[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]




 
                 STATE OF CLASS ACTIONS TEN YEARS AFTER
                            THE ENACTMENT OF
                     THE CLASS ACTION FAIRNESS ACT

=======================================================================

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON THE CONSTITUTION 
                           AND CIVIL JUSTICE

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 27, 2015

                               __________

                           Serial No. 114-10

                               __________

         Printed for the use of the Committee on the Judiciary


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                       COMMITTEE ON THE JUDICIARY

                   BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        JERROLD NADLER, New York
LAMAR S. SMITH, Texas                ZOE LOFGREN, California
STEVE CHABOT, Ohio                   SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California          STEVE COHEN, Tennessee
J. RANDY FORBES, Virginia            HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE KING, Iowa                       Georgia
TRENT FRANKS, Arizona                PEDRO R. PIERLUISI, Puerto Rico
LOUIE GOHMERT, Texas                 JUDY CHU, California
JIM JORDAN, Ohio                     TED DEUTCH, Florida
TED POE, Texas                       LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah                 KAREN BASS, California
TOM MARINO, Pennsylvania             CEDRIC RICHMOND, Louisiana
TREY GOWDY, South Carolina           SUZAN DelBENE, Washington
RAUUL LABRADOR, Idaho                HAKEEM JEFFRIES, New York
BLAKE FARENTHOLD, Texas              DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia                SCOTT PETERS, California
RON DeSANTIS, Florida
MIMI WALTERS, California
KEN BUCK, Colorado
JOHN RATCLIFFE, Texas
DAVE TROTT, Michigan
MIKE BISHOP, Michigan

           Shelley Husband, Chief of Staff & General Counsel
        Perry Apelbaum, Minority Staff Director & Chief Counsel
                                 ------                                

           Subcommittee on the Constitution and Civil Justice

                    TRENT FRANKS, Arizona, Chairman

                  RON DeSANTIS, Florida, Vice-Chairman

STEVE KING, Iowa                     STEVE COHEN, Tennessee
LOUIE GOHMERT, Texas                 JERROLD NADLER, New York
JIM JORDAN, Ohio                     TED DEUTCH, Florida

                     Paul B. Taylor, Chief Counsel

                    James J. Park, Minority Counsel
                    
                    
                                (II)
                    
                           
                    
                    
                    
                    
                            C O N T E N T S

                              ----------                              

                           FEBRUARY 27, 2015

                                                                   Page

                           OPENING STATEMENTS

The Honorable Trent Franks, a Representative in Congress from the 
  State of Arizona, and Chairman, Subcommittee on the 
  Constitution and Civil Justice.................................     1
The Honorable Steve Cohen, a Representative in Congress from the 
  State of Tennessee, and Ranking Member, Subcommittee on the 
  Constitution and Civil Justice.................................     2
The Honorable Bob Goodlatte, a Representative in Congress from 
  the State of Virginia, and Chairman, Committee on the Judiciary     5
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Chairman, Committee on the 
  Judiciary......................................................     6

                               WITNESSES

Andrew J. Pincus, Partner, Mayer Brown, U.S. Chamber Institute 
  for Legal Reform
  Oral Testimony.................................................     9
  Prepared Statement.............................................    11
John Parker Sweeney, President, DRI--The Voice of the Defense Bar
  Oral Testimony.................................................    26
  Prepared Statement.............................................    28
Patricia W. Moore, Professor of Law, St. Thomas University School 
  of Law
  Oral Testimony.................................................    46
  Prepared Statement.............................................    48
Jessica Miller, Partner, Skadden, Arps, Slate, Meagher & Flom LLP
  Oral Testimony.................................................    65
  Prepared Statement.............................................    67

                                APPENDIX
               Material Submitted for the Hearing Record

Material submitted by the Honorable Steve Cohen, a Representative 
  in Congress from the State of Tennessee, and Ranking Member, 
  Subcommittee on the Constitution and Civil Justice.............    96


   STATE OF CLASS ACTIONS TEN YEARS AFTER THE ENACTMENT OF THE CLASS 
                          ACTION FAIRNESS ACT

                              ----------                              


                       FRIDAY, FEBRUARY 27, 2015

                        House of Representatives

                   Subcommittee on the Constitution 
                           and Civil Justice

                       Committee on the Judiciary

                            Washington, DC.

    The Subcommittee met, pursuant to call, at 9:07 a.m., in 
room 2141, Rayburn Office Building, the Honorable Trent Franks 
(Chairman of the Subcommittee) presiding.
    Present: Representatives Franks, Goodlatte, DeSantis, King, 
Gohmert, Cohen, Conyers, and Nadler.
    Staff present: (Majority) Zachary Somers, Counsel; Tricia 
White, Clerk; (Minority) James J. Park, Minority Counsel; and 
Veronica Eligan, Professional Staff Member.
    Mr. Franks. Good morning. The Subcommittee on the 
Constitution and Civil Justice will come to order. Without 
objection, the Chair is authorized to declare a recess of the 
Committee at any time.
    10 years ago last week, Congress passed, and President 
George W. Bush signed into law, the Class Action Fairness Act, 
or CAFA as it commonly known. The bill was authorized by 
Chairman Goodlatte in the House and Chairman Grassley in the 
Senate, and received strong bipartisan support in both 
chambers. As it has been 10 years since CAFA was enacted, it 
seems like it is time for this Subcommittee to examine the 
current state of class action litigation in the Federal courts.
    The class action is a mechanism designed to allow injured 
parties to join together with others who have suffered the same 
harm when their claims are not large enough to make pursuing 
them individually cost efficient. If used properly, class 
actions are a valuable tool in our system of justice, but they 
are only beneficial when the redress of actual injuries 
suffered by class members is the priority of the litigation.
    In recent years, however, class actions have been used with 
increased frequency in ways that do not promote the interests 
they were intended to serve. CAFA was designed as a balanced 
approach to address some of the most egregious problems in 
class action litigation. Its goals were to promote fairness, 
ensure that interstate class actions are tried in Federal 
court, and establish new protections for consumers against 
abusive class action settlements.
    In many ways, the Act has been highly successful at 
achieving its goals. However, despite CAFA's successes, many 
legal commentators have raised concerns about new class action 
abuses that CAFA was not intended to address. One of the 
problems that has emerged with increased frequency is CAFA's 
enactment no injury class actions. In these cases, attorneys 
seek damages on behalf of a class of plaintiffs who have not 
suffered any actual harm. Rather, plaintiffs in these cases 
seek compensation for potential injuries that may never occur.
    These class actions are being filed despite the fact that 
it is a bedrock principle of both Federal and state law that a 
civil suit may not proceed if there is no injury. By allowing 
no injury class actions to proceed, judges are turning this 
bedrock principle on its head simply because a case is brought 
as a class action instead of by an individual plaintiff. As the 
Supreme Court has observed, class actions will always ``present 
opportunities for abuse.'' This likelihood for abuse is at its 
greatest in actions in which the class of plaintiff does not 
need to show that they are actually harmed.
    If no injury class actions are not bad enough, in the wake, 
CAFA attorneys have invented another class action device as 
well, a class action in which no plaintiff exists. These no 
plaintiff class actions are made possible through the use of cy 
pres settlements. In these cases, an uninjured third party with 
no connection to the litigation, usually a non-profit 
organization, is awarded money as part of a settlement because 
it would be too difficult or costly to identify the alleged 
victims. These settlements present a whole host of problems, 
not the least of which is that they almost certainly violate 
the Constitution's Article 3 case or controversy requirement.
    With the advent of no injury and no plaintiff class 
actions, it is not surprising that a recent empirical study 
conducted by our first witness, Andy Pincus, determined that 
``class actions do not provide class members with anything 
close to the benefits claimed by their proponents, although 
they can and do enrich attorneys.''
    It is also not surprising that a recent independent public 
opinion poll sponsored by DRI found that 78 percent of 
Americans believe that plaintiffs should only be able to join a 
class action if they can show that they were actually harmed, 
and 85 percent of Americans believe that class action lawyers 
should be required to obtain permission from individuals before 
enrolling them as plaintiffs.
    I look forward to the witnesses' testimony, and I hope that 
through this hearing we can begin to examine what improvements 
are needed to ensure that the Federal class action system is 
functioning in a manner that is fair and efficient for 
plaintiffs and defendants.
    And with that, I would recognize the Ranking Member for his 
opening statement.
    Mr. Cohen. Thank you, Mr. Chairman. Class actions do 
benefit society by providing plaintiffs access to court. In 
cases where a defendant may have caused small injuries to a 
large number of persons, class actions have offered an 
important way for injured people to obtain remedies they might 
otherwise not be able to get. I see it all the time in my 
personal life. I open up an envelope, and there is a class 
action based on something that has happened with a stock I have 
owned. And while I know the attorney is going to make a goodly 
amount of money, I am going to get something and knew about it, 
and never would have gotten anything otherwise. So class 
actions do a lot of good for a lot of people.
    Class actions are a way to stop large-scale wrongdoing by a 
defendant. By doing so, they can protect our health, promote 
safe products, fight discrimination, ensure fair wages, punish 
fraud, and stockholders get benefits. Unfortunately, the Class 
Action Fairness Act of 2005 made it harder and more expensive 
for plaintiffs to pursue class actions.
    Most controversially, the Act made it easier to remove 
class actions from State court to Federal court where class 
actions and litigation generally may be more difficult for 
plaintiffs to pursue. This is true even when the plaintiffs are 
all from one State that does business in that State, and the 
claim arises under State law. Still, it gives an opportunity to 
move it out of State courts.
    The Act may have denied many people the benefits of class 
actions over the last decade. This is a shame. The Center for 
Justice and Democracy at New York Law School published a report 
in October 2014 entitled ``First Class Relief: How Class 
Actions Benefit Those Who Are Injured, Defrauded, and 
Violated.'' This report details numerous class actions that 
have helped to remedy wrongs committed against consumers, 
employees, students, borrowers, service members, small 
businesses.
    I ask unanimous consent at this point, Mr. Chairman, to 
offer this report for the record.*
---------------------------------------------------------------------------
    *Note: The information referred to is not reprinted in this hearing 
record but is on file with the Subcommittee, and can be accessed at: 
http://centerjd.org/content/first-class-relief-how-class-actions-
benefit-those-who-are-injured-defrauded-and-violated.
---------------------------------------------------------------------------
    Mr. Franks. Without objection.
    Mr. Cohen. Thank you, sir. There are simply too many 
examples of the good that class actions have done for people to 
discuss in detail here. A few examples: Morgan v. Richmond 
School of Health and Technology, a for-profit school settled 
with 4,000 primarily African-American and low income students, 
who the school targeted for reverse redlining by using 
deceptive practices to enroll them for what the school knew was 
an inadequate education, saddling students with large debts, 
but without improved opportunities for employment. The students 
never would have had a thought about bringing an action 
themselves. Could not have, would not have got relief.
    In Re Dynamic Random Access Memory anti-trust litigation 
where defendant manufacturers of dynamic random access memory 
chips used in computers and videogame consoles settled for $242 
million with a class of 19,000 plaintiff companies that 
purchased those chips, with recoveries for class members 
ranging from $1,000 to $1 million.
    Carter v. Wells Fargo Advisors, where Wells Fargo settled a 
gender discrimination class action brought by 1,200 female 
financial advisors who alleged discrimination in pay, 
promotion, and other employment decisions for $32 million, or 
about $18,000 for each class member, and injunctive relief 
against future discrimination.
    Sure, there are interests who would not have wanted that to 
go forth. There are interests that would not want us to have 
access to class actions because they want to continue to 
discriminate against women, take advantage of African-Americans 
and young students, and rip them off, and pay them less. It 
needs to stop. The only way to do that is class actions.
    That is the best, often the only mechanism that can deliver 
those good results. Individual cases may be too costly to 
pursue and not worth the compensation available to the 
individual victim. But in the aggregate, these cases involve 
large-scale wrongdoing that should be stopped, and the 
attorneys that bring the cases are private attorneys general 
that are doing the work that government otherwise could be 
doing if the resources were there to work in a collective 
fashion, where the laws were such that this was illegal. Well, 
it would already be illegal, but easier to pursue.
    The majority witnesses will say today that class actions do 
not benefit class members and are not worth the costs they 
impose on corporate defendants. They will assert that class 
actions primarily benefit plaintiffs' lawyers. Well, that is 
not true, and the plaintiff lawyers deserve the pay they get 
because they are acting in the public interest and do benefit 
the public. In making these assertions, they rely on no 
objective data. Instead we will hear about a deeply flawed 
study conducted by the Mayer Brown law firm, otherwise a firm 
that I think well of for they employ Toby Moffett, a great 
American. But the study that they use critics have noted has 
cherry picked data and mischaracterization of cases to support 
its conclusions.
    Today, the American Association for Justice and the 
National Association of Consumer Advocates released a report 
called ``Class Actions are a Cornerstone of Our Civil Justice 
System: A Review of Class Actions Filed in 2009.'' This report 
contains a detailed case-by-case rebuttal of the Mayer Brown 
study that the majority witnesses today rely on in support of 
their assertions, attacking class actions and plaintiffs' 
lawyers. And I ask unanimous consent that it be made a part of 
the record. Mr. Chairman?**
---------------------------------------------------------------------------
    **Note: The information referred to is not reprinted in this 
hearing record but is on file with the Subcommittee, and can be 
accessed at:

