recent opinion, ``It is unfair to 
absent class members if there is a significant likelihood their 
recovery will be diluted by fraudulent or inaccurate 
claims.''\10\
---------------------------------------------------------------------------
    \10\Carrera v. Bayer Corp., 727 F.3d 307, 310 (3d Cir. 2013).
---------------------------------------------------------------------------
    Sometimes, because judges do not separate the injured from 
the non-injured in class actions early enough in the 
proceedings, they end up throwing out settlements because it 
turns out hardly any of the class members were harmed, and did 
not want compensation. Other times, when judges realize they 
have created an overbroad class, they justify their actions by 
coming up with novel theories to provide some compensation to 
people who are entirely satisfied with the product, and do not 
want compensation. Either way, the solution is to direct judges 
to determine as best they can, early in the proceedings, which 
proposed class members are significantly and comparably 
injured, and those who are not, and to treat them accordingly. 
That's fair to everyone.
    FICALA would simply make clear what already should be clear 
to the Federal courts, namely that uninjured class members are 
incompatible with Rule 23(b)(3)'s current requirement that 
classes should not be certified unless common legal and factual 
issues predominate in the class action. This subsection's 
requirement that those seeking to bring a class action 
``affirmatively demonstrate'' that each proposed class member 
suffered the same type and scope of injury as the named class 
representatives, as well as its requirement that the Federal 
court conduct ``a rigorous analysis'' of the evidence presented 
that the requirements of this subsection have been met, are 
both drawn from existing Supreme Court precedent.\11\
---------------------------------------------------------------------------
    \11\Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350-51 (2011) 
(``A party seeking class certification must affirmatively demonstrate 
his compliance with the Rule . . . We [have] recognized . . . that 
certification is proper only if the trial court is satisfied, after a 
rigorous analysis, that the prerequisites of Rule 23(a) have been 
satisfied'') (internal quotations and citations omitted).
---------------------------------------------------------------------------
    Opponents of the bill may claim this provision will somehow 
interfere with the class action process. But this section of 
the bill does not prohibit the filing of any class actions at 
all. It simply requires that if class actions are filed, 
similarly injured people should be grouped with other similarly 
injured people in their own class action. Claims seeking 
monetary relief for personal injury or economic loss\12\ should 
be grouped in classes in which those who are most injured 
receive the most compensation. No one should be forced into a 
class action with other uninjured or minimally injured members, 
only to see their own compensation reduced.
---------------------------------------------------------------------------
    \12\Black's Law Dictionary defines ``personal injury'' as ``In a 
negligence action, any harm caused to a person, such as a broken bone, 
a cut, or a bruise; bodily injury.'' ``Economic loss'' is defined by 
Black's Law Dictionary as ``A monetary loss such as lost wages or lost 
profits . . . [I]n a products-liability suit, economic loss includes 
the cost of repair or replacement of defective property, as well as 
commercial loss for the property's inadequate value and consequent loss 
of profits or use.''

Conflicts of Interest:
(a) REQUIRED DISCLOSURES.--In a class action complaint, class 
counsel shall state whether any proposed class representative 
or named plaintiff in the complaint is a relative of, is a 
present or former employee of, is a present or former client of 
(other than with respect to the class action), or has any 
contractual relationship with (other than with respect to the 
class action) class counsel. In addition, the complaint shall 
describe the circumstances under which each class 
representative or named plaintiff agreed to be included in the 
complaint and shall identify any other class action in which 
any proposed class representative or named plaintiff has a 
similar role. (b) PROHIBITION OF CONFLICTS.--A Federal court 
shall not issue an order granting certification of any class 
action in which any proposed class representative or named 
plaintiff is a relative of, is a present or former employee of, 
is a present or former client of (other than with respect to 
the class action), or has any contractual relationship with 
(other than with respect to the class action) class counsel. 
(c) DEFINITION.--For purposes of this section, ``relative'' 
shall be defined by reference to section 3110(a)(3) of title 5, 
United States Code.\13\
---------------------------------------------------------------------------
    \13\5 U.S.C. Sec. 3110(a)(3) (prohibiting the employment of 
relatives by Federal public officials) provides that ```relative' 
means, with respect to a public official, an individual who is related 
to the public official as father, mother, son, daughter, brother, 
sister, uncle, aunt, first cousin, nephew, niece, husband, wife, 
father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-
law, sister-in-law, stepfather, stepmother, stepson, stepdaughter, 
stepbrother, stepsister, half brother, or half sister.''

    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?''\14\
---------------------------------------------------------------------------
    \14\Available at http://quod.lib.umich.edu/l/lincoln/lincoln2/
1:134.1?rgn=div2;view=fulltext.
---------------------------------------------------------------------------
    That was Lincoln in the 1850's. Here's Forbes magazine just 
a couple 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 [trial lawyer] Rubinstein [the fellow 
        seen here at his own deposition] . . . [A]nother 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 . . . 
        E-mails 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.\15\
---------------------------------------------------------------------------
    \15\Available at http://www.forbes.com/sites/danielfisher/2015/11/
17/collapse-of-5-hour-energy-case-reveals-secrets/#475a827a1aa4.

    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 do not feel injured by the supposedly wrongful conduct in 
the first place. In too many cases, opportunistic 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'll have someone who can sue on behalf 
of a proposed class of all other buyers. No product purchaser 
has actually complained or feels cheated. That's a major reason 
why so few class members bother to collect the payments 
available in class action settlements--they do not feel injured 
by the supposedly wrongful conduct in the first place. This 
abuse of class actions--lawyer-driven lawsuits--must end. 
FICALA 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, is a present or former employee of, is a present or former 
client of, or has any contractual relationship with the class 
---------------------------------------------------------------------------
action lawyer.

Class Member Benefits:
(a) DISTRIBUTION OF BENEFITS TO CLASS MEMBERS.--A Federal court 
shall not issue an order granting certification of a class 
action seeking monetary relief unless the class is defined with 
reference to objective criteria and the party seeking to 
maintain such a class action affirmatively demonstrates that 
there is a reliable and administratively feasible mechanism (a) 
for the court to determine whether putative class members fall 
within the class definition and (b) for distributing directly 
to a substantial majority of class members any monetary relief 
secured for the class.

    Because the whole purpose of class actions is to redress 
the injuries sustained by class members, the system should 
ensure that any benefits obtained in such cases can actually be 
delivered to those class members. And it should ensure that 
class members, not their lawyers, get most of those benefits. 
Consequently, FICALA's section on ``Class member benefits'' 
includes the following provisions: a requirement that, in a 
class action seeking monetary relief, a class cannot be 
certified unless counsel can demonstrate that there is a 
``reliable and administratively feasible mechanism'' for the 
court to identify who falls within the class (through something 
other than a self-serving declaration) and for distributing any 
monetary award that's obtained to a substantial majority of the 
class members. In short, counsel have to demonstrate that the 
use of the class action device in a particular controversy 
would actually serve the purpose of compensating class members 
for their alleged injuries, if the class proves its case.
    As one appeals court judge (nominated by President Obama) 
wrote in his dissent in a recent class action case, ``The chief 
difficulty we confront in this case arises from the fact that 
some of the members of the class have not suffered the . . . 
injury upon which this entire case is predicated [and that] 
could constitute as many as 24,000 consumers who would have no 
valid claim against the defendants under the state [] laws even 
if the named plaintiffs win on the merits.''\16\ He went on to 
chastise the other judges who allowed the class action to 
proceed, writing ``if the district court does not identify a 
culling method to ensure that the class, by judgment, includes 
only members who were actually injured, this court has no 
business simply hoping that one will work.''\17\
---------------------------------------------------------------------------
    \16\In re Nexium Antitrust Litigation, 777 F.3d 9, 32-33 (1st Cir. 
2015) (Kayatta, Circuit Judge, dissenting).
    \17\Id. at 35.
---------------------------------------------------------------------------
    Some courts of appeals have imposed this sort of 
``ascertainability'' requirement.\18\ But other courts, such as 
the Ninth Circuit, have rejected this rule.\19\ America needs a 
rule that ensures class actions are used only where they will 
serve to actually get compensation to class members, where 
deserved. Cases that do nothing more than get lawyers lots of 
money are not consistent with the legitimate purposes of class 
actions. FICALA would establish that rule.
---------------------------------------------------------------------------
    \18\See Carrera v. Bayer Corp., 727 F. 3d 300, 305, 306 (3d Cir. 
2013) (``Many courts and commentators have recognized that an essential 
prerequisite of a class action, at least with respect to actions under 
Rule 23(b)(3), is that the class must be currently and readily 
ascertainable based on objective criteria . . . If class members are 
impossible to identify without extensive and individualized fact-
finding or `mini-trials,' then a class action is inappropriate.'') 
(also holding that a plaintiff seeking class certification ``must show, 
by by a preponderance of the evidence, that the class is `currently and 
readily ascertainable based on objective criteria,' and the trial court 
must evaluate this showing by employing a ``rigorous analysis.''). 
Several other Circuits have joined that view. See In re Nexium 
Antitrust Litig., 777 F.3d 9 (1st Cir. 2015); Brecher v. Republic of 
Argentina, 806 F.3d 22 (2d Cir. 2015), EQT Prod. Co. v. Adair, 764 F.3d 
347 (4th Cir. 2014); Karhu v. Vital Pharmaceuticals, Inc.,--Fed. 
App'x--, 2015 WL 3560722, at *2-3 (11th Cir 2015).
    \19\See Rikos v. Procter & Gamble Co., 799 F.3d 497, 525 (6th Cir. 
2015); Mullins v. Direct Digital, LLC, 795 F.3d 654, 658 (7th Cir. 
2015); and Brieseno v. Conagra Foods, Inc., __ F.3d __ (9th Cir., Jan. 
3, 2017).

(b) ATTORNEYS' FEES IN CLASS ACTIONS.--(1) FEE DISTRIBUTION 
TIMING.--In a class action seeking monetary relief, no 
attorneys' fees may be determined or paid pursuant to Rule 
23(h) of the Federal Rules of Civil Procedure or otherwise 
until the distribution of any monetary recovery to class 
members has been completed. (2) FEE DETERMINATIONS BASED ON 
MONETARY AWARDS.--Unless otherwise specified by Federal 
statute, if a judgment or proposed settlement in a class action 
provides for a monetary recovery, the portion of any attorneys' 
fee award to class counsel that is attributed to the monetary 
recovery shall be limited to a reasonable percentage of any 
payments directly distributed to and received by class members. 
In no event shall the attorneys' fee award exceed the total 
amount of money directly distributed to and received by all 
class members. (3) FEE DETERMINATIONS BASED ON EQUITABLE 
RELIEF.--Unless otherwise specified by Federal statute, if a 
judgment or proposed settlement in a class action provides for 
equitable relief,\20\ the portion of any attorneys' fee award 
to class counsel that is attributed to the equitable relief 
shall be limited to a reasonable percentage of the value of the 
equitable relief, including any injunctive relief.\21\
---------------------------------------------------------------------------
    \20\Black's Law Dictionary (10th ed. 2014) defines ``equitable 
remedy'' as ``A remedy, usu. a nonmonetary one such as an injunction or 
specific performance, obtained when available legal remedies, usu. 
monetary damages, cannot adequately redress the injury.''
    \21\Black's Law Dictionary (10th ed. 2014) defines ``injunction'' 
as ``A court order commanding or preventing an action.''

    The Manual for Complex Litigation (4th ed. 2004)\22\ is a 
treatise published by the Federal Judicial Center, which is 
operated by the Federal judiciary. It was written by a group of 
well-respected judges, most of whom are still active. Section 
21.71 of the Manual states as follows: ``Compensating counsel 
for the actual benefits conferred on the class members is the 
basis for awarding attorney fees. The fundamental focus is the 
result actually achieved for class members. That approach is 
premised on finding a tangible benefit actually obtained by the 
class members . . . In cases involving a claims procedure or a 
distribution of benefits over time, the court should not base 
the attorney fee award on the amount of money set aside to 
satisfy potential claims. Rather, the fee awards should be 
based only on the benefits actually delivered.'' However, for 
the most part, Federal courts are not following this directive. 
Congress needs to enforce what the some Federal courts are not 
enforcing.
---------------------------------------------------------------------------
    \22\Available at http://www.fjc.gov/public/home.nsf/
autoframe?openagent&url;_l=/public/home.nsf/inavgeneral?openpage&url;_r=/
public/home.nsf/pages/524.
---------------------------------------------------------------------------
    Taking a step back, it's important to realize that in class 
actions, no one asks the class members if they want a lawsuit 
brought on their behalf. Lawyers can sue for them without 
getting their permission. And there's good reason to suspect 
most people do not want to be part of most of these cases. 
According to a sworn declaration of a professional who 
administers class action settlements, the median rate at which 
consumer class action members take the compensation offered in 
a settlement is an incredibly low 0.023 percent.\23\
---------------------------------------------------------------------------
    \23\Declaration of Deborah McComb Re Settlement Claims April 21, 
2014, at 2, available at http://blogs.reuters.com/alison-frankel/files/
2014/05/duracellclassaction-mccombdeclaration.pdf.
---------------------------------------------------------------------------
    That's right--only the tiniest fraction of a percent of 
consumer class action members bother to claim the compensation 
awarded them. Another study of the limited publicly available 
distributions to class members for cases filed in or removed to 
Federal court in 2009 found that ``few class members ever even 
see those paltry benefits--particularly in consumer class 
actions. Unfortunately, because information regarding the 
distribution of class action settlements is rarely available, 
the public almost never learns what percentage of a settlement 
is actually paid to class members. But of the six cases in our 
[2009] data set for which settlement distribution data was 
public, five delivered funds to only miniscule percentages of 
the class: 0.000006%, 0.33%,1.5%, 9.66%, and 12%. Those results 
are consistent with other available information about 
settlement distribution in consumer class actions.''\24\ 
Further examples can be found in that report's Appendix A.
---------------------------------------------------------------------------
    \24\Available at http://blogs.reuters.com/alison-frankel/files/
2013/12/mayerbrownclassaction
study.pdf.
---------------------------------------------------------------------------
    What that means is that the primary beneficiaries of 
consumer class actions are the lawyers--not the allegedly 
injured class members. Lawyers tend to reap millions, while the 
alleged victims get little or nothing. Here are a few examples:
    The Subway sandwich chain was sued in a class action 
because trial lawyers complained their ``foot-long'' subs 
usually were not a full foot-long. As part of the settlement, 
Subway agreed to pay small amounts to the ten class 
representatives, but the millions of other class members 
received nothing. Not a dime. Meanwhile, the lawyers were 
awarded $520,000 in fees.\25\ The settlement was appealed to 
the Seventh Circuit Court of Appeals. During oral arguments in 
September, 2016, Judge Diane Sykes remarked that ``[a] class 
action that seeks only worthless benefits for the class should 
be dismissed out of hand. . . . That's what should have 
happened here. . . . This is a racket.''\26\
---------------------------------------------------------------------------
    \25\In re Subway Footlong Sandwich Marketing and Sales Practices 
Litigation, MDL No. 13-02439, available at http://
www.wied.uscourts.gov/sites/wied/files/documents/Subway%20MDL%
20Final%20'settlement%20Approval%20Order.pdf.
    \26\See http://www.abajournal.com/magazine/article/
subway_sandwich_class_action.
---------------------------------------------------------------------------
    The Coca Cola Company was sued in a class action lawsuit 
for allegedly implying in its advertising that a product called 
``vitaminwater'' was healthy.\27\ Class members received zero 
dollars in the settlement. The lawyers were awarded $1.2 
million in fees.
---------------------------------------------------------------------------
    \27\Volz v. Coca Cola Co., No. 1:10-cv-00879 (S.D. Ohio 2014).
---------------------------------------------------------------------------
    In Lane v. Facebook, Inc., which arose out of alleged 
privacy violations by Facebook, the company agreed to settle 
the case by spending $6.5 million to establish a new charity 
called the Digital Trust Foundation (``DTF'') whose purpose was 
to educate users on protection of identity and personal 
information online. Facebook agreed to pay class counsel $3 
million. Zero dollars were paid to class members. The Ninth 
Circuit affirmed this deal, but in a withering dissent, Judge 
Kleinfeld observed that ``Facebook users who had suffered 
damages . . . got no money, not a nickel from the defendants . 
. . [while] [c]lass counsel, on the other hand, got 
millions.''\28\ While the U.S. Supreme Court declined to review 
the Facebook settlement,\29\ Chief Justice Roberts issued an 
unusual statement with respect to the Court's denial of 
certiorari, stating that these charitable donation provisions 
(also known as cy pres awards) are a ``growing feature'' of 
class action settlements that warranted monitoring.\30\
---------------------------------------------------------------------------
    \28\Lane v. Facebook, Inc., 696 F.3d 811, 828 (9th Cir. 2013) 
(Kleinfeld, J., dissenting).
    \29\See Marek v. Lane, 134 S. Ct. 8 (2013).
    \30\Id. at 9.
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    The class action system is supposed to primarily benefit 
victims, not lawyers. Class action lawyers should only get paid 
after the victims get paid, and FICALA requires just that in 
the subsection entitled ``Fee Distribution Timing.'' Also, the 
portion of attorneys' fee awards to class action lawyers should 
be limited to a reasonable percentage of the money actually 
distributed to and received by the victims, and class action 
lawyers' fees should never exceed the total amount of money 
received by all the victims. FICALA requires that as well in 
the subsection entitled ``Fee Determinations Based on Monetary 
Awards.''
    Insofar as a class action seeks equitable relief (that is, 
non-monetary relief, including any injunctive relief that seeks 
to stop the defendant from doing something wrong), the portion 
of any class action lawyers' fee award should be limited to a 
reasonable percentage of the value of that relief, as 
determined by the court. FICALA requires that in the subsection 
entitled ``Fee Determinations Based on Equitable Relief.''
    This provision will not affect fee awards in civil rights 
cases because both the monetary and equitable relief attorneys' 
fees provisions in FICALA are qualified with the initial phrase 
``Unless otherwise specified by Federal statute.'' The Civil 
Rights Attorney's Fee Award Act of 1976, 42 U.S.C. 
Sec. 1988,\31\ 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. Sec. 1983--the statute most commonly used to 
assert civil rights claims. Consequently, FICALA will not 
affect attorneys' fees in civil rights class actions at all.
---------------------------------------------------------------------------
    \31\42 U.S.C. Sec. 1988 provides that ``(b) Attorney's fees. In any 
action or proceeding to enforce a provision of sections 1981, 1981a, 
1982, 1983, 1985, and 1986 of this title, title IX of Public Law 92-318 
[20 U.S.C.A. Sec. 1681 et seq.], the Religious Freedom Restoration Act 
of 1993 [42 U.S.C.A. Sec. 2000bb et seq.], the Religious Land Use and 
Institutionalized Persons Act of 2000 [42 U.S.C.A. Sec. 2000cc et 
seq.], title VI of the Civil Rights Act of 1964 [42 U.S.C.A. Sec. 2000d 
et seq.], or section 13981 of this title, the court, in its discretion, 
may allow the prevailing party, other than the United States, a 
reasonable attorney's fee as part of the costs, except that in any 
action brought against a judicial officer for an act or omission taken 
in such officer's judicial capacity such officer shall not be held 
liable for any costs, including attorney's fees, unless such action was 
clearly in excess of such officer's jurisdiction. (c) Expert fees. In 
awarding an attorney's fee under subsection (b) of this section in any 
action or proceeding to enforce a provision of section 1981 or 1981a of 
this title, the court, in its discretion, may include expert fees as 
part of the attorney's fee.''
---------------------------------------------------------------------------
    Regarding other equitable relief cases that do not 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 Federal 
court) is met.\32\ A majority of courts consider only the value 
of the injunctive relief from the plaintiff's perspective or 
viewpoint.\33\ Some courts determine the jurisdictional amount 
by evaluating the claim from the perspective of the party 
seeking Federal court jurisdiction.\34\ 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.\35\ The bottom line is that, under 
FICALA, Federal courts will be able to use any method they deem 
best for reasonably assessing reasonable attorneys' fee awards 
in equitable relief class action settlements. This provision, 
of course, does not alter in any way the relief that would be 
granted to civil rights class action members, or to any other 
equitable relief class action members.
---------------------------------------------------------------------------
    \32\See Packard v. Provident Nat'l Bank, 994 F.2d 1039, 1050 (3d 
Cir. 1993) (valuing right to enjoin bank from charging fees); 
Massachusetts State Pharm. Ass'n v. Federal Prescription Serv., 431 
F.2d 130, 131 (8th Cir. 1970) (valuing right to enjoin solicitation of 
business).
    \33\See 14AA Fed. Prac. & Proc. Juris. Sec. 3703 (4th ed.) (April 
2016 Update).
    \34\See id.
    \35\See id.

