H.R. 985 prohibits a federal court from certifying any proposed class seeking monetary relief for personal injury or economic loss unless the party seeking the class action shows that each proposed class member suffered the same type and scope of injury as the named class representative or representatives. The bill requires a court, in issuing a class certification order for any class subject to the bill’s requirements, to also certify that those requirements have been met based on a rigorous analysis of the evidence presented, and requires that class action lawyers should only get paid after the victims get paid and orders any third-party funding agreement to be disclosed to the district court.
H.R. 985 also includes the text of H.R. 906, the Furthering Asbestos Claim Transparency Act of 2017, which amends Section 524(g) of the Bankruptcy Code to require asbestos trusts to file quarterly reports with the bankruptcy court, not later than 60 days after the end of every quarter, detailing claimants’ names, claimants’ exposure history, and the basis for any payments made to claimants.
The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Mar 9, 2017.
Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2017
TITLE I--FAIRNESS IN CLASS ACTION LITIGATION
Fairness in Class Action Litigation Act of 2017
(Sec. 103) This bill amends the federal judicial code to prohibit federal courts from certifying class actions unless:
in a class action seeking monetary relief for personal injury or economic loss, each proposed class member suffered the same type and scope of injury as the named class representatives; no class representatives or named plaintiffs are relatives of class counsel, except in a private securities litigation brought as a class action subject to the Securities Act of 1933 or the Securities Exchange Act of 1934; and in a class action seeking monetary relief, the party seeking to maintain the class action demonstrates a reliable and administratively feasible mechanism for the court to determine whether putative class members fall within the class definition and for the distribution of any monetary relief directly to a substantial majority of class members. Class counsel must disclose: (1) whether any proposed class representatives or named plaintiffs are relatives of, present or former employees or clients of, or contractually related to class counsel; (2) the circumstances under which such representatives or plaintiffs agreed to be included in the complaint; and (3) any other class action in which such representatives and plaintiffs have a similar role.
The bill limits attorney's fees to a reasonable percentage of: (1) any payments received by class members, and (2) the value of any equitable relief.
No attorney's fees based on monetary relief may: (1) be paid until distribution of the monetary recovery to class members has been completed, or (2) exceed the total amount distributed to and received by all class members.
Class counsel must submit to the Federal Judicial Center and the Administrative Office of the U.S. Courts an accounting of the disbursement of funds paid by defendants in class action settlements. The Judicial Conference of the United States must use the accountings to prepare an annual summary for Congress and the public on how funds paid by defendants in class actions have been distributed to class members, class counsel, and other persons.
A court's order that certifies a class with respect to particular issues must include a determination that the entirety of the cause of action from which the particular issues arise satisfies all the class certification prerequisites.
Except in certain private securities actions, a stay of discovery is required during the pendency of preliminary motions in class action proceedings (motions to transfer, dismiss, strike, or dispose of class allegations) unless the court finds upon the motion of a party that particularized discovery is necessary to preserve evidence or to prevent undue prejudice.
Class counsel must disclose any person or entity who has a contingent right to receive compensation from any settlement, judgment, or relief obtained in the action.
Appeals courts must permit appeals from an order granting or denying class certification.
(Sec. 104) Federal courts must apply diversity of citizenship jurisdictional requirements to the claims of each plaintiff individually (as though each plaintiff were the sole plaintiff in the action) when deciding a motion to remand back to a state court a civil action in which: (1) two or more plaintiffs assert personal injury or wrongful death claims, (2) the action was removed from state court to federal court on the basis of a diversity of citizenship among the parties, and (3) 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.
A court must sever, and remand to state court, claims that do not satisfy the diversity jurisdictional requirements unless: (1) a claim is so related to claims that satisfy the diversity requirements that they form part of the same case or controversy under Article III of the Constitution, and (2) the plaintiff consents to the removal from state to federal court. The court must retain jurisdiction over claims that satisfy the diversity requirements.
(Sec. 105) In coordinated or consolidated pretrial proceedings for personal injury claims conducted by judges assigned by the judicial panel on multidistrict litigation, plaintiffs must: (1) submit medical records and other evidence for factual contentions regarding the alleged injury, the exposure to the risk that allegedly caused the injury, and the alleged cause of the injury; and (2) receive not less than 80% of any monetary recovery obtained for those claims, subject to the satisfaction of any liens for medical services provided to the plaintiff related to those claims. Trials may not be conducted in multidistrict litigation proceedings unless all parties to that civil action consent.
A federal appeals court having jurisdiction over the transferee district shall permit an appeal from an order issued in coordinated or consolidated pretrial proceedings if: (1) the order is applicable to one or more civil actions seeking redress for personal injury, and (2) an immediate appeal may materially advance the ultimate termination of one or more civil actions in the proceedings.
A federal appeals court may accept an appeal from an order issued in any coordinated or consolidated proceedings granting or denying a motion to remand a civil action to the state court from which it was removed if application is made within 14 days after the order is entered.
TITLE II--FURTHERING ASBESTOS CLAIM TRANSPARENCY
Furthering Asbestos Claim Transparency (FACT) Act of 2017
(Sec. 202) This title amends the federal bankruptcy code to require asbestos liability trusts to disclose information about claimant demands and payments from the trusts by: (1) filing with the bankruptcy court quarterly reports to be available on the public docket, (2) providing the information upon request to parties in actions concerning liability for asbestos exposure. (A bankruptcy court, in confirming a debtor's chapter 11 bankruptcy reorganization plan, may prohibit entities seeking payment for alleged asbestos damages from taking legal action against a reorganized debtor if the court authorizes a debtor-funded trust to assume the debtor's asbestos liability and serve as asbestos-claimants' exclusive source of compensation.)