Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2017

To amend the procedures used in Federal court class actions and multidistrict litigation proceedings to assure fairer, more efficient outcomes for claimants and defendants, and for other purposes. 1. Short title; reference; table of contents (a) Short title This Act may be cited as the Fairness in Class Action Litigation Act of 2017 (b) Reference Whenever, in this Act, reference is made to an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of title 28, United States Code. (c) Table of contents The table of contents of this Act is as follows: Sec. 1. Short title; reference; table of contents. Sec. 2. Purposes. Sec. 3. Class action procedures. Sec. 4. Misjoinder of plaintiffs in personal injury and wrongful death actions. Sec. 5. Multidistrict litigation proceedings procedures. Sec. 6. Rulemaking authority of Supreme Court and Judicial Conference. Sec. 7. Effective date. 2. Purposes The purposes of this Act are to— (1) assure fair and prompt recoveries for class members and multidistrict litigation plaintiffs with legitimate claims; (2) diminish abuses in class action and mass tort litigation that are undermining the integrity of the U.S. legal system; and (3) restore the intent of the framers of the United States Constitution by ensuring Federal court consideration of interstate controversies of national importance consistent with diversity jurisdiction principles. 3. Class action procedures (a) In general Chapter 114 is amended by inserting after section 1715 the following: 1716. Class action injury allegations (a) In general A Federal court shall not issue an order granting certification of a class action seeking monetary relief for personal injury or economic loss unless the party seeking to maintain such a class action affirmatively demonstrates that each proposed class member suffered the same type and scope of injury as the named class representative or representatives. (b) Certification order An order issued under Rule 23(c)(1) of the Federal Rules of Civil Procedure that certifies a class seeking monetary relief for personal injury or economic loss shall include a determination, based on a rigorous analysis of the evidence presented, that the requirement in subsection (a) of this section is satisfied. 1717. Conflicts of interest (a) Required disclosures In a class action complaint, class counsel shall state whether any proposed class representative or named plaintiff in the complaint is a relative of, is a present or former employee of, is a present or former client of (other than with respect to the class action), or has any contractual relationship with (other than with respect to the class action) class counsel. In addition, the complaint shall describe the circumstances under which each class representative or named plaintiff agreed to be included in the complaint and shall identify any other class action in which any proposed class representative or named plaintiff has a similar role. (b) Prohibition of conflicts A Federal court shall not issue an order granting certification of any class action in which any proposed class representative or named plaintiff is a relative of, is a present or former employee of, is a present or former client of (other than with respect to the class action), or has any contractual relationship with (other than with respect to the class action) class counsel. (c) Definition For purposes of this section, relative 1718. Class member benefits (a) Distribution of benefits to class members A Federal court shall not issue an order granting certification of a class action seeking monetary relief unless the class is defined with reference to objective criteria and the party seeking to maintain such a class action affirmatively demonstrates that there is a reliable and administratively feasible mechanism (a) for the court to determine whether putative class members fall within the class definition and (b) for distributing directly to a substantial majority of class members any monetary relief secured for the class. (b) Attorneys’ fees in class actions (1) Fee distribution timing In a class action seeking monetary relief, no attorneys’ fees may be determined or paid pursuant to Rule 23(h) of the Federal Rules of Civil Procedure or otherwise until the distribution of any monetary recovery to class members has been completed. (2) Fee determinations based on monetary awards Unless otherwise specified by Federal statute, if a judgment or proposed settlement in a class action provides for a monetary recovery, the portion of any attorneys’ fee award to class counsel that is attributed to the monetary recovery shall be limited to a reasonable percentage of any payments directly distributed to and received by class members. In no event shall the attorneys’ fee award exceed the total amount of money directly distributed to and received by all class members. (3) Fee determinations based on equitable relief Unless otherwise specified by Federal statute, if a judgment or proposed settlement in a class action provides for equitable relief, the portion of any attorneys’ fee award to class counsel that is attributed to the equitable relief shall be limited to a reasonable percentage of the value of the equitable relief, including any injunctive relief. 1719. Money distribution data (a) Settlement accountings In any settlement of a class action that provides for monetary benefits, the court shall order class counsel to submit to the Director of the Federal Judicial Center and the Director of the Administrative Office of the United States Courts an accounting of the disbursement of all funds paid by the defendant pursuant to the settlement agreement. The accounting shall state the total amount paid directly to all class members, the actual or estimated total number of class members, the number of class members who received payments, the average amount (both mean and median) paid directly to all class members, the largest amount paid to any class member, the smallest amount paid to any class member and, separately, each amount paid to any other person (including class counsel) and the purpose of the payment. In stating the amounts paid to class members, no individual class member shall be identified. No attorneys’ fees may be paid to class counsel pursuant to Rule 23(h) of the Federal Rules of Civil Procedure until the accounting has been submitted. (b) Annual settlement distribution reports Commencing not later than 12 months after the date of enactment of this Act, the Judicial Conference of the United States, with the assistance of the Director of the Federal Judicial Center and the Director of the Administrative Office of the United States Courts, shall annually prepare and transmit to the Committees on the Judiciary of the Senate and the House of Representatives for public dissemination a report summarizing how funds paid by defendants in class actions have been distributed, based on the settlement accountings submitted pursuant to subsection (a). 