Money Distribution Data:
(a) SETTLEMENT ACCOUNTINGS.--In any settlement of a class 
action that provides for monetary benefits, the court shall 
order class counsel to submit to the Director of the Federal 
Judicial Center and the Director of the Administrative Office 
of the United States Courts an accounting of the disbursement 
of all funds paid by the defendant pursuant to the settlement 
agreement. The accounting shall state the total amount paid 
directly to all class members, the actual or estimated total 
number of class members, the number of class members who 
received payments, the average amount (both mean and median) 
paid directly to all class members, the largest amount paid to 
any class member, the smallest amount paid to any class member 
and, separately, each amount paid to any other person 
(including class counsel) and the purpose of the payment. In 
stating the amounts paid to class members, no individual class 
member shall be identified. No attorneys' fees may be paid to 
class counsel pursuant to Rule 23(h)\36\ of the Federal Rules 
of Civil Procedure until the accounting has been submitted. (b) 
ANNUAL SETTLEMENT DISTRIBUTION REPORTS.--Commencing not later 
than 12 months after the date of enactment of this Act, the 
Judicial Conference of the United States, with the assistance 
of the Director of the Federal Judicial Center and the Director 
of the Administrative Office of the United States Courts, shall 
annually prepare and transmit to the Committees on the 
Judiciary of the Senate and the House of Representatives for 
public dissemination a report summarizing how funds paid by 
defendants in class actions have been distributed, based on the 
settlement accountings submitted pursuant to subsection (a).
---------------------------------------------------------------------------
    \36\Rule 23(h) sets out the rules for the award of attorneys' fees 
in class actions.

    Here's the way attorneys' fees in class actions generally 
work. Assume that to settle a class action, a defendant agrees 
to pay up to $10 million--$10 to each of one million purported 
class members. Under current practice, the court may award the 
class counsel $2.5 million (25% of the maximum potential 
settlement amount) without waiting to find out how much money 
actually gets to class members themselves. The court may award 
more or less, but 25% is a frequently used percentage. If, as 
usually happens, only 2.5% of the class members (2,500 persons) 
claim their settlement payments (for a total of $25,000), the 
attorneys will receive 100 times the cash received by all class 
members combined: $2.5 million to the lawyers, $25,000 to all 
of the allegedly injured consumers.
    Because lawyers and Federal courts are not required to make 
public exactly how class action settlement funds are 
distributed, and to whom, and in what amounts, the public and 
Congress is largely in the dark regarding the extent of 
potential abuses. To remedy that situation, FICALA requires 
that in any Federal court-approved class action settlement, the 
trial lawyers must provide the Administrative Office of United 
States Courts (the ``AO'') with an accounting of how all money 
paid by the defendants was distributed. The AO, in turn, would 
be charged with publishing annual aggregate reports on class 
settlement distributions derived from these data. This data 
would show whether class actions are actually providing 
benefits to class members.
    This would let the public and Congress know what comes out 
of its class action litigation system. Transparency in this 
regard would be particularly helpful in exposing the extent of 
the abuse of so-called cy pres awards. Class actions include 
large numbers of consumers who were satisfied with the product 
or service at issue and therefore have zero motivation to 
obtain compensation. In response to this growing reality in 
consumer class actions, many courts have resorted to cy pres, 
the practice of distributing money in class actions that is not 
claimed by real people to third-party charities that supposedly 
work in the interest of the public in the abstract. While the 
use of cy pres in class action settlements has benefited 
numerous organizations, the practice is troubling because it 
raises serious questions about the purpose of the class action 
device. As one court put it, ``[t]here is no indirect benefit 
to the class from the defendant's giving the money to someone 
else.''\37\ And as the Third Circuit Court of Appeals stated in 
another case, ``inclusion of a cy pres distribution may 
increase a settlement fund, and with it attorneys' fees, 
without increasing the direct benefit to the class.''\38\ And 
cy pres diminishes any incentive to identify class members 
since the lawyer will receive the same amount of fees even if 
hardly anyone gets any compensation.
---------------------------------------------------------------------------
    \37\Mirfasihi v. Fleet Mortg. Corp., 356 F.3d 781, 784 (7th Cir. 
2004).
    \38\In re Baby Prods. Antitrust Litig., Nos. 12-1165, et al., 708 
F.3d 163, 173 (3d Cir. 2013), available at http://
www2.ca3.uscourts.gov/opinarch/121165p.pdf.
---------------------------------------------------------------------------
    In sum, consumers in many class action lawsuits are not 
receiving any benefits. Rather, the bulk of the money ends up 
going to lawyers and uninjured third-party organizations, or 
both. Given this troubling trend, Congress should help at least 
expose the extent of this abuse by requiring transparency in 
the allocation of class action settlement funds, including cy 
pres awards.

Issues Classes:
(a) IN GENERAL.--A Federal court shall not issue an order 
granting certification of a class action with respect to 
particular issues pursuant to Rule 23(c)(4) of the Federal 
Rules of Civil Procedure unless the entirety of the cause of 
action from which the particular issues arise satisfies all the 
class certification prerequisites of Rule 23(a) and Rule 
23(b)(1), Rule 23(b)(2), or Rule 23(b)(3). (b) CERTIFICATION 
ORDER.--An order issued under Rule 23(c)(4) of the Federal 
Rules of Civil Procedure that certifies a class with respect to 
particular issues shall include a determination, based on a 
rigorous analysis of the evidence presented, that the 
requirement in subsection (a) of this section is satisfied.

    Rule 23 of the Federal Rules of Civil Procedure--and the 
Supreme Court's recent interpretations of Rule 23 in Wal-Mart 
Stores, Inc. v. Dukes and Comcast Corp. v. Behrend--recognize 
that class actions are an exception to the ordinary rules of 
litigation, and that the class action system may be used only 
when the Rule's requirements are satisfied, particularly that 
issues common to all class members predominate over 
individualized issues that must be resolved on a plaintiff-by-
plaintiff basis. Some lower courts, however, encouraged by 
opportunistic lawyers, are circumventing these rulings by 
permitting the certification of so-called ``issues classes'' in 
which a single legal or factual issue may be determined for the 
whole class even though the claims are dominated by 
individualized issues that require case-by-case evaluations.
    As the U.S. Court of Appeals for the Fifth Circuit 
explained in a case called Castano,\39\ ``Reading [R]ule 
23(c)(4) as allowing a court to sever issues . . . would 
eviscerate the predominance requirement of [R]ule 23(b)(3); the 
result would be automatic certification in every case where 
there is a common issue, a result that could not have been 
intended.''
---------------------------------------------------------------------------
    \39\84 F.3d 734 (5th Cir. 1996).
---------------------------------------------------------------------------
    That unintended result has manifested itself in the 
decisions of some courts, which have certified class actions to 
resolve general ``issues'' regarding a product when the result 
is to create a huge class in which the vast majority of class 
members have no complaint against the product.
    In some circuits, class certification is ordered over the 
issue of whether the product was defective before there was any 
evaluation of whether the class members actually experienced a 
problem with their products. That's incompatible with Rule 
23(b), which requires that ``questions of law or fact common to 
class members predominate over any questions affecting only 
individual members, and that a class action is superior to 
other available methods for fairly and efficiently adjudicating 
the controversy.'' Issues of law or fact cannot be held in 
common by a class if the class consists largely of people who 
do not have any injuries at all, and consequently have no legal 
or factual basis for being in the class.
    Congress must ensure that class action standards are not 
circumvented through the use of ``issues classes.'' The 
subsection of FICALA entitled ``Issues classes'' therefore 
makes clear--as the Fifth Circuit made clear in Castano--that 
plaintiffs' attorneys cannot certify an ``issue'' class unless 
the entire claim for relief (not just the issue standing alone) 
qualifies for class treatment under Rule 23.

Stay of Discovery:
In any class action, all discovery and other proceedings shall 
be stayed 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, unless the court finds 
upon the motion of any party that particularized discovery is 
necessary to preserve evidence or to prevent undue prejudice to 
that party.

    The discovery process (the pre-trial process in a lawsuit 
in which parties demand documents and other things from other 
parties in the lawsuit) imposes huge costs on litigants--
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 ten to fifteen 
percent annually over the next few years.\40\ 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.\41\ And 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 
relatively 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?
---------------------------------------------------------------------------
    \40\George Socha & Tom Gelbmann, Climbing Back: Revenue Climbing 
Back for EDD Industry, Law Tech. News (Aug. 1, 2010), http://
www.law.com/jsp/lawtechnologynews/PubArticle
LTN.jsp?id=1202463900292.
    \41\See Nicholas Pace & Laura Zakaras, Rand Institute for Civil 
Justice, Where the Money Goes: Understanding Litigant Expenditures for 
Producing Electronic Discovery, 17 (2012); see also Laura Hunt, 
Trending: Proportionality in Electronic Discovery in Common Law 
Countries and the United States' Federal and State Courts, 43 U. Balt. 
L. Rev. 279, 279 (2014) (similar).
---------------------------------------------------------------------------
    The reality for most civil litigation is that the 
defendants' obligation to bear these exorbitant discovery costs 
incentivizes unscrupulous plaintiffs' attorneys 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 opponent will have to bear the 
financial burden of preparing the discovery response actually 
gives litigants an incentive to make discovery requests, and 
the bigger the expense to be borne by the opponent, the bigger 
the incentive to make the request.''\42\ And 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.\43\ 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.\44\
---------------------------------------------------------------------------
    \42\Martin H. Redish, Electronic Discovery and the Litigation 
Matrix, 51 Duke L.J. 561, 603 (2001).
    \43\See John H. Beisner, Discovering a Better Way: The Need for 
Effective Civil Litigation Reform, 60 Duke L.J. 547, 549 (2010) 
(``Plaintiffs' attorneys routinely burden defendants with 
costly discovery requests and engage in open-ended `fishing 
expeditions' in the hope of coercing a quick settlement.'').
    \44\Bell Atl. Corp. v. Twombly, 550 U.S. 544, 559 (2007).
---------------------------------------------------------------------------
    For example, assume that a defendant moves to dismiss a 
class action because it does not assert any valid claims. Under 
current law, plaintiffs' attorneys 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's 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.
    Congress addressed this very same issue 20 years ago in the 
context of securities class actions. It found in the House 
Report for the Private Securities Litigation Reform Act that 
``[t]he cost of discovery often forces innocent parties to 
settle frivolous securities class actions,'' and enacted a 
provision limiting discovery prior to a decision resolving the 
legal sufficiency of the complaint. The rationale underlying 
that legislation applies equally to class actions outside the 
securities context, and Congress should enact the same 
provision for class actions generally. Consequently, the 
subsection of FICALA 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.\45\
---------------------------------------------------------------------------
    \45\Examples of ``undue prejudice'' could relate to the potential 
loss or spoliation of evidence, such as situations in which, unless 
documents are collected they may be destroyed. There may also be 
circumstances in which witnesses may become unavailable (due to health, 
or leaving employment). There could also be class actions in which 
emergency injunctive relief is being sought where discovery might be 
justifiable. This provision mirrors 15 U.S.C. Sec. 78u-4(b)(3)(B), 
which relates to private securities litigation and provides that ``In 
any private action arising under this chapter, all discovery and other 
proceedings shall be stayed during the pendency of any motion to 
dismiss, unless the court finds upon the motion of any party that 
particularized discovery is necessary to preserve evidence or to 
prevent undue prejudice to that party.''

Third-Party Litigation Funding Disclosure:
In any class action, class counsel shall promptly disclose in 
writing to the court and all other parties the identity of any 
person or entity, other than a class member or class counsel of 
record, who has a contingent right to receive compensation from 
any settlement, judgment, or other relief obtained in the 
action.

    An agreement for third-party funding of a class action was 
recently ordered produced by a Federal court in a case 
involving an oil rig explosion off the Nigerian coast. Under 
this agreement, a third-party funder agreed to provide 
financing to counsel for prosecuting a putative class action 
seeking damages for individuals allegedly incurring economic 
loss. There are provisions in the agreement that clearly reveal 
the third-party funder's influence over the case. For example, 
the agreement refers to a ``Project 0Plan'' for the litigation 
developed by counsel and the funder, with restrictions on the 
ability of the class action lawyer to deviate from it, 
particularly with respect to hiring only certain, identified 
experts. According to the same document, the funder agreed to 
provide class counsel with financing, and in exchange the class 
action lawyer committed, in the event of a recovery, to repay 
that amount plus a ``Success Fee'' (to the extent recovered) of 
six times the financed amount to be paid from attorneys' fees--
plus 2% of the total amount recovered by the putative class 
members. That last part is very important, because counsel are 
agreeing to hand over class member money without telling the 
class members or getting their permission. FICALA would require 
in every such case the disclosure of this sort of information, 
which is information the court needs in deciding whether the 
class representative is adequate, which involves determining 
who is really running the show.
    This case underscores that the issue of funder control over 
litigation strategy is particularly troublesome in putative 
class actions. As Judge Susan Illston (of the Northern District 
of California) explained in ordering the disclosure of the 
third-party litigation funding arrangement at issue in that 
litigation, the ``funding agreement is relevant to the adequacy 
[of representation] determination [required for class 
certification] and should be produced to [the] defendant.''\46\ 
Judge Illston's concerns proved well-founded. In addition to 
the provisions described above, the funding agreement provides 
that the lawyers shall endeavor to ``recover the maximum 
possible Contingency Fee,''\47\ a requirement that may conflict 
with class member interests.
---------------------------------------------------------------------------
    \46\Gbarabe v. Chevron Corp., No. 14-cv-00173-SI, 2016 U.S. Dist. 
LEXIS 103594, at *6 (N.D. Cal. Aug. 5, 2016).
    \47\Gbarabe Litigation Funding Agreement, para. 3.1.3 (emphasis 
added).
---------------------------------------------------------------------------
    Another example of substantial control by a funder was the 
elaborate funding agreement used in litigation against Chevron 
filed in an Ecuadorian court alleging environmental 
contamination in Ecuador. The litigation was financed in part 
by $4 million from Burford, one of the largest third-party 
financing companies in the world. The funding agreement at 
issue in that case ``provide[d] control to the Funders'' 
through the ``installment of `Nominated Lawyers'''--lawyers 
``selected by the Claimants with the Funder's approval.''\48\ 
In addition to exerting control, it was clear that the 
Nominated Lawyers, who among other things controlled the purse 
strings and served as monitors, supervised the costs and course 
of the litigation.\49\ In 2014, the U.S. District Court for the 
Southern District of New York ruled\50\ that the $9.5 billion 
Ecuadorian judgment was the product of fraud and racketeering 
activity, finding it unenforceable.
---------------------------------------------------------------------------
    \48\Maya Steinitz, The Litigation Finance Contract, 54 Wm. & Mary 
L. Rev. 455, 472 (2012) (emphasis added).
    \49\Id.
    \50\Available at http://www.theamazonpost.com/wp-content/uploads/
Chevron-Ecuador-Opinion-3.4.14.pdf.
---------------------------------------------------------------------------
    These kinds of provisions inappropriately vest the funder 
with substantial control over key litigation decisions, 
undermining the primacy of the attorney-client relationship. In 
addition, these arrangements also undermine the adequacy of 
representation requirement under Rule 23, which requires that 
attorneys adequately represent the interests of class members 
in order to advance a case as a class action. One way to ensure 
that these concerns are addressed is to require disclosure of 
these arrangements at the outset of civil litigation. Indeed, 
the U.S. District Court for the Northern District of California 
has now issued a rule mandating the disclosure of such 
information in all class and representative actions,\51\ 
providing an important precedent for making the practice more 
transparent.
---------------------------------------------------------------------------
    \51\Ben Hancock, Northern District, First in Nation, Mandates 
Disclosure of Third-Party Funding in Class Actions, The Recorder, Jan. 
23, 2017, http://www.therecorder.com/id=120277
7487488/Northern-District-First-in-Nation-Mandates-Disclosure-of-
ThirdParty-Funding-in-Class-
Actions?slreturn=20170101100404.
---------------------------------------------------------------------------
    In these situations, the third-party funders of the lawsuit 
do not represent the interests of the class members. They're in 
the lawsuits solely to make money for themselves, possibly 
including taking money away from the victims' own recovery. A 
lawyer should not be allowed to enter into secret agreements 
signing away the class members' funds. Consequently, the 
subsection of FICALA entitled ``Third-party litigation funding 
disclosure'' requires that any such third-party funding 
agreement be disclosed to the district court and all parties. 
That would allow the district court to take appropriate steps 
to protect class members' interests.

