Partner Chris Love recently testified before the Washington State Senate Law and Justice Committee regarding proposed legislation SB 5893 (formerly SB 3595), which amends portions of the Revised Code of Washington to address modern tort litigation issues. Chris joined Larry Shannon, government affairs director for the Washington State Association for Justice. In their testimony, the two thanked the Committee, the bill’s proponents, and its sponsor for their efforts to highlight these issues through the work session and SB 5893. They agreed that the bill speaks to real issues but is not the appropriate solution as currently drafted due to its unintended consequences.
What is the background of SB 5893?
Class action lawsuits allow groups of plaintiffs to file a case together when individually their claims would be too small to justify legal action.
Litigation costs in class actions are typically the responsibility of the individual parties in the lawsuit unless the attorneys’ fees are authorized by a contract or statute, or recognized through the common fund doctrine. In common fund recoveries, attorneys’ fees can be awarded and paid using a reasonable percentage of the overall recovery.
Additionally, to bring any lawsuit, including class actions, a plaintiff must have standing, which is achieved when they are able to identify a specific “injury” or “harm” that was caused by the named defendant. Standing may also be conferred through legal rights created by statute even though without the statute no injury would exist. However, in a series of recent U.S. Supreme Court cases, including TransUnion LLC v. Ramirez (2021), the court ruled that the violation of a plaintiff’s legal rights created by the statute was insufficient to confer standing and that harm must also be proven.
What are the Goals of SB 5893?
SB 5893 was first introduced in the 2020 legislative session by Senator Mike Padden; however, it did not advance through the legislative process. The meeting Chris participated in was intended to determine whether the bill should be taken up again in the new legislative session
The bill would accomplish the following:
- Only parties charged with paying attorneys’ fees in a tort action could petition the court to determine the reasonableness of the attorneys’ fees. The court would need to consider various factors to determine the reasonableness of the fees.
- In any tort action under Washington law, when attorneys’ fees are paid from a common fund recovery, the court must award an attorneys’ fee equal to 35% of the value of the common fund received by the beneficiaries without regard to the reasonableness of those fees.
- It would confer standing on a party alleging a violation of a statute that could be remedied by an award of statutory damages.
- When a court orders an award of statutory damages, it must account for inflation from December 31 of the year in which the damages were incurred through December 31 of the year before the award.
What Concerns Are There About SB 5893?
- While the intent of SB 5893 is to address important issues regarding modern issues in tort litigation, there are some issues with the proposed legislation that should be addressed. Plaintiffs need the ability to request court approval of fee awards. Under current law, plaintiffs have the ability to request court review of an attorney’s fees. Although rarely invoked, this legal transparency is a building block in the trust between plaintiffs and their attorneys. SB 5893 would shift that safeguard from plaintiffs to defendants responsible for paying fees. Not only would this deprive plaintiffs of this important civil protection, it would potentially escalate the problem SB 5893 attempts to address: frivolous objections to attorney fee requests.
- The state often does not have jurisdiction over these claims. Since most class actions are heard in federal court, due to federal diversity jurisdiction, the state does not have jurisdiction over most class action claims. Therefore, the federal constitution will apply, and the court will apply federal precedent. If SB 5893 were enacted, it would not affect the majority of class actions.
- The bill would disincentivize an important tool in class action cases. Many class-action suits only allow plaintiffs to receive a portion of the settlement if they take some action at the outset (such as returning a postcard in the mail). If they do not act, they will not be eligible for a portion of the settlement. Since defendants in important types of class action lawsuits are from low profit margin industries, they can’t afford to pay a guaranteed settlement to everyone (whether or not they requested to be part of the class action). In many cases, the plaintiffs in these lawsuits are still current employees, and the goal is to recover some compensation, not to put them out of a job by bankrupting their employer. Existing law allows defendants to facilitate settlements large enough to pay out reasonable amounts to participating class members with the understanding that all the money may not be paid out.
- The bill may have unintended consequences. Cases filed under the Washington State Law Against Discrimination (WLAD) protect Washingtonians from discrimination based on religious belief, race, national origin, sexual orientation, gender identity, military and veteran status, and many other characteristics. These cases include fee-shifting provisions that are awarded under the statute. Language in the bill would allow the court to determine whether a fee award is appropriate by looking at the results obtained. Courts have determined that courts should not look at the results obtained in these cases because neither the proposed statute nor WLAD reference the results obtained. Instead, consistent with WLAD’s purpose of identifying and eliminating discrimination, the trigger for a fee award is a court or jury finding that discrimination occurred, regardless of the amount of compensatory damages awarded by the jury, if any. The unintended consequence of SB 5893 is that these cases are intended to identify and prove discrimination, but the statute would disincentivize attorneys from bringing these cases because if the jury simply decided that the discrimination was not harmful, then no attorneys’ fees would be recovered.
What Is Next for SB 5893?
“I appreciated the opportunity to discuss the content of the bill with members of the Washington State Senate Law and Justice Committee, and I look forward to continued talks so that we can ensure access to justice for all,” Chris says.
Chris remains in ongoing discussions with SB 5893’s proponents regarding these concerns. It is anticipated that a revised version of the bill may be submitted in a future legislative session.