On Wednesday, the House Judiciary Committee approved a bill that has received little coverage, but which has the potential to transform class-action lawsuits.
The business lobby has long complained that the current class-action lawsuit system is too often exploited by opportunistic lawyers, working mainly to enrich themselves rather than serve their clients. Consumer advocates insist the suits are an essential tool for corporate accountability, and one of the few practical ways individuals can challenge big businesses in court.
In recent years, companies have increasingly relied on legal fine print to avoid the lawsuits, inserting language into contracts requiring disputes to be settled by private arbitrators, not the courts. In the final years of the Obama administration, regulators moved to limit those arbitration clauses, proposing rules that ban them from student loan agreements and some financial services.
But some in Congress are now moving in the other direction, drafting a law that would make it harder to launch class-action lawsuits in the first place.
Introduced last Thursday by Republican Rep. Bob Goodlatte of Virginia, with support of Texas Rep. Pete Sessions, the Fairness in Class Action Litigation Act of 2017 would “keep baseless class action suits away from innocent parties,” Rep. Goodlatte said in his announcement of the bill.
Rep. Goodlatte, the Chairman of the Judiciary Committee, said the law will cut down on frivolous lawsuits while “keeping the doors to justice open for parties with real and legitimate claims, and maximizing their recoveries.”
The bill has now cleared the House Judiciary Committee, but it’s not yet clear whether the Republican leadership will prioritize the bill and push for its passage through both chambers of Congress. Rep. Goodlatte, and representatives of the congressional leadership, did not respond to requests for comment.
But some class-action lawyers and academics are already in panic mode.