Appeals:
A court of appeals shall permit an appeal from an order 
granting or denying class-action certification under Rule 23 of 
the Federal Rules of Civil Procedure.

    The certification decision in a class action as a practical 
matter disposes of the case, because virtually every case in 
which a class is certified is settled. That's why Federal 
judges consistently characterize class certification as ``in 
effect, the whole case.''\52\ But district courts' class 
certification decisions are not automatically appealable. 
Federal Rule of Civil Procedure 23(f) gives Federal courts of 
appeals discretionary authority to grant permission to appeal a 
class certification ruling. A study of class certification 
appeals filed over 7 years (from October 31, 2006 through 
December 31, 2013) found that less than 25% of the petitions to 
appeal were granted--a one-third decline in the grant rate from 
the prior 8-year period.\53\ And the grant rate varied 
dramatically among the circuits, from 5.4% to 46.4%.\54\ 
Importantly, a significant share of district court decisions 
are reversed--more than one-third.\55\
---------------------------------------------------------------------------
    \52\Hon. Diane Wood, Circuit Judge, Remarks at the FTC Workshop: 
Protecting Consumer Interests in Class Actions (Sept. 13-14, 2004), in 
Panel 2: Tools for Ensuring that Settlements are ``Fair, Reasonable, 
and Adequate,'' 18 Geo. J. Legal Ethics 1197, 1213 (2005). As Justice 
Ruth Bader Ginsburg has also explained, ``[a] court's decision to 
certify a class . . . places pressure on the defendant to settle even 
unmeritorious claims.'' Shady Grove Orthopedic Assocs., P.A. v. 
Allstate Ins. Co., 559 U.S. 393, 445 n.3 (2010) (Ginsburg, J., 
dissenting).
    \53\Skadden, Arps, Slate, Meagher & Flom LLP, Study Reveals US 
Courts of Appeal Are Less Receptive to Reviewing Class Certification 
Rulings at 1 (April 2014), available at https://www.skadden.-com/sites/
default/files/publications/Study_Reveals_US_Courts_of%20Appeal_Are_
Less_Receptive_to_Reviewing_Class_Certification_Rulings.pdf.
    \54\Id. at 1-2.
    \55\Id.
---------------------------------------------------------------------------
    The provision in the bill is even-handed, as it allows an 
appeal as of right of a class certification decision, whether 
that decision went against the plaintiff or the defendant. 
Promoting correctness and uniformity of class certification 
decisions is essential given the critical role of certification 
in these lawsuits. And the differing treatment based on 
geographic location is something Congress should remedy. 
Consequently, FICALA's appeals provision helps ensure the 
correctness of class action certification rulings by providing 
that class certification decisions are appealable as of right. 
Getting class certification questions correctly decided is 
essential to fixing the current class action system, and that 
will not happen unless appellate courts weigh in.
Sec. 4. Misjoinder of Plaintiffs in Personal Injury and Wrongful Death 
        Actions.
(d) MISJOINDER OF PLAINTIFFS IN PERSONAL INJURY AND WRONGFUL 
DEATH ACTIONS.--(1) This subsection shall apply to any civil 
action in which--(A) two or more plaintiffs assert personal 
injury or wrongful death claims; (B) the action is removed on 
the basis of the jurisdiction conferred by section 1332(a)\56\; 
and (C) a motion to remand is made on the ground that one or 
more defendants are citizens of the same State as one or more 
plaintiffs. (2) In deciding the remand motion in any such case, 
the court shall apply the jurisdictional requirements of 
section 1332(a) to the claims of each plaintiff individually, 
as though that plaintiff were the sole plaintiff in the action. 
(3) The court shall sever the claims that do not satisfy the 
jurisdictional requirements of section 1332(a) and shall remand 
those claims to the State court from which the action was 
removed. The court shall retain jurisdiction over the claims 
that satisfy the jurisdictional requirements of section 
1332(a).
---------------------------------------------------------------------------
    \56\28 U.S.C. Sec. 1332(a) is the general Federal diversity statute 
that sets out the criteria cases must meet in order to be heard in a 
Federal court. It provides as follows: ``(a) The district courts shall 
have original jurisdiction of all civil actions where the matter in 
controversy exceeds the sum or value of $75,000, exclusive of interest 
and costs, and is between--(1) citizens of different States; (2) 
citizens of a State and citizens or subjects of a foreign state, except 
that the district courts shall not have original jurisdiction under 
this subsection of an action between citizens of a State and citizens 
or subjects of a foreign state who are lawfully admitted for permanent 
residence in the United States and are domiciled in the same State; (3) 
citizens of different States and in which citizens or subjects of a 
foreign state are additional parties; and (4) a foreign state, defined 
in section 1603(a) of this title, as plaintiff and citizens of a State 
or of different States.''

    Congress enacted the Class Action Fairness Act in 2005 to 
address a serious problem: certain ``magnet'' state courts were 
handling many (if not most) class actions with national 
ramifications, effectively dictating results for residents of 
all 50 states. Now, the same problem has arisen with mass tort 
claims, claims in which lots of individual lawsuits are joined 
together into one big one.
    Aggressive trial lawyers are managing to establish what are 
effectively full-blown, nationwide mass tort proceedings in 
state courts by designing their lawsuits with the goal of 
preventing removal of their cases to Federal court. They do 
this by adding parties to defeat diversity jurisdiction, even 
though the claims should be subject to Federal diversity 
jurisdiction. A few state courts have effectively become 
national mass tort courts, deciding cases with no relationship 
to the venue. The principal reason lawyers can engage in this 
abusive practice is that the Federal courts are divided on 
whether to adopt the fraudulent misjoinder doctrine--the 
principle that in assessing Federal subject matter 
jurisdiction, Federal courts should not defer to plaintiffs' 
grouping of multiple claims in a single complaint if the 
apparent purpose is to avoid Federal jurisdiction, and instead 
conduct a jurisdictional analysis on a case-by-case basis, 
making sure that cases in which the real parties in interest 
are from different states have a Federal forum for their 
dispute.\57\
---------------------------------------------------------------------------
    \57\Compare Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1360 
(11th Cir. 1996) (applying fraudulent misjoinder doctrine) with In re 
Prempro Prods. Liab. Litig., 591 F.3d 613 (8th Cir. 2010) (declining to 
adopt or reject fraudulent misjoinder doctrine).
---------------------------------------------------------------------------
    Congress needs to prevent abusive mass action litigation by 
ensuring Federal court jurisdiction over nationwide mass tort 
proceedings. That is why FICALA's section on misjoinder 
codifies the fraudulent misjoinder doctrine in the mass tort 
context by requiring Federal courts to consider each 
plaintiff's claims separately in assessing Federal jurisdiction 
over multi-plaintiff complaints asserting personal injury or 
wrongful death claims. The House Judiciary Committee recently 
reported out H.R. 725, the Innocent Party Protection Act, which 
prevents lawyers from adding local defendants with the same 
citizenship as the plaintiff to a lawsuit simply to keep the 
case in a preferred state court. The fraudulent misjoinder 
provision in FICALA similarly prevents lawyers from adding 
plaintiffs with the same citizenship as the out-of-state 
defendant to a mass torts case simply to keep the case in state 
court. This provision addresses the flip side of the same coin.
    In Tapscott v. MS Dealer Service Corp., the Eleventh 
Circuit held that a district court had jurisdiction over a 
lawsuit removed to Federal court where certain parties were 
``egregious[ly] misjoined and ``ha[d] no real connection'' to 
each other.\58\ Relying on this doctrine, a number of courts 
have applied fraudulent misjoinder where plaintiffs attempt to 
join their factually dissimilar personal injury claims in a 
single action in an attempt to defeat diversity 
jurisdiction.\59\ But many others have not, including Federal 
courts in California, based largely on the fact that the Ninth 
Circuit has never expressly adopted the fraudulent misjoinder 
doctrine.\60\ A recent study of more than 2,900 cases filed 
against companies in Los Angeles and San Francisco counties 
between 2010 and 2016 found that the cases involved 25,000 
individual plaintiffs, and that only 10.1% of the plaintiffs 
were California residents.\61\ The remaining 89.9%--
representing over 20,000 individual plaintiffs--were residents 
of another state.\62\ This provision of FICALA would prevent 
such abuse.
---------------------------------------------------------------------------
    \58\Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1360 (11th 
Cir. 1996), abrogated on other grounds by Cohen v. Office Depot, Inc., 
204 F.3d 1069, 1076 (11th Cir. 2000).
    \59\See, e.g., In re Propecia (Finasteride) Prod. Liab. Litig., 
Nos. 12-MD-2331 (JG) (VVP), 12-CV-2049 (JG) (VVP), 2013 U.S. Dist. 
LEXIS 117375, at *71 (E.D.N.Y. May 17, 2013) (``[T]he court concludes 
that the doctrine of fraudulent misjoinder should be applied to the 
claims here. There is no basis for joining, in a single action, fifty-
four plaintiffs from twenty-four jurisdictions who purchased different 
products at different times from unidentified sources.''), adopted, 
2013 U.S. Dist. LEXIS 118155 (E.D.N.Y. June 6, 2013).
    \60\In re Boston Sci. Corp., 2015 U.S. Dist. LEXIS 133665, at *4.
    \61\See Ryan Tacher, Civil Justice Ass'n of Cal., Out-of-State 
Plaintiffs: Are Out-of-State Plaintiffs Clogging California Courts? 2 
(2016), http://cjac.org/what/research/CJAC_Out_of_
State_Plaintiffs_Exec_Summary.pdf.
    \62\Id.
---------------------------------------------------------------------------
    Two cases provide good illustrations of the need for this 
misjoinder provision. Bancroft v. Bayer Corp.\63\ involved a 
products liability lawsuit filed in St. Clair County, Illinois 
(adjoining the notorious Madison County). The complaint joined 
the claims of 45 plaintiffs, one of whom (and apparently only 
one) was a co-citizen of the defendant. Other plaintiffs came 
from all over the country. The defendant removed, asserting 
fraudulent misjoinder under the Eleventh Circuit's decision in 
Tapscott v. MS Dealer Service Corp.,\64\ but the district court 
rejected Tapscott and refused to adopt the fraudulent 
misjoinder doctrine. The Bancroft case shows how current law 
allows plaintiffs to defeat removal that is otherwise proper by 
finding a single plaintiff among many (here, one out of 45) who 
is a co-citizen of the defendant. The misjoinder provision of 
the bill would allow the defendant to remove the 44 plaintiffs' 
claims that individually satisfy all the requirements for 
diversity jurisdiction.
---------------------------------------------------------------------------
    \63\2010 WL 148628 (S.D. Ill. Jan. 13, 2010).
    \64\77 F.3d 1353 (11th Cir. 1996).
---------------------------------------------------------------------------
    An even more recent egregious illustration is Jones v. 
Bayer Corp.\65\ In Jones, 99 plaintiffs filed a single lawsuit 
in the Circuit Court of St. Louis, Missouri, asserting products 
liability claims against Bayer and other defendants. The number 
99 was hardly a coincidence; with fewer than 100 plaintiffs, 
the defendants could not remove the case under the ``mass 
action'' provision of the Class Action Fairness Act. The 
defendants argued for removal under Sec. 1332(a), but the 
plaintiffs' lawyers anticipated that and made sure 3 of the 99 
plaintiffs were co-citizens with one or more of the corporate 
defendants. The district court rejected the defendants' attempt 
to invoke the fraudulent misjoinder doctrine and ordered remand 
even though the case (minus the 3 co-citizen defendants) 
belonged in Federal court. The misjoinder provision in the bill 
would remedy that.
---------------------------------------------------------------------------
    \65\2016 WL 7230433 (E.D. Mo. Dec. 14, 2016).
---------------------------------------------------------------------------
Sec. 5. Multidistrict Litigation Proceedings Procedures.
Allegations Verification:
(i) ALLEGATIONS VERIFICATION.--In any coordinated or 
consolidated pretrial proceedings conducted pursuant to 
subsection (b), counsel for a plaintiff asserting a claim 
seeking redress for personal injury whose civil action is 
assigned to or directly filed in the proceedings shall make a 
submission sufficient to demonstrate that there is evidentiary 
support (including but not limited to medical records) for the 
factual contentions in plaintiff's complaint regarding the 
alleged injury, the exposure to the risk that allegedly caused 
the injury, and the alleged cause of the injury. The submission 
must be made within the first 45 days after the civil action is 
transferred to or directly filed in the proceedings. That 
deadline shall not be extended. Within 30 days after the 
submission deadline, the judge or judges to whom the action is 
assigned shall enter an order determining whether the 
submission is sufficient and shall dismiss the action without 
prejudice if the submission is found to be insufficient. If a 
plaintiff in an action dismissed without prejudice fails to 
tender a sufficient submission within the following 30 days, 
the action shall be dismissed with prejudice.

    Congress created multi-district litigation ``MDL'' 
proceedings as a special Federal legal procedure designed to 
speed the process of handling complex cases when ``civil 
actions involving one or more common questions of fact are 
pending in different districts.''\66\ The Judicial Panel on 
Multidistrict Litigation decides whether cases should be 
consolidated under MDL, and if so, where the cases should be 
transferred. Cases subject to MDL are sent from one court, 
known as the transferor, to another, known as the transferee, 
for all pretrial proceedings and discovery. If a case is not 
settled or dismissed in the transferee court, it is remanded 
(that is, sent back) to the transferor court for trial. The MDL 
proceedings concept, however, has become subject to great 
abuse.
---------------------------------------------------------------------------
    \66\28 U.S.C. Sec. 1407.
---------------------------------------------------------------------------
    Last year, one Federal MDL judge--Chief Judge Clay Land of 
the U.S. District Court for the Middle District of Georgia--
became so disgusted with the breakdown of the MDL process as it 
exists today that he issued an opinion that included the 
following comments:

        Some lawyers seem to think that their cases will be 
        swept into the MDL where a global settlement will be 
        reached, allowing them to obtain recovery without the 
        individual merit of their case being scrutinized as 
        closely as it would if it proceeded as a separate 
        individual action. This attitude explains why many 
        cases are filed . . . with so little pre-filing 
        preparation that counsel apparently has no idea whether 
        or how she will prove causation. . . . [B]ased on 
        fifteen years on the Federal bench and a front row seat 
        as an MDL transferee judge [I am] convinced that MDL 
        consolidation for products liability actions does have 
        the unintended consequence of producing more new case 
        filings of marginal merit in Federal court, many of 
        which would not have been filed otherwise.\67\
---------------------------------------------------------------------------
    \67\Order, In re Mentor Corp. (MDL Docket No. 2004, 4:08-MD-2004 
(CDL)), Document 1039 (filed September 7, 2016) (U.S. District Judge 
Clay D. Land, M.D.Ga.).

