PROVIDENCE, RI — A new occupant in the White House is prompting trial lawyers, for the first time in years, to take seriously tort reform efforts by Republicans in Congress.
Just this month the Republican-controlled House passed bills that would narrow the scope of membership in class actions, restrict the payment of class counsel fees, increase transparency in the asbestos trust compensation system, and codify rules prohibiting the fraudulent joinder of defendants.
House Republicans topped off that string of successes by also passing a bill designed to put “teeth” back into Rule 11’s prohibition against the filing of frivolous suits.
The House passed similar measures last year only to see them die in a Republican-controlled Senate faced with the reality that President Obama would veto them.
But the election of Donald J. Trump as president has changed the political landscape, emboldening proponents who no longer see a veto by the executive branch as a roadblock to reforms enacted by a Congress that remains solidly in Republican hands.
“With a Republican majority, this becomes a more imminent threat,” said Annette Gonthier-Kiely, president of the Massachusetts Academy of Trial Attorneys.
The bills passed by Congress are a threat that must be taken seriously, agreed Zachary M. Mandell, president of the Rhode Island Association for Justice.
“These bills significantly and drastically would reduce consumer rights under the civil justice system,” Mandell said.
Meanwhile, Providence products liability attorney John F. Kelleher sees the changes in Washington as an overdue opportunity for litigation reform on the federal level.
“The question is what shape it’s going to be in once it gets through the Senate. But with a Republican in the White House, we see a possibility that if meaningful legislation makes it through both houses of Congress, that it can become law,” said Kelleher, president of Defense Counsel of Rhode Island.
The reforms are backed by the U.S. Chamber Institute for Legal Reform. Matt Webb, ILR’s senior vice president of legal reform policy, said he is cautiously optimistic that at least some of the reforms will become law. He suggested that there may even be some Democrats in the Senate who would back the bills.
“There are a number of Democratic senators who are up for reelection in states that President Trump carried,” Webb said. “They’re going to be looking for things they can support that help differentiate themselves from those [Democrats] who are basically obstructing everything.”
But according to Plymouth products liability lawyer Walter Kelley, the House action is “nothing more than a corporate handout.”
“It essentially is not allowing people to hold the manufacturers of dangerous products accountable,” he said.
While Kelley acknowledged Trump’s reputation for litigiousness, that fact gives him little comfort that the president would not sign tort reform legislation that makes its way out of Congress.
“I wouldn’t put anything past Trump,” he said. “It doesn’t give me a warm, fuzzy feeling to know that he’d be the one to sign the bill.”
But Gonthier-Kiely isn’t so certain that a presidential veto of litigation reform measures is off the table.
“There’s a level of unpredictability,” she said. “We really don’t know where President Trump stands on this. Even if he had his own opinion that he was not in favor of it, it could become a bargaining chip to get some other legislation.”
Class action reform
On March 9, the House passed by a 220-201 vote the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2017. As suggested by its cumbersome title, H.R. 985 combines two separate acts, one addressing class actions and the second (the FACT Act) addressing asbestos compensation.
The heart of the Fairness in Class Action Litigation Act is a provision that prohibits a federal court from certifying a class unless, after a “rigorous analysis” of the evidence, the plaintiff affirmatively demonstrates that each proposed class member suffered the same type and scope of injury as the named class representative.
Kelley, a MATA board member, said such a change would unfairly favor multi-billion-dollar corporations and their insurance companies.
“By requiring that all plaintiffs in a consolidated action have identical injuries or losses, they are effectively wiping out a family’s ability to seek justice on an even playing field with the world’s largest and wealthiest corporations when they cause harm,” Kelley said.
But Webb said limiting class membership to those suffering the same type and scope of injury would help prevent plaintiffs’ attorneys from artificially inflating the size of a class in an effort to drive up the settlement value of a case.
“The goal of the act is to maximize recovery for deserving victims while weeding out unmeritorious claims,” Kelleher added.
To avoid conflicts of interests, H.R. 985 would further prohibit the certification of any class action in which the class representative or named plaintiff is a relative or employee of class counsel.
The class action bill also addresses the distribution and determination of attorneys’ fees, providing that no fees may be “determined or paid … until the distribution of any monetary recovery to class members has been completed.”
The bill would further place restrictions on the amount of fees, limiting awards to class counsel to a “reasonable percentage” of payments directly distributed to and received by class members.
“In no event shall the attorneys’ fee award exceed the total amount of money directly distributed to and received by all class members,” the bill states.
Webb sees the legislation as including a number of consumer protection provisions aimed at putting the interests of class action plaintiffs ahead of lawyers.
“Rather than class counsel getting the lion’s share of any award in a class action, the bulk of it would have to go to class members,” Webb said.
The FACT Act would require asbestos trusts to file quarterly reports with the bankruptcy court describing the exposure history of claimants and the basis for any payment from the trust made to a claimant. Parties to asbestos litigation also would be permitted access to information regarding claims against and payments from a particular trust.
Improving transparency is critical to preventing asbestos claimants from “double-dipping,” according to Webb. He said it would allow defendants in ongoing litigation to determine if a particular plaintiff’s claims history is inconsistent with his claim of asbestos exposure in a pending case.