On March 9, 2017, the House passed the Fairness in Class Action Litigation Act of 2017 and the Innocent Party Protection Act, addressing class actions and fraudulent joinder suits, respectively.

The class action bill (H.R. 985):

• requires plaintiffs seeking monetary relief for personal injury or economic loss to show that each potential class member suffered the same type and scope of injury to win class certification;
• requires class counsel to disclose whether any proposed class representation is a relative, or present or former employee or client, or has a contractual relationship with class counsel;
• requires the complaint to describe the circumstances under which each class representative agreed to be included and identify any other class action in which he had a similar role;
• forbids certification of a class action (except certain securities actions) in which any proposed class representative is a relative or employee of class counsel;
• prohibits certification absent a reliable and administratively feasible mechanism (a) to determine if putative class members fall within the class definition and (b) for distributing directly to a substantial majority of class members any monetary relief recovered;
• forbids determination or payment of attorney’s fees before distributions to class members are complete;
• limits attorney’s fees to a reasonable percentage of payments to class members or the value of equitable relief;
• requires class counsel to render an accounting of funds paid pursuant to any settlement to the Federal Judicial Center and Administration Office of U.S. Courts;
• bars class certification of particular issues unless the entirety of the action from which the issues arise is certifiable;
• stays discovery during any motion to dismiss, transfer, or strike class allegations unless the court finds particularized discovery is necessary to preserve evidence or prevent prejudice;
• mandates third-party litigation funding disclosure; and
• allows interlocutory appeal from a class certification order.

The fraudulent joinder bill (H.R. 725):

• Applies to motions to remand cases removed on the basis of diversity jurisdiction when the basis for remand is that

– there is not complete diversity; or

– a defendant is a citizen of the State where the case was filed; and

– the motion is opposed because joinder of the non-diverse defendant is fraudulent.

• Provides that jurisdiction over a defendant is fraudulent if:

– there is actual fraud in the pleading of jurisdictional facts with respect to that defendant;

– it is not plausible to conclude that applicable state law would impose liability on that defendant;

– state or federal law clearly bar all claims against that defendant; or

– objective evidence clearly demonstrates that there is no good faith intention to prosecute the action or to seek a joint judgment against that defendant.

• Permits a court to consider the pleadings, affidavits, and other evidence submitted by the parties.
• Requires a court to dismiss without prejudice claims against fraudulently-joined defendants and deny remand.