In a June 13, 2017, ruling on a motion for partial summary judgment in the Ocwen Financial Corp. Securities Litigation (the “Ocwen Litigation”), the United States District Court for the Southern District of Florida determined Ocwen materially misrepresented in its securities filings and other public statements that its Executive Chairman would recuse himself from Ocwen’s transactions with companies in which the Executive Chairman also served as Chairman and thus had a direct financial interest. The Court concluded that although Ocwen and the Executive Chairman definitively stated the Executive Chairman would recuse himself according to company policy, there was in fact no company policy requiring recusal, nor had the Executive Chairman recused himself. The Court further concluded these statements by Ocwen and the Executive Chairman was materially false and misleading as a matter of law. Thus, while class plaintiffs still must prove the remaining elements of their Section 10(b)/Rule 10b-5 claim at trial, the Court found the class plaintiffs were entitled to judgment as a matter of law on the first element of their claim – that the statements concerning the Executive Chairman’s recusal were materially false and misleading.
Recently introduced legislation pending before the U.S. House of Representatives attempts to make wide-sweeping reforms to the procedural rules governing class actions and, if implemented, could permanently alter the class action landscape and render class actions a “shadow of what we know today,” according to Reuters.
Rep. Bob Goodlatte (R-VA), Chairman of the U.S. House of Representative’s Judiciary Committee, along with co-sponsors Reps. Pete Sessions (R-TX) and Glenn Grothman (R-WI), recently introduced the “Fairness in Class Action Litigation Act of 2017” in the Committee. The bill circumvents the traditional rulemaking process under the Rules Enabling Act, judicial interpretation of Federal Rule of Civil Procedure 23, and the Advisory Committee on Civil Rules’ amendment process.
The bill’s stated purpose is to “diminish abuses in class action and mass tort litigation that are undermining the integrity of the U.S. legal system.” Should the bill pass the House and the Senate in its current form and be signed by President Trump, plaintiffs’ ability to bring and certify class actions as currently understood could be severely hampered.