    When a mass tort MDL proceeding is created, a helter-
skelter ``gold rush'' ensues. Opportunistic lawyers launch 
advertising campaigns that result in the rapid filing of poorly 
investigated--and often frivolous or fraudulent--claims that 
otherwise would never have been filed. As Chief Judge Land 
noted in his decision, ``The MDL [here] began with twenty-two 
cases. Due to subsequent tag along transfers, it exploded to 
more than 850 cases, which explosion appears to have been 
fueled, at least in part, by an onslaught of lawyers television 
solicitations.''\68\ The allegation verification provisions of 
FICALA would help change that.
---------------------------------------------------------------------------
    \68\Order, In re Mentor Corp. (MDL Docket No. 2004, 4:08-MD-2004 
(CDL)), Document 1039 (filed September 7, 2016) (U.S. District Judge 
Clay D. Land, M.D.Ga.).
---------------------------------------------------------------------------
    Because of the lack of screening of these mass tort claims, 
they are taking over the Federal court system. Astoundingly, 
there are around 120,000 lawsuits pending in those MDL 
proceedings. That's 35% of all civil lawsuits currently pending 
in all Federal courts nationwide (which number about 342,000). 
FICALA would correct that problem by making plaintiffs' counsel 
demonstrate up front that they've performed an adequate 
investigation of each claim before filing it.
    Many claims filed in MDL proceedings are bogus: there is no 
apparent evidence of injury or exposure to the alleged risk. As 
MDL Judge Land noted, MDL proceedings encourage ``case filings 
of marginal merit''--cases ``that otherwise could not be filed 
if they had to stand on their own.''\69\ In the silica 
litigation, Judge Janis Graham Jack oversaw an MDL proceeding 
encompassing thousands of lawsuits alleging that plaintiffs had 
been harmed by breathing in crystalline silica, a substance 
similar to sand, but smaller. She wrote, ``Because of silica's 
widespread use, some plaintiffs' lawyers viewed it as the 
source of the next big mass tort'' after asbestos.\70\ But in 
the end, Judge Jack, who presided over the silica MDL 
proceeding, recommended that all but one of the 10,000 claims 
on the MDL docket should be dismissed on remand because the 
diagnoses were fraudulently prepared.\71\ In a sharp ruling 
finding litigation screening fraud, Judge Jack resolved that 
the ```epidemic' of some 10,000 cases of silicosis `is largely 
the result of misdiagnosis''' and that ``the failure of the 
challenged doctors to observe the same standards for a `legal 
diagnosis' as they do for a `medical diagnosis' renders their 
diagnoses . . . inadmissible[.]''\72\ According to Judge Jack, 
``the diagnoses were . . . manufactured for money,''\73\ and 
``in [the] hopes of extracting mass nuisance-value settlements 
because [defendants] are financially incapable of examining the 
merits of each individual claim in the usual manner.''\74\
---------------------------------------------------------------------------
    \69\In re Mentor Corp. Obtape Transobturator Sling Prods. Liab. 
Litig., MDL No. 2004, slip op. at 4 (M.D. Ga. Sept. 17, 2016).
    \70\Julie Creswell, Testing for Silicosis Comes Under Scrutiny in 
Congress, N.Y. Times, Mar. 8, 2006, http://www.nytimes.com/2006/03/08/
business/08silica.html?pagewanted=print&_r=0.
    \71\Victor E. Schwartz et al., Getting the Sand Out of the Eyes of 
the Law: The Need for a Clear Rule for Sand Suppliers in Texas after 
Humble Sand & Gravel, Inc. v. Gomez, 37 St. Mary's L.J. 283, 291 
(2006).
    \72\In re Silica Prods. Liab. Litig., 398 F. Supp. 2d 563, 632, 634 
(S.D. Tex. 2005) (citation omitted).
    \73\Id. at 635.
    \74\Lester Brickman, The Use of Litigation Screenings in Mass 
Torts: A Formula for Fraud?, 61 SMU L. Rev. 1221, 1316 n.512 (2008) 
(quoting In re Silica, 398 F. Supp. 2d at 676).
---------------------------------------------------------------------------
    Meritless claims are clogging the system, diverting 
judicial attention away from more valid claims. And because 
they create the misimpression that thousands have been injured, 
they create improper, indiscriminate pressure on defendants to 
settle. Thus, as Chief Judge Land observed, there is a need for 
``approaches that weed out non-meritorious cases early, 
efficiently, and justly.''\75\
---------------------------------------------------------------------------
    \75\Order, In re Mentor Corp. (MDL Docket No. 2004, 4:08-MD-2004 
(CDL)), Document 1039 (filed September 7, 2016) (U.S. District Judge 
Clay D. Land, M.D.Ga.).
---------------------------------------------------------------------------
    The allegations verification provision of FICALA is just 
such an approach. It would require that for each lawsuit filed 
in or transferred to a Federal MDL mass tort proceeding, 
plaintiffs' lawyers must submit to the MDL court evidence that 
before filing, they properly investigated the asserted claims. 
Specifically, they would be required to submit evidentiary 
support (including, but not limited to, medical records) for 
the factual contentions in each plaintiff's complaint regarding 
the alleged injury, the exposure to the risk that allegedly 
caused the injury, and the alleged cause of the injury.

Trial Prohibition:
(j) TRIAL PROHIBITION.--In any coordinated or consolidated 
pretrial proceedings conducted pursuant to subsection (b),\76\ 
the judge or judges to whom actions are assigned by the 
Judicial Panel on Multidistrict Litigation may not conduct any 
trial in any civil action transferred to or directly filed in 
the proceedings unless all parties to the civil action consent 
to trial of the specific case sought to be tried.
---------------------------------------------------------------------------
    \76\28 U.S.C. Sec. 1407(b) sets out the procedures for MDL 
proceedings, providing that ``Such coordinated or consolidated pretrial 
proceedings shall be conducted by a judge or judges to whom such 
actions are assigned by the judicial panel on multidistrict litigation. 
For this purpose, upon request of the panel, a circuit judge or a 
district judge may be designated and assigned temporarily for service 
in the transferee district by the Chief Justice of the United States or 
the chief judge of the circuit, as may be required, in accordance with 
the provisions of chapter 13 of this title. With the consent of the 
transferee district court, such actions may be assigned by the panel to 
a judge or judges of such district. The judge or judges to whom such 
actions are assigned, the members of the judicial panel on 
multidistrict litigation, and other circuit and district judges 
designated when needed by the panel may exercise the powers of a 
district judge in any district for the purpose of conducting pretrial 
depositions in such coordinated or consolidated pretrial proceedings.''

    28 U.S.C. Sec. 1407(a), which authorizes MDL proceedings, 
explicitly states that ``When civil actions involving one or 
more common questions of fact are pending in different 
districts, such actions may be transferred to any district for 
coordinated or consolidated pretrial proceedings.'' The 
repeated use of the word ``pretrial'' throughout the rest of 
Sec. 1407 makes clear that trials are not authorized to be 
conducted by MDL courts. But while the MDL statute provides 
only for consolidated pre-trial proceedings, some MDL courts 
pressure defendants to agree to so-called ``bellwether'' 
trials--namely, pseudo-trials that supposedly test a claim's 
suitability for settlement--in order to pressure a settlement 
in the case. Often, however, those trials are not fair tests of 
the plaintiffs' claims because they consist of claims hand-
picked by plaintiffs' counsel that do not fairly represent the 
claims of all the plaintiffs in the MDL proceedings.
    In enacting the MDL statute, Congress made clear that MDL 
courts were supposed to handle pre-trial proceedings only--and 
then send the cases back to the courts in which they were 
originally filed for trial: ``Each action so transferred shall 
be remanded by the panel at or before the conclusion of such 
pretrial proceedings to the district from which it was 
transferred unless it shall have been previously 
terminated.''\77\ The MDL trial prohibition in FICALA would 
prevent the unfair, improper use of the MDL process to deprive 
defendants of their due process right to individual trials by 
affirming Congress's original intent that MDL proceedings are 
for pre-trial purposes only--and that no trial may be conducted 
by an MDL court unless all parties consent to a waiver of venue 
and personal jurisdiction for that particular trial.
---------------------------------------------------------------------------
    \77\28 U.S.C. Sec. 1407(a).

Review of Orders:
(k) REVIEW OF ORDERS.--(1) IN GENERAL.--The Court of Appeals 
having jurisdiction over the transferee district shall permit 
an appeal to be taken from any order issued in the conduct of 
coordinated or consolidated pretrial proceedings conducted 
pursuant to subsection (b),\78\ provided that an immediate 
appeal from the order may materially\79\ advance the ultimate 
termination of one or more civil actions in the proceedings. 
(2) REMAND ORDERS.--Notwithstanding section 1447(e),\80\ a 
court of appeals may accept an appeal from an order issued in 
any coordinated or consolidated proceedings conducted pursuant 
to subsection (b) granting or denying a motion to remand a 
civil action to the State court from which it was removed if 
application is made to the court of appeals within 14 days 
after the order is entered.
---------------------------------------------------------------------------
    \78\28 U.S.C. Sec. 1407(b) sets out the procedures for MDL 
proceedings, providing that ``Such coordinated or consolidated pretrial 
proceedings shall be conducted by a judge or judges to whom such 
actions are assigned by the judicial panel on multidistrict litigation. 
For this purpose, upon request of the panel, a circuit judge or a 
district judge may be designated and assigned temporarily for service 
in the transferee district by the Chief Justice of the United States or 
the chief judge of the circuit, as may be required, in accordance with 
the provisions of chapter 13 of this title. With the consent of the 
transferee district court, such actions may be assigned by the panel to 
a judge or judges of such district. The judge or judges to whom such 
actions are assigned, the members of the judicial panel on 
multidistrict litigation, and other circuit and district judges 
designated when needed by the panel may exercise the powers of a 
district judge in any district for the purpose of conducting pretrial 
depositions in such coordinated or consolidated pretrial proceedings.''
    \79\Black's Law Dictionary (10th ed. 2014) defines ``material'' as 
``Of such a nature that knowledge of the item would affect a person's 
decision-making; significant; essential.''
    \80\28 U.S.C. Sec. 1447(d), which will become Sec. 1447(e) if 
FICALA becomes law, states ``An order remanding a case to the State 
court from which it was removed is not reviewable on appeal or 
otherwise, except that an order remanding a case to the State court 
from which it was removed pursuant to section 1442 or 1443 of this 
title shall be reviewable by appeal or otherwise.'' The text of FICALA 
makes clear that discretionary review by an appeals court of 
jurisdictional remand rulings by an MDL court are authorized, 
notwithstanding the prohibitions on such review in 28 U.S.C. 
Sec. 1447(d).

    Some MDL judges have issued questionable rulings on pivotal 
issues that are not subject to immediate appellate review, 
including the admissibility of expert evidence and the 
appropriateness of multi-plaintiff trials. Given the high 
stakes of these cases, and the likelihood of a coerced 
settlement based on incorrect legal rulings, interlocutory 
review is critical. Moreover, greater appellate court attention 
to mass tort MDL proceedings is warranted, because these 
proceedings now encompass more than 35% of all civil cases 
pending in the Federal court system nationwide.
    Indeed, MDL courts have sometimes forced defendants to 
proceed with consecutive trials without the benefit of 
appellate review, even though the same judicial errors will 
likely be repeated. For example, in In re E. I. du Pont de 
Nemours & Co., the MDL judge recognized that ``some issues on 
appeal may impact the cases that are not yet tried in th[e] 
MDL.''\81\ Nonetheless, the court refused to stay further 
trials pending the resolution of the appeal, reasoning that 
bellwether ``trials are meant not only for determination of the 
rights and obligations of the litigants, but for a special 
purpose . . . information gathering that may lead to a global 
settlement.''\82\ But that does not make sense, because if the 
information gathered is a result of uncorrected legal errors, 
then any resulting settlement is tainted.
---------------------------------------------------------------------------
    \81\In re E. I. du Pont de Nemours & Co., MDL 2433, 2016 U.S. Dist. 
LEXIS 43337, at *1198 (S.D. Ohio Mar. 29, 2016).
    \82\Id. at *1198-99.
---------------------------------------------------------------------------
    To help prevent these problems, the ``review of orders'' 
provision in FICALA would authorize immediate appellate review 
of interlocutory MDL court orders where immediate review may 
materially advance the ultimate conclusion of one or more cases 
in the MDL proceeding.

Ensuring Proper Recovery for Plaintiffs:
(l) ENSURING PROPER RECOVERY FOR PLAINTIFFS.--The claimants in 
any civil action asserting a claim for personal injury 
transferred to or directly filed in coordinated or consolidated 
pretrial proceedings conducted pursuant to subsection (b)\83\ 
shall receive not less than 80 percent of any monetary recovery 
obtained in that action by settlement, judgment or otherwise. 
The judge or judges to whom the coordinated or consolidated 
pretrial proceedings have been assigned shall have jurisdiction 
over any disputes regarding compliance with this requirement.
---------------------------------------------------------------------------
    \83\28 U.S.C. Sec. 1407(b) sets out the procedures for MDL 
proceedings, providing that ``Such coordinated or consolidated pretrial 
proceedings shall be conducted by a judge or judges to whom such 
actions are assigned by the judicial panel on multidistrict litigation. 
For this purpose, upon request of the panel, a circuit judge or a 
district judge may be designated and assigned temporarily for service 
in the transferee district by the Chief Justice of the United States or 
the chief judge of the circuit, as may be required, in accordance with 
the provisions of chapter 13 of this title. With the consent of the 
transferee district court, such actions may be assigned by the panel to 
a judge or judges of such district. The judge or judges to whom such 
actions are assigned, the members of the judicial panel on 
multidistrict litigation, and other circuit and district judges 
designated when needed by the panel may exercise the powers of a 
district judge in any district for the purpose of conducting pretrial 
depositions in such coordinated or consolidated pretrial proceedings.''

    When the cost-savings economies of scale are achieved by 
trial lawyers in an MDL proceeding, those savings should be 
passed on to the victims. But unfortunately, mass tort 
litigation matters suffer from the same problem as class 
actions: lawyers manipulate the system to take an unfair share 
of settlement payments. Even though trial lawyers may be 
handling thousands of copycat individual cases asserting 
similar personal injury or wrongful death claims and theories--
and thereby realizing substantial economies of scale--they 
still demand a 33-40% fee, which is standard for a standalone 
case, but a huge windfall when the lawyer is handling a large 
number of copycat mass tort cases under the streamlined MDL 
process.
    The provision of FICALA entitled ``Ensuring Proper Recovery 
for Plaintiffs'' therefore requires that in settlements of 
Federal court mass tort claims in MDL proceedings, 80% of all 
compensation paid must go directly to claimants, regardless of 
what the lawyer-client fee arrangement may provide. Plaintiffs' 
lawyers who file lawsuits do not operate in a free market 
environment. Instead, they have the unique ability to simply 
give another party a piece of paper--a legal complaint--which 
requires the other party to spend money in their defense, 
regardless of the merits of the complaint against them, or else 
risk a default judgment for not defending themselves. 
Unscrupulous lawyers can then simply point out to the parties 
served that the costs of paying off the lawyers will be less 
than the costs of the other parties' defending themselves. And 
so innocent parties served with complaints are pressured to 
settle.
    The Supreme Court has also noted the institutionally 
coercive role lawyers are allowed to play in society, stating 
in one case ``As an officer of the court, a member of the bar 
enjoys singular powers that others do not possess; by virtue of 
admission, members of the bar share a kind of monopoly granted 
only to lawyers. . . . [A]s an officer of the court, a lawyer 
can cause persons to drop their private affairs and be called 
as witnesses in court, and for depositions and other pretrial 
processes that, while subject to the ultimate control of the 
court, may be conducted outside courtrooms. The license granted 
by the court requires members of the bar to conduct themselves 
in a manner compatible with the role of courts in the 
administration of justice.''\84\
---------------------------------------------------------------------------
    \84\In re Snyder, 472 U.S. 634, 644 (1985).
---------------------------------------------------------------------------
    This understanding has a long history in America. Indeed, 
fear that the legal profession would abuse its power to 
generate lawsuits led to limits on attorneys' fees in all the 
states at the Founding of our country. In 1778, in Virginia, 
attorneys' fees were fixed by statute in the General Court and 
the High Court of Chancery depending on the nature of the 
action.\85\ Delaware had its own unique method for reducing 
litigiousness. In 1793, Delaware passed the Act for Regulating 
and Establishing Fees providing that for all pleadings in an 
action subsequent to a declaration, the fee would be one cent 
for every written line, twelve words to a line.\86\
---------------------------------------------------------------------------
    \85\9 Statutes at Large of Virginia 529 (Hening ed. 1823).
    \86\2 Laws of the State of Delaware 1116, c. 27 (1797).
---------------------------------------------------------------------------
    Given the unique power of lawyers filing lawsuits to coerce 
settlements, it's reasonable to require that when lawyers use 
the Federal MDL system to consolidate multiple, identical 
claims while streamlining their own lawsuit costs, Federal 
rules should require them to pass along those savings to 
victims. Because if they do not, the MDL system will continue 
to incentivize lawyers to treat it less as a means of 
efficiently resolving claims for victims, and more as a means 
of allowing unscrupulous lawyers to increase their coercive 
settlement leverage and thereby pad their own bank accounts.
Sec. 6. Rulemaking Authority of Supreme Court and Judicial Conference.
    This section makes clear that nothing in the bill restricts 
the authority of the Judicial Conference and the Supreme Court 
to propose their own rule changes under chapter 131 of title 28 
of the U.S. Code, which sets out the procedures under which the 
courts themselves can create their own rules.
Sec. 7. Effective Date.
    This section provides that the amendments made by the bill 
shall apply on the date of enactment.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                      TITLE 28, UNITED STATES CODE



