Wednesday, February 22, 2017

The Fairness in Class Actions Litigation Act of 2017 (H.R. 985): A Few Thoughts

By Professor Simona Grossi

The Fairness in Class Actions Litigation Act of 2017 (H.R. 985) is currently pending in Congress. The bill, purportedly intended to reform class actions and bring “fairness” to the process, implicitly reveals, and not that covertly, the proponents’ disapproval of the work that the Advisory Committee has been doing on Fed. R. Civ. P. 23 for the past five years. Apparently the Advisory Committee is not moving fast enough or in the preferred direction. Of course,  Congress has the constitutional authority to provide rules of procedure for  Federal courts, but the system devised under the Rules Enabling Act (REA) has the benefit of proceeding through a transparent public process that, although far from perfect, promotes a fair consideration of all sides of any proposed alteration of the federal rules. Measures pushed through Congress, although subject to the usual hearing process, rarely have the detailed consideration and input from all interested parties that occurs under the rulemaking system followed by the Advisory Committee.

The procedural reform imposed by H.R. 985 is not a bottom-up, but rather a top-down imposition of   relatively narrow point of view. It is certainly not the product of the type of public forum system followed by the Advisory Committee. True, the legislature is representative of the people. But it is truly so? To what extent? And even assuming that it is, the class actions topic is so technical—sometimes even hyper technical for the experts in the field—that it demands a focused and narrow process of reflection and study, exchange and confrontation, precisely the one the Advisory Committee engages in and has engaged in with respect to Rule 23.

Monday, February 20, 2017

In Kindred, Supreme Court to Revisit Mandatory Arbitration Clauses

Professor Adam Zimmerman offers his thoughts on Kindred Nursing Centers v. Clark, scheduled for oral arguments before the U.S. Supreme Court on Wednesday, Feb. 22.

Kindred involves one of the latest challenges to mandatory arbitration clauses that bar class actions.  The Supreme Court in a series of cases since Concepcion has broadly permitted corporations to require that consumers enter arbitration agreements waiving rights to bring class actions in any forum.  But long before Concepcion, the Court also drew an important distinction for parties challenging arbitration agreements.  In Buckeye Check Cashing, the Court said a party who challenges the terms of an agreement that includes an arbitration provision has to raise that problem in the arbitration itself.  But when a party challenges whether or she entered into an arbitration agreement at all, the Court suggested that's something for courts to decide under state law.  

Nursing home cases raise that problem because many people in nursing homes may rely on someone else to enter into the nursing home contract using a power-of-attorney.  The lower court found that, as a matter of state law, it could decide whether those mandatory arbitration agreements signed by those using a power of attorney were invalid and ultimately found they were.  The Supreme Court will now decide whether, under the logic of cases like Concepcion, the Kentucky Supreme Court should have enforced the arbitration agreement under the Federal Arbitration Act, or instead, whether a party can raise state law challenges to entering such an agreement.