      http://www.consumeradvocates.org/sites/default/files/
      Class%20Action%20Report%202-27-15.pdf.
    Mr. Franks. Without objection.
    Mr. Cohen. Thank you. The NACA and AAJ report shows that, 
in fact, class members did benefit in the cases cited in the 
Mayer Brown study. These people included Bernie Madoff's 
victims, employees who lost retirement funds due to misconduct 
by retirement fund members, and disabled tenants in public 
housing.
    I also take issue with the assertion that class actions 
simply benefit plaintiffs' lawyers. All the benefits of class 
actions outlined would not be possible but for the hard work 
and dedication of the lawyers who are willing to fight such 
actions on behalf of victims. They ought to be commended for 
their work, not attacked.
    Finally, I note that the Rules Advisory Committee of the 
Judicial Conference of the United States is currently 
considering amendments to Rule 23, which governs class actions. 
Given that Federal judges deal routinely with class actions, 
the consequences of CAFA, we should leave it to their expertise 
to determine what changes need to be made. It is amazing that 
we worry about the attorneys and what they make when they bring 
class actions on behalf of who have been wronged when the 
courts have found it wrong, but we do not worry about the 
tremendous salaries that are paid to the executives of the 
companies that are doing the unlawful work. That is one of the 
greatest flaws in our system today in America, the disparity in 
wealth and what the corporate CEOs are making and taking home 
and getting in benefits.
    I will yield back the remainder of my time.
    Mr. Franks. And I thank the gentleman, and I would now 
yield to the distinguished Chairman of the Committee, Mr. 
Goodlatte, from Virginia.
    Mr. Goodlatte. Thank you, Mr. Chairman. Mr. Chairman, 10 
years ago, I introduced and helped usher the Class Action 
Fairness Act through Congress and to the President's desk where 
it was signed into law. This legislation corrected a serious 
flaw in our Federal jurisdictional statutes that forbid Federal 
courts form hearing most interstate class actions.
    While the reforms contained in the Class Action Fairness 
Act have been integral in improving the civil justice system in 
the United States, abusive class action practices still exist 
today. I hope that through this hearing, the Committee can 
begin to examine some of the current problems in Federal class 
action litigation, and look for ways to improve the system to 
ensure that class action lawsuits are benefitting the victims 
they are intended to compensate.
    The class action device is a necessary and important part 
of our legal system. It promotes efficiency by allowing 
plaintiffs with similar claims to adjudicate their cases in one 
proceeding, and it promotes fairness by allowing claims to be 
heard in cases in which there are small harms to a large number 
of people that would otherwise go unaddressed because the cost 
of an individual plaintiff to sue would far exceed the 
benefits.
    In the 1960's and 70's, class actions that sought 
injunctive relief were used to accomplish landmark civil rights 
reform, such as integrating public school systems, improving 
conditions in our prison systems, and challenging 
discriminatory housing and public accommodation laws. Today's 
class action litigation, however, has in large part shifted far 
away from these important civil rights suits, and is now 
dominated by class actions brought by enterprising plaintiffs' 
attorneys seeking money damages on behalf of consumers.
    The rules that govern class action litigation have not kept 
up with this shift. In fact, other than the Class Action 
Fairness Act, no other major reforms to the laws governing 
Federal class actions have been adopted since 1966. Judging by 
some of the problems that have arisen since Class Action 
Fairness Act was enacted 10 years ago, additional reform is 
likely needed.
    I am concerned that in the years since the Class Action 
Fairness Act was enacted, there has been a proliferation of 
class actions filed by entrepreneurial attorneys on behalf of 
whole classes of plaintiffs that have not suffered any actual 
injury. These class actions are often comprised of class 
members that do not even know that they have been harmed, do 
not care about the minor injuries that the lawsuit is based on, 
and generally have no interest in pursuing litigation.
    These co-called no injury class actions appear to violate 
Article 3 of the Constitution, which requires a plaintiff 
suffer an actual and concrete injury in order to have standing 
to sue in Federal court. This principle does not change simply 
because a case is brought as a class action instead of by an 
individual. Alarmingly, however, many Federal courts have 
departed from this constitutional requirement and certified 
class actions in which the class members have not suffered any 
actual harm.
    No injury class actions appear to be to no one's benefit 
except the lawyers who are able to generate large fees 
litigating and settling these no injury cases. In fact, no 
injury class actions can actually harm the very class members 
on whose behalf they are purportedly brought. This harm occurs 
when individuals who have actually been injured are forced to 
sacrifice valid claims in order to preserve the lesser claims 
that everyone in the class can assert, or when consumers who 
are currently uninjured forgo real claims on future injuries in 
order to pursue more minor no injury claims. In short, no 
injury class actions can lead to substantial under compensation 
for consumers who have suffered actual harm.
    I am also concerned that we may be witnessing a significant 
increase in class action settlements that produce little or no 
benefit to the members of the class. We tried to address this 
trend in the Class Action Fairness Act by putting significant 
restrictions on coupon settlements. But in the wake post-CAFA 
innovations, we may need to consider more reform to restrict 
parasitic settlements that benefit no one other than the 
attorney who brought the class action.
    Given that class action lawsuit involve more money and 
touch more Americans than virtually any other litigation 
pending in our legal system, it is important that we have a 
Federal class action system that benefits those who have been 
truly injured and is fair to both plaintiffs and defendants. I 
look forward to the witnesses' testimony and any suggestions 
they may have for improving the laws governing class actions in 
Federal court.
    And I thank the Chairman, and yield back.
    Mr. Franks. I thank the gentleman, and I would now yield to 
the Ranking Member of the Committee, Mr. Conyers from Michigan.
    Mr. Conyers. Thank you, Mr. Chairman. Members of the 
Committee, I may be the only one on this Subcommittee that was 
here when the Class Action Fairness Act was sped through the 
Congress in 2005, and here we are again.
    When Congress considered the measure 10 years ago, I warned 
that it would simply benefit corporate wrongdoers to the 
detriment of large numbers of people who suffer great harm. 
This is because the Act makes it relatively easy for corporate 
defendants to have their cases removed from State courts to the 
Federal courts, a venue where they believe they have greater 
advantages. And unfortunately, my concerns have proven to be 
correct over 10 years since the Act's passage.
    Although proponents of this legislation claimed in 2005 
that the Act was necessary to curb forum shopping by 
plaintiffs, in reality this law has proved to be the ultimate 
tool for forum shopping by defendants. There are several 
reasons why the changes effected by the Class Action Fairness 
Act are so problematic.
    To begin with, the Act offends federalism by undermining 
State laws in State courts. You see, State law often is the 
source of many critical consumer and environmental protections 
through common law, tort, and statutory provisions. In turn, 
class actions are vital to enforcing these rights as they allow 
aggregation of small claims that otherwise might not warrant 
individual litigation. Nevertheless, the Class Action Fairness 
Act makes virtually every class action removable to Federal 
court, thereby divesting State courts of the ability to 
interpret and develop State law.
    In addition, by making it easier to remove class actions to 
Federal court, the Act makes class certification more difficult 
and expensive. Back in 2005, I correctly predicted that Federal 
courts would be less likely to certify class actions. This has 
become a reality because of a series of adverse Federal 
precedents that make it more difficult to establish the class 
action certification requirements under Rule 23 of the Federal 
Rules of Civil Procedure.
    For instance, in 2011, the Supreme Court substantially 
narrowed the scope of Rule 23's commonality requirement in the 
Walmart Stores case. This case denied class certification in an 
employment discrimination class action suit seeking to 
vindicate the rights of as many as one and a half million 
female workers. The Court in a 5 to 4 decision, along 
ideological lines on the basic issue presented in the case, 
namely whether the purported class satisfied Rule 23's 
requirement that there be questions of law or fact common to 
the class of female employees.
    The Court's conservative justices found it did not, giving 
what many critics say is a very narrow reading of Rule 23's 
commonality requirement. This narrow reading severely 
constrains the ability of plaintiffs to band together in large 
class actions, even when as in Dukes, the plaintiffs alleged 
the same type of injury, which in that case was gender-based 
employment discrimination. This decision has effectively made 
the Federal courts an even more favorable forum for defendants 
in consumer, anti-trust, environmental, and employment 
discrimination cases.
    Finally, the Act increases the work load of an already 
overburdened Federal court system. In 2005, we were concerned 
about the effect that the Act would have on Federal courts 
considering the number of judicial vacancies, which at the time 
was 5 percent of the Federal judicial positions. Well, as you 
might suspect, the number has climbed to 7 percent as of last 
October. And I also note that there are only 1,500 Federal 
judges as compared to 30,000 State judges.
    Growing caseloads force Federal judges to have even less 
time for case management and supervision, thereby resulting in 
delayed justice in class actions and other Federal cases, and 
creates the risk that judges will dismiss cases or encourage 
less than optimal settlements to clear their dockets.
    So I conclude with the observation that this Act, Class 
Action Fairness, has made it increasingly difficult for 
consumers, employees, small businesses, to vindicate their 
rights and to seek remedies for harmful acts of corporate 
wrongdoers. It was bad policy then, and remains so today.
    And I thank the Chairman for allowing some extra time.
    Mr. Franks. And I thank the gentleman. And without 
objection, other Members' opening statements will be made part 
of the record.
    So now, I will introduce our witnesses. Our first witness 
is Andrew Pincus, a partner at Mayer Brown, who focuses his 
practice on briefing and arguing cases in the Supreme Court and 
other appellate courts, as well as on developing legal 
arguments in trial courts. He has argued 24 cases in the 
Supreme Court and filed briefs in more than 150 cases in that 
Court.
    Mr. Pincus served as General Counsel to the U.S. Department 
of Commerce from 1997 to 2000, and as an assistant to the 
Solicitor General in the Justice Department from 1984 to 1988. 
Thank you for being here, sir.
    Our second witness is John Parker Sweeney, president of DRI 
- the Voice of the Defense Bar. With 22,000 members, DRI is the 
Nation's largest professional association of civil defense 
attorneys. In addition, Mr. Sweeney is a partner at a law firm 
here in Washington. He has over 30 years of complex litigation 
experience, including defending major class actions and serving 
as national counsel in class action and mass tort cases across 
the country. Welcome, sir.
    Our third witness is Patricia Moore, a professor of law at 
St. Thomas University School of Law where she teaches civil 
procedure, evidence, pre-trial litigation, and complex 
litigation. She has published over a dozen law review articles, 
including several articles on class action litigation.
    Prior to entering academia, Professor Moore was a civil 
litigation partner at a national firm where she was the first 
woman to rise through the ranks and become partner in the 
firm's litigation department. Welcome.
    Our final witness is Jessica Miller, a partner at Skadden 
Arps, who has brought experience in the defense of class 
actions and other complex civil litigation with a focus on 
product liability matters and multidistrict litigation 
proceedings. She has litigated in numerous Federal and State 
trial courts, and also has extensive appellate experience. In 
addition, Ms. Miller has been involved in several major Federal 
legislative efforts, and has written extensively on class 
action and tort reform issues.
    Each of the witness' written statements will be entered 
into the record in its entirety, and I would ask each witness 
to summarize his or her testimony in 5 minutes or less. And to 
help to help you stay within that time, there is a timing light 
in front of you. The light will switch from green to yellow 
indicating that you have 1 minute to conclude your testimony, 
and, of course, when the light turns red, it indicates that the 
witness' 5 minutes have expired.
    So now, before I recognize the witnesses, it is the 
tradition of this Subcommittee that they be sworn, so if you 
will please stand.
    Do you solemnly swear that the testimony that you are about 
to give will be the truth, the whole truth, and nothing but the 
truth, so help you God?
    [A chorus of ayes.]
    Mr. Franks. You may be seated. Let the record reflect that 
the witnesses have answered in the affirmative.
    I would now recognize our first witness, Mr. Pincus. And, 
Mr. Pincus, if you will turn that microphone on before you. 
Yes, sir.

