- While some litigation has reasonable motivation and tangible harms behind it, some does not.
- Class action plaintiffs often get only pennies on the dollar from court cases, while lawyers make millions in contingency fees. This encourages aggressive plaintiffs’ attorneys and third-party litigation investors to find huge supposed classes, sometimes even when many of those class members have dissimilar injuries or no injuries at all.
- Serial plaintiffs go to extreme lengths to find targets, like operating big banks of mobile phones, just waiting to get called, and pretending to operate as medical facilities in order to attract faxes.
- Multi-million dollar settlements have become a routine way for legitimate businesses to mitigate the risk and exposure of abusive TCPA class action litigation, because a court fight against even groundless claims would be even more expensive. These settlements cost revenue, jobs, and sometimes the solvency of the businesses.
- One of our members who settled such a suit in 2013 was hit with a comparable lawsuit a year later by the same attorney; the serial plaintiff quickly went on to sue multiple other marketing research and analytics companies.
The Lawsuit Abuse Reduction Act (LARA) (H.R. 720, S. 237) would penalize lawyers for filing baseless lawsuits, including for attorney’s fees and costs incurred by the victims of the suits. LARA also would reverse a 1993 amendment to the Federal Rules of Civil Procedure that has allowed parties and their lawyers to avoid sanctions for making frivolous claims by withdrawing such claims within 21 days.
The Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act (FICALA) (H.R.985) aims to assure fair and prompt recoveries for class members with legitimate claims while diminishing abuses of the system. Among numerous reforms, FICALA would:
- Eliminate “no-injury” class actions by prohibiting federal courts from certifying any class unless the proposed class rep demonstrates that all the proposed class members suffered the same type/scope of injury.
- Require that a class cannot be certified in a class action seeking money, unless the class members will be objectively identifiable and that there is a way to distribute the money to them.
- Mandate disclosure of any third-party funding agreements behind a class action lawsuit. Right now, hedge funds can bankroll dozens of lawsuits at a time in search of a big payout, proliferating and prolonging litigation.
- Mandate a stay of discovery in a class action case, unless needed to preserve evidence or prevent undue prejudice.
- Require appeals courts to permit appeals from an order granting or denying class certification.
- Prohibit any attorney's fees based on monetary relief being paid before complete distribution to class members.
- Prohibit attorney’s fees from exceeding the total amount distributed to and received by all class members.
- Require disclosure in the complaint of potential conflicts of interest between the class rep and the class lawyer, as well as the circumstances under which the class representative agreed to be included in the complaint.
FICALA’s provisions (1) identifying class members, (2) demonstrating that payments actually are delivered to a substantial majority of the class members, and (3) avoiding classes that include people who sustained injuries different from the representative plaintiff, would be the most likely to help marketing research and analytics companies threatened by TCPA class actions.
LARA (H.R. 720) passed the House, 230-188, on 3/10/17. FICALA passed the House, 220 to 201, on 3/9/17.
The Insights Association position
The Insights Association supports passage of FICALA and LARA, to help right the class action lawsuit system. This will prioritize consumers’ interests over those that represent them, discourage lawyer-driven litigation, and make sure that those consumers who have actually been harmed will receive compensation.