[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3826 Introduced in Senate (IS)]
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119th CONGRESS
2d Session
S. 3826
To amend title 28, United States Code, to increase transparency and
oversight of third-party litigation funding in certain actions, and for
other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 11, 2026
Mr. Grassley (for himself, Mr. Tillis, Mr. Kennedy, and Mr. Cornyn)
introduced the following bill; which was read twice and referred to the
Committee on the Judiciary
_______________________________________________________________________
A BILL
To amend title 28, United States Code, to increase transparency and
oversight of third-party litigation funding in certain actions, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Litigation Funding Transparency Act
of 2026''.
SEC. 2. TRANSPARENCY AND OVERSIGHT OF THIRD-PARTY LITIGATION FUNDING IN
CLASS AND MASS ACTIONS.
(a) In General.--Chapter 115 of title 28, United States Code, is
amended by adding at the end the following:
``Sec. 1747. Third-party litigation funding disclosure
``(a) Definitions.--In this section:
``(1) Class action.--The term `class action' has the
meaning given the term in section 1711.
``(2) Commercial enterprise.--The term `commercial
enterprise'--
``(A) means any entity formed for the ongoing
conduct of lawful business; and
``(B) does not include any entity that, in a
covered civil action, has a right or expectation of
payment based on any activity, right, or interest
described in subparagraph (A) or (B) of paragraph (8)
that is limited to--
``(i) the repayment of the principal of a
loan;
``(ii) the repayment of the principal of a
loan plus interest that does not exceed the
greater of 10 percent or a rate 3 times the
annual average 30-year constant maturity
Treasury yield, as published by the Board of
Governors of the Federal Reserve System, for
the year preceding the date on which the
relevant agreement was executed; or
``(iii) the reimbursement of fees or grants
paid or given to counsel of record for services
provided in a covered civil action.
``(3) Covered civil action.--The term `covered civil
action'--
``(A) means--
``(i) any civil action transferred to or
filed in coordinated or consolidated pretrial
proceedings established by the judicial panel
on multidistrict litigation pursuant to section
1407;
``(ii) any class action; and
``(iii) any civil action filed in a
coordinated or consolidated proceeding before a
district court of the United States that
includes not fewer than 100 civil actions; and
``(B) does not include any action brought or funded
by a nonprofit legal organization funded by donors that
is providing funding or representation to clients on a
pro bono basis if the donations to the nonprofit
organization that are used to bring or fund the action
were not provided by a foreign state, a foreign person,
a sovereign wealth fund, or a commercial enterprise,
any of which is controlled by or owned by a foreign
state, foreign person, or sovereign wealth fund.
``(4) Foreign person.--The term `foreign person'--
``(A) means any person that is not a United States
person; and
``(B) does not include a foreign state or a
sovereign wealth fund.
``(5) Foreign principal.--The term `foreign principal' has
the meaning given the term in section 1 of the Foreign Agents
Registration Act of 1938, as amended (22 U.S.C. 611).
``(6) Foreign state.--The term `foreign state' has the
meaning given the term in section 1603.
``(7) Sovereign wealth fund.--The term `sovereign wealth
fund' means an investment fund owned or controlled by a foreign
state, an agency or instrumentality of a foreign state, or an
entity a majority of the shares or other ownership interest of
which is owned or controlled by a foreign state or by an agency
or instrumentality of a foreign state.
``(8) Third-party funder.--The term `third-party funder'
means any commercial enterprise, foreign state, foreign person,
or sovereign wealth fund, other than counsel of record, that--
``(A) provides or agrees to provide direct or
indirect monetary support to a party, counsel, or law
firm for purposes of funding the initiation or
litigation of a covered civil action in which neither
the commercial enterprise, foreign state, foreign
person, or sovereign wealth fund, as applicable, nor a
subsidiary corporation thereof (as defined in section
424(f) of the Internal Revenue Code of 1986, determined
by substituting `corporation which is the commercial
enterprise, foreign state, foreign person, or sovereign
wealth fund described in section 1747(a)(8) of title
28, United States Code,' for `employer corporation'
each place it appears), is a named party; or
``(B) as a nonparty, has a right to receive in
return anything that is greater in value than what is
given or granted that is related in any respect to
proceeds from a covered civil action or a group of
actions of which the covered civil action is a part, by
settlement, judgment, attorney's fees, or otherwise.
