Articles Posted in Class Actions

A senator from Virginia has introduced a proposed piece of legislation that would have dramatic implications for class action litigation if passed. The senator proposed the legislation with the intent of making class action lawsuits more fair and more efficient for all parties involved, including the court system. The bill would increase the recoveries for victims deemed deserving and filter out claims considered unmeritorious. These meritless claims are viewed as an unnecessary burden on judicial resources, according to proponents of the bill.

There are a number of ways that the legislation would change class action litigation in federal courts throughout the United States. Here are some examples. First, the legislation would require the plaintiff to demonstrate to an affirmative degree that there is “a reliable and administratively feasible mechanism” that the court can use to determine which potential class members are encompassed within the class. That mechanism would also need to provide a feasible and reliable way to distribute funds to those class members.

Next, attorneys would be prohibited from receiving class counsel fees until an accounting of the overall amount of fees that the defendant had dispersed is conducted. One of the things that the accounting would need to identify is the overall amount of compensation given to the class, the estimated or actual number of members in the class, the average compensation amount disbursed, and the highest sum provided to any single class member. It would also have to list any amounts paid to other individuals, including plaintiff’s counsel, and the reason for the payment.

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The United States Supreme Court recently handed down an opinion that may have broad implications for class action lawsuits. In Spokeo, Inc. v. Robins, the defendant maintained a search engine that allowed users to search specifically for people through its database. Employers could use the site to gain information about job applicants before deciding whether to hire them. The plaintiff discovered that the profile Spokeo provided for him contained numerous mistakes and other improper information. He brought a federal class action lawsuit against Spokeo, stating that it did not comply with the federal Fair Credit Reporting Act.

The lower court dismissed the lawsuit, stating that he had not adequately pleaded that he had suffered an actual injury as a result of the incorrect information in his profile. According to federal pleading standards, a plaintiff must establish that he or she has suffered a cognizable injury before being deemed entitled to compensation. This is known as the injury in fact requirement.

On appeal to the Ninth Circuit, the court reversed, finding that the plaintiff and other class members had an interest in how Spokeo handled their credit information. This was sufficient to establish an injury in fact, the court concluded.

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The United States Supreme Court recently issued a key ruling involving class action litigation. In Tyson Foods, Inc. v. Bouaphakeo, the high court was asked to consider whether the plaintiffs could use the “representative evidence” method of proving predominance according to Federal Rule of Civil Procedure 23(b)(3).

The plaintiffs were employees in Tyson’s Iowa-based pork slaughtering, cutting, and retrimming departments. Due to the nature of the work performed, the workers were required to don specific protective gear prior to beginning their work day. The type of equipment they needed to wear varied based on the department in which they were assigned to work on any given day. Based on an injunction issued by a federal court in prior years, Tyson was required to compensate each employee an additional four minutes of pay each day to reflect the amount of time required to don and doff the protective gear, which were referred to by the company as “K-code time.” Sometime in 2007, Tyson ceased making these payments to some of its employees while continuing to compensate others.

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The United States Supreme Court has handed down a key ruling in Campbell-Edwald Co. v. Gomez, holding that a defendant’s offer of settlement to a lead plaintiff in a class action lawsuit does not render the remaining claims of the class members moot. In the lawsuit, the plaintiff brought a class action under the Telephone Consumer Protection Act, requesting damages for unwanted text messages that the defendant delivered to him and the other class members. Prior to seeking class certification, the defendant sent a settlement offer to the plaintiff under Federal Rule of Civil Procedure 68.

After a defendant makes an offer of settlement under FRCP 68, the plaintiff has 10 days to either reject the offer or provide acceptance in writing. If the plaintiff does not respond, the offer is considered rejected. If the plaintiff rejects the settlement, a series of mechanisms kick in that affect trial and the payment of legal fees.

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The U.S. House of Representatives is set to consider a piece of legislation that is designed to reform the existing federal class action litigation standards by requiring that class actions divide proposed classes into class members who have been injured and class members who have not been injured. The two groups would be maintained in separate class action lawsuits. Called the Fairness in Class Action Litigation Act of 2015 (H.R. 1927), the text of the proposed bill states:

“No federal court shall certify any proposed class unless the party seeking to maintain a class action affirmatively demonstrates through admissible evidentiary proof that each proposed class member suffered an injury of the same type and extent as the injury of the named class representative or representatives.”

The bill defines the term “injury” as the damages alleged in the lawsuit. If the legislation is enacted, class action plaintiffs will need to demonstrate that the class members have experienced a similar type and scope of damages as the representative of the lawsuit. Also, when certifying a class action, federal judges will need to include an analysis and description of whether the plaintiff has satisfied this requirement and whether each class member shares a similar type of injury.

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The recent 2015 amendments to the Federal Rules of Civil Procedure, which were approved on October 9, 2015, take effect on December 1, raising concerns about how some of the changes will affect class action litigation.

First, changes to existing Federal Rule of Civil Procedure (“FRCP”) 26(b)(1) will impose an express limitation on discovery. Now, discovery will be limited to information that is proportional to the needs of the case, considering:

• The importance of the issues at stake in the action,
• The amount in controversy,
• The parties’ relative access to relevant information,
• The parties’ resources,
• The importance of the discovery in resolving the issues, and
• Whether the burden or expense of the proposed discovery outweighs its likely benefit.

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