Legislature(2005 - 2006)CAPITOL 120
04/12/2005 08:00 AM House JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| HB246 | |
| HB96 | |
| HB53 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 53 | TELECONFERENCED | |
| += | HB 96 | TELECONFERENCED | |
| *+ | HB 246 | TELECONFERENCED | |
HB 246 - REQUIRE OPT-IN FOR CLASS ACTIONS CHAIR McGUIRE announced that the first order of business would be HOUSE BILL NO. 246, "An Act requiring a member to opt into a class action; and amending Rule 23(c), Alaska Rules of Civil Procedure." 8:23:57 AM VANESSA TONDINI, Staff to Representative Lesil McGuire, House Judiciary Standing Committee, Alaska State Legislature, relayed on behalf of the House Judiciary Standing Committee, sponsor of HB 246, that the bill proposes changes to the notice provisions of Rule 23 of the Alaska Rules of Civil Procedure, which is the rule providing procedures for class action lawsuits in the state; class action lawsuits are lawsuits filed by one or more people on behalf of themselves and a larger group of people who are similarly situated. Rule 23 sets out the prerequisites that must be met and the factors that must be weighed by the court when determining whether a class action lawsuit should be maintained and would be preferable to allowing separate claims by individuals. MS. TONDINI explained that once it is determined by the court that a class action lawsuit should be maintained, the court must then direct notice to all members of the class and must use the best notice practicable to all members that can be identified through reasonable efforts. Currently that notice must tell members the date by which they must opt out of the class action lawsuit, that any members not opting out will be affected by any forthcoming judgments, and that any members not opting out may enter an appearance through counsel; in other words, members of a class action lawsuit must take affirmative action in order to opt out of the class. The change proposed by HB 246 simply changes the notice provisions of Rule 23 such that potential members of a class action lawsuit must take affirmative action in order to become a part of it. MS. TONDINI suggested that the reason for proposing the change offered through HB 246 is because currently there is the potential for members of a class action lawsuit to unknowingly be swept up into it, thus having their lives and business affected without them ever consenting to being a part of the suit. She mentioned that under the change proposed by HB 246, one would automatically be maintain his/her right to file an individual claim. She then relayed that President George W. Bush recently signed into law the Class Action Fairness Act of 2005, which requires that all [interstate] class action lawsuits be brought in federal court, and which addresses the issue of judgments in the form of coupons being awarded to members of a class while the prevailing attorneys in such cases get awarded large attorney fees. In past instances where coupons have been awarded, she remarked, those coupons have been of little or no value. Additionally, once an award has been determined, members of a class action lawsuit must accept it and are then left without further recourse. MS. TONDINI recounted a couple of the examples that were used by President George W. Bush, when he signed the aforementioned Act into law, to illustrate how being required to opt out of class action lawsuits has been problematic for those that get swept into them. She concluded her explanation by offering her belief that the change proposed by HB 246 is an appropriate one to make, particularly given that it is sometimes difficult to contact Alaskan citizens because they are often somewhat transient. CHAIR McGUIRE, speaking as chair of the House Judiciary Standing Committee, sponsor of HB 246, relayed that the bill is neither retroactive nor is it targeted at any particular [current] lawsuit. Rather, the issue of having to opt out of a class action lawsuit has been of concern to her for a long time, as well as of concern to people she's spoken with, she remarked, adding that even Senator Ben Stevens has been swept into a class action lawsuit without being aware of it for six months. 8:31:23 AM REPRESENTATIVE GARA characterized the issue addressed by the bill as a complex subject, and said he is uncomfortable attempting to deal with it in a short period of time. Remarking that there are those who are far more knowledgeable about class action lawsuits than he and who could probably list hundreds of cases in which people, had they been acting individually, would not have been able to stand up to, and obtain remedy from, a large corporation, entity, or agency, he offered an example of a situation involving an automobile manufacturer in which a class action lawsuit was used to a address situation involving a severe amount of corporate misconduct towards its customers. He also acknowledged that there are situations in which the class action lawsuit system has been misused, but added