   TESTIMONY OF ANDREW J. PINCUS, PARTNER, MAYER BROWN, U.S. 
               CHAMBER INSTITUTE FOR LEGAL REFORM

    Mr. Pincus. Thank you, Mr. Chairman. Chairman Franks, 
Ranking Member Cohen, and Members of the Subcommittee, it is an 
honor to appear before you on behalf of the Chamber of Commerce 
and its Institute of Legal Reform. And, Congressman Cohen, 
thank you for your very kind comments about my friend, Toby 
Moffett. We are very proud to have him at Mayer Brown.
    In 1966, nearly 50 years ago, the Federal Courts Rules 
Committee authorized new class action procedures with little 
historical precedent, in particular, the catch-all damages 
class action permitted by Rule 23(b)(3). As several Members of 
the Subcommittee have noted, the Committee acted with the 
laudable goals of making it easier for plaintiffs with small 
claims to obtain access to justice, and enabling the courts to 
manage disputes involving large numbers of claimants.
    Serious questions have been raised about how well that 
innovation is working, particularly how it is interacting with 
other significant changes in the litigation system over the 
past 5 decades. That debate has largely been a war of 
anecdotes. People on the plaintiff side point to class actions 
that achieved great results. People on the defense side point 
to class actions that did not. It is not a very satisfying 
discussion.
    As several Members of the Subcommittee noted, my law firm 
tried to answer the question in a more systematic way by 
undertaking an empirical analysis of a neutrally-selected 
sample of punitive employee and consumer class action lawsuits. 
And just a word about the methodology because I know some 
people have criticized it. What we did was basically, since 
there is no database of all the class actions filed in the 
Federal courts, was to look in the reporters that report for 
the legal community about class actions, and take the ones that 
were mentioned as being filed in 2009. So we did not cherry 
pick the sample. It was whatever was reported in those 
publications, and then we tried to follow through on what 
happened.
    And I am certainly looking forward to reading and 
responding to the report that Congressman Cohen mentioned. I am 
sorry that it was not released a few days earlier so I could 
have responded to it here today, but we will definitely 
respond.
    But let me talk a little about the results that we found. 
Not one of the class actions ended in a final judgment on the 
merits. Every one that was resolved was either dismissed or 
settled, and the vast majority of resolved cases produced no 
benefits for members of the class. One-third of those that were 
resolved were dismissed voluntarily by the plaintiffs, so no 
benefit to the class. Just under another third were dismissed 
by the courts on the merits. Again, no benefits. So the 
remaining one-third were all settled on a class basis. What 
happened in those settlements?
    As several Members of the Subcommittee have noted, a lot of 
those settlements these days provide for a significant share of 
the money to go to lawyers, and often a significant share of 
the settlement dollars to go to third parties through the cy 
pres process, not to the members of the class.
    With respect to the funds that the agreements allocate to 
members of the class, it is very hard to figure out whether any 
members of the class actually receive them because information 
regarding the actual distribution of the money as opposed to 
the settlement that says X million dollars or X tens of 
millions of dollars for the class. How much do members of the 
class actually pick up is often not public, almost always not 
public.
    In our study, we tried to find data to the extent we could, 
and we could for six cases. One of them, as someone has 
mentioned, was a Madoff case, which obviously involved very, 
very large prospective recoveries to the members of the class. 
The others delivered funds to only miniscule percentages of the 
class--.00006 percent, .33 percent, 1.5 percent, 9.66 percent, 
and 12 percent.
    These results are not unusual. A senior consultant at a 
claims administrator, the settlement administrators that 
perform the distribution processes, says that ``In consumer 
class actions, the claims rate''--in other words, the rate of 
members of the punitive class that get money--``is almost 
always less than 1 percent, and the median claims rate is .023 
percent.'' So 1 out of 4,350 class members actually recovers.
    Does this mean that every class action is unjustified? No. 
Does it mean that there are significant problems in our class 
action system? I think yes, and I think what it means is the 
incentive structure that we have in class actions today does 
not work for plaintiffs lawyers, for judges, and for defense 
counsel.
    And I see that my time is up, and I will be happy to 
elaborate on that and answer any other questions that the 
Subcommittee has. Thank you.
    [The prepared statement of Mr. Pincus follows:]***
---------------------------------------------------------------------------
    ***Note: The supplemental material submitted with this witness 
statement is not printed in this hearing record but is on file with the 
Subcommittee. The complete statement can be accessed at: http://
docs.house.gov/meetings/JU/JU10/20150227/103030/HHRG-114-JU10-Wstate-
PincusA-20150227.pdf.




