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Class Action Bill Will Harm Consumers and Benefit Large Corporations

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By Joseph Rainsbury, an appellate attorney in Roanoke, VA

Congressman Bob Goodlatte is the chair of the House Judiciary Committee. Earlier this year, he introduced a bill (H.R. 985) that, if passed, will deprive consumers of a valuable tool for combating corporate misconduct — the modern class action.

Goodlatte’s website says that his “Fairness in Class-Action Litigation Act of 2017” will “protect innocent individuals and small businesses who have become the targets of frivolous suits.” In reality, the bill will protect large corporations from meritorious lawsuits brought by consumers whom they have cheated and injured.

Class actions allow plaintiffs with similar claims to pool their litigation efforts against a single defendant. Suppose your cable company, without your permission, adds a $5 channel to your bill every month. It makes no economic sense for you to sue the cable company. Your attorney’s fees would dwarf any recovery. But if the cable company is doing the same thing to a million other customers, and you can join with those other customers in a single action, a lawsuit becomes economically viable.

Keeping large corporations honest

The real value of class actions, however, is not in the resulting recovery — which often is only a few dollars per customer. Rather, their real value is that the threat of such actions keeps large corporations honest. It deters them from nickeling and diming us to death.

Congressman Goodlatte’s bill, however, would kill federal class actions as we know them. Here’s how. For a class-action to proceed in federal court, the judge has to “certify” the class, which means he decides whether the plaintiffs’ claims have enough in common to justify their proceeding as a class.

Up until now, plaintiffs seeking class certification merely had to show “commonality” in one aspect of their case (e.g., they are all complaining about the same corporate misconduct). Goodlatte’s bill changes that. It requires that plaintiffs show commonality in all aspects of their cases, including damages. In opaque legalese, buried in the middle of the bill, it requires that the “entirety of the cause of action” satisfy the commonality requirement. Yet it is virtually never the case that class members have identical damages.

In the example above, the cable company might overcharge different consumers by different amounts, for different channels, or for different lengths of time. And where the class action involves corporate practices causing personal injuries, each class member is always going to be unique in terms of medical expenses, lost wages, pain, etc. Requiring commonality in all aspects of the class members’ cases would effectively destroy federal class actions as a way to police the misconduct of large corporations.

Not a reform bill

It is distressing that this has been proposed by Congressman Goodlatte. His Class Action Fairness Act of 2005 provided welcome reforms to many of the unsavory practices of class-action plaintiffs’ lawyers. By conferring federal jurisdiction over class actions with aggregate claims of over $5 million, the 2005 Act allowed corporate defendants to escape notorious state-court “judicial hellholes” (such as Madison County, Illinois) where corrupt state judges systematically favored equally corrupt plaintiff’s lawyers. It allowed such corporations to get a fair hearing in federal court.

It is distressing that this has been proposed by Congressman Goodlatte. His Class Action Fairness Act of 2005 provided welcome reforms to many of the unsavory practices of class-action plaintiffs’ lawyers. By conferring federal jurisdiction over class actions with aggregate claims of over $5 million, the 2005 Act allowed corporate defendants to escape notorious state-court “judicial hellholes” (such as Madison County, Illinois) where corrupt state judges systematically favored equally corrupt plaintiff’s lawyers. It allowed such corporations to get a fair hearing in federal court.

Goodlatte’s current bill, by contrast, is not a reform bill. It throws the baby out with the bathwater. Are there problems and abuses in modern class-action litigation? Sure. But the correct approach is to make targeted repairs, not to junk the whole system. Contrary to the claims on Goodlatte’s website, the “Fairness in Class-Action Litigation Act of 2017” will harm, not protect, individuals.

Large corporations, no longer fearing class-action suits, will go back to chiseling consumers and introducing harmful products into the marketplace. So if the “Fairness in Class-Action Litigation Act Of 2017” passes, and the president signs it into law, you will know who to thank when you see that extra five dollar charge on your cable bill, when your loved one suffers a bad reaction to a mass-marketed drug, or when your airbag fails to deploy during an accident: your Congressman, Bob Goodlatte.

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