Frivolous Lawsuit, Class Action Bills Up for Debate

WASHINGTON (CN) – The House of Representatives is set to consider two legal reform bills, one that would restore harsh penalties for lawyers who file frivolous legal challenges and another that would cut down on access to class action lawsuits.

The House Rules Committee debated the bills on Wednesday afternoon in its cramped hearing room on the third floor of the Capitol, preparing them for a vote in the near future. The committee, which is heavily weighted in favor of the majority party, details how a bill will be considered before the full House and what amendments can be offered on the floor.

The first bill the committee considered was the Lawsuit Abuse Reduction Act, which would reinstate sanctions judges must hand down to lawyers who file frivolous lawsuits.

The law keeps in place the standards judges use to evaluate whether a lawsuit is frivolous, but it removes a 21-day window in which lawyers can withdraw claims after they have been challenged as frivolous.

The sanctions, contained in rule 11 of the Federal Rules of Civil Procedure, were weakened in 1993 amidst criticism that civil rights and employment cases disproportionately took the brunt of the law.

Proponents of the bill, which passed the House in 2015 before dying in the Senate, say mandatory sanctions are an important deterrent to lawyers who repeatedly file baseless claims in the hopes one might stick and win them a sizable award.

“These unnecessary and improper lawsuits harm innocent defendants by forcing them to fight completely baseless claims in court, which can cost thousands of dollars and create undue stress,” Rep. Pete Sessions, a Texas Republican who chairs the Rules Committee, said at the hearing.

But critics, including the American Bar Association and the Judicial Conference, say the proposed law could chill civil rights cases, which often rely on novel legal arguments that might seem frivolous.

“We have judges and we generally think it’s a good idea for judges to be able to make decisions,” Rep. Steve Cohen, a Tennessee Democrat who testified against the bill, said at the hearing. “They can do that now but this takes that away from them.”

Rep. Bob Goodlatte, the chairman of the House Judiciary Committee, dismissed this claim, noting that a part of the bill specifically says judges should not read the law to “impede the assertion or development of new claims, defenses or remedies.”

“We don’t see any need for any area of the law to be exempt from bringing a rule 11 motion when it’s appropriate to bring that motion,” Goodlatte said in an interview, referring to the area of the law that describes the sanctions for frivolous suits.

Cohen feared the bill could also create a “cottage industry” of lawyers who work to deem claims against clients frivolous.

The second bill the committee considered would require more financial disclosure for class action payouts and funding as well as impose stricter rules on what classes can receive certification.

Under the new law, a judge could not certify a class unless all members of the class showed they suffered the same “type and scope of injury” as the named plaintiffs. Class action lawyers would also only be able to receive a “reasonable percentage” of the payments their class wins.

Cohen and some of the Democrats on the Rules Committee blasted the bill, saying it puts up a “virtual obstacle course” for people seeking class action cases.  Democrats also expressed concern that neither bill had a hearing in this Congress before going to the Rules Committee.

But Republicans like Goodlatte say the law will prevent lawyers from collecting attorneys’ fees that far outpace the size of the award their clients won.