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                               __________
    Mr. Franks. Thank you, Mr. Pincus.
    And I will now recognize our second witness, Mr. Sweeney. 
And I hope you turn on your microphone, sir.

         TESTIMONY OF JOHN PARKER SWEENEY, PRESIDENT, 
               DRI--THE VOICE OF THE DEFENSE BAR

    Mr. Sweeney. Good morning, Mr. Chairman.
    Mr. Franks. Is that microphone on, Mr. Sweeney?
    Mr. Sweeney. Yes, it is.
    Mr. Franks. Okay. Maybe pull it a little closer.
    Mr. Sweeney. First, I want to thank the Subcommittee for 
inviting DRI to appear here today. With 22,000 members, DRI is 
the largest association of lawyers defending American 
businesses in court. Over the past 4 years, DRI has submitted 
two dozen briefs to the United States Supreme Court providing 
our views in class action cases for their benefit. DRI also 
conducts the Nation's only annual national opinion poll devoted 
exclusively to the civil justice system.
    I would like to express our appreciation today for the time 
and skill that went into the enactment of the Class Action 
Fairness Act of 2005. This legislation brought increased 
fairness, consistency, and efficiency to the civil justice 
system. As with most important legislation, however, experience 
with the Act reveals opportunities to make the Act more 
effective and address threats to its purposes.
    Although we discuss other issues in my full statement, I 
would like to concentrate my opening remarks this morning on 
the issue of no injury class actions. Our clients want to do 
the right thing by their customers, and they want and try to 
play by the rules. These no injury class actions unfairly 
burden them as they unfairly burden our judicial system.
    The Supreme Court has held that Article 3 standing requires 
a plaintiff to have suffered an injury in fact. This is a 
bedrock prerequisite for access to the courts. Yet American 
businesses face many actions brought by plaintiffs who have 
admitted they have not been harmed, and propose a class of 
equally unharmed individuals.
    In these no injury class actions, plaintiffs ask the courts 
to ignore the requirement of injury-in-fact, often by seeking 
to recover some fixed amount or range of statutory damages 
without any showing of injury on the part of them or the 
members of the class they purport to represent.
    Examples include claims brought under the Consumer Fraud or 
Deceptive Practices Act of various States. In a typical case, 
the plaintiff contends the defendant committed widespread 
technical violations of some statute, admits that he and the 
class he seeks to represent sustain no actual harm as a result 
of violations, or if some are harmed, most are not, and then 
seeks to have the court award aggregate damages based on some 
formulaic calculation or range of statutory penalties unrelated 
to any actual injury-in-fact.
    These cases fail to meet Article 3 standing requirements, 
both for the class representatives themselves and for the 
absent class members. They also raise broad policy concerns 
about using the civil justice system to punish defendants for 
technical statutory violations. And punishment it is because if 
class members are by definition unharmed, there is nothing 
compensatory about the process.
    Permitting aggregated actions by unharmed individuals 
places enormous pressure on defendants to settle claims that 
would be valueless if tried on an individual basis, and 
needlessly divert limited judicial resources. These settlements 
raise the same concern the 109th Congress had with coupon 
settlements that Class Action Fairness Act was passed to 
address.
    Congress also passed the Rules Enabling Act to prevent the 
use of procedural rules to abridge or enlarge substantive 
rights. Permitting class actions under Rule 23 on behalf of 
unharmed absent class members who lack Article 3 standing flies 
in the face of this important congressional mandate.
    Because some courts permit such aggregation of no injury 
claims while others do not, the current environment is 
unpredictable for our members and our clients. More 
importantly, permitting litigation by and on behalf of unharmed 
parties impairs the ability of the civil justice system to 
process deserving claims for actual harm.
    As an organization devoted to improving the civil justice 
system, we believe a hard look at addressing the problem no 
injury actions is warranted. We are not alone in that belief. 
For the past 3 years, we have conducted our national opinion 
poll. We have asked class action questions on each of our 
polls. In 2013, 68 percent said they would require plaintiffs 
to show actual harm to join a class action. In 2014, we asked 
if respondents would support a law requiring a person to show 
they were actually harmed by a company's products, service, or 
policies. 78 percent would support such a law. Large majorities 
support this reform across 12 demographic categories, 
Republicans and Democratic, and liberals and conservatives 
alike.
    Mr. Chairman, the American public thinks it makes no sense 
to pay damages to people who have suffered no harm. They 
support reform. It is just common sense to them as it is to us. 
Thank you. I look forward to answering the Subcommittee's 
questions.
    [The prepared statement of Mr. Sweeney follows:]
    
    

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                               __________
    Mr. Franks. Thank you, Mr. Sweeney.
    And I would now recognize our third witness, Ms. Moore. Ms. 
Moore, please turn on your microphone and pull it close.

       TESTIMONY OF PATRICIA W. MOORE, PROFESSOR OF LAW, 
              ST. THOMAS UNIVERSITY SCHOOL OF LAW

    Ms. Moore. Thank you, Mr. Chairman, Ranking Member Cohen, 
and Members of the Committee and the Subcommittee. It is my 
privilege to testify before you here today.
    The majority witnesses largely ignore the types of class 
actions which harm class members much more than by a small 
amount of money. Employment discrimination, wage and hour 
litigation, civil rights cases, anti-trust cases, securities 
cases--there is hardly a nod to these critically important 
types of class actions that vindicate the rights of workers, 
small business, members of minority groups, and institutional 
investors who are watching out for people's retirement funds.
    The majority witnesses misplace their focus on compensation 
in consumer class actions. For small value claims, compensation 
is not the most important societal goal. The key question for 
society is whether the defendant has been required to 
internalize the cost of breaking the law by cheating a whole 
bunch of consumers out of a small amount of money each. Without 
the payment of money as a result of a class action, the company 
has no deterrent to ignoring the law.
    It has been a decade since CAFA was enacted into law, and 
the consensus of litigants on both sides and academics is that 
CAFA has been extremely successful in bringing actions based on 
State law into Federal court. The majority witnesses admit 
this. Even more importantly than their victory on CAFA, 
defendants have won major victories on class actions in the 
Supreme Court. One allows corporations to make consumers, 
simply by clicking on a mouse, give up their right to go to 
court and give up their constitutional right to appear before a 
jury. Another case makes it very hard for employees to band 
together to fight unlawful discrimination against them on the 
basis of race or gender.
    The evidence that the majority witnesses rely on here 
primarily is the Mayer Brown study and a DRI survey. However, 
the methodological flaws in these so-called empirical studies 
could be picked out by a college student in a beginning 
statistics class.
    The Mayer Brown study was conducted by a biased party with 
a financial stake in the outcome of the study. The study sample 
was not randomly selected, nor was the study comprehensive. 
Mayer Brown cherry picked 188 cases, which is about 6 percent 
of all class actions filed in Federal court every year. The DRI 
survey is just that, an opinion survey. It in no way attempts 
to empirically measure class actions. Many of the questions 
that they asked people were totally misleading and assumed 
false premises in the way they were stated.
    The majority witnesses have talked a lot about this concept 
of class members having no injury. Even a cursory review of 
cases that I have seen would call into question the premise 
that class members are receiving compensation for no injury. 
For example, the poster child for this so-called no injury 
class is the BP litigation, in which BP recently attempted to 
gain cert in the Supreme Court so that they could overturn the 
Deep Water Horizon settlement by telling the Supreme Court that 
the class included people along the Gulf Coast who had suffered 
no injury. This was not true because the very settlement 
agreement that BP itself had agreed to and negotiated defined 
the class to include only those people who had suffered an 
injury.
    Besides sometimes mischaracterizing what actually happens 
in these cases, the majority witnesses are really arguing that 
they do not like the remedies that are granted by the 
substantive law itself. If a Federal or a State statute says 
you are entitled to statutory damages if a company breaks the 
law, the legislature itself has said we think it is an 
important public policy that this law be obeyed.
    And for Members of Congress who are very concerned about 
States' rights, the majority witnesses are trying to overturn 
what the State law has defined as an injury. If the State 
legislature has said that something is an injury under State 
law, then it is an injury even if the Chamber thinks it is no 
big deal or that it is a technical violation.
    One of CAFA's purposes was to ensure that important cases 
based on State law should be in Federal court. So amending CAFA 
may affect important rights created by the States.
    Thank you very much for your attention. I look forward to 
answering your questions.
    [The prepared statement of Ms. Moore follows:]
   
   
 
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                               __________
    Mr. Franks. Thank you, and thank you all for your 
testimony. We will now proceed under the----
    Forgive me, Ms. Miller. I now recognize Ms. Miller for 5 
minutes, and please turn on your microphone.

