Mass Tort Defense

State Committee Misses Opportunity for Class Action Reform

Readers of MassTortDefense recognize that one of the most challenging jurisdictions for potential class actions defendants is California, given the substantive law, some state courts' take on certification issues, and the aggressive plaintiffs' bar.  It is no surprise that advocates of a balanced and appropriate role for class actions have from time to time attempted legislative reform in this state.

One idea that has been proposed is a requirement that class action advertisements (and there are plenty) include appropriate disclosures that potential plaintiffs could be liable for attorneys’ fees if a defendant prevails.

Unfortunately, the state Assembly's Judiciary Committee last week rejected such a proposal in a vote along party lines.  Proposed A.B. 1954 would have required ads soliciting plaintiffs for a class action to disclose that they might be held responsible for part of a defendant's legal fees if the defendant prevails under certain conditions. The legislation also would have permitted the state's Department of Consumer Affairs to impose a fine of up to $2,000 for an ad that failed to include the notice provision.

Supporters of the bill expressed concern about what they see as a flood of class action solicitations, which are seen as a serious impediment to doing business in California.  The bill was supported by the Civil Justice Association of California and the California Building Industry Association, as well as the California Chamber of Commerce.  Our readers know that some potential plaintiffs see class actions like purchasing a lottery ticket - no risk, high reward.  Opponents argued that in the state, orders directing named plaintiffs of a class to pay for a prevailing defendant’s fees happens only in rare cases. But it can and does happen, and what's wrong with letting potential plaintiffs know this? Such a bill would increases transparency and thus protect consumers; it might cut down on the number of "shakedown" class actions that only disclose promises of huge settlements without the potential other side of the coin. 

 

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Sean P. Wajert of Shook, Hardy & Bacon LLP