           *       *       *       *       *       *       *
PART IV--JURISDICTION AND VENUE

           *       *       *       *       *       *       *


CHAPTER 87--DISTRICT COURTS; VENUE

           *       *       *       *       *       *       *


Sec. 1407. Multidistrict litigation

    (a) When civil actions involving one or more common 
questions of fact are pending in different districts, such 
actions may be transferred to any district for coordinated or 
consolidated pretrial proceedings. Such transfers shall be made 
by the judicial panel on multidistrict litigation authorized by 
this section upon its determination that transfers for such 
proceedings will be for the convenience of parties and 
witnesses and will promote the just and efficient conduct of 
such actions. Each action so transferred shall be remanded by 
the panel at or before the conclusion of such pretrial 
proceedings to the district from which it was transferred 
unless it shall have been previously terminated: Provided, 
however, That the panel may separate any claim, cross-claim, 
counter-claim, or third-party claim and remand any of such 
claims before the remainder of the action is remanded.
    (b) Such coordinated or consolidated pretrial proceedings 
shall be conducted by a judge or judges to whom such actions 
are assigned by the judicial panel on multidistrict litigation. 
For this purpose, upon request of the panel, a circuit judge or 
a district judge may be designated and assigned temporarily for 
service in the transferee district by the Chief Justice of the 
United States or the chief judge of the circuit, as may be 
required, in accordance with the provisions of chapter 13 of 
this title. With the consent of the transferee district court, 
such actions may be assigned by the panel to a judge or judges 
of such district. The judge or judges to whom such actions are 
assigned, the members of the judicial panel on multidistrict 
litigation, and other circuit and district judges designated 
when needed by the panel may exercise the powers of a district 
judge in any district for the purpose of conducting pretrial 
depositions in such coordinated or consolidated pretrial 
proceedings.
    (c) Proceedings for the transfer of an action under this 
section may be initiated by--
            
                    
            (i) the judicial panel on multidistrict litigation 
        upon its own initiative, or
            
                    
            (ii) motion filed with the panel by a party in any 
        action in which transfer for coordinated or 
        consolidated pretrial proceedings under this section 
        may be appropriate. A copy of such motion shall be 
        filed in the district court in which the moving party's 
        action is pending.
The panel shall give notice to the parties in all actions in 
which transfers for coordinated or consolidated pretrial 
proceedings are contemplated, and such notice shall specify the 
time and place of any hearing to determine whether such 
transfer shall be made. Orders of the panel to set a hearing 
and other orders of the panel issued prior to the order either 
directing or denying transfer shall be filed in the office of 
the clerk of the district court in which a transfer hearing is 
to be or has been held. The panel's order of transfer shall be 
based upon a record of such hearing at which material evidence 
may be offered by any party to an action pending in any 
district that would be affected by the proceedings under this 
section, and shall be supported by findings of fact and 
conclusions of law based upon such record. Orders of transfer 
and such other orders as the panel may make thereafter shall be 
filed in the office of the clerk of the district court of the 
transferee district and shall be effective when thus filed. The 
clerk of the transferee district court shall forthwith transmit 
a certified copy of the panel's order to transfer to the clerk 
of the district court from which the action is being 
transferred. An order denying transfer shall be filed in each 
district wherein there is a case pending in which the motion 
for transfer has been made.
    (d) The judicial panel on multidistrict litigation shall 
consist of seven circuit and district judges designated from 
time to time by the Chief Justice of the United States, no two 
of whom shall be from the same circuit. The concurrence of four 
members shall be necessary to any action by the panel.
    (e) No proceedings for review of any order of the panel may 
be permitted except by extraordinary writ pursuant to the 
provisions of title 28, section 1651, United States Code. 
Petitions for an extraordinary writ to review an order of the 
panel to set a transfer hearing and other orders of the panel 
issued prior to the order either directing or denying transfer 
shall be filed only in the court of appeals having jurisdiction 
over the district in which a hearing is to be or has been held. 
Petitions for an extraordinary writ to review an order to 
transfer or orders subsequent to transfer shall be filed only 
in the court of appeals having jurisdiction over the transferee 
district. There shall be no appeal or review of an order of the 
panel denying a motion to transfer for consolidated or 
coordinated proceedings.
    (f) The panel may prescribe rules for the conduct of its 
business not inconsistent with Acts of Congress and the Federal 
Rules of Civil Procedure.
    (g) Nothing in this section shall apply to any action in 
which the United States is a complainant arising under the 
antitrust laws. ``Antitrust laws'' as used herein include those 
acts referred to in the Act of October 15, 1914, as amended (38 
Stat. 730; 15 U.S.C. 12), and also include the Act of June 19, 
1936 (49 Stat. 1526; 15 U.S.C. 13, 13a, and 13b) and the Act of 
September 26, 1914, as added March 21, 1938 (52 Stat. 116, 117; 
15 U.S.C. 56); but shall not include section 4A of the Act of 
October 15, 1914, as added July 7, 1955 (69 Stat. 282; 15 
U.S.C. 15a).
    (h) Notwithstanding the provisions of section 1404 or 
subsection (f) of this section, the judicial panel on 
multidistrict litigation may consolidate and transfer with or 
without the consent of the parties, for both pretrial purposes 
and for trial, any action brought under section 4C of the 
Clayton Act.
    (i) Allegations Verification.--In any coordinated or 
consolidated pretrial proceedings conducted pursuant to 
subsection (b), counsel for a plaintiff asserting a claim 
seeking redress for personal injury whose civil action is 
assigned to or directly filed in the proceedings shall make a 
submission sufficient to demonstrate that there is evidentiary 
support (including but not limited to medical records) for the 
factual contentions in plaintiff's complaint regarding the 
alleged injury, the exposure to the risk that allegedly caused 
the injury, and the alleged cause of the injury. The submission 
must be made within the first 45 days after the civil action is 
transferred to or directly filed in the proceedings. That 
deadline shall not be extended. Within 30 days after the 
submission deadline, the judge or judges to whom the action is 
assigned shall enter an order determining whether the 
submission is sufficient and shall dismiss the action without 
prejudice if the submission is found to be insufficient. If a 
plaintiff in an action dismissed without prejudice fails to 
tender a sufficient submission within the following 30 days, 
the action shall be dismissed with prejudice.
    (j) Trial Prohibition.--In any coordinated or consolidated 
pretrial proceedings conducted pursuant to subsection (b), the 
judge or judges to whom actions are assigned by the Judicial 
Panel on Multidistrict Litigation may not conduct any trial in 
any civil action transferred to or directly filed in the 
proceedings unless all parties to the civil action consent to 
trial of the specific case sought to be tried.
    (k) Review of Orders.--
            (1) In general.--The Court of Appeals having 
        jurisdiction over the transferee district shall permit 
        an appeal to be taken from any order issued in the 
        conduct of coordinated or consolidated pretrial 
        proceedings conducted pursuant to subsection (b), 
        provided that an immediate appeal from the order may 
        materially advance the ultimate termination of one or 
        more civil actions in the proceedings.
            (2) Remand orders.--Notwithstanding section 
        1447(e), a court of appeals may accept an appeal from 
        an order issued in any coordinated or consolidated 
        proceedings conducted pursuant to subsection (b) 
        granting or denying a motion to remand a civil action 
        to the State court from which it was removed if 
        application is made to the court of appeals within 14 
        days after the order is entered.
    (l) Ensuring Proper Recovery for Plaintiffs.--The claimants 
in any civil action asserting a claim for personal injury 
transferred to or directly filed in coordinated or consolidated 
pretrial proceedings conducted pursuant to subsection (b) shall 
receive not less than 80 percent of any monetary recovery 
obtained in that action by settlement, judgment or otherwise. 
The judge or judges to whom the coordinated or consolidated 
pretrial proceedings have been assigned shall have jurisdiction 
over any disputes regarding compliance with this requirement.

           *       *       *       *       *       *       *


CHAPTER 89--DISTRICT COURTS; REMOVAL OF CASES FROM STATE COURTS

           *       *       *       *       *       *       *


Sec. 1447. Procedure after removal generally

    (a) In any case removed from a State court, the district 
court may issue all necessary orders and process to bring 
before it all proper parties whether served by process issued 
by the State court or otherwise.
    (b) It may require the removing party to file with its 
clerk copies of all records and proceedings in such State court 
or may cause the same to be brought before it by writ of 
certiorari issued to such State court.
    (c) A motion to remand the case on the basis of any defect 
other than lack of subject matter jurisdiction must be made 
within 30 days after the filing of the notice of removal under 
section 1446(a). If at any time before final judgment it 
appears that the district court lacks subject matter 
jurisdiction, the case shall be remanded. An order remanding 
the case may require payment of just costs and any actual 
expenses, including attorney fees, incurred as a result of the 
removal. A certified copy of the order of remand shall be 
mailed by the clerk to the clerk of the State court. The State 
court may thereupon proceed with such case.
    (d) Misjoinder of Plaintiffs in Personal Injury and 
Wrongful Death Actions.--
            (1) This subsection shall apply to any civil action 
        in which--
                    (A) two or more plaintiffs assert personal 
                injury or wrongful death claims;
                    (B) the action is removed on the basis of 
                the jurisdiction conferred by section 1332(a); 
                and
                    (C) a motion to remand is made on the 
                ground that one or more defendants are citizens 
                of the same State as one or more plaintiffs.
            (2) In deciding the remand motion in any such case, 
        the court shall apply the jurisdictional requirements 
        of section 1332(a) to the claims of each plaintiff 
        individually, as though that plaintiff were the sole 
        plaintiff in the action.
            (3) The court shall sever the claims that do not 
        satisfy the jurisdictional requirements of section 
        1332(a) and shall remand those claims to the State 
        court from which the action was removed. The court 
        shall retain jurisdiction over the claims that satisfy 
        the jurisdictional requirements of section 1332(a).
    [(d)] (e) An order remanding a case to the State court from 
which it was removed is not reviewable on appeal or otherwise, 
except that an order remanding a case to the State court from 
which it was removed pursuant to section 1442 or 1443 of this 
title shall be reviewable by appeal or otherwise.
    [(e)] (f) If after removal the plaintiff seeks to join 
additional defendants whose joinder would destroy subject 
matter jurisdiction, the court may deny joinder, or permit 
joinder and remand the action to the State court.

           *       *       *       *       *       *       *


PART V--PROCEDURE

           *       *       *       *       *       *       *


CHAPTER 114--CLASS ACTIONS

           *       *       *       *       *       *       *


Sec. 1716. Class action injury allegations

    (a) In General.--A Federal court shall not issue an order 
granting certification of a class action seeking monetary 
relief for personal injury or economic loss unless the party 
seeking to maintain such a class action affirmatively 
demonstrates that each proposed class member suffered the same 
type and scope of injury as the named class representative or 
representatives.
    (b) Certification Order.--An order issued under Rule 
23(c)(1) of the Federal Rules of Civil Procedure that certifies 
a class seeking monetary relief for personal injury or economic 
loss shall include a determination, based on a rigorous 
analysis of the evidence presented, that the requirement in 
subsection (a) of this section is satisfied.

Sec. 1717. Conflicts of interest

    (a) Required Disclosures.--In a class action complaint, 
class counsel shall state whether any proposed class 
representative or named plaintiff in the complaint is a 
relative of, is a present or former employee of, is a present 
or former client of (other than with respect to the class 
action), or has any contractual relationship with (other than 
with respect to the class action) class counsel. In addition, 
the complaint shall describe the circumstances under which each 
class representative or named plaintiff agreed to be included 
in the complaint and shall identify any other class action in 
which any proposed class representative or named plaintiff has 
a similar role.
    (b) Prohibition of Conflicts.--A Federal court shall not 
issue an order granting certification of any class action in 
which any proposed class representative or named plaintiff is a 
relative of, is a present or former employee of, is a present 
or former client of (other than with respect to the class 
action), or has any contractual relationship with (other than 
with respect to the class action) class counsel.
    (c) Definition.--For purposes of this section, ``relative'' 
shall be defined by reference to section 3110(a)(3) of title 5, 
United States Code.

Sec. 1718. Class member benefits

    (a) Distribution of Benefits to Class Members.--A Federal 
court shall not issue an order granting certification of a 
class action seeking monetary relief unless the class is 
defined with reference to objective criteria and the party 
seeking to maintain such a class action affirmatively 
demonstrates that there is a reliable and administratively 
feasible mechanism (a) for the court to determine whether 
putative class members fall within the class definition and (b) 
for distributing directly to a substantial majority of class 
members any monetary relief secured for the class.
    (b) Attorneys' Fees in Class Actions.--
            (1) Fee distribution timing.--In a class action 
        seeking monetary relief, no attorneys' fees may be 
        determined or paid pursuant to Rule 23(h) of the 
        Federal Rules of Civil Procedure or otherwise until the 
        distribution of any monetary recovery to class members 
        has been completed.
            (2) Fee determinations based on monetary awards.--
        Unless otherwise specified by Federal statute, if a 
        judgment or proposed settlement in a class action 
        provides for a monetary recovery, the portion of any 
        attorneys' fee award to class counsel that is 
        attributed to the monetary recovery shall be limited to 
        a reasonable percentage of any payments directly 
        distributed to and received by class members. In no 
        event shall the attorneys' fee award exceed the total 
        amount of money directly distributed to and received by 
        all class members.
            (3) Fee determinations based on equitable relief.--
        Unless otherwise specified by Federal statute, if a 
        judgment or proposed settlement in a class action 
        provides for equitable relief, the portion of any 
        attorneys' fee award to class counsel that is 
        attributed to the equitable relief shall be limited to 
        a reasonable percentage of the value of the equitable 
        relief, including any injunctive relief.

Sec. 1719. Money distribution data

    (a) Settlement Accountings.--In any settlement of a class 
action that provides for monetary benefits, the court shall 
order class counsel to submit to the Director of the Federal 
Judicial Center and the Director of the Administrative Office 
of the United States Courts an accounting of the disbursement 
of all funds paid by the defendant pursuant to the settlement 
agreement. The accounting shall state the total amount paid 
directly to all class members, the actual or estimated total 
number of class members, the number of class members who 
received payments, the average amount (both mean and median) 
paid directly to all class members, the largest amount paid to 
any class member, the smallest amount paid to any class member 
and, separately, each amount paid to any other person 
(including class counsel) and the purpose of the payment. In 
stating the amounts paid to class members, no individual class 
member shall be identified. No attorneys' fees may be paid to 
class counsel pursuant to Rule 23(h) of the Federal Rules of 
Civil Procedure until the accounting has been submitted.
    (b) Annual Settlement Distribution Reports.--Commencing not 
later than 12 months after the date of enactment of this Act, 
the Judicial Conference of the United States, with the 
assistance of the Director of the Federal Judicial Center and 
the Director of the Administrative Office of the United States 
Courts, shall annually prepare and transmit to the Committees 
on the Judiciary of the Senate and the House of Representatives 
for public dissemination a report summarizing how funds paid by 
defendants in class actions have been distributed, based on the 
settlement accountings submitted pursuant to subsection (a).

Sec. 1720. Issues classes

    (a) In General.--A Federal court shall not issue an order 
granting certification of a class action with respect to 
particular issues pursuant to Rule 23(c)(4) of the Federal 
Rules of Civil Procedure unless the entirety of the cause of 
action from which the particular issues arise satisfies all the 
class certification prerequisites of Rule 23(a) and Rule 
23(b)(1), Rule 23(b)(2), or Rule 23(b)(3).
    (b) Certification Order.--An order issued under Rule 
23(c)(4) of the Federal Rules of Civil Procedure that certifies 
a class with respect to particular issues shall include a 
determination, based on a rigorous analysis of the evidence 
presented, that the requirement in subsection (a) of this 
section is satisfied.

Sec. 1721. Stay of discovery

    In any class action, all discovery and other proceedings 
shall be stayed 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, unless the court 
finds upon the motion of any party that particularized 
discovery is necessary to preserve evidence or to prevent undue 
prejudice to that party.

Sec. 1722. Third-party litigation funding disclosure

    In any class action, class counsel shall promptly disclose 
in writing to the court and all other parties the identity of 
any person or entity, other than a class member or class 
counsel of record, who has a contingent right to receive 
compensation from any settlement, judgment, or other relief 
obtained in the action.

Sec. 1723. Appeals

    A court of appeals shall permit an appeal from an order 
granting or denying class-action certification under Rule 23 of 
the Federal Rules of Civil Procedure.