        TESTIMONY OF JESSICA MILLER, PARTNER, SKADDEN, 
                ARPS, SLATE, MEAGHER & FLOM LLP

    Ms. Miller. Good morning, Chairman----
    Mr. Franks. Would you pull that microphone close to you and 
make sure that----
    Ms. Miller. Can you not hear me? Is that better?
    Mr. Franks. Yes, ma'am. Yes, ma'am.
    Ms. Miller. Good morning, Chairman Franks, Ranking Member 
Cohen, and Members of the Subcommittee. If I had walked into 
this hearing today just off the street and listened to the 
opening statements of the Chairman, the Ranking Member, and the 
Committee Members, I am pretty sure that my sympathies would 
naturally have been with those of you who were talking about 
racial discrimination, civil rights, private attorneys general. 
Those are all things that are really important to me.
    But I practice in the class action area every day, and I 
have done so for 20 years, and that is not what it is about. 
That is not the reality of what is happening in class actions 
today. The reality is shakedowns by plaintiffs' lawyers who are 
bringing class actions not against companies that are cheating 
consumers. They are bringing class actions on behalf of people 
who have products that work. And I think the most obvious 
example of that are these roofing class actions and these 
washing machine class actions, which are being brought against 
every single manufacturer. So it is not like there is a bad guy 
out there. Everybody in America who has a front load washing 
machine has been a plaintiff in a class action.
    And I think that is so important to think about because if 
you go to somewhere like Europe, all they have got is front 
load washing machines. There is no great conspiracy by the 
washing machine industry to trick Americans into buying, you 
know, energy efficient front load washers.
    And I think another good example are these roofing class 
actions, right? You have got roofs. They are sitting out there. 
It is snowing. It is hailing. You know, things happen to roofs. 
And what happens with a no injury or over broad class action is 
that plaintiffs' lawyers find one person whose roof had a 
problem. Well, yes, roofs have problems. And then suddenly you 
have got a nationwide class action on behalf of every single 
person who has ever had a roof in America because one person 
had a problem with a roof.
    And so, that is where you get these over broad and no 
injury class actions we are talking about today. We are not 
talking civil rights here. We are talking about people whose 
roofs are functioning fine, who do not have any desire to be 
part of a class action, and all of a sudden we have some 
Federal courts are certifying these cases. And then you have 
these settlements, and what happens? A bunch of people who 
never had a problem with their roof suddenly get a couple of 
dollars in the mail that they did not want. Half of them do not 
even, you know, cash the checks.
    I think the most poignant example of what is wrong with our 
class action system is the Pella class action in the 7th 
Circuit. So, this was a class action that involved allegedly 
rotting windows, and the defendant tried to avoid class 
certification by telling the court there are lots of people 
whose windows did not rot. There are lots of people whose 
windows were installed improperly. There were a lot of 
different experiences that people had with these windows. But 
the court said we are going to certify this class action even 
though you guys are saying it is over broad.
    And so, then what happened? So the class action settled, 
and that is not a surprise because if you are a defendant, even 
if you make a great product, one person's product is going to 
fail. Someone's windows are going to rot. Somebody is going to 
have forgotten to close the windows, or to repaint the windows, 
or something. Something is going to happen. There is going to 
be one person in America whose windows rot no matter how good 
American corporations are, right? And if that person is before 
the wrong jury, all of a sudden this defendant could have 
millions of dollars of liability or hundreds of millions of 
dollars. So Pella settled the case.
    And then what happened? Well, only one-half of 1 percent of 
class members expressed any interest in the settlement. One-
half of 1 percent showed up to get their money. And this was 
not one of those class actions where they only offered you a 
couple of bucks. This was actually a class action with some 
real money for those who were motivated or cared about it. But 
nobody was interested.
    So then, the court said, oh, we have a problem here. This 
settlement is no good because all the money went to the lawyers 
and no money went to the consumers. But what everybody is 
missing is that no money went to consumers because consumers 
were happy with their windows.
    So that is what we are talking about when we say no injury 
class actions. We are not talking about, you know, any sort of 
corporate conspiracy to harm America. We are talking about 
basically people recruiting somebody, sending out emails. Has 
anybody had a problem with your roofing shingles, because I can 
get you some money. And then we can leverage that into money 
for everyone in America who has roofing shingles, whether they 
are good, bad, or have not had any problems. And that is what 
we feel Congress needs to address. That is not promoting 
justice in this country. There is no benefit to these types of 
class actions.
    And I think the solution that would help address this 
problem is legislation that would say we can only have class 
actions proceeding to Federal court if all the class members 
have suffered the same type of injury as the named plaintiff. 
And the reason I say is think about my roofing case. Think 
about my washing machine case. If the named plaintiff claims to 
have mold, or if the named plaintiff claims to have a problem, 
there may, in fact, have been a manufacturing defect with one 
person's shingles.
    But you do not want to have a system where that person 
cannot bring in money for millions of other people who have not 
had a problem. And if you have legislation that says everybody 
has got to suffer the same type of injury, then it is not 
eradicating class actions. It is eradicating meritless class 
actions.
    Thanks, and I look forward to answering any questions.
    [The prepared statement of Ms. Miller follows:]

    
 