1720. Issues classes (a) In general A Federal court shall not issue an order granting certification of a class action with respect to particular issues pursuant to Rule 23(c)(4) of the Federal Rules of Civil Procedure unless the entirety of the cause of action from which the particular issues arise satisfies all the class certification prerequisites of Rule 23(a) and Rule 23(b)(1), Rule 23(b)(2), or Rule 23(b)(3). (b) Certification order An order issued under Rule 23(c)(4) of the Federal Rules of Civil Procedure that certifies a class with respect to particular issues shall include a determination, based on a rigorous analysis of the evidence presented, that the requirement in subsection (a) of this section is satisfied. 1721. Stay of discovery In any class action, all discovery and other proceedings shall be stayed during the pendency of any motion to transfer, motion to dismiss, motion to strike class allegations, or other motion to dispose of the class allegations, unless the court finds upon the motion of any party that particularized discovery is necessary to preserve evidence or to prevent undue prejudice to that party. 1722. Third-party litigation funding disclosure In any class action, class counsel shall promptly disclose in writing to the court and all other parties the identity of any person or entity, other than a class member or class counsel of record, who has a contingent right to receive compensation from any settlement, judgment, or other relief obtained in the action. 1723. Appeals A court of appeals shall permit an appeal from an order granting or denying class-action certification under Rule 23 of the Federal Rules of Civil Procedure. . 4. Misjoinder of plaintiffs in personal injury and wrongful death actions Section 1447 is amended— (1) by redesignating subsection (d) as subsection (e); (2) by redesignating subsection (e) as subsection (f); and (3) by inserting after subsection (c) the following: (d) Misjoinder of plaintiffs in personal injury and wrongful death actions (1) This subsection shall apply to any civil action in which— (A) two or more plaintiffs assert personal injury or wrongful death claims; (B) the action is removed on the basis of the jurisdiction conferred by section 1332(a); and (C) a motion to remand is made on the ground that one or more defendants are citizens of the same State as one or more plaintiffs. (2) In deciding the remand motion in any such case, the court shall apply the jurisdictional requirements of section 1332(a) to the claims of each plaintiff individually, as though that plaintiff were the sole plaintiff in the action. (3) The court shall sever the claims that do not satisfy the jurisdictional requirements of section 1332(a) and shall remand those claims to the State court from which the action was removed. The court shall retain jurisdiction over the claims that satisfy the jurisdictional requirements of section 1332(a). . 5. Multidistrict litigation proceedings procedures (a) In general Chapter 87 is amended by adding to section 1407 the following: (i) Allegations verification In any coordinated or consolidated pretrial proceedings conducted pursuant to subsection (b), counsel for a plaintiff asserting a claim seeking redress for personal injury whose civil action is assigned to or directly filed in the proceedings shall make a submission sufficient to demonstrate that there is evidentiary support (including but not limited to medical records) for the factual contentions in plaintiff’s complaint regarding the alleged injury, the exposure to the risk that allegedly caused the injury, and the alleged cause of the injury. The submission must be made within the first 45 days after the civil action is transferred to or directly filed in the proceedings. That deadline shall not be extended. Within 30 days after the submission deadline, the judge or judges to whom the action is assigned shall enter an order determining whether the submission is sufficient and shall dismiss the action without prejudice if the submission is found to be insufficient. If a plaintiff in an action dismissed without prejudice fails to tender a sufficient submission within the following 30 days, the action shall be dismissed with prejudice. (j) Trial prohibition In any coordinated or consolidated pretrial proceedings conducted pursuant to subsection (b), the judge or judges to whom actions are assigned by the Judicial Panel on Multidistrict Litigation may not conduct any trial in any civil action transferred to or directly filed in the proceedings unless all parties to the civil action consent to trial of the specific case sought to be tried. (k) Review of orders (1) In general The Court of Appeals having jurisdiction over the transferee district shall permit an appeal to be taken from any order issued in the conduct of coordinated or consolidated pretrial proceedings conducted pursuant to subsection (b), provided that an immediate appeal from the order may materially advance the ultimate termination of one or more civil actions in the proceedings. (2) Remand orders Notwithstanding section 1447(e), a court of appeals may accept an appeal from an order issued in any coordinated or consolidated proceedings conducted pursuant to subsection (b) granting or denying a motion to remand a civil action to the State court from which it was removed if application is made to the court of appeals within 14 days after the order is entered. (l) Ensuring proper recovery for plaintiffs The claimants in any civil action asserting a claim for personal injury transferred to or directly filed in coordinated or consolidated pretrial proceedings conducted pursuant to subsection (b) shall receive not less than 80 percent of any monetary recovery obtained in that action by settlement, judgment or otherwise. The judge or judges to whom the coordinated or consolidated pretrial proceedings have been assigned shall have jurisdiction over any disputes regarding compliance with this requirement. . 