           *       *       *       *       *       *       *


                            Dissenting Views

    H.R. 985, the ``Fairness in Class Action Litigation Act of 
2017,'' represents the latest attempt to tilt the civil justice 
playing field in favor of corporate defendants and to deny 
consumers and members of the public access to justice. The bill 
aims to eliminate the use of class actions by imposing numerous 
new and unnecessary requirements for the certification and 
consideration of class action lawsuits and also by creating new 
onerous requirements for multidistrict litigation. In addition, 
the bill amends the remand statute in a way that could make it 
easier for defendants to have certain personal injury and 
wrongful death actions be heard in Federal court.
    Class actions are a critical tool for allowing those 
injured by corporate wrongdoing to receive some measure of 
justice by making it economically feasible to pursue claims 
that are too small or too burdensome to pursue on an individual 
basis, but are nonetheless meritorious. Class actions are also 
an important enforcement mechanism and are particularly vital 
in consumer protection, civil rights, antitrust, personal 
injury, and employment cases. Finally, they promote the 
efficient consideration of numerous cases raising substantially 
the same factual and legal questions, thereby lessening burdens 
on courts. By making most class actions very difficult if not 
impossible to pursue, H.R. 985 undermines these important 
goals.
    H.R. 985 is highly problematic for many reasons. To begin 
with, the bill is a solution in search of a problem because it 
appears to be based on the false premise--offered with no 
supporting evidence--that Federal courts are routinely failing 
to comply with the rigorous requirements for certifying class 
actions specified in Federal Rule of Civil Procedure 23. 
Indeed, the false notion that many class actions and 
multidistrict proceedings are somehow inherently fraudulent or 
improper is implicit throughout the bill. In fact, what 
proponents appear to be concerned with is not the fact that the 
requirements of class certification and multidistrict 
litigation are unfair, but that they are not skewed decisively 
in corporate defendants' favor.
    In addition, H.R. 985 undermines the core purpose of class 
actions and multidistrict litigation, which is to ensure 
efficiency in the disposition of numerous but substantially the 
same claims or factual questions and to provide access to 
courts for parties that, individually, would not have the 
incentive or resources to pursue otherwise meritorious claims. 
Rather, the bill's numerous, vague or impossible-to-meet 
certification and other requirements will only foster more 
litigation, increase burdens and costs that would fall 
disproportionately on plaintiffs, and allow more opportunities 
for corporate defendants to have a case dismissed or to engage 
in dilatory tactics. Also, its attorneys' fee and ``conflict of 
interest'' provisions aimed specifically at class counsel 
appear designed to make it harder for plaintiffs to obtain 
legal representation in the first place.
    Finally, the bill would substantially and needlessly 
increase resource burdens on the Federal courts, significantly 
reduce judicial discretion in many respects, and unnecessarily 
circumvent the careful and thorough Rules Enabling Act process 
for amending Federal civil procedure rules.\1\ In fact, the 
Judicial Conference of the United States reports that it has 
been ``studying class action for the last five years'' and 
``has considered many of the issues addressed in H.R. 985.''\2\ 
Accordingly, the Judicial Conference ``strongly urge[s] 
Congress not to amend the class action procedures found in Rule 
23 outside the Rules Enabling Act process.''\3\
---------------------------------------------------------------------------
    \1\28 U.S.C. Sec. Sec. 2071 et seq. (2017).
    \2\Letter from Daniel G. Campbell, U.S. District Judge, D. Ariz., 
Chair, Comm. on Rules of Practice and Procedure, & John D. Bates, U.S. 
District Judge, D.D.C., Chair, Advisory Comm. on Civil Rules, Judicial 
Conference of the United States, to Bob Goodlatte (R-VA), Chair, H. 
Comm. on the Judiciary (Feb. 14, 2017) (on file with H. Comm. on the 
Judiciary Democratic staff) [hereinafter ``Judicial Conference 
Letter''].
    \3\Id.
---------------------------------------------------------------------------
    We are also concerned that the Majority has failed to 
accord any deliberative process to this legislation, which was 
introduced only days before the Committee considered it for 
markup. No hearings have been held this Congress and the 
version of the bill considered last Congress only consisted of 
one section of H.R. 985. Indeed, the Committee's markup of H.R. 
985 represented the first vetting of any kind for most of these 
provisions. In its opposition to this measure, the American Bar 
Association correctly notes the many shortcomings of 
``advancing comprehensive class action reform without a hearing 
to examine all the complicated issues involved with so many 
rule changes.''\4\
---------------------------------------------------------------------------
    \4\Letter from Thomas M. Susman, Director, Governmental Affairs 
Office, American Bar Association to Bob Goodlatte (R-VA), Chair, H. 
Comm. on the Judiciary (Feb. 14, 2017) (on file with H. Comm. on the 
Judiciary Democratic staff) [hereinafter ``ABA Letter''].
---------------------------------------------------------------------------
    In recognition of these many concerns, numerous labor, 
consumer rights, and public interest groups oppose H.R. 985, 
including the AFL-CIO, the Alliance for Justice, the American 
Antitrust Institute, the Center for Science in the Public 
Interest, Consumer Federation of America, Consumers Union, the 
Committee to Support the Antitrust Laws, the NAACP, the 
National Association of Consumer Advocates, the National 
Consumer Law Center, the National Employment Law Project, 
Public Citizen, Public Justice, and the Southern Poverty Law 
Center.\5\ The bill is also opposed by a coalition of 121 civil 
rights groups as well as a coalition of 37 disability rights 
groups.\6\ In addition, the Obama Administration threatened to 
veto legislation last Congress that consisted of just one 
section of H.R. 985 because ``it would impair the enforcement 
of important Federal laws [and] constrain access to the 
courts.''\7\ Finally, Professor Arthur Miller, the Nation's 
foremost scholar of Federal civil practice and procedure, wrote 
in opposition to this earlier iteration of the bill because it 
violated the central mandate of the class action device, which 
is to promote judicial efficiency through the use of class 
representatives to establish injury on behalf of all similarly 
situated. Rather than addressing these concerns, the current 
version of H.R. 985 greatly exacerbates them.
---------------------------------------------------------------------------
    \5\Letter from 72 consumer rights, public interest, and labor 
groups to Bob Goodlatte (R-VA), Chair, & John Conyers, Jr. (D-MI), 
Ranking Member, H. Comm. on the Judiciary (Feb. 14, 2017) (on file with 
H. Comm. on the Judiciary Democratic staff) [hereinafter ``Groups 
Letter'']; Letter from the National Association of Shareholder & 
Consumer Attorneys to Paul Ryan, Speaker of the House, et al. (Feb. 16, 
2017) (on file with H. Comm. on the Judiciary Democratic staff); Letter 
from National Association of Consumer Advocates to Bob Goodlatte (R-
VA), Chair, & John Conyers, Jr. (D-MI), Ranking Member, H. Comm. on the 
Judiciary (Feb. 15, 2017) (on file with H. Comm. on the Judiciary 
Democratic staff).
    \6\Letter from 121 civil rights groups to Bob Goodlatte (R-VA), 
Chair, & John Conyers, Jr. (D-MI), Ranking Member, H. Comm. on the 
Judiciary (Feb. 15, 2017) (on file with H. Comm. on the Judiciary 
Democratic staff) [hereinafter ``Civil Rights Letter'']; Undated letter 
from 37 disability rights groups to Bob Goodlatte (R-VA), Chair, & John 
Conyers, Jr. (D-MI), Ranking Member, H. Comm. on the Judiciary (on file 
with H. Comm. on the Judiciary Democratic staff) [hereinafter 
``Disability Rights Letter''].
    \7\Executive Office of the President, Office of Management and 
Budget, Statement of Administration Policy on H.R. 1927, the ``Fairness 
in Class Action Litigation and Furthering Asbestos Claim Transparency 
Act of 2015,'' Jan. 6, 2016.
---------------------------------------------------------------------------
    For the foregoing reasons and those discussed below, we 
must respectfully oppose H.R. 985.

                       DESCRIPTION AND BACKGROUND

                              DESCRIPTION

    H.R. 985 would impose a series of new and burdensome 
statutory requirements for the certification and consideration 
of class actions. In addition, with respect to multidistrict 
litigation, it would, among other things, impose a heightened 
burden on plaintiffs in personal injury actions to demonstrate 
evidentiary support for their factual allegations. Finally, the 
bill amends the remand statute to require Federal courts in 
diversity cases involving two or more plaintiffs in personal 
injury or wrongful death cases to consider each plaintiff 
separately when determining whether they have met the 
requirements of the Federal diversity statute. All of these 
provisions will have the effect of fueling increased litigation 
and costs for plaintiffs with the apparent goal of dissuading 
future plaintiffs from filing suit, even when they have 
meritorious claims. The following described provisions will be 
the primary focus of these views.
    Section 3(a) amends chapter 114 of title 28 of the United 
States Code by adding after section 1715 several new sections 
governing class actions. For example, new section 1716 would 
prohibit a Federal court from certifying any proposed class 
seeking monetary relief for personal injury or economic loss 
unless the party seeking the class action proves that each 
proposed class member suffered the same type and scope of 
injury as the putative class representative. The terms 
``economic loss'' and ``scope of injury'' are undefined. 
Section 1716 further requires a court, in issuing a class 
certification order for any class subject to subsection 2(a), 
to also certify that the requirements of subsection 2(a) have 
been met ``based on a rigorous analysis of the evidence 
presented[.]''
    New section 1717 prohibits a Federal court from certifying 
any class action in which a proposed class representative or 
named plaintiff is a relative of, a present or former client of 
(other than with respect to the class action), a present or 
former employee of, or has any contractual relationship (other 
than with respect to the class action) with class counsel. 
Section 1717 requires that in a class action complaint, the 
attorney for the class representative or named plaintiff 
disclose the existence of such a relationship, describe the 
circumstances under which each class representative or named 
plaintiff agreed to be included in the complaint, and identify 
any other class action to which the class representative or 
named plaintiff has a similar role.
    New section 1718 imposes an ``ascertainability'' 
requirement for class action certification. Specifically, it 
prohibits class certification unless ``the class is defined 
with reference to objective criteria and the party seeking to 
maintain such a class action affirmatively demonstrates that 
there is a reliable and administratively feasible mechanism (a) 
for the court to determine whether putative class members fall 
within the class definition and (b) for distributing directly 
to a substantial majority of class members any monetary relief 
secured for the class.'' The bill offers no guidance as to the 
meaning of terms such as ``reference to objective criteria,'' 
``affirmatively demonstrates,'' ``reliable and administratively 
feasible mechanism,'' and ``substantial majority.'' There is 
currently a circuit split on whether such a standard as would 
be codified in new section 1718--which reflects the most 
corporate-defendant friendly view--should be imposed.
    Section 1718(b)(1) prohibits attorneys' fees from being 
determined or paid until any monetary recovery is distributed 
to all class members, even when it is impossible to identify or 
find all class members. This provision contains no ``good 
faith'' or ``honest efforts'' exception, nor does it impose a 
graduated scheme, such as partial payment of fees pending 
complete payment to class members. Rather, it takes an 
absolutist approach, leaving open the real possibility that 
many class counsel will not be paid at all.
    Section 1718(b)(2) specifies that in class actions where a 
judgment or proposed settlement provides for monetary recovery, 
attorneys' fee awards must be limited to ``a reasonable 
percentage of any payments directly distributed to and received 
by class members'' and, in no case may the fee award exceed the 
total amount of money distributed to and received by all class 
members. Section 1718(b)(3) similarly limits attorneys' fees in 
cases seeking equitable relief to ``a reasonable percentage of 
the value of the equitable relief, including any injunctive 
relief.'' The bill fails to offer any guidance as to what would 
constitute a ``reasonable percentage'' as used in the foregoing 
subsections, nor is there any guidance regarding how to 
monetize equitable relief. Moreover, there is no ``good faith'' 
or ``honest efforts'' exception from the prohibition on payment 
of attorneys' fees where an attorney makes honest and 
exhaustive efforts to find all class members, but is unable to 
do so, thereby potentially resulting in an unduly harsh 
outcome.
    New section 1719, among other things, prohibits the payment 
of attorneys' fees to class counsel until they submit certain 
information regarding the distribution of monetary awards and 
settlements to the Federal Judicial Center and the 
Administrative Office of the United States Courts. As with the 
attorneys' fee provision in section 1718, there is no ``good 
faith'' or ``honest efforts'' exception from the prohibition on 
attorneys' fees being paid for less-than-full compliance with 
this requirement.
    New section 1720 prohibits a Federal court from certifying 
a class action with respect to particular issues unless the 
entire cause of action from which the particular issues arise 
satisfies all of the class certification requirements of Rule 
23. Under current law in all circuits, such ``issue'' class 
actions need not satisfy all of the certification requirements 
of Rule 23.
    New section 1721 provides that in any class action, 
discovery must be stayed whenever any motion to transfer, 
motion to dismiss, motion to strike class allegations, or other 
motion to dispose of class allegations, is pending. Discovery 
is not stayed when any party files a motion asking the court to 
find that ``particularlized discovery is necessary to preserve 
evidence or to prevent undue prejudice to that party.'' The 
bill does not define or provide guidance as to the meaning of 
the terms ``particularlized discovery'' and ``undue 
prejudice.'' Under current law, a court has discretion whether 
to stay discovery in response to a motion. This provision 
effectively makes a stay on discovery the default outcome 
absent certain circumstances that are not well defined.
    New section 1723 provides for mandatory appeal from an 
order granting or denying class certification. Current Rule 
23(f) already provides for discretionary appeals from such 
orders, but at any rate any appeal must be made within 14 days 
of the order.
    Section 4 of the bill amends the remand statute, 28 U.S.C. 
Sec. 1447, by adding a new subsection (d). New subsection 
1447(d)(1) applies to any civil action with two or more 
plaintiffs alleging personal injury or wrongful death claims 
where the action is removed to Federal court on the basis of 
diversity jurisdiction and a motion to remand is made on the 
ground that one or more defendants is a citizen of the same 
state as one or more plaintiffs.
    Subsection 1447(d)(2) requires a court considering a remand 
motion to apply the diversity statute's various requirements 
for establishing diversity jurisdiction to each plaintiffs' 
claims individually, as if each plaintiff was the sole 
plaintiff in the civil action. Subsection 1447(d)(3) requires a 
court, in such circumstances, to sever claims and remand to 
state court only the claims of those plaintiffs that do not 
meet the diversity statute's requirements. The practical effect 
could be to make it easier to establish diversity jurisdiction 
in multi-plaintiff cases involving personal injury or wrongful 
death claims, increasing the number of diversity cases in 
Federal court where diversity might otherwise be defeated 
because of the lack of complete diversity.
    Section 5 of the bill adds new subsections to 28 U.S.C. 
Sec. 1407, which governs multidistrict litigation. Section 
1407(b) provides that a judge or judges may be assigned by the 
Judicial Panel on Multidistrict Litigation to preside over 
coordinated or consolidated pretrial proceedings in cases where 
civil actions involving one or more common questions of fact 
are pending in different districts. Proposed new section 
1407(i) requires that, in any such proceeding involving redress 
for personal injury, plaintiff's counsel must make a submission 
``sufficient to demonstrate that there is evidentiary support 
(including but not limited to medical records) for the factual 
contentions in plaintiff's complaint regarding the alleged 
injury, the exposure to the risk that allegedly caused the 
injury, and the alleged cause of the injury.''
    Additionally, section 1407(i) requires that such submission 
be made within 45 days after the civil action is transferred to 
or filed in the consolidated pretrial proceedings, with no 
extensions. The presiding judge must, within 30 days of the 
submission deadline, determine whether the submission is 
``sufficient'' and must dismiss the action without prejudice if 
it is not. If a plaintiff whose action is dismissed does not 
tender a ``sufficient'' submission within 30 days following 
dismissal, the action must be dismissed with prejudice. The 
bill does not provide any guidance as to what would constitute 
a ``sufficient'' submission to ``demonstrate . . . evidentiary 
support'' for factual contentions regarding an alleged injury. 
New section 1407(i) essentially codifies a practice that some 
courts use at their discretion in certain cases. This provision 
would essentially mandate that every court impose this standard 
in every personal injury multidistrict proceeding.
    New subsection 1407(l) requires that claimants in a 
multidistrict proceeding receive no less than 80 percent of any 
monetary recovery obtained by judgment, settlement, or 
otherwise. It also provides judges assigned to the 
multidistrict proceeding with jurisdiction over any disputes 
regarding compliance with this requirement. In essence, this 
provision codifies a 20 percent cap on attorneys' contingency 
fees, which may present an insurmountable disincentive for 
counsel to undertake such litigation. It also overrides state 
laws governing such fees in personal injury and wrongful death 
cases. Moreover, the provision fails to define or offer any 
guidance as to how the 80 percent monetary recovery is to be 
calculated or who qualifies as a ``claimant'' under this 
provision.
    Section 7 of the bill provides, among other things, that 
its provisions will apply to any civil action pending on the 
date of enactment.

                               BACKGROUND

    H.R. 985 pertains to class actions and multidistrict 
litigation. A class action is a type of lawsuit filed by one or 
more individuals on behalf of a larger group of people. Class 
actions can be beneficial to consumers and courts. They are 
beneficial to consumers because they give a potentially large 
group of individuals who are injured in the same manner by the 
same defendants the ability to hold the wrongdoers accountable. 
Class actions make it economically feasible for these 
plaintiffs to seek justice for smaller, but not 
inconsequential, injuries in areas as diverse as products 
liability, wage and hour litigation, and employment 
discrimination. As a result, class actions help level the 
playing field between injured consumers and powerful corporate 
defendants. They also help promote private enforcement of 
public policy, particularly when there is large-scale wrong-
doing by an institutional actor.\8\
---------------------------------------------------------------------------
    \8\For outlines of the policy reasons supporting the existence of 
the class action mechanism, see Fairness in Class Action Litigation Act 
of 2015: Hearing on H.R. 1927 Before the Subcomm. on the Constitution 
and Civil Justice of the H. Comm. on the Judiciary, 114th Cong. (2015) 
[hereinafter ``Subcommittee Hearing''] (statement of Alexandra Lahav, 
Joel Barlow Professor, University of Connecticut Law School, at 2); The 
State of Class Actions Ten Years After The Enactment of the Class 
Action Fairness Act: Hearing Before the Subcomm. on the Constitution 
and Civil Justice of the H. Comm. on the Judiciary, 114th Cong. (2015) 
[hereinafter ``CAFA Hearing''] (statement of Patricia W. Moore, 
Professor of Law, St. Thomas University School of Law, at 2).
---------------------------------------------------------------------------
    Additionally, class actions can be beneficial for courts 
because they promote judicial efficiency. The class action is 
an efficient mechanism to deal with what would otherwise be a 
large number of small and repetitive cases involving common 
legal and factual questions. Through class certification, 
courts can consolidate similar cases and conserve judicial 
resources.\9\
---------------------------------------------------------------------------
    \9\Id.
---------------------------------------------------------------------------
    Federal Rule of Civil Procedure 23 governs class actions 
filed in Federal courts. Rule 23(a) specifies four 
prerequisites necessary for the certification of a class:

        (1) Lthe class is so numerous that joinder of all 
        members is impracticable;

        (2) Lthere are questions of law or fact common to the 
        class;

        (3) Lthe claims or defenses of the representative 
        parties are typical of the claims or defenses of the 
        class; and

        (4) Lthe representative parties will fairly and 
        adequately protect the interests of the class.\10\
---------------------------------------------------------------------------
    \10\Fed. R. Civ. P. 23(a).