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                               __________
    Mr. Franks. And thank you, Ms. Miller, and thank you all 
for your testimony. And we will now proceed under the 5-minute 
rule with questions, and I will begin by recognizing myself for 
5 minutes. And, Mr. Pincus, if it is all right, I will start 
with you, sir.
    As I mentioned in my opening statement, I have some serious 
concerns with these no injury class actions. And these 
lawsuits, as you are aware, the class of plaintiffs has not 
personally experienced any actual injury. These class actions 
seems to pose a host of constitutional problems under Article 3 
and the due process clause. So if you could briefly describe 
some of the constitutional problems with no injury class 
actions.
    Mr. Pincus. Sure. Thank you, Mr. Chairman. Let me start out 
by talking about a different category of no injury class 
actions than the ones that Ms. Miller was talking about that I 
do talk about in my testimony, which is this increasing 
phenomenon of cases where Congress has provided for statutory 
damages, it is true, often for regulatory violations. And so, a 
claim is brought for a claimed violation of what often is a 
very complicated regulatory scheme. And even the named 
plaintiff cannot show that he or she has suffered any actual 
injury.
    For example, if it is a claim about a credit report, the 
plaintiff cannot say someone has relied on this false credit 
report, and it somehow has injured my ability to get a loan, or 
injured my reputation, or in some other way. There is no actual 
damage in the traditional sense that this person can say here 
is how I was hurt. The person says, I do not have to show I was 
actually hurt because it has provided for statutory damages, 
and everyone is in the class is entitled to the $100 or $1,000 
of statutory damages.
    So what does that mean? First of all, it means that the 
courts are, if this theory were accepted, hearing claims that 
do not satisfy the fundamental Article 3 requirement of an 
actual injury in order to access the Federal courts. But it 
also means in practical terms the ability in the economy we 
have today for one uninjured person to assert a claim on behalf 
of a million or millions of similarly uninjured people, and 
claim that each one is entitled to $1,000. So pretty quickly 
you have got a claim for a billion dollars where nobody 
suffered any actual injury, and where, if that claim is 
accepted, the other class action criteria are sort of easy to 
meet because you do not have to show reliance by anybody who 
caused the injury. You do not have to show causation in terms 
of the fact that the statutory violation actually injured the 
particular people in the class. And you do not have to quantify 
the amount of the actual injury.
    So combining these two developments--statutory damages, the 
no injury claim, and class actions--puts together a very 
powerful weapon to file a class action and get a very large 
settlement when, in fact, nobody may be injured. And I think 
one of the fundamental problems with these no injury cases is 
of the type that Ms. Miller was talking about. When you combine 
a big class with people who may have been injured and people 
who have not been injured, that pot of money is going to be 
allocated amongst everybody. So what happens to the consumers 
in that punitive class? The people who are really injured are 
going to get less because the people who are not injured are 
sharing in the pot. And that does not seem an appropriate 
result for anybody.
    Mr. Franks. Thank you, sir. Ms. Miller, I was fascinated by 
your legislative suggestion, and, you know, and kind of staying 
on this subject, would you elaborate a little bit more on what 
kind of legislation could address these types of lawsuits? And 
also if you could express whether or not you think placing any 
restrictions on these lawsuit would eliminate the deterrent 
effect, which I think is ostensibly the most powerful argument 
that no injury class actions provide.
    Ms. Miller. Sure. Rule 23(b)(3), which is currently the 
rule that governs whether a class can be certified, has a 
requirement in it of typicality, right? Rule 23 has a 
requirement of typicality. The named plaintiff is supposed to 
be typical of the class members.
    And for many years, the types of class actions we are 
talking about today would not have been certified by most 
Federal courts because courts said the named plaintiff needs to 
be typical of everyone else. And if I have a rotting roof, I am 
not typical of all the people who do not have a rotting roof. 
For some reason, a number of courts have just moved away from 
that, and have sort of watered down the typicality requirement 
of Rule 23, such that you can now have a class action where the 
named plaintiff is not at all typical of everyone else.
    And so, the sort of legislation I am talking about, which 
would say that all the class members have to suffer the same 
type of injury as the named plaintiff, it is really not 
anything dramatically different from what really is in Rule 23 
and should be the law right now. It would basically just be 
legislating that when Rule 23 says typicality, that typicality 
requirement is actually is a legitimate valid thing that courts 
need to be considering.
    So to the extent that there was discussion today about 
gender discrimination suits, this would not affect that sort of 
suit, right, because if you have a suit where everybody was 
discriminated against, that is not what this is talking about. 
This is talking about where the named plaintiff suffered one 
type of injury, and that is not representative of what was 
suffered by the absent class members or, in 99 percent of the 
cases, not suffered by the absent class members.
    Mr. Franks. Well, thank you very much. And I would now 
yield to the Ranking Member for his questions for 5 minutes.
    Mr. Cohen. Thank you, Mr. Chair. Ms. Miller, your testimony 
was quite good, and I think Uncle Frank would be happy to have 
heard it and proud of you. Lautenberg that is, one of my 
heroes. But is there not good that comes out of class actions 
on gender and race issues, some areas like that, consumer 
issues?
    Ms. Miller. I think that one of the problems is that there 
has developed this notion that a class action is a means of 
effectuating societal good, and that a class action has certain 
public policy benefits. And I think when Rule 23 was developed, 
it really was a procedural tool. And a class action can have 
some good, but it is only going to have some good if the 
requirements of Rule 23 are satisfied and everybody suffered 
the same injury.
    Mr. Cohen. All right. I understand.
    Ms. Miller. Right. So if you have----
    Mr. Cohen. But when everybody suffers the injury, all the 
women, all the African-Americans, is there not good that comes 
from those class actions?
    Ms. Miller. I think there can be good that comes from class 
actions.
    Mr. Cohen. Maybe a situation where there is not good that 
comes when women or African-Americans are part of a class 
action and a court rules that they were harmed.
    Ms. Miller. Right. I want to make a couple of points. First 
of all, remember that we are talking about CAFA. And what CAFA 
did was CAFA brought class actions into Federal court that 
would never have been in Federal court. It was not the gender 
discrimination and the race discrimination, which are brought 
under Federal law. Those cases were already in Federal court. 
So really what CAFA brought into Federal court were class 
actions based on consumer protection statutes, so this really 
is a consumer protection issue.
    There absolutely can be good that comes from class actions 
regardless of the topic, but there can only be good if the 
rules are satisfied, because if you have a named plaintiff who 
does not represent everybody else, then the class action just 
becomes a tool of blackmail. And regardless of what you are 
trying to promote, regardless of what social norms you are 
trying to promote, it has to be done fairly.
    Mr. Cohen. Ms. Moore----
    Ms. Miller. And I am obviously not----
    Mr. Cohen. Thank you. Thank you, Ms. Miller. Ms. Moore, 
what do you think of Ms. Miller's remedy that she suggests that 
we should only have people that have the same injury in a class 
action?
    Ms. Moore. Well, I think it is important to remember that 
whatever legislation might be passed would not only affect some 
washing machine case, but it would also affect employment 
discrimination cases. In fact, one of the reasons the Supreme 
Court struck down the certification of the Walmart v. Dukes 
class was because it argued that you could not say that all of 
these women had been discriminated against. That was not the 
premise of that suit at all as believed by the Supreme Court.
    And so, if you start saying, well, you are going to have to 
show us you were discriminated against, or you are going to 
have to show us there is something wrong with your washing 
machine before you can even walk into the door, that is 
contrary to our entire system of justice, which says, you know, 
two people have two sides of a story. And our traditional way 
of deciding that was to have a jury or another trier of fact 
decide it. So this is a way to move these merits decisions 
closer and closer to the beginning of the case.
    Mr. Cohen. So you are saying that her proposed remedy 
sounds good, but does not fit a lot of cases maybe?
    Ms. Moore. I think that in the first place, I do not agree 
that class actions are being certified that have people in them 
that have literally had no injury. And even if we believe that 
and we try to have legislation that would just deal with that 
issue, it is bound to spill over into other class actions, like 
discrimination class actions, which, by the way, are very, very 
hard to maintain in Federal court today.
    Mr. Cohen. Mr. Sweeney and Mr. Pincus, do you have any 
suggested remedies to the problems with CAFA and certification 
that would not affect employment discrimination, or gender, or 
race issues, how to distinguish those?
    Mr. Pincus. Well, I think one of the problems that CAFA did 
not get at is there are some fundamental incentive problems in 
the system today. I think it is important to recognize that, 
you know, the fact that there is a problem does not mean 
plaintiffs' lawyers are bad, or defense lawyers are bad, or 
courts are necessarily doing the wrong thing. Everyone is 
responding to the incentives that they now have, and those 
incentives for plaintiffs' lawyers and the class members are 
often not appropriately lined, as many, many commentators have 
recognized.
    The rational defendant, there is a reason why in my study 
and in almost every other study class actions that survive a 
motion to dismiss are settled, because everybody at that point 
has an interest in settlement. The plaintiff's lawyer, often 
settlement maximizes the hourly rate of return in terms of his 
investment in the case. The defendant is looking to avoid costs 
of litigation, and if the settlement cost is not going to be 
much more or less than the cost of the litigation, why not 
settle? And the judge says, I have a lot of work to do, I am 
happy to get this case off my docket.
    The protection there is supposed to be judges looking at 
settlements, but I think what we have learned is judges really 
need an adversary process. And when both parties before the 
court are saying this is a great settlement, it is awfully 
hard, even for a judge who wants to get behind that, to have 
the information to do it. Only in the last couple of years 
where we have had objectors coming into court and pointing out 
problems in settlements have there begun to be, mostly at the 
appellate level, settlements that are looked at and set aside.
    But there is one additional problem in the current system. 
A judge cannot say I do not like this settlement because the 
defendant should not settle. I think this case is bogus. That 
is not an option for a judge today, but that is often a problem 
in a lot of these cases. In fact, there are some cases, albeit 
in New York State court, in which a judge just turned down a 
settlement in a case involving a challenge to a merger because 
the judge said I think this settlement is unfair to the 
corporation's shareholders. They are being asked to pay money 
to these plaintiffs who do not have a good claim. I am going to 
force the defendant to litigate the case because that is the 
only option I have.
    So we have a system that does not quite have the tools or 
the incentive alignment to produce the kind of results we want.
    Mr. Cohen. Thank you.
    Mr. Sweeney. Mr. Chairman, if I may respond?
    Mr. Franks. Briefly, Mr. Sweeney.
    Mr. Sweeney. I started my career----
    Mr. Franks. Sir, would you turn that microphone on?
    Mr. Sweeney. I started my career at the United States 
Securities and Exchange Commission in the post-Watergate era. I 
know something about the power of the civil injunction to 
require American business to comply with the law. I also know 
something about the power of the class action where consumers 
have been injured to correct injustice.
    But in 30 years in private practice representing American 
business, I have not seen many of those class actions in 
practice. And what I see are class actions that squander 
transactional costs and do not provide a significant benefit to 
consumers. And what we need is a law which says if you are not 
injured, you do not need to be in the class action.
    Mr. Franks. Thank you, sir. And I would now recognize the 
gentleman from Virginia, Mr. Goodlatte.
    Mr. Goodlatte. Thank you, Mr. Chairman, and I want to thank 
all of our witnesses. And, Ms. Miller, I especially appreciate 
your giving the examples of the washing machines and the 
roofers. And I would say in response to Ms. Moore's point that 
we want to use our civil justice system to allow people to get 
into court, and claim injuries, and have that decided by the 
process. But that is not what happens with class action 
lawsuits where somebody is brought into court without having 
even consented to doing that.