that for him, it comes down to the question of whether to throw the baby out with the bathwater. REPRESENTATIVE GARA said his preference would be to take the same approach that the federal government is taking, that of stipulating that only certain small groups of people - such as a group of employees with a claim against an employer, for example - should be provided with the opt-in method, and that all other groups should continue to be provided with the opt-out method. In situations involving class action lawsuits regarding consumer goods, he predicted, an opt-in method would result in there never being enough class members to make the litigation possible. He added, "I wouldn't mind identifying some of those areas where there's been abuse [of the current opt-out method] and trying to put a crimp on it." With regard to the issue of awarding coupons, he said he would hate for someone to only get a 1$ coupon at the end of a class action lawsuit - such would be an insult to the member - and so perhaps such coupon awards could be pooled together and given to a charity, for example, so that the award as a whole actually means something. CHAIR McGUIRE said her goal in having a hearing on the bill today was to have members start thinking about the underlying issues it raises. She mentioned that perhaps the committee could consider looking into contingency fees, and reiterated that her concern centers on fact that there are class action lawsuits which result in the attorneys receiving large fees while the consumer receives almost nothing and yet is barred from any further recourse regardless of whether he/she is even aware that he/she is part of the class action. She mentioned that some states, because of their laws regarding class action lawsuits, even attract such activity and therefore have a worse problem than Alaska. REPRESENTATIVE GARA offered some examples of appropriate class action lawsuits wherein members did benefit from the ability to pool their litigation resources. He suggested that perhaps the attorney fees in class action lawsuits could be limited to "one and a half times the going rate." 8:38:51 AM REPRESENTATIVE GRUENBERG said he has some serious problems with the bill, and relayed that in a California Supreme Court case, Dar v. Yellow Cab Company, the customers had been overcharged, and it would have been impossible for the individual customers to maintain a meaningful case against the company; as members of a class, however, they were awarded a coupon book to help pay for future cab fare. He offered his belief that class action lawsuits were developed because individual consumers can't afford to protect their own rights; a class action lawsuit also consolidates and simplifies the case, keeps the defendants all together, and reduces the risk of inconsistent judgments. REPRESENTATIVE GRUENBERG noted that Rule 23(c)(2) already says that the court must absolutely notify all individual members of the class using best notice practicable under the circumstances, and that this usually includes direct mail and publications. He offered the following quote, which he attributed to Oliver Wendell Holmes: "The law does enough when it does all that it can." He added, "I'd like us to think very carefully before we change this rule, which isn't used very often here, but when it is used, it affects a lot of people." Noting that Rule 23.1 pertains to derivative action by shareholders, and that HB 246 would not in any way affect that rule, he surmised that instead the bill will only affect consumer protection class action lawsuits, and offered his belief that [the committee] should think the issue through several times before doing something that will divest consumers of any of the legal protections they currently have. 8:42:08 AM MS. TONDINI said she agrees with Representative Gruenberg's points, but offered her belief that because class action lawsuits are so important, and because it is the consumer they are trying to protect, HB 246 will further protect the consumer by giving him/her more power to determine his/her own fate in becoming part of a class action lawsuit. CHAIR McGUIRE, acknowledging that there are examples of both types of cases, noted that there are some who will say that the notice provisions of Rule 23 are not as meaningful as they should be. Rather, many consumers only become aware that they are a member of class action lawsuit when they receive a check, any yet they might have been a class member for many years, and would perhaps have preferred to preserve their own individual claim. And so although there are some cases for which the current system has worked, she remarked, there are also some cases for which the current system has proven to be broken. REPRESENTATIVE GRUENBERG said that before he upsets the common law, he wants to be sure that he knows more about an issue than the people who went before him and established that common law in the first place. [HB 246 was held over.]
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