Additionally, Rule 23(b) specifies the findings that a court 
must make prior to certifying a class action, assuming that the 
requirements of Rule 23(a) have been met. These findings 
include, among other things, whether the prosecution of 
separate actions by or against individual class members would 
create the risk of inconsistent or varying adjudications, 
whether the party opposing the class has acted or refused to 
act on grounds that apply generally to the class such that 
relief would be appropriate for the class as a whole, and 
whether common questions of law or fact predominate over any 
other questions affecting only individual class members and 
that a class action would be superior to other methods of 
adjudicating the controversy fairly and efficiently.\11\
---------------------------------------------------------------------------
    \11\Fed. R. Civ. P. 23(b). Rule 23 contains a number of other 
provisions that are not relevant to this bill.
---------------------------------------------------------------------------
    Multidistrict litigation is a Federal legal procedure 
allowing cases that have one or more common factual questions 
to be consolidated and transferred from one court, the 
transferor, to another court, the transferee, ``for the 
convenience of parties and witnesses'' and to ``promote the 
just and efficient conduct of such actions.''\12\ The Judicial 
Panel on Multidistrict Litigation decides whether cases should 
be consolidated and transferred.\13\ Cases are sent from one 
court to another for all pretrial proceedings and discovery and 
are remanded to the transferor court at or before the 
conclusion of such proceedings.\14\ Proceedings for transfer 
may be initiated by the Judicial Panel on its own initiative or 
by a motion filed with the Panel by any party.\15\
---------------------------------------------------------------------------
    \12\28 U.S.C. Sec. 1407(a) (2017) (``When civil actions involving 
one or more common questions of fact are pending in different 
districts, such actions may be transferred to any district for 
coordinated or consolidated pretrial proceedings.'').
    \13\Id.
    \14\Id.
    \15\Id. at Sec. 1407(c)(i)-(ii).
---------------------------------------------------------------------------

                         CONCERNS WITH H.R. 985

            I. H.R. 985 IS A SOLUTION IN SEARCH OF A PROBLEM

    There is no need for H.R. 985 because plaintiffs already 
must satisfy many rigorous requirements in order to pursue a 
class action, and the bill's proponents offer no evidence that 
the Federal courts systematically fail to apply these 
standards. As explained above, Rule 23 requires plaintiffs 
seeking class action certification to make substantial 
showings, including commonality of factual and legal questions 
and typicality of the putative representative's claims compared 
to those of putative class members. Moreover, case law 
demonstrates that the Federal courts vigorously enforce Rule 
23's requirements. Pursuing a class action also requires 
extensive discovery and motion practice, which mandate a 
significant expenditure of time and resources. H.R. 985 would 
only make these procedural hurdles even more burdensome and 
potentially cost-prohibitive. Indeed, the real aim of the bill 
does not seem to be to make class actions fairer, but to tilt 
the playing field decisively in defendants' favor.
    Much of the initial justification of this bill from the 
114th Congress was based on the false notion that too many 
class actions were fraudulent or otherwise improper because 
most putative class members suffered no actual injury. In 
support of this allegation, the bill's proponents cited 
``benefit of the bargain'' cases and cases asserting statutory 
damages for violations of consumer protection statutes. In 
fact, however, these are not ``no injury'' cases. As Professor 
Alexandra Lahav explained in testimony before the Subcommittee 
on the Constitution and Civil Justice in the 114th Congress, 
plaintiffs in such cases have suffered a real injury. In 
``benefit of the bargain'' cases, for instance, plaintiffs have 
suffered financial injury in the form of paying a price for 
what turned out to be a defective product that is, in reality, 
worth less than what the plaintiff bargained for. Similarly, in 
many state consumer protection statutes, and in civil rights, 
employment, or privacy statutes, the injury, while very real, 
is difficult to quantify in monetary terms. Legislatures, 
therefore, set statutory damage levels to simplify the process 
of quantifying damages, to deter corporate wrongdoing, and to 
encourage access to the courts.
    Other than proposed new section 1716, the Judiciary 
Committee has held no hearing on any of the other provisions of 
H.R. 985. As a result, none of these provisions or the 
purported justifications for them has ever been vetted by our 
Committee. For instance, the bill's proponents offer absolutely 
no evidence warranting H.R. 985's so-called ``conflict of 
interest'' provision, which prohibits class certification where 
a class representative or named plaintiff is a relative of, 
current or former client of, current or former employee of, or 
has a contractual relationship with the plaintiffs' counsel. We 
are unaware of any justification supporting the implication 
that such relationships are per se problematic. As it is, 
courts must exercise judgment as to whether a particular 
relationship with class counsel poses a conflict of interest 
pursuant to Rule 23(a)(4), which requires a court to consider 
whether class counsel ``will fairly and adequately protect the 
interests of the class.''\16\
---------------------------------------------------------------------------
    \16\Fed. R. Civ. P. 23(a)(4). Professor John C. Coffee, Jr. of 
Columbia Law School has written that H.R. 985's conflict of interest 
provision arguably is unconstitutional, as the Fifth Amendment's Due 
Process Clause has been interpreted to preclude the government in a 
civil case from unreasonably interfering with a citizen's choice of 
hired counsel. John C. Coffee, Jr., How Not to Write a Class Action 
``Reform'' Bill, The CLS Blue Sky Blog, Feb. 21, 2017, available at 
http://clsbluesky.law.columbia.edu/2017/02/21/how-not-to-write-a-class-
action-reform-bill/.
---------------------------------------------------------------------------

II. H.R. 985 UNDERMINES THE ABILITY OF PLAINTIFFS TO PURSUE MOST CLASS 
 ACTIONS AND MULTIDISTRICT LITIGATION BY IMPOSING NUMEROUS BURDENSOME 
                              REQUIREMENTS

    H.R. 985 presents many obstacles to the pursuit of class 
actions and multidistrict litigation. These include: (1) 
requiring that a putative class representative prove that every 
class member suffered the ``same type and scope of injury;'' 
(2) requiring a putative class representative to ascertain all 
class members at the certification stage; (3) effectively 
eliminating courts' ability to certify ``issue'' class actions; 
(4) a default stay of discovery in response to any motion to 
dispose of class allegations absent a finding by a court on the 
need for ``particularized'' discovery in certain circumstances; 
(5) providing for mandatory appeal from any order granting or 
denying a motion for class certification; (6) imposing a 
significant threshold of proof and draconian deadlines on 
plaintiffs and courts in multidistrict personal injury 
litigation, and (7) imposing harsh attorneys' fee and 
``conflict of interest'' provisions aimed specifically at class 
counsel. Taken together, these provisions undermine the core 
purpose of class actions and multidistrict litigation, which is 
to provide for efficiency in the disposition of numerous, but 
substantially the same claims or factual questions and to 
provide access to courts for parties that, individually, would 
not have the incentive or resources to pursue otherwise 
meritorious claims.
A. LSection 1716 Imposes Impossible Standard to Establish Same Type and 
        Scope of Injury
    H.R. 985's requirement that a plaintiff show that, for 
class actions seeking monetary relief for personal injury or 
economic loss, each proposed class member suffered the exact 
same ``type and scope'' of injury would be virtually impossible 
to meet as a practical matter, especially for many types of 
claims where the exact ``scope'' of an injury, such as in 
antitrust, employment discrimination, or privacy matters, 
cannot be measured with any precision. Moreover, by requiring a 
putative class representative to make such showings at the 
certification stage--a nascent stage of litigation, before 
there has been any substantial discovery--H.R. 985 effectively 
requires a decision on the merits before trial and before 
appropriate class members can even be identified, an extremely 
difficult if not impossible standard to meet.
    To prove injury, a plaintiff would have to prove the 
alleged violation that caused the injury for each possible 
class member--i.e., litigation on the merits. As Professor 
Arthur Miller, the Nation's foremost expert of Federal practice 
and procedure, noted in a letter in opposition to prior 
legislation that was nearly identical to H.R. 985's proposed 
section 1716:

        [the] core function of a class representative is to try 
        to establish injury on behalf of similarly situated 
        persons. Thus the bill effectively wipes out Rule 23, 
        under which class representatives litigate common 
        questions on behalf of the class. The represented 
        persons are absent until after entry of a judgment that 
        binds them, at which point (upon a favorable judgment) 
        they are asked to come forward to prove their damages. 
        Until that time, the identity of many of the class 
        members is unknown, indeed possibly even 
        unknowable.\17\
---------------------------------------------------------------------------
    \17\Letter from Arthur R. Miller, University Professor, New York 
University School of Law, to Trent Franks (R-AZ), Chair, & Steve Cohen 
(D-TN), Ranking Member, Subcomm. on the Constitution and Civil Justice 
of the H. Comm. on the Judiciary (Apr. 27, 2015) (on file with H. Comm. 
on the Judiciary Democratic staff) [hereinafter ``Miller Letter''].