    In a traditional case, the plaintiff makes a decision in 
consultation with their attorney whether or not they want to go 
into court and seek relief for a harm they have had. But in a 
class action, that is not what happens. Someone else makes that 
decision. In fact, those same people make the decision in 
conjunction with the defendants and with the consent of the 
court to settle the case without ever consulting that 
plaintiff. So if there is no injury on the part of an 
individual, I think we need to look at making sure that that 
happens.
    So, Ms. Miller, I wonder if you would comment on this. 
Would placing restrictions on no injury class actions eliminate 
the deterrent effect of no injury cases and allow corporations 
to violate the law with impunity?
    Ms. Miller. I do not think it would. I think, if I may, and 
I am not sure I am answering your question exactly. But I think 
one thing that has sort of been lost here today is a very 
fundamental concept in U.S. justice, and that is due process. 
And we were talking earlier about how both sides, there are two 
sides to every story. The problem with the class action of the 
type that we are describing today is that the other side of the 
story never gets told to the jury because the jury only sees 
that named plaintiff. The jury does not see everybody else.
    And so, there is no due process, and there is no fairness 
to a trial where you have one person sitting before the jury, 
millions of people that the jury never sees and never hears 
from, who all never had a problem with the product. So there is 
no fairness in that process.
    In terms of deterrence, I understand that there is concern, 
oh, if we do not have class actions, we will not be deterring 
companies from acting improperly. But if a company acted 
improperly, if a company made bad roofing shingles, then 
everybody would have problems. Lots of people would have 
problems. If a company made bad shingles, right, then you would 
be able to bring a class action under this proposed legislation 
because the named plaintiff's experiences would be typical of 
those of the absent class members.
    What we are talking about here are products that do not 
have any widespread problems, services that are not causing 
lots of people problems. So I am not really sure what you deter 
by having a class action where most of the class members----
    Mr. Goodlatte. Got it. Let me turn to Mr. Pincus and ask if 
he wants to comment on that same question about placing 
restrictions on no injury class actions. Would that eliminate 
the deterrent effect of no injury cases and allow corporations 
to violate the law with impunity? And then I have a follow-up 
question for you as well, Mr. Pincus, and that is, what cost do 
class actions that give more benefits to the plaintiffs' 
attorneys than to the actual class members impose on society as 
a whole? So give us your cost benefit analysis here.
    Mr. Pincus. Well, Mr. Chairman, to take your first question 
first, I think if there is no injury, first of all, it is hard 
to see what we are deterring. There is sort of a statutory 
violation in the air that seems a much more appropriate role 
for law enforcement or a government enforcement agency if it is 
a significant enough problem, rather than----
    Mr. Goodlatte. And law enforcement can also be a civil 
regulatory agency as well.
    Mr. Pincus. Yes, civil regulatory if it is bad, but if it 
was bad you would think there would be some injury, some other 
government agency. But it seems very odd to give sort of a 
roving deputization to, you know, what is in the real world, 
cases that are put together by plaintiffs' lawyers to sort of 
say, gee, there is no injury here, but I think it is a bad 
thing. I am going to bring this lawsuit, trigger all of these 
costs.
    Mr. Goodlatte. Okay. Now, shift to my second question 
because I am running out of time.
    Mr. Pincus. So with respect to your second question, it is 
sort of relates to the first. I think one of the problems in 
the current system, the incentive alignment that I was talking 
about, is either in the bringing of the case or the negotiation 
of the settlement, the class action lawyer and the class have 
somewhat different interests because they are both going to be 
paid out of the same pot. And we do not really have a very good 
system for supervising how that works. And as a result, we have 
these settlements, as I talked about in my testimony, where a 
disproportionate amount of money goes to the lawyers.
    Mr. Goodlatte. I am going to go back to Ms. Miller for one 
more question. In either of the two examples you gave or other 
examples, can you speak to this issue of the disproportionate 
benefit of attorneys' fees to what benefitted the plaintiffs in 
particular cases?
    Ms. Miller. Well, I think that pretty much happens in every 
class action. As I noted in the appellate class action, only 
one-half of 1 percent of class members participated in the 
settlement, and that is pretty typical.
    Mr. Goodlatte. What did the attorneys get in that case?
    Ms. Miller. Several million, hundreds of millions, I 
believe.
    Mr. Goodlatte. Lots of money relative to very little gain 
for all the people who are brought into court.
    Ms. Miller. And, you know, some people say, oh, it was an 
unfair settlement because the consumers got so little and the 
lawyers got so much. But really I have a hard time saying that 
because the consumers really had no injury. They did not want 
the money, so it is not like the consumers were harmed in this. 
It is just really a shakedown.
    Mr. Goodlatte. Thank you.
    Mr. Franks. And I thank the gentleman, and I now recognize 
Mr. Conyers for 5 minutes.
    Mr. Conyers. Thank you, Mr. Chairman. Professor Moore, Mr. 
Pincus cites a study conducted by his firm that suggests that 
class actions do not really benefit class members, only class 
counsel. Do you have a comment about that?
    Ms. Moore. Yes, Congressman. As I mentioned in my opening 
remarks, it would take me far more than 5 minutes to describe 
the methodological flaws of this study. They candidly admit 
that it is not a random sample. When you do a study and you try 
to argue from the sample that you find that this is true of the 
whole population that is out there, you must have a sample that 
is statistically random and valid, and this is nothing of the 
kind.
    We know even though we have very little data on the number 
of class actions that are filed, we know that more than 3,000, 
probably 4,000 class actions per year are filed in Federal 
court. They say, well, we went to these reporters, BNA and 
Mealey's, and found, you know, some cases that were there that 
they thought were important to put on there. And so, we thought 
they were important to include, too, and then, you know, they 
ignore everything else.
    I can tell you that the percentage of consumer class 
actions that they found in their 188 cases is way larger than 
what real statistical studies show is the percentage of 
consumer class actions.
    Mr. Conyers. Thank you. Let me----
    Mr. Pincus. Can I respond, Congressman?
    Mr. Conyers. Just a moment. I have got a couple of 
questions and only 5 minutes. You know, there is a claim that 
the courts are certifying class actions when there is allegedly 
no injury, and, therefore, these courts have violated our 
Article 3 standing requirement. Do you want to elaborate on 
that a little bit?
    Ms. Moore. Sure. There are so many restrictions on the 
filing, the maintenance of class actions and the settlement of 
class actions. In fact, the whole reason that--well, one of the 
reasons that the proponents of CAFA wanted to be in Federal 
court was that they said that Federal judges were much tougher 
on class certification that State court judges. And, you know, 
we dispute whether that might have been the case, but that is 
certainly what they believed.
    In fact, Mayer Brown's study actually, you know, to the 
extent you look at what it found, it actually shows how hard it 
is for class actions to succeed. And so, there are so many road 
blocks in the way of the successful pursuit of a class action. 
There are cases out there all over the place that turn down 
class actions in Federal court because they do not meet 
ascertainability requirements.
    And so, this goes back to my point about the lack of data. 
You know, you pick one case out out of 4,000 and say, oh, here 
is this terrible case. We need a broader understanding of what 
is out there.
    Mr. Conyers. I am sympathetic to that. But why is it 
problematic, Professor, that there are no publicly-available 
court data on class actions, and how does it relate to the 
claims made by some of the majority witnesses?
    Ms. Moore. Okay. If we had even access to the data that the 
administrative office of the courts has, we could go in and we 
could run a list of all the cases that have been filed this 
year that say that they are class actions. We could then take a 
random sample of that whole universe and go, you know, look at 
200 cases randomly selected, and go look at those. That would 
give us a much more valid basis for saying here is a good 
sample of what is going on. We can infer from that to the 
larger population.
    Mr. Conyers. Thank you, Mr. Chairman.
    Mr. Franks. And I thank the gentleman, and now recognize 
the gentleman from Iowa, Mr. King.
    Mr. King. Thank you, Mr. Chairman, and I thank the 
witnesses, and I appreciate your testimony here. First, I 
wanted to comment, as I picked up the opening statements along 
the way, I think I merged two of them together. But the phrase 
came out in my mind as I listened, ``entrepreneurial attorneys 
pursuing parasitic settlements.'' I think that summarizes what 
we are talking about here.
    But I wanted to turn to Mr. Pincus first and ask, in this 
discussion, are you also considering when government is 
involved as a defendant?
    Mr. Pincus. The cases that we looked did not look at 
government defendant cases. These were private cases.
    Mr. King. Yes. So you have not considered them? Do you have 
any experience with that?
    Mr. Pincus. I have some, and, you know, I think to some 
extent, you know, some cases against the government are really 
parallels of private actions, but some are often brought to 
vindicate other kinds of rights, privacy rights and things that 
are sort of unique to the government context and may present a 
different situation.
    Also, it is important to note that in most cases against 
the government, damages are not available, right, because the 
government has sovereign immunity. So they are cases for 
injunctive relief for the most part, not entirely, obviously 
not in the employment context. But that changes the incentives 
that surround the cases to a pretty significant degree.
    Mr. King. I am going to go with parallel cases and leave 
that component at that. But I want to turn to Mr. Sweeney, and 
I think you made the strongest statements about standing in 
your testimony, and that is a bedrock prerequisite for access 
to the court, and yet we are having a discussion here whereby 
any logical observation of damage, there would not be standing 
in the entire class.
    What is the rationale that the judges are using when they 
grant standing to a class where no one in the class has been 
injured?
    Mr. Sweeney. Usually what happens at the certification 
stage is the court punts the question down the road without 
demanding of the proponents of the class, the class counsel, 
proof of harm to all the members of the punitive class. They go 
ahead and they certify a class. That leaves the American 
business in a horrible situation.
    Very, very, very few class certification rulings are 
permitted interlocutory appeal in our circuit courts under Rule 
23(f). When that was originally passed in 1998, about a little 
more than a third of all interlocutory appeals were permitted. 
It is down to less than a quarter now. So in every case that I 
have tried to get a certification ruling heard on interlocutory 
appeal, it has been turned down, which means there is no 
accountability, unless the corporation takes the claim to 
verdict.
    What happens then? When you have a verdict that is 
potentially against a large class of unharmed individuals, the 
amount in question can be astronomic, and that presents two 
huge problems for American business. One, can they even afford 
an appeal bond? 10 percent of a billion dollars is going to 
bankrupt most companies. They cannot afford to appeal that 
adverse ruling.
    And even if they can appeal it, if they are a publicly-held 
company, an astronomic verdict like that has a huge depressive 
effect on their stock value. So is there any wonder that they 
settle these claims, claims which are not meritorious, prior to 
a verdict like that?
    Mr. King. Well, do you, Mr. Sweeney, have any experience 
with a class where the list is sealed by the courts, or a 
negotiated settlement that seals that list of class members?
    Mr. Sweeney. Well, I do not know about sealing lists per 
se, but most settlements are confidential.
    Mr. King. Yes.
    Mr. Sweeney. And one of the reasons why it is so difficult 
to garner any data in this area is precisely because of that, 
and for good reason. What company which has been extorted into 
paying settlement money where they did not think they did 
anything wrong is going to want that to be on the public 
record?
    Mr. King. Okay. I am running out of time, Mr. Sweeney, so I 
would like to turn to, and I thank you. I would like to turn to 
Ms. Miller. And, you know, we see cases here often where there 
is a plaintiff or a class of plaintiffs, and more likely, a 
plaintiff, that has a legitimate claim, but they have great 
difficulty achieving standing. And so, is it your opinion that 
if we saw those cases and Congress decided to write standing 
into legislation, do we have the constitutional authority to 
define ``standing'' in our legislation so that the courts would 
react to that and grant the standing?
    Ms. Miller. Well, I think the answer to that question is 
yes because I think what we are talking about is completely 
consistent with Article 3 standing notions. And if I could have 
