Legislation the House is expected to take up this week would make it virtually impossible to get judges to certify class-action lawsuits, according to the bill's critics. Its supporters, including the U.S. Chamber of Commerce, say it would merely foil suits that benefit no one but lawyers.
The House Judiciary Committee approved HR1927 last summer, and the Rules Committee is expected to send it to the House floor this week. The bill, sponsored by Rep. Bob Goodlatte (R-Va.) and titled the “Fairness in Class Action Litigation of 2015,” would prohibit class-action lawsuits that seek money for personal injury or monetary loss unless each class member “suffered the same type and scope of injury.”
In healthcare, class-action lawsuits are often filed in cases involving data breaches and investor grievances. For example, hospital chain HCA holdings recently agreed to pay $215 million to settle a class-action lawsuit filed by shareholders who alleged the company used misleading information to sell stock during its initial public offering.
Also, a number of potential class-action lawsuits were filed last year against Premera Blue Cross and Anthem after the companies disclosed data breaches that exposed the records of millions of members.
The Premera cases have been consolidated, as have the Anthem ones, and are now in federal district courts. They are seeking class-action status but have not yet been certified as class-action suits. A judge must certify a case as a class-action suit before it can officially be considered one.
An attorney representing plaintiffs suing Premera, James Bilsborrow with Weitz & Luxenberg, said HR1927 “could potentially have devastating effects for victims of healthcare breaches.”
Bilsborrow said that's because the bill would require that every member of the class in a data breach case suffer the exact same type of fraud. He called that “unrealistic” given that breach victims can face financial, social security, unemployment and/or medical frauds, among others.
The bill, he said, is “an attempt to prevent consumers from holding companies accountable when they screw up.”
The bill would alter the requirement under current law that plaintiffs in a class-action suit have suffered similar harms.
“The way it's drafted makes it essentially impossible to ever bring a class action where the damages are going to differ substantially person-by-person,” said Paul Bland, executive director of Public Justice, which has opposed the bill. “That's true with nearly all class actions.”
Advocates for consumers and investors as well as civil rights groups are unanimously against the bill, Bland said.
The U.S. Chamber of Commerce, however, has thrown its weight behind HR1927, and that could ease its path through the legislative process in the Republican-controlled Congress.
Attempts to reach the chamber for comment Monday were unsuccessful. But Chamber Executive Vice President for Government Affairs R. Bruce Josten wrote members of Congress a letter (PDF) in June praising the bill.
In that letter, he argued that settlements in class action lawsuits rarely reward class members in any significant way. And even when the settlements are large, he wrote, an “overwhelming majority” of class members do not participate in them because they didn't have problems in the first place.
The bill, in the Chamber's view, would block class-action suits filed on behalf of people who never had any problems with a product or service. “This legislation would address the problem of overbroad, noninjury class actions, which cost millions of dollars to defend and typically result in settlements where nobody wins, except the lawyers,” Josten wrote.
But Bland said it's unlikely President Barack Obama would allow the bill to become law even if Congress approves it.
An attempt to reach a White House spokeswoman for comment was not immediately successful Monday afternoon.
