House Passes Class Action Fairness Bill - But Is It a Good Thing?

Last week, the U.S. House of Representatives passed the excitingly titled “Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act.” The Act, split (unsurprisingly) into two areas that cover class action lawsuits and asbestos claims, faced repeated amendments and has already been singled out for veto by the White House. Why?

Not to be confused with 2005’s Class Action Fairness Act (which you can read about here), the Fairness in Class Action Litigation bill is essentially an attempt to ensure that only lawsuits in which all class members suffered the same “scope of injury” can proceed in court. The Republican-backed bill is a response to the perceived prevalence of questionable and “overly broad” class actions and the idea – not necessarily proven – that people who don’t really have legitimate claims are often covered by class action lawsuits. As the bill puts it, judges would be required to “affirmatively demonstrate that each proposed class member suffered the same type and scope of injury as the named class representative or representatives” before certifying the class.

Opponents of the bill argued that the current system already allows judges to make informed calls on who qualifies to join a case and that the additional burden of “affirmatively demonstrating” class members’ qualifications will only slow things down while ultimately changing nothing. The bill’s supporters, though, argue that forcing judges to look again at who’s being included in class membership will reduce unnecessary or frivolous claims and help slim down class actions, ultimately helping those whose cases need to be heard.

The bill still needs to make it through the Senate – and get past the White House veto.

The fact is, this bill is simply the latest incarnation of a long-running argument about how class actions work and who they affect. Businesses don’t like them and often feel targeted by what they see as dubious claims. Court decisions that both Republican and businesses have dubbed “overly broad” have added to a sense that class actions are helping people who don’t have valid claims get access to damages and money they don’t deserve. On the other hand, supporters of class action lawsuits oppose government intervention in judges’ ability to define who can take part in the lawsuits – preferring, understandably, that as wide a scope as possible be allowed.

Back in July, we reported on this bill, noting that it could spell serious trouble if judges are forced to reduce class definitions to meet a diminished “size and scope” of injuries. Here’s what some lawmakers don’t seem to get; class actions are designed to bring people together with similar, but not identical, injuries. These lawsuits often deal with products sold under false claims or items that are faulty and have broken in several different ways.

A washing machine that breaks halfway through a load is very different to one that breaks when you’re not using it.

Burdening judges with extra requirements may be designed to prevent unqualified class members, but if it cuts out legitimate claims, the bill is a failure. The LA Times have called the bill “Orwellian” – in the name of fairness, lawmakers may only make things harder for consumers with fair claims.

Threatening to veto the bill before it can become law, the White House has stated that courts already have “ample authority under the existing rules governing class actions to screen out frivolous and baseless lawsuits.” The White House also takes issue with the bill’s second feature dealing with asbestos claim victims.

It’s not good when consumers’ rights become a political point scoring match and it would be nice to think that class action law won’t become another proxy war between Republicans and President Obama’s White House. Nice – but naive. Class action lawsuits have always divided the government along party lines and it’s not surprising that this latest debate about how the lawsuits should work – and who they should work for – has followed suit. We can only hope that by the time it’s through the Senate, it’s either significantly changed or simply doesn’t pass. There may be a time and a place for class action reform, but this – reducing who can be a class member and why – is not it.