1 second, I just want to clarify an answer I gave earlier, that 
Pella settlement would have given $11 million to the attorneys.
    Mr. King. Thank you. And if I could just do a general quick 
question.
    Mr. Franks. I thank the gentleman----
    Mr. King. Does anybody disagree with the response of Ms. 
Miller on the standing and Congress' authority to draft and 
write standing into legislation?
    [Nonverbal response.]
    Mr. King. I see nobody said no. Then I am going to take 
that as Ms. Miller's response stands, and I thank you all, and 
yield back, Mr. Chairman.
    Mr. Franks. I thank the gentleman, and we are going to try 
to get these last two in before votes, so I am going to ask 
everyone to stick close to the 5 minutes. And with that, I 
recognize Mr. Nadler.
    Mr. Nadler. Thank you. Let me start by asking Ms. Moore, I 
have been sitting here listening puzzled because what I have 
been hearing from the three witnesses against class actions is 
that the courts ignore Article 3 and ignore standing 
requirements, and allow people with no injury at all to be 
plaintiffs in lawsuits. I hear from Mr. Sweeney when he is 
asked how do they get away with that, he says, well, they 
punted down the case, then they get a verdict. But he did not 
explain how they get a verdict without considering that 
question first. He then goes into interlocutory appeals.
    Ms. Moore, is it the case that a court will never rule on 
the question of injury? And if that is not the case, why are we 
talking about no injury plaintiffs? Do courts not enforce the 
case in the controversy stand of Article 3?
    Ms. Moore. Well, of course. I do not think anyone is 
arguing with the abstract proposition that if you have suffered 
no injury, you should not get compensation. But that is not 
what is happening here, and we are hearing about hypothetical 
cases.
    Mr. Nadler. We are hearing about hypothetical cases where 
allegedly people suffered no injury get compensation. Is that 
real?
    Ms. Moore. No.
    Mr. Nadler. It is nonsense. It does not happen.
    Ms. Moore. There are so many restrictions on cases. There 
is so much case law has developed as to what is standing, and 
who should get compensation, and what a makes a class cohesive 
enough to certify. That, you know, this discussion is 
proceeding as if there is no case law out there that guides and 
restricts the things that are being talked about.
    Mr. Nadler. So in other words, this is just as much 
nonsense when we hear from the Chamber Institute for Legal 
Reform. It is just as much nonsense as it was when they assured 
this Committee 10 years ago that if we pass the then pending, 
which we did Bankruptcy Act, every American would get a $400 
reduction in interest rates from his bank. That turned out to 
be not true, and this is equally nonsense?
    Ms. Moore. Well, that is not my area of expertise, 
Congressman, but I take your point.
    Mr. Nadler. This is also nonsense. Now, let me ask you a 
second question. I do not think even Mr. Sweeney, Mr. Pincus, 
and Ms. Miller would maintain that there are not people who 
are, in fact, injured. But I do take it from the gravamen of 
their testimony, they would like to eliminate class actions all 
together. No?
    [Nonverbal response.]
    Mr. Nadler. No, okay. I am glad to hear that because I do 
not understand how we would, A, get compensation to people who 
are truly injured, and B, how we would hold the General Motors 
of the world who think it is okay to hide the fatal defects in 
automobiles as more people get killed if we did not have class 
action suits to bring that out. Mr. Moore, how would we?
    Ms. Moore. I do not think there is a good way of deterring 
that kind of abuse.
    Mr. Nadler. Let me ask you a last question. Well, maybe a 
last question. Has the CAFA, the law that we are talking about 
now in 10 years, how has that harmed legitimate plaintiffs and 
the public safety?
    Ms. Moore. That is a very hard question to answer because, 
of course, the theory is that Federal judges and State judges 
are both trying to do the right thing. To the extent that 
Federal judges and Federal court procedural rules are more 
tough on plaintiffs than are State court rules, then plaintiffs 
have been harmed.
    Mr. Nadler. And by ``more tough,'' you mean harder to 
certify a class.
    Ms. Moore. Not just for class actions. There is a whole 
panoply of procedural rules that favor defendants, and over the 
last 20, 30 years have gradually more and more favored 
defendants over plaintiffs in Federal court, and that is one of 
the reasons they want to be in Federal court. It goes well 
beyond class actions.
    Mr. Nadler. And finally, given what you just said, what are 
the implications for the ongoing development of state law if 
State courts are routinely deprived of the opportunity to 
address certain areas, and the Federal courts are asked almost 
exclusively to say what the state courts would say about 
interpretation of state law, and are barred, I think, from 
ongoing development of common law on State grounds?
    Ms. Moore. I think it shows perhaps a disrespect for State 
law and for State judges to say, well, you know, they have made 
up this law for statutory damages, and we do not really think 
that that is very important. So we want to have some 
legislation that we do not have to follow that.
    Mr. Nadler. And lastly on that point, what would you say 
about the contention that we cannot trust State judges, or we 
have to bring it into the Federal courts, they do a better job, 
from people who generally support States' rights?
    Ms. Moore. I think that there is no empirical evidence that 
State court judges are not tough on class actions.
    Mr. Nadler. And this is certainly an anti-States' rights--
--
    Mr. Franks. The gentleman's time has expired.
    Mr. Nadler. Would you answer that last question, please? 
This is certainly an anti-states' rights----
    Mr. Franks. The gentleman time has expired. I will now 
recognize Mr. Gohmert.
    Mr. Nadler. Would you answer the question, please? You did 
not cut anybody else off like this.
    Mr. Franks. The gentleman's time has expired. I told you I 
would hold everybody to 5 minutes.
    Mr. Nadler. Yes, only for the last two.
    Mr. Franks. The gentleman's time has expired.
    Mr. Nadler. She could have finished answering that question 
by now.
    Mr. Franks. She finished the last question. Mr. Gohmert?
    Mr. Gohmert. Thank you, and I appreciate you being here. 
And we do have a vote that is about to expire, and so I 
appreciate your patience this morning. I may come at this issue 
from a little different perspective than most having been a 
judge that was asked by my State to take over what was called 
the lawsuit from hell that had existed for 11 years, been 
through five or six judges that had been reamed by PR firms 
that went after them that were hired. And most people blamed 
the plaintiffs, and they certainly included thousands of 
plaintiffs perhaps that did not have similar injuries, Ms. 
Miller.
    But what I also found was the defendants had a distinct 
pecuniary interest in delaying the outcome of the litigation as 
much or more than the plaintiffs because they were working 
hourly. And within 6 months, I dismissed, I think, 200 or 300 
defendants. And one of the lawyers was waiting for me for some 
of the defendants when I went into the clerk's office after the 
hearing, and he said, Judge, I have been sitting here talking 
to some other folks. We do not know what we are going to do. I 
put two kids through college and law school on this case. I do 
not know what I am going to do.
    But what I found was that if you have a judge that properly 
does his or her homework, finds that on the Daubert issue you 
do not have to have months of hearings on someone's 
qualifications as an expert, that unless the law has changed 
since I ruled on this and set a scheduling order, you do not 
have to take live testimony at trial. You put a discovery order 
in place, scheduling order, and you are not deviating, and you 
better get all of the questions asked that you need asked to 
prove expertise or to show a lack of it.
    And you do not have to have months' long hearings over 
expertise. You just say we are taking no live testimony. Same 
on venue issues, other things. There are no requirements, at 
least they did not use to exist, that there be live testimony. 
And so, there are ways to get around that. So I think there are 
things that judges could do in a more activist role to police 
themselves that is not being done. And by the way, that whole 
litigation was disposed of basically in 2 years.
    But, Ms. Miller, I am intrigued by your suggestion that we 
limit litigants to having the same injury. And I am wondering, 
like, for example, say you have got a products issue of an 
accelerator sticking, and perhaps some plaintiffs had that same 
problem, but they only had property damage and were not 
actually injured, no medical records, nothing to show in the 
way of dollars, pain and suffering. But then you have others 
who were killed or had dramatic injuries.
    If we use the injury rule, then you might say, well, gee, 
these have property damage, these have personal injury, so the 
property damage does not count when actually they were injured 
by the same thing. I am wondering if perhaps it might be more 
appropriate to look at having the same proximate cause or 
having the same specific issue out of the lawsuit from hell 
that I took over outside my district. You know, there were some 
very legitimate cases, but there were some that should never 
have been brought. So I am wondering, what brought you to 
exclude the possibility of us limiting to specific proximate 
cause or specific items that did the injury.
    Ms. Miller. Well, I think if you have somebody, using your 
example. You talked about somebody who was killed, so there are 
a couple of things I would note. First of all, if you have a 
serious personal injury like that, everybody says, oh, we need 
class actions because people with small injuries, you know, 
cannot recover. If you have somebody who is killed or has a 
serious physical injury, as you know from watching late night 
TV, that person's family will be barraged by thousands of 
lawyers who want to represent a person who's been injured.
    So class actions are not typically used in a situation 
where somebody has suffered a severe injury like those. Those 
suits would proceed alone. The problem with----
    Mr. Gohmert. Well, some of them have been sucked up into 
class actions sometimes kicking and screaming, but that has 
been an issue.
    Ms. Miller. So most Federal courts would not include 
personal injury cases with non-personal injury cases.
    Mr. Gohmert. It has been years ago, but some have been.
    Ms. Miller. Right.
    Mr. Gohmert. Could I just ask----
    Mr. Franks. The gentleman's time has expired.
    Mr. Gohmert [continuing]. Every witness to provide your 
thoughts on the issue of limited----
    Mr. Franks. The gentleman's time has expired. We are over 
time.
    Mr. Gohmert. I am asking unanimous consent that we allow 
the witnesses to respond to that answer after the hearing.
    Mr. Franks. Without objection for the record.
    Mr. Gohmert. Thank you.
    Mr. Franks. And I now recognize the gentleman from Florida, 
Mr. DeSantis.
    Mr. DeSantis. Mr. Pincus, are no injury class actions 
consistent with Article 3 of the Constitution, which requires a 
discreet case or controversy?
    Mr. Pincus. No, Congressman, they are clearly not.
    Mr. DeSantis. So how are courts getting around that 
standing requirement?
    Mr. Pincus. Well, what some courts say if the named 
plaintiffs have standing, that that is enough. And so, they 
will certify cases, for example, nationwide classes where the 
plaintiffs have zero chance of recovering under the law of some 
States. They may have under others, the classes nationwide, and 
it all sort of gets smooshed together. Sometimes this happens 
in the settlement context. Sometimes it happens in the 
litigation context.
    The other way that this happens it that some courts say 
that statutory damages can be a substitute for actual injury 
instead of merely substitute for quantifying actual injury.
    Mr. DeSantis. Ms. Miller, do you see a conflict between 
Article 3 of the Constitution and no injury class actions?
    Ms. Miller. I believe there is a conflict between Article 3 
and no injury class actions, as well as over broad class 
actions. Both class actions present a problem because in the 
over broad class actions, the absent class members have no 
standing. And in those cases, that just never gets litigated in 
reality because what happens is the case settles, or the court 
says, well, you know, everybody over paid for this washing 
machine by like 50 cents because of this problem, so we are 
going to say everybody has standing.
    Mr. DeSantis. Great. Well, I have some time left, but we 
are going to vote. I really appreciate the Chairman moving this 
along so I could just get in that question. I think it is an 
important issue.
    Mr. Franks. Well, I thank the gentleman very much.
    Mr. DeSantis. I yield back the balance of my time.
    Mr. Franks. I thank the gentleman very much, and I thank 
the witnesses, and I thank the Members here. This will conclude 
today's hearing, and thanks to all of our witnesses for 
attending.
    Without objection, all Members will have 5 legislative days 
to submit additional written questions for the witnesses or 
additional materials for the record.
    And, again, I thank the witnesses, and the Members, and the 
audience, and this hearing is adjourned.
    Mr. Sweeney. Thank you, Mr. Chairman.
    Ms. Moore. Thank you, Mr. Chairman.
    Ms. Miller. Thank you, Chairman.
    [Whereupon, at 10:40 a.m., the Subcommittee was adjourned.]
                            A P P E N D I X

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               Material Submitted for the Hearing Record

 Material submitted by the Honorable Steve Cohen, a Representative in 
Congress from the State of Tennessee, and Ranking Member, Subcommittee 
                 on the Constitution and Civil Justice



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