Archive for the ‘Class Action Legislation’ Category

According to Pete Kasperowicz at The Hill’s Floor Action Blog, Senator Al Franken (D-Minn.) and Representative Rosa DeLauro (D-Conn.) have introduced legislation in Congress intended to reverse limitations on employment discrimination class actions recognized in the Supreme Court’s 2011 decision in Wal-Mart Stores, Inc. v. Dukes

A fact sheet available on Senator Franken’s official website describes the key provisions of the bill as follows:

The Equal Employment Opportunity Restoration Act will restore workers’ ability to challenge discriminatory employment practices on a class-wide basis. It adds to Title 28 of the U.S. Code a new section 4201, which does the following:

  • Section 4201(a) creates a new judicial procedure – called “group actions” – that workers can use when bringing employment discrimination cases. The requirements for establishing a group action are the same as the pre-Dukes requirements for maintaining a class action under Rule 23 of the Federal Rules of Civil Procedure—namely, clarifying that the merits of the case need not be proven to certify the group action.
  • Section 4201(b) provides that group actions can be used regardless of whether the group is challenging an objective employment practice, a subjective employment practice, or a mixed employment practice (such as the use of a written test to qualify for an interview).  It also provides that employers’ written anti-discrimination policies can be considered as a defense to certification only insofar as the employer demonstrates that the policy actually has been implemented in practice.
  • Section 4201(c) says that the group actions authorized by this section are subject to the same procedural requirements as class actions authorized by Rule 23. These include notice and opt-out requirements. This section also preserves the application of the Class Action Fairness Act and the availability of appeals.
  • Section 4201(d) says that courts can use statistical analyses and any other procedures they deem necessary to provide justice to prevailing plaintiffs.

It does not appear from Senator Franken’s fact sheet that the bill has significant bipartisan support, and having just been introduced, there is no telling how far it will go towards becoming law in its present form.  However, we’ll keep an eye on any future developments here at CAB.

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Anyone interested in curious in an outsider’s critique of the U.S. class action system should be following the debate over the adoption of an opt-out collective action scheme in the U.K.  Opponents of opt-out collective actions point to the “looniness” of the American system as a reason why not to adopt a similar scheme.  Proponents say that a U.S.-style class action procedure is the only way to preserve justice and access to the courts for consumers.  Should the U.K. try out lawsuits, American Style, or should they follow the European Wayand leave mass justice to government regulators?  This op-ed from the Times Online entitled Class Actions: Why Are We Waiting? offers arguments from both sides of the debate.

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As reported today in the UK trade publication Professional Pensions, the Civil Justice Council, a governmental advisory committee charged with studying and recommending policy decisions relating to civil justice issues, issued a report earlier this month recommending that enhanced collective action procedures be adopted in the British civil courts.  The procedures, if adopted, would include many of the features of class actions in the United States.  Many of the recommendations are similar to those recently recommended by an advisory group in the Australian state of Victoria.

Here is a summary of the panel’s recommendations:

1) Introduction of a generic collective action procedure;

2) Procedures to allow a wider range of representatives to bring collective actions, ranging from individuals to “ad hoc bodies”;

3) Permitting both opt-in and opt-out actions, with tolling procedures to apply during the pendency of an opt-out action;

4) Strict certification requirements;

5) Enhanced case management of collective actions by specialized judges;

6) Permitting awards of aggregate damages in opt-out actions, which would involve changes to both procedural and substantive law;

7) Requirement that the court conduct a fairness hearing to evaluate the fairness of a collective action settlement to absent parties;

8) “Full” cost-shifting;

9) Cy pres awards allowing unclaimed funds to be distributed to a foundation or trust;

10) Recommendation that the changes be introduced by legislation as opposed to by changes to the civil rules.

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Two news sources reported today on a forum sponsored by the Manhattan Institute to discuss a research paper releaseed by the U.S. Chamber of Commerce Institute of Legal Reform (ILR).  See the Wall Street Journal’s Market Watch section and an American Lawyer article by Brian Baxter posted on Law.com.  The report and press release is available for viewing at the IRL website: www.InstituteforLegalReform.com

Among numerous other statistics provided in the report, the report states that securities class action filings increased by 58% in 2007 over 2006 and that $51.8 billion was paid out in securities class action settlements over the last decade.  The report also states that the average dollar amount per settlement increased by 43%, not taking into account “billion dollar plus settlements,” and contends that “[b]etween 1995 and 2005, securities class action litigation caused the destruction of nearly $25 billion of shareholder wealth.”  The report offers various proposals for securities class action reform, including the adoption of the “Securities Litigation Attorney Accountability and Transparency Act,” (S.3033, H.R. 5463), or SLAATA, a bill being championed by Texas Senator John Cornyn.  (See this previous ClassActionBlawg.com entry).

The ILR has an unapologetically pro-business slant, but whether you agree or disagree with the organization’s views, the statistics provided and issues raised in the report are important ones to consider in the ongoing debate over securities and other class action reform.

