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New Bill Could Be a Game-Changer for MDLs and Class Actions

February 22, 2017 |  product-liability

Kelley Olah

Kelley S. Olah

Partner
Drug and Medical Device Litigation Co-Chair

The Fairness in Class Action Litigation Act of 2017, introduced in the U.S. House and approved by the Judiciary Committee last week, proposes far-reaching changes to the rules governing multidistrict litigations (MDLs), removals and class actions. Sponsored by the chairman of the House Judiciary Committee, Rep. Bob Goodlatte (R-Va), the bill’s stated purpose is to assure recoveries for plaintiffs with “legitimate claims” while also diminishing abuses that are “undermining the integrity of the U.S. legal system.” MDLs Much of the published commentary surrounding the act focuses on the proposed class action reforms, but the provisions regarding MDLs are deserving of equal attention. Giving a nod to Lone Pine case management orders and the Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach decision, the bill, as written, requires:

  • Plaintiff attorneys to submit “allegations verifications” in each case within 45 days after transfer that contain the evidentiary support (g. medical records) for the claims
  • All parties to consent to trial of the specific case sought to be tried before the MDL judge
  • The right to an immediate appeal of any MDL order during pretrial proceedings (as long as the appeal would materially advance the ultimate termination of one or more civil actions in the proceedings)
  • Recovery by claimants of at least 80 percent of any settlement (effectively capping plaintiffs’ attorney fees at 20 percent)
Removals Also noteworthy, the act contains a provision regarding multi-plaintiff personal injury and wrongful death cases removed to federal court. The proposed law requires any federal judge deciding a remand motion to sever all non-diverse plaintiffs and retain jurisdiction over the remaining claims. Such a requirement would end certain forum-shopping tactics and move more litigation from state to federal courts. Class Actions Key points for class action litigation include:
  • No certification unless each proposed class member suffered the same type and scope of injury
  • No certification of class if there is any family, employment or contractual relationship between class counsel and any proposed class rep or named plaintiff
  • No attorneys’ fees may be paid until distribution to class members is completed
  • Attorneys’ fees may not exceed the total amount of money received by class members
  • Detailed settlement accountings must be sent to the director of the Federal Judicial Center of the U.S. Courts
  • Annual reports shall be made to the House and Senate committees on the judiciary summarizing how funds paid by defendants have been distributed
  • Discovery stays to be entered upon the filing of any motion to transfer, dismiss, or strike or any motion to dispose of the class allegations
  • Mandated third-party litigation funding disclosure
  • Right of appeal from any order granting or denying class-action certification
Next up for the bill is a vote in the House. The scope and potential impact of the proposed law is not lost on anyone involved in consolidated proceedings. And as Rep. Goodlatte stated, “It does all this in about ten pages of legislative text.” The full text of the bill is available here. Rep. Goodlatte’s statement regarding the bill is available here.

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