Professor Miller further noted that the Supreme Court has 
rejected the notion that a class representative must first 
establish that it will win on the merits in order to obtain 
class certification.\18\ He observed that class membership does 
not equate to entitlement to damages, a distinction that H.R. 
985's proponents appear deliberately to be trying to blur.\19\
---------------------------------------------------------------------------
    \18\Miller Letter at 3.
    \19\Id.
---------------------------------------------------------------------------
    Other civil procedure experts concur. For example, 
Professor John C. Coffee, Jr., wrote that this provision only 
adds unnecessary ``ambiguity'' to current law, noting that 
``under this proposed standard, a person who suffered a 
slightly different economic or personal injury from the class 
representative might have to be excluded'' from a class.\20\ 
Professor Elizabeth Chamblee Burch wrote that ``this proposal 
demands a degree of similarity that is both ill defined and 
unnecessary,'' and noted that the Supreme Court held last year 
that ``parties should be able to enjoy the benefits of class 
actions even when damages vary'' and that ``[p]ersonal injury 
and economic losses will inevitably affect class members 
differently.''\21\ Professor Myriam Gilles noted that ``it is 
impossible to exclude zero-damage plaintiffs from a class 
because `many of the members of the class may be unknown, or if 
they are known still the facts bearing on their claims may be 
unknown.'''\22\ Moreover, excluding ``zero-damage plaintiffs 
from class actions . . . serves no policy purpose'' because the 
``presence of uninjured members within a defined class does not 
increase the aggregate damages that the defendant must 
pay.''\23\ Also, ``the `scope' requirement would eliminate 
damages class actions, period'' because ``the amount of damage 
always (or almost always) varies across class members.''\24\
---------------------------------------------------------------------------
    \20\Memorandum Regarding A Brief and Selective Overview of the 
``Fairness in Class Action Litigation Act of 2017'' from John C. 
Coffee, Jr., Adolf A. Berle Professor of Law, Columbia Law School, to 
Democratic Staff, H. Comm. on the Judiciary Democratic Staff, at 1-2 
(Feb. 13, 2017) [hereinafter ``Coffee Memo''].
    \21\Letter from Elizabeth Chamblee Burch, Charles H. Kirbo Chair of 
Law, The University of Georgia School of Law, to Democratic Staff, H. 
Comm. on the Judiciary, at 1 (Feb. 13, 2017) [hereinafter ``Burch 
Letter''].
    \22\Letter from Myriam Gilles, Vice Dean, & Paul R. Verkuil 
Research Chair Professor of Law, Benjamin N. Cardozo Law School, to 
Democratic Staff, H. Comm. on the Judiciary, at 2 (Feb. 13, 2017) 
(quoting Kohen v. Pacific Inv. Mgmt. Co. LLC, 571 F.3d 672, 677 (7th 
Cir. 2009)) [hereinafter ``Gilles Letter''].
    \23\Id.
    \24\Id. at 3.
---------------------------------------------------------------------------
    The American Bar Association, writing in opposition to H.R. 
985, noted that the ``same type and scope of injury'' 
requirement ``places a nearly insurmountable burden for people 
who have suffered personal injury or economic loss at the hands 
of large institutions with vast resources, effectively barring 
them from bringing class actions.''\25\ Similarly, a coalition 
of 121 civil rights groups observed that at the class 
certification stage of a civil rights class action, ``it is 
frequently impossible to identify all of the victims or the 
precise nature of each of their injuries'' and that ``even if 
this information were knowable, class members' injuries would 
not be `the same,''' thereby precluding most civil rights class 
actions were this requirement to be enacted.\26\ Indeed, as 
another coalition of consumer rights, labor, environmental, and 
public interest groups explained, ``virtually never does every 
member of the class suffer the same `scope' of injury from the 
same wrongdoing''' and that this requirement ``alone would 
sound the death knell for most class actions.''\27\
---------------------------------------------------------------------------
    \25\ABA Letter.
    \26\Civil Rights Letter.
    \27\Groups Letter.
---------------------------------------------------------------------------
B. LSection 1718(a)'s Ascertainability Requirement Has Been Rejected by 
        Most Courts for Good Reason
    Proposed section 1718(a) creates a statutory 
``ascertainability'' requirement in money damages class 
actions, under which a plaintiff must identify every class 
member in order to obtain class certification, a virtual 
impossibility in most consumer cases where individual claims 
may be small, where consumers who purchased a product at issue 
may not come forward or may not have kept a receipt or other 
evidence of purchase. The kind of rigid ``ascertainability'' 
requirement contained in H.R. 985 has been debated among the 
Federal courts of appeals, and most courts of appeals have 
rejected it. This provision essentially codifies the more 
corporate-defendant-friendly view that classes are 
ascertainable at the certification stage, with the practical 
effect that in many small-claim consumer cases, where class 
members are inherently difficult to identify, defendants can 
escape liability because the class is not ascertainable even if 
there is overwhelming evidence of the defendant's 
wrongdoing.\28\ Moreover, section 1718(a)'s vague requirement 
that the class be ``defined with reference to objective 
criteria'' and that the putative class representative 
``affirmatively demonstrate[] that there is a reliable and 
administratively feasible mechanism'' for the court to 
determine whether putative class members fall within the class 
and for distributing monetary relief to a substantial majority 
of such class members is unnecessary, cumbersome, costly, and 
invites further litigation over their meaning.
---------------------------------------------------------------------------
    \28\Plaintiffs' counsel typically define class members in terms of 
people harmed by the defendant's conduct, employ a mix of subjective 
and objective criteria, and invoke criteria dependent on the merits. 
Plaintiffs' counsel often revise their class definition after receiving 
class discovery from defendants. Burch Letter at 2 and fn.2.
---------------------------------------------------------------------------
C. LSection 1720 Will Have a Particularly Devastating Impact on Civil 
        Rights Class Actions
    Proposed section 1720 in H.R. 985 further threatens to 
undermine class actions, particularly in civil rights cases. 
This provision would prohibit certification of ``issue'' class 
actions unless the entire cause of action meets all of Rule 
23's class action certification requirements, changing current 
law dramatically and effectively barring or at least severely 
limiting issue class actions. Rule 23(c)(4) provides that 
``when appropriate, an action may be brought or maintained as a 
class action with respect to particular issues.''\29\ 
Currently, all Federal circuit courts read Rule 23(c)(4) to 
permit courts to certify a class for the limited purpose of 
deciding an issue common to a group of plaintiffs within a case 
even when the putative class has not yet been certified. This 
allows a court, for example, to decide the issue of liability 
only, rather than also consider damages and other questions in 
the case. Being able to decide common questions within a case 
while allowing other issues to be decided on an individual 
basis would be in keeping with one of the purposes of class 
actions, namely, promoting judicial efficiency. Yet, as 
Professor Gilles noted, H.R. 985 ``would abolish such issue 
classes'' using an approach that ``is maximalist and harsh'' 
and not justified by any evidence that defendants' due process 
rights are threatened by the use of issue classes.\30\
---------------------------------------------------------------------------
    \29\Fed. R. Civ. P. 23(c)(4).
    \30\Gilles Letter at 7.
---------------------------------------------------------------------------
    In particular, making issue class actions harder to pursue 
would have an especially adverse impact on civil rights class 
actions, which depend on issue class actions to a greater 
extent than other kinds of claims. Doing so would have a 
devastating impact on race and gender class actions that often 
can only be maintained as to particular issues such as 
liability. Requiring that an entire cause of action be 
certified as a class before any common issue can be decided 
will have the practical effect of denying many such plaintiffs 
their day in court, where it may not be practicable for 
individual plaintiffs to pursue individual cases on their own. 
As a coalition of civil rights groups has written in opposition 
to H.R. 985, ``the bill's limitation on `issue classes' will 
impede the enforcement of civil rights laws'' because such 
classes ``can promote both efficiency and fairness'' by 
allowing ``class certification for the core question of 
liability (often a complex proceeding).''\31\
---------------------------------------------------------------------------
    \31\Civil Rights Letter at 2.
---------------------------------------------------------------------------
    For the foregoing reasons, and, in particular, because of 
the potentially disproportionate impact that this provision 
would have on civil rights cases, including legal challenges to 
President Donald Trump's Executive Order banning refugees and 
travelers from certain majority-Muslim countries, 
Representative Pramila Jayapal (D-WA) offered an amendment to 
strike the bill's ``issue classes'' provision. The Committee, 
however, rejected her amendment by a party-line vote of 12 to 
19.
D. LSection 1721's Default Stay of Discovery Will Exponentially 
        Increase Litigation
    Proposed section 1721 in H.R. 985 would needlessly extend 
class action litigation, which is already an expensive and 
cumbersome process. The provision would stay discovery and 
other proceedings while any motion to dispose of the class 
allegations is pending, including motions to strike class 
allegations, motions to dismiss, and motions to transfer unless 
the court finds, on motion of a party, that ``particularlized 
discovery'' is needed to preserve evidence or to prevent undue 
prejudice to that party. Currently, motions to stay discovery 
may be granted at the discretion of the district court. Section 
1721 appears to significantly reduce this discretion, making a 
stay mandatory unless a party can either show the need to 
preserve evidence, notwithstanding the potential absence of any 
discovery up to that point in the case, or satisfy the vague 
standard that it would suffer ``undue prejudice.'' Even under 
such circumstances, discovery can only be ``particularized,'' 
though the bill provides no guidance as to what this term means 
in this context. The effect of this provision would be to 
increase litigation burdens and costs on plaintiffs, provide 
another opportunity for corporate defendants to engage in 
dilatory tactics by filing multiple motions each of which would 
trigger a stay of discovery and litigation over whether 
discovery should then be permitted, and dissuade future 
plaintiffs from pursuing meritorious claims.
    As Professor Coffee wrote, the bill's stay of discovery 
``provision can easily be exploited by defendants to delay 
class litigation indefinitely by making each of these motions 
[to dispose of class allegations] in seriatim fashion. 
Predictably, motions will follow motions in order to delay 
discovery.''\32\ Professor Burch noted that this ``proposal 
will unduly prolong litigation that is already protracted'' and 
``would make it difficult for the court and the parties to 
conduct discovery and make informed decisions about whether to 
certify the class.''\33\
---------------------------------------------------------------------------
    \32\Coffee Memorandum at 5.
    \33\Burch Letter at 5.
---------------------------------------------------------------------------
    For the foregoing reasons, Representative Ted Deutch (D-FL) 
offered an amendment to strike the bill's stay of discovery 
provision. The Committee, however, rejected the amendment by a 
party-line vote of 12 to 19.
E. LSection 1723's Mandatory Right of Appeal Provides More Chances for 
        Delay and Increases Burdens and Costs
    Proposed new section 1723 establishes a mandatory right of 
appeal to a Federal court of appeals of the grant or denial of 
a motion to certify a class. Under current Rule 23(f), such 
appeals may be heard at the discretion of the appeals court and 
must be filed within 14 days of the entry of such order.\34\ As 
with most other provisions in H.R. 985, this mandatory appeal 
provision would give defendants yet another opportunity to 
delay consideration of class actions and thereby further 
increase litigation burdens and costs for plaintiffs.
---------------------------------------------------------------------------
    \34\Fed. R. Civ. P. 23(f).
---------------------------------------------------------------------------
F. LThe Bill Imposes Unreasonable Restrictions on Class Counsel
    Various provisions in H.R. 985 appear intended to target 
class counsel and threaten the ability of plaintiffs to obtain 
legal representation in class actions. For instance, several 
provisions, including proposed sections 1718(b) and 1719, would 
delay the payment of any attorneys' fees under certain strict 
conditions or until class counsel complies with certain 
settlement information accounting requirements, respectively. 
These provisions, which do not apply to defense counsel, appear 
to be unduly harsh and aimed at discouraging lawyers from 
taking the risk of representing class action plaintiffs by 
creating a strong financial disincentive.
    Section 1718(b)(1) delays payment of attorneys' fees until 
all monetary recovery has been paid to class members. Yet some 
class settlements may take many years to distribute, and under 
this provision, plaintiffs' counsel would have to wait 
potentially years before receiving any payment. Moreover, as 
discussed earlier, sometimes it is simply impossible to 
identify all class members. Under this provision, which makes 
no exception for honest, good faith efforts by class counsel to 
identify and ensure payment to all class members, it is 
possible that counsel will not be paid at all. While ensuring 
class members are paid is an important goal, H.R. 985's 
proponents appear to be more interested in disincentivizing 
plaintiffs' lawyers, rather than fashioning a reasonable 
solution, such as an interim fee distribution or some other 
less draconian approach.
    Similarly, although section 1718(b)(2) limits payments to 
class counsel to a reasonable percentage of the class members' 
monetary recovery, it fails to account for situations where 
funds may remain because class members may be difficult to 
identify, monetary awards are too small to distribute to 
individual class members, or funds are simply unclaimed. As 
with other provisions, this ambiguity could lead to further 
litigation and increased costs, as well as disincentivizing 
attorneys from representing class plaintiffs.
    A similar concern arises with respect to section 
1718(b)(3), which applies a similar ``reasonable percentage'' 
standard in cases where the class members are awarded or agree 
to equitable relief, such as in many civil rights cases. In 
these cases, there is the additional ambiguity of determining 
how to monetize equitable relief for purposes of determining a 
reasonable attorneys' fee award, further heightening concerns 
about the ability of plaintiffs to obtain adequate legal 
representation in such cases.
    Finally, the already-discussed ``conflict of interest'' 
provision of section 1717(b) would deny class certification in 
all cases where the class representative or named plaintiff is 
a relative of, present or former client of, present or former 
employee of, or has a contractual relationship with the class 
counsel, without exception. This unnecessary provision wrongly 
assumes that all of these relationships raise impermissible 
conflicts of interest per se and, based on this false premise, 
effectively denies plaintiffs the right to choose their 
counsel.
    H.R. 985's class action provisions aimed at class counsel 
will have a particularly adverse impact on civil rights 
plaintiffs. As civil rights organizations opposing H.R. 985 
note, the bill's ``reasonable percentage of equitable relief'' 
standard is arbitrary and unworkable.\35\ These organizations 
rightly ask ``how is a judge to determine the cash value of an 
integrated school, a well-operating foster care system, the 
deinstitutionalization of individuals with disabilities, or 
myriad other forms of equitable relief secured by civil rights 
class actions?''\36\ The ultimate result, they explain, is that 
``[n]on-profit organizations cannot bear the risk of these long 
and expensive cases if, at the end, their fees are calculated 
under this incoherent and capricious standard. Indeed, the bill 
creates an incentive for defendants to prolong the litigation 
so as to make it economically impossible for plaintiffs' 
attorneys to continue to prosecute the litigation.''\37\
---------------------------------------------------------------------------
    \35\Civil Rights Letter at 3.
    \36\Id.
    \37\Id.; see also Disability Rights Letter at 1 (``By severely 
limiting attorneys' fees in cases seeking only injunctive relief, [H.R. 
985] would remove class actions as an essential tool for those who seek 
to improve the systems that serve people with disabilities.'').
---------------------------------------------------------------------------
    For the foregoing reasons, Ranking Member John Conyers, Jr. 
(D-MI) offered an amendment that would have exempted all civil 
rights cases from H.R. 985's class action provisions. The 
Committee, however, rejected his amendment by a party-line vote 
of 11 to 14.
    The bill's various class action provisions would similarly 
stifle the ability of plaintiffs in a wide spectrum of cases to 
pursue justice. For instance, those injured by fraudulent 
conduct, including the former students of Trump University who 
sued President Donald Trump for allegedly bilking thousands of 
dollars out of students while never providing the University's 
advertised educational services, would effectively be precluded 
from having their day in court. To address this particular 
shortcoming of the bill, Representative Hank Johnson (D-GA) 
offered an amendment that would have exempted all fraud cases 
from all of the bill's class action provisions. The Committee, 
however, rejected this amendment as well by voice vote.
G. LSection 4's Remand Provisions Would Unnecessarily Burden Federal 
        Courts
    Section 4 of the bill would amend the remand statute, 28 
U.S.C. Sec. 1447, to add a new provision that applies: (1) in 
personal injury or wrongful death cases; (2) where there are 
two or more plaintiffs; (3) the case has been removed to 
Federal court on the basis of diversity jurisdiction; and (4) a 
motion to remand the case is made on the ground that one or 
more plaintiffs is a citizen of the same state as one or more 
defendants. In such a case, the court deciding the remand 
motion must apply the requirements of the Federal diversity 
statute\38\ to the claims of each plaintiff individually and 
remand only those claims of the plaintiff that does not satisfy 
the diversity statute's requirements.
---------------------------------------------------------------------------
    \38\28 U.S.C. Sec. 1332(a) (2017). Under this provision, in order 
for a Federal court to exercise diversity jurisdiction over what would 
otherwise be a state law case, there must be at least $75,000 amount in 
controversy and the plaintiff and the defendant must be citizens of 
different states.
---------------------------------------------------------------------------
    While it is unclear exactly what problem the bill's 
sponsors intend for this provision to address, it seems that in 
cases where one plaintiff is a citizen of the same state as one 
defendant and another plaintiff is a citizen of a different 
state as that defendant, this provision would make it easier 
for defendants to keep at least one of the plaintiffs' cases in 
Federal court, even if the plaintiffs assert the same legal 
claims arising from the same set of operative facts. This would 
seem to unnecessarily burden Federal courts with parallel 
consideration of a case at the same time that a proceeding on 
the same facts and legal claims takes place in state court.
H. LSection 5's Multidistrict Litigation Evidentiary Support 
        Requirement Is Unreasonable and Unjustified and Its Arbitrary 
        Cap on Attorneys' Fees Could Undermine the Ability of 
        Plaintiffs to Obtain Representation
    Section 5 of the bill amends 28 U.S.C. Sec. 1407, the 
statutory provision governing multidistrict litigation. Under 
that provision, cases in different districts raising common 
issues of fact may be transferred to a designated judge or 
judges for pretrial proceedings. H.R. 985 would add a new 
section 1407(i) requiring plaintiffs to produce proof of their 
allegations early on in such proceedings. Specifically, it 
requires that plaintiffs in personal injury cases make a 
submission ``sufficient to demonstrate that there is 
evidentiary support (including but not limited to medical 
records) for the factual contentions in plaintiff's complaint 
regarding the alleged injury, the exposure to the risk that 
allegedly caused the injury, and the alleged cause of the 
injury'' within the extremely strict deadline of 45 days after 
the civil action is transferred to or filed in the consolidated 
pretrial proceedings, with no extensions. The presiding judge 
must, within 30 days of the submission deadline, determine 
whether the submission is ``sufficient'' and must dismiss the 
action without prejudice if it is not. If the action is 
dismissed, a plaintiff would then have only 30 days to make a 
``sufficient'' submission or the case must be dismissed with 
prejudice.
    This provision places a significant burden on plaintiffs to 
prove their allegations to a considerable degree at the 
beginning of their case, denying them the ability to further 
develop their claims through the discovery process. It also 
codifies a procedure that some courts have adopted in some 
cases, but, as with the ``ascertainability'' requirement, there 
is no consensus among courts as to whether it is even 
appropriate to impose such a high burden at such an early stage 
on plaintiffs.\39\
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    \39\Professor Burch further notes that, in addition to denying 
courts the necessary flexibility to adapt case management orders to 
specific circumstances, this provision may also raise federalism 
concerns to the extent that it conflicts with state law that may not 
require an allegation of specific cause of harm. Burch Letter at 6-7.
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    New section 1407(j) would prohibit trials in multidistrict 
proceedings unless all the parties consent. This provision may 
be aimed at preventing ``bellwether trials,'' or trials of 
randomly selected cases in multidistrict litigation to test the 
parties' arguments and help to resolve the overall litigation. 
The requirement that all parties consent to trial means that it 
is unlikely that any such cases would go to trial, meaning 
further cost and delay for plaintiffs.
    Section 5 would also add a new section 1407(l) to title 28, 
United States Code, which would require that 80 percent of any 
monetary recovery in personal injury multidistrict litigation 
be paid to plaintiffs, effectively codifying a 20 percent cap 
on attorneys' contingent fees in personal injury multidistrict 
litigation. By codifying a 20 percent cap on attorneys' 
contingency fees, this provision may present an insurmountable 
disincentive for counsel to undertake such litigation. It also 
may conflict with state laws governing such fees in personal 
injury and wrongful death cases. The provision is also 
ambiguous in some respects, leaving unclear, for example, who 
would pay for experts or reimburse insurers on plaintiffs' 
medical bills. It is not even clear who might be a ``claimant'' 
entitled to part of the 80 percent of the monetary recovery. As 
with other provisions in the bill, this ambiguity opens the 
door to more litigation, cost, and delay.
I. LH.R. 985's Will Impose New Burdens on Pending Cases
    Section 7 makes the bill's various provisions applicable to 
all cases pending on the date of enactment. In this way, the 
bill unjustly changes class action and other procedural rules 
on cases in the midst of litigation, burdening plaintiffs with 
new requirements they had no way of preparing for.
    Given the tremendous costs and increased burdens of the 
bill's various provisions on litigants and courts, 
Representative Sheila Jackson Lee (D-TX) offered an amendment 
to delay the bill's effective date until the Administrative 
Office of the United States Courts completed an assessment of 
the costs the bill would impose on litigants and the courts. 
The Committee, however, rejected this sensible amendment by a 
party-line vote of 12 to 17.
    Because the bill would impose onerous requirements on 
plaintiffs and effectively make much civil litigation cost-
prohibitive in Federal court, Representative David Cicilline 
(D-RI) offered an amendment that would have exempted from the 
entire bill all civil actions, to the extent permitted by law, 
concerning injuries caused by a firearm. The Committee, 
however, rejected this amendment by a party-line vote of 12 to 
19.

    III. H.R. 985 WOULD STRAIN LIMITED JUDICIAL RESOURCES, OVERRIDE 
   JUDICIAL DISCRETION, AND CIRCUMVENT THE RULES ENABLING ACT PROCESS

    H.R. 985 would strain already-limited judicial resources. 
Without doubt, the bill's numerous new and vaguely-worded 
standards would foster extensive litigation to resolve their 
meaning and application. This would be in addition to the 
already resource-intensive process that courts must follow when 
considering class action certification motions. For instance, 
as Professor Coffee noted, the bill's mandatory appeal 
provision alone could substantially increase the burdens on 
appellate courts possibly by as much as five-fold because 
appeals courts currently permit relatively few appeals under 
Rule 23(f).\40\ Similarly, the automatic third-party litigation 
funding disclosure requirement in proposed section 1722 will 
needlessly burden Federal courts by creating more chances for 
discovery disputes.
---------------------------------------------------------------------------
    \40\Coffee Memorandum at 6.
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    The bill also significantly reduces judicial discretion in 
a number of ways. For example, its stay of discovery provision 
significantly reduces the discretion that courts currently have 
to stay, or to allow, discovery in response to a motion. 
Similarly, the bill's mandatory appeal provision adds to the 
burden of appellate courts while taking away their authority to 
determine when an appeal of a class certification order might 
be warranted. Likewise, the bill's ``conflict of interest'' 
provision denies courts any discretion to determine whether 
certain relationships actually pose a conflict of interest, 
imposing instead a per se rule requiring denial of class 
certification if certain relationships exist between class 
counsel and a named plaintiff or class representative. Finally, 
the bill's multidistrict litigation provision imposes draconian 
deadlines on both plaintiffs and courts to make determinations 
about the sufficiency of a plaintiff's factual allegations, 
with no ``good cause'' or other exception to allow a court some 
flexibility in setting deadlines. It also requires dismissal by 
the court if it makes certain findings, rather than leaving 
that decision to the court's discretion.
    Finally, H.R. 985 circumvents the highly prudential and 
deliberative Rules Enabling Act process, a process that 
reflects input not only from the Federal judiciary, but also 
from other interested parties and the public generally.\41\ In 
fact, the Judicial Conference of the United States is in the 
midst of a multi-year study of Rule 23 that ``has considered 
many of the issues addressed in H.R. 985.''\42\ Accordingly, 
the Conference has ``strongly urge[d] Congress not to amend the 
class action procedures found in Rule 23.''\43\ Although H.R. 
985 includes a provision stating that nothing in the bill 
should be interpreted to prohibit the Supreme Court or the 
Judicial Conference from using the Rules Enabling Act process, 
the measure nonetheless clearly circumvents that process. 
Indeed, several provisions contained in H.R. 985, such as the 
bill's ``ascertainability'' standard and its changes to 
consideration of ``issue'' class actions, have already been 
considered and rejected by the Advisory Committee on Civil 
Rules as part of the Judicial Conference's consideration of 
Rule 23 amendments.
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    \41\28 U.S.C. Sec. Sec. 2071 et seq. (2017).
    \42\Judicial Conference Letter.
    \43\Id.
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                               CONCLUSION

    H.R. 985 purports to help plaintiffs, but it will in fact 
deny plaintiffs any justice by greatly diminishing the 
availability of class actions and multidistrict litigation. The 
bill's proponents offer no credible evidence that such 
draconian legislation is needed and, in the absence of any 
hearing to assess most of the bill's provisions, the 
justifications for those provisions are unclear at best. If 
anything, the bill is so skewed in favor of corporate 
defendants' interests that the obvious inference is that its 
aim is to rig the procedural rules governing class actions and 
multidistrict litigation to ensure defendant-friendly outcomes 
rather than to guarantee fairness or address abuses. In 
addition, H.R. 985's various requirements are so vague or 
impossible to meet that they would provide numerous 
opportunities for defendants to engage in dilatory tactics, 
raising litigation costs and burdens for plaintiffs to the 
point of dissuading future plaintiffs from even filing suit. 
Finally, the bill would substantially and needlessly increase 
resource burdens on the Federal courts, significantly reduce 
judicial discretion in many respects, and unnecessarily 
circumvent the Rules Enabling Act process.
    For all of the foregoing reasons, we respectfully dissent 
and we urge our colleagues to oppose H.R. 985.

                                   Mr. Conyers, Jr.
                                   Mr. Nadler.
                                   Ms. Lofgren.
                                   Ms. Jackson Lee.
                                   Mr. Cohen.
                                   Mr. Johnson, Jr.
                                   Mr. Deutch.
                                   Mr. Gutierrez.
                                   Ms. Bass.
                                   Mr. Richmond.
                                   Mr. Jeffries.
                                   Mr. Cicilline.
                                   Mr. Swalwell.
                                   Mr. Lieu.
                                   Mr. Raskin.
                                   Ms. Jayapal.

                                 [all]