BY: Charles Ash, IV | IN: Class Action & Commercial Litigation
The House of Representatives recently passed a bill that would significantly diminish large corporations’ accountability for selling you dangerous or defective products. While the world is preoccupied with headlines about Russia, ISIS, and Donald Trump’s tweets, the U.S. Chamber of Commerce is diligently pushing the so-called Fairness in Class Action Litigation Act through our legislature. Before going any further, it is worthwhile to consider exactly what the U.S. Chamber of Commerce is.
According to its website, the U.S. Chamber of Commerce claims to be “the world’s largest business organization.” In reality, the Chamber is the largest lobbying group in the United States, and has consistently spent more than any other lobbying organization on a yearly basis. Its website expresses an unabashed pride in being corporations’ “voice in Washington D.C.” to “advocate for pro-business policies.” The Chamber states that “[f]or 100 years, we have driven the pro-business agenda in Washington.”
The pro-business agenda that the Chamber advocates includes legal reform, which simply means reforming the laws with the aim of achieving a specific goal. The organization is currently advocating aggressively for pro-business legal reform in the enactment of the Fairness in Class Action Litigation Act, and the goals they seek to achieve are to eradicate class action lawsuits and substantially limit corporate liability to consumers.
If passed, the Act would make it nearly impossible to certify a class action lawsuit by imposing a heightened standard to the commonality requirement of Federal Rule of Civil Procedure 23. The Act would prohibit certification of a class where the plaintiffs did not suffer the same type and extent of damages. This requirement would effectively create an impassable barrier for a class of plaintiffs that incurred economic (money) damages.
The Chamber was motivated to implement this legal reform by a lawsuit brought by consumers who purchased defective washing machines. In the lawsuit, the plaintiffs sought payment of money damages incurred to replace washing machines known to grow black mold. The Chamber rushed to the side of the washing machine manufacturers and argued on their behalf, asserting that individuals who have the same type of washing machine, but have not yet started to grow black mold, have not sustained an injury and therefore should not be permitted to join the lawsuit. In other words, the Chamber argued that the plaintiffs should come back after they had black mold in their washing machine and that they should not be permitted to maintain a class action because they did not all pay the same amount for the washing machine.
The Fairness in Class Action Litigation Act seeks to add a heightened commonality requirement mandating that each class member suffer “the same type and scope of injury as the named class representative or representatives.” In the example of the washing machine case, even if you had the type of washing machine that was known to create black mold, you would not be permitted to sue with the people that had already developed black mold because you did not sustain the same scope of injury. Additionally, an individual would not be considered a class member unless they paid exactly the same price for the washing machine as a named plaintiff because the extent of their damages (replacement cost) would not be the same.
Daniel Karon, a writer for the American Bar Association, effectively illustrated the dangers of this modification to Rule 23’s commonality requirement by using the example of a defective water heater. Years ago, problems arose with a number of water heaters that included defectively manufactured control valves that allowed sediment from crusty gas lines to flow through the control valves. When the water heater’s pilot light blew out, the control valve was supposed to shut tight, keeping unconsumed gas from flowing into people’s basements. However, the sediment prevented closure, which meant that gas would continue to leak out into the basement of the home. Many rural homes used liquid propane gas, which is heavier than air. For this reason, it sank to the floor when released. When an unknowing homeowner attempted to relight the pilot on the water heater, a catastrophic and deadly explosion occurred.
With the above facts in mind, assume that you and 10,000 other people purchased the same defective water heater. For the price of $100 – $200 dollars, you could replace the defectively manufactured control valves. Under the heightened commonality requirements of the Fairness in Class Action Litigation Act, you and the other 10,000 people would likely be unable to join in a class action together. To meet the heightened commonality requirement, you would need to establish (through admissible evidence) that you and the 10,000 other class members paid the exact same amount for the defective water heater and the cost of repair was exactly the same for you as it was for the other class members.
In the illustration of the defective water heater, under the existing class action rules, a court could certify a class and send a crucial notice of the defect and the pending lawsuit to the 10,000 people to alert them that they have a dangerously defective water heater. This notice could preemptively avert thousands of catastrophic losses to consumers, and, in this case, prevent them from blowing up their homes. However, replacing or repairing those defective water heaters will cost the manufacturing corporation money. As such, the U.S. Department of Commerce will gladly use their deep pockets to push this bill through the legislature, which will insulate corporations from exposure, albeit at a great cost consumers.
Do not be deceived by the title. The Fairness in Class Action Litigation Act is not fair to anyone and would be more appropriately titled “The End of Class Action Litigation Act.” If implemented, the Act will have you – not the manufacturer or retailer – pay the cost for a dangerous or defective product you purchase. It is completely unrealistic to think that an individual lawsuit for $100 is worth your time or the expense of an attorney. Furthermore, the heightened commonality requirements of the bill eliminate large classes because it is extremely unlikely that a large class of people will have the exact same type of injury and exact scope of injury, even if their injuries both arise from the same product.
Smaller classes mean smaller class awards, and as the final and fatal blow to class actions, in order to eliminate even small class actions, the bill would cap the attorney’s fee to the amount awarded to the class. For example, if a class of 30 people were each owed $100, the plaintiff’s attorney would have to spend two years litigating a class action lawsuit for a maximum attorney fee of $3,000.00.
There is nothing fair about this bill. It is an appalling attempt by big businesses to absolve themselves of any liability to the consumers that buy their products (i.e., every single individual in this country).
The attorneys in Sommers Schwartz’s Class Action Litigation Group are committed to pursuing and protecting the rights of consumers and others, and we will continue to monitor legislative actions concerning the public’s access to justice.
View all posts byCharles Ash, IV
Charles R. Ash, IV is a Shareholder in Sommers Schwartz’s Complex Litigation groups. A substantial portion of Rob’s practice is devoted to collective and class actions arising under the Fair Labor Standards Act (FLSA) and similar state laws.