6. Rulemaking authority of Supreme Court and Judicial Conference Nothing in this Act shall restrict in any way the authority of the Judicial Conference and the Supreme Court to propose and prescribe general rules of practice and procedure under chapter 131 7. Effective date The amendments made by the Act shall apply to any civil action pending on the date of enactment of this Act or commenced thereafter. March 7, 2017 Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Summary: Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2017 TITLE I--FAIRNESS IN CLASS ACTION LITIGATION Fairness in Class Action Litigation Act of 2017 (Sec. 103) This bill amends the federal judicial code to prohibit federal courts from certifying class actions unless: in a class action seeking monetary relief for personal injury or economic loss, each proposed class member suffered the same type and scope of injury as the named class representatives; no class representatives or named plaintiffs are relatives of class counsel, except in a private securities litigation brought as a class action subject to the Securities Act of 1933 or the Securities Exchange Act of 1934; and in a class action seeking monetary relief, the party seeking to maintain the class action demonstrates a reliable and administratively feasible mechanism for the court to determine whether putative class members fall within the class definition and for the distribution of any monetary relief directly to a substantial majority of class members. Class counsel must disclose: (1) whether any proposed class representatives or named plaintiffs are relatives of, present or former employees or clients of, or contractually related to class counsel; (2) the circumstances under which such representatives or plaintiffs agreed to be included in the complaint; and (3) any other class action in which such representatives and plaintiffs have a similar role. The bill limits attorney's fees to a reasonable percentage of: (1) any payments received by class members, and (2) the value of any equitable relief. No attorney's fees based on monetary relief may: (1) be paid until distribution of the monetary recovery to class members has been completed, or (2) exceed the total amount distributed to and received by all class members. Class counsel must submit to the Federal Judicial Center and the Administrative Office of the U.S. Courts an accounting of the disbursement of funds paid by defendants in class action settlements. The Judicial Conference of the United States must use the accountings to prepare an annual summary for Congress and the public on how funds paid by defendants in class actions have been distributed to class members, class counsel, and other persons. A court's order that certifies a class with respect to particular issues must include a determination that the entirety of the cause of action from which the particular issues arise satisfies all the class certification prerequisites. Except in certain private securities actions, a stay of discovery is required during the pendency of preliminary motions in class action proceedings (motions to transfer, dismiss, strike, or dispose of class allegations) unless the court finds upon the motion of a party that particularized discovery is necessary to preserve evidence or to prevent undue prejudice. Class counsel must disclose any person or entity who has a contingent right to receive compensation from any settlement, judgment, or relief obtained in the action. Appeals courts must permit appeals from an order granting or denying class certification. (Sec. 104) Federal courts must apply diversity of citizenship jurisdictional requirements to the claims of each plaintiff individually (as though each plaintiff were the sole plaintiff in the action) when deciding a motion to remand back to a state court a civil action in which: (1) two or more plaintiffs assert personal injury or wrongful death claims, (2) the action was removed from state court to federal court on the basis of a diversity of citizenship among the parties, and (3) a motion to remand is made on the ground that one or more defendants are citizens of the same state as one or more plaintiffs. A court must sever, and remand to state court, claims that do not satisfy the diversity jurisdictional requirements unless: (1) a claim is so related to claims that satisfy the diversity requirements that they form part of the same case or controversy under Article III of the Constitution, and (2) the plaintiff consents to the removal from state to federal court. The court must retain jurisdiction over claims that satisfy the diversity requirements. (Sec. 105) In coordinated or consolidated pretrial proceedings for personal injury claims conducted by judges assigned by the judicial panel on multidistrict litigation, plaintiffs must: (1) submit medical records and other evidence for factual contentions regarding the alleged injury, the exposure to the risk that allegedly caused the injury, and the alleged cause of the injury; and (2) receive not less than 80% of any monetary recovery obtained for those claims, subject to the satisfaction of any liens for medical services provided to the plaintiff related to those claims. Trials may not be conducted in multidistrict litigation proceedings unless all parties to that civil action consent. A federal appeals court having jurisdiction over the transferee district shall permit an appeal from an order issued in coordinated or consolidated pretrial proceedings if: (1) the order is applicable to one or more civil actions seeking redress for personal injury, and (2) an immediate appeal may materially advance the ultimate termination of one or more civil actions in the proceedings. A federal appeals court may accept an appeal from an order issued in any coordinated or consolidated proceedings granting or denying a motion to remand a civil action to the state court from which it was removed if application is made within 14 days after the order is entered. TITLE II--FURTHERING ASBESTOS CLAIM TRANSPARENCY Furthering Asbestos Claim Transparency (FACT) Act of 2017 (Sec. 202) This title amends the federal bankruptcy code to require asbestos liability trusts to disclose information about claimant demands and payments from the trusts by: (1) filing with the bankruptcy court quarterly reports to be available on the public docket, (2) providing the information upon request to parties in actions concerning liability for asbestos exposure. (A bankruptcy court, in confirming a debtor's chapter 11 bankruptcy reorganization plan, may prohibit entities seeking payment for alleged asbestos damages from taking legal action against a reorganized debtor if the court authorizes a debtor-funded trust to assume the debtor's asbestos liability and serve as asbestos-claimants' exclusive source of compensation.)