Washington, D.C.—House Judiciary Committee Chairman Bob Goodlatte (R-Va.) delivered the following remarks during the House Judiciary Committee’s markup of H.R. 985, the Fairness in Class Action Litigation Act.
Chairman Goodlatte: 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 are U.S. companies, putting those U.S. companies at a distinct economic disadvantage when competing with companies worldwide.
But the problem of overbroad class actions doesn’t just affect U.S. companies. It affects consumers in the United States, who are forced into lawsuits they don’t 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 0.023 percent. That’s right – only the tiniest fraction of consumer class action members bother to claim the compensation awarded them in a settlement. That’s clear proof that vastly large numbers of class members are satisfied with the product they purchase, don’t want compensation, and don’t want to be lumped into a gigantic class action lawsuit.
Federal judges are crying out for Congress to reform the class action system, which currently allows trial lawyers to fill classes with hundreds and thousands of unmeritorious claims and use those artificially inflated classes to force defendants to settle the case. Liberal Justice Ruth Bader Ginsburg has recognized that – quote — “[a] court’s decision to certify a class … places pressure on the defendant to settle even unmeritorious claims.” 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.” And 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.” 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.”
The purpose of a class action is to provide a fair means of evaluating similar, meritorious claims, not to provide a way for lawyers to artificially inflate the size of a class to extort a larger settlement fee for themselves, siphoning money away from injured parties, and increasing prices for everyone.
This bill includes several reforms. It prevents people from being forced into class actions with other uninjured or minimally injured members, only to have the compensation of injured parties reduced.
It prevents trial lawyers from using incestuous, litigation-factory arrangements to gin up lawsuits. It requires courts to use objective criteria in determining who’s injured in a class action and how compensation will actually reach injured victims. It requires that injured victims get paid first, before the lawyers, and that lawyer fees be limited to a reasonable percentage of the money injured victims actually receive.
It requires judges to itemize exactly who gets what in a class action settlement, and who’s paying and controlling the lawyers. It requires that all the rules governing class action be followed, that expensive pre-trial proceedings be put on hold while the court determines if the case can’t meet class certification requirements, and allows appeals of class certification orders so justice can be done, faster.
It ensures lawyers don’t add plaintiffs just for forum shopping purposes. And it requires the verification of allegations in multidistrict pre-trial proceedings, ensuring defendants receive due process while plaintiffs, not lawyers, get the benefits of any cost savings achieved by the multidistrict pre-trial process.
And it does all this in about ten pages of legislative text. Please join me in supporting this bill on behalf of consumers and injured parties everywhere.
Click here to learn more about today’s markup.