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Here are some blog postings from the week that was that might be of interest to class action practitioners.  The topic headings may or may not be a permanent addition to this weekly column.  They made sense this week given logical groupings in the topics being discussed around the blogosphere.  Let me know what you think.

Class Action Decisions

The Complex Litigator discusses the latest California appellate decision addressing the test for employment and provides a more general analysis of trends in wage and hour class action litigation surrounding alleged misclassification of employees as independent contractors.


Class Action Defense Blog summarizes a recent Tenth Circuit Court of Appeals decision affirming the dismissal of a class action lawsuit, holding in part that the alleged violation of a licensing statute is insufficient to support a claim for unjust enrichment.


Drug and Device Law Blog reviews the latest in medical monitoring class action decisions:


Class Action Trends

The UCL Practitioner provides a link to a powerpoint presentation from a recent CLE course discussing the California Unfair Competition Law (UCL or Section 17200) after Proposition 64.


The D&O Diary provides a summary of rulings on motions to dismiss subprime and credit-crisis-related lawsuits


If you’re interested in tracking the latest trends in the useof technology in class action settlements, see this Class Reactions posting discusses a recent class action settlement permitting the online submission of claims:


Class Action News

Classified summarizes the latest class action news:


Mass Tort Litigation Blog reviews an interesting article of general interest to litigators, discussing an emperical study of trends in summary judgment orders:


Legislation Impacting Class Actions 

Point of Law reviews an editorial in The Examiner praising Senator John Cornyn’s securities class action reform bill (see my earlier discussion of the bill here)…


… and reports on the demise of a Senate Bill that would have resulted in a tax deduction on expenses advanced by lawyers in contingency fee cases:



Here’s more critical commentary on the same bill from RejectSociety.com:


Class Action Scandals

Ideoblog provides a thoughtful and thorough response to St. John’s Law Professor Michael Perino’s paper on the Milberg Weiss kickback scandal…


…while Law and More critiques William Lerach’s somewhat-less-than-confessional essay “I am Guilty”


For a report on developments in the phen-fen corruption trial in Kentucky, see this Folo posting:


Internet and Tech Issues

Slashdot reports on a class action lawsuit filed in Quebec against a telecom company on behalf of DSL subcribers and other recent legislative developments in Canada implicating Net neutrality…


…more on the same case from Michael Geist:


…while TechCrunch comments on a class action lawsuit accusing an Internet business and services directory of online advertising “click fraud”:


Arbitration Clauses and Class Action Waivers

Tort Deform provides a lengthy criticism of mandatory arbitration clauses in consumer agreements…


… and Wage Law discusses the results of a recent opinion poll of American consumers regarding binding arbitration and attitudes toward potential legislation banning binding arbitration clauses in consumer agreements:



Overlawyered contributor Ted Frank chronicles his experiences as a pro se objector to a class action settlement involving video game purchasers.


Finally, Bits and Pieces columnist Emory Schley laments the frustration and disappointment of participating in class action settlements:


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According to an AP story published today, Texas Senator John Cornyn has introduced a bill “aimed at protecting shareholders from rogue attorneys” in securities class actions.  Senator Cornyn’s bill, not coincidentally, was introduced on the same day that class action attorney William Lerach reported to prison for a 2-year term for paying illegal kickbacks to securities class action plaintiffs.  See here for Senator Cornyn’s official statement regarding the proposed legislation.  According to Senator Cornyn, the bill would 1) require sworn disclosures regarding the existence of direct or indirect payments by counsel to plaintiffs; 2) create a competitive bidding process for the selection of lead plaintiffs’ counsel; and 3) commission a GAO study regarding the appropriate “hourly rate for lead counsel.”

I previously commented on a proposal to initiate a Congressional investigation into systematic abuses in class action litigation.  (See my earlier entry here.)  Having not read the text of Senator Cornyn’s bill, I can’t say with confidence that it is another example of an unnecessarily rash solution to a perceived problem that can be remedied simply by enforcing existing law.  However, Mr. Lerach was prosecuted under existing law, pleaded guilty, and is now serving time in prison for his illegal acts.  Reforms requiring more “transparency,” such as requiring the submission of a sworn statement, would not appear to be a significant deterrent to a clever lawyer bent on breaking the law.  As for the other proposed reforms, judges are already very well equipped to make determinations about the appropriateness of an attorney’s fee in a particular jurisdiction without having a government study to rely on.  The proposal to create a competitive bidding process for the appointment of class counsel is a concern because it may have the unintended consequence of encouraging, not reducing, unprofessional conduct, and because it has serious implications for the very nature of the attorney/client relationship.  Rule 23 already give judges the power to scrutinize relationships and potential conflicts of interests between lawyers and their clients in deciding whether to certify proposed class actions.  I am skeptical that reforms of the type proposed by Senator Cornyn are necessary or even likely to reduce potential lawsuit abuse in ways not already covered existing laws.

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