``(9) United states person.--The term `United States
person' has the meaning given the term in section 101 of the
Foreign Intelligence Surveillance Act of 1978 (50 U.S.C. 1801).
``(b) Disclosure.--In any covered civil action, a party or any
counsel of record for a party shall--
``(1) disclose in writing to the court and all other named
parties to the action the identity of any third-party funder of
the action;
``(2) disclose in writing to the court and all other named
parties to the action whether any third-party funder of the
action is a foreign state, foreign person, sovereign wealth
fund, or a commercial enterprise that is directly or indirectly
controlled by or owned by a foreign state, foreign person, or a
sovereign wealth fund;
``(3) produce for inspection and copying to the court and
to all other named parties to the action any agreement
concerning the provision of monetary support described in
subsection (a)(8)(A) or creating the right described in
subsection (a)(8)(B), unless otherwise ordered by the court;
and
``(4) transmit to the Administrative Office of the United
States Courts copies of any disclosures made under paragraph
(2), or any productions made under paragraph (3) in any case in
which a disclosure is required under paragraph (2).
``(c) Timing.--The disclosures and notifications required by
subsection (b) shall be made not later than the later of--
``(1) 10 days after the execution of any agreement
described in subsection (b)(3); or
``(2) the time of service of the action.
``(d) Duty To Correct.--A party or counsel of record that made a
disclosure required by this section shall supplement or correct each
such disclosure in a timely manner--
``(1) if such party or counsel of record learns that the
disclosure is or has become incomplete or incorrect in some
material respect, if the additional or corrective information
has not otherwise been made known to the other parties during
the discovery process or in writing; or
``(2) as ordered by the court.
``(e) Enforcement.--The obligations set forth in subsection (b)
shall be deemed to be disclosures required by rule 26(a) of the Federal
Rules of Civil Procedure and shall be subject to the sanction
provisions of rule 37 of the Federal Rules of Civil Procedure.
``(f) Website Update; Report.--Not later than 180 days after the
date of enactment of this section, and every 120 days thereafter, the
Administrative Office of the United States Courts shall submit to
Congress, the Attorney General, and the Principal Deputy Assistant
Attorney General for National Security and shall post on the United
States Courts website a report that lists--
``(1) each foreign state, foreign person, sovereign wealth
fund, or commercial enterprise that was identified in a covered
civil action in response to subsection (b)(2) or subsection (g)
during the preceding 120 days;
``(2) the caption and docket number of the action described
in paragraph (1);
``(3) the court in which the action described in paragraph
(1) is pending;
``(4) the amount of any monetary support provided by the
person identified in paragraph (1); and
``(5) the total amount each foreign state, foreign person,
sovereign wealth fund, or commercial enterprise listed in
paragraph (1) has provided in support of any covered civil
action during the preceding 120 days.
``(g) Litigation Integrity.--
``(1) In general.--No third-party funder in a covered civil
action shall exert or be afforded the right to exert, by
contract or otherwise, influence, control, or discretion
regarding the litigation strategy, decision-making, or
settlement negotiations of a party.
``(2) Contempt.--The court presiding over a covered civil
action may--
``(A) hold in contempt any person that violates
paragraph (1); and
``(B) for purposes of issuing and enforcing a
contempt order under subparagraph (A), exercise the
powers of a district judge in any district.
``(h) Protection of Proprietary Information Acquired During the
Discovery Process.--
``(1) In general.--In a covered civil action, no third-
party funder or any agent, counsel, or representative of a
third-party funder may obtain, inspect, copy, or otherwise view
any discovery materials that are produced in the action subject
to a protective order issued pursuant to rule 26(c)(1)(G) of
the Federal Rules of Civil Procedure, unless specifically
authorized by the court.
``(2) Contempt.--The court presiding over a covered civil
action may--
``(A) hold in contempt any person or entity that
violates paragraph (1); and
``(B) for purposes of issuing and enforcing a
contempt order under subparagraph (A), exercise the
powers of a district court in any district.''.
(b) Technical and Conforming Amendment.--The table of sections for
chapter 115 of title 28, United States Code, is amended by adding at
the end the following:
``1747. Third-party litigation funding disclosure.''.
SEC. 3. APPLICABILITY.
The amendments made by this Act shall apply to any case pending on
or commenced after the date of enactment of this Act.
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