Federal multidistrict litigation: background, basics, global settlements, and bellwether trials.
This article provides an introductory summary to the history, structure and basic mechanisms of the MDL process. This article will also address ways in which practitioners may use the MDL process to more conveniently dispose of related claims occurring in multiple jurisdictions.
I. MDL Basics
A. About the JPML
Section 1047(a) provides that when civil actions involving one or more common questions of fact are pending in different districts, such actions may be transferred to any district for coordinated or consolidated pretrial proceedings. (2) Transfers are made by the JPML (3) upon its determination that transfers for such proceedings "will be for the convenience of parties and witnesses and will promote the just and efficient conduct of such actions." (4)
The JPML consists of seven circuit and district judges designated from time to time by the Chief Justice of the United States, no two of whom shall be from the same circuit. (5) The concurrence of four members shall be necessary to any action by the panel. Judge John G. Heyburn II is the current Chair of the JPML. Any attorney admitted in any federal district court may practice before the JPML. When the case is transferred, any attorney may continue to represent his client in the transferee district, and there is express provision that local counsel is not required. (6)
B. Initiating a transfer of an action into an MDL
Under Section 1407(c), proceedings for the transfer of an action under this section may be initiated in two ways: (i) by the JPML upon its own initiative, or (ii) by motion filed with the JPML by a party in any action in which transfer for coordinated or consolidated pretrial proceedings under this section may be appropriate. A copy of such motion shall be filed in the district court in which the moving party's action is pending. (7)
The JPML provides notice to the parties in all actions in which transfers for coordinated or consolidated pretrial proceedings are contemplated, and such notice specifies the time and place of any hearing to determine whether such transfer shall be made. Orders of the JPML setting a hearing and other orders of the JPML issued prior to the order either directing or denying transfer are filed in the Office of the Clerk of the district court in which a transfer hearing is to be or has been held. The JPML's order of transfer is required to be based upon a record of a hearing at which material evidence may be offered by any party to an action pending in any district that would be affected by the proceedings under this section, and shall be supported by findings of fact and conclusions of law based upon such record. Orders of transfer and such other orders as the JPML may make thereafter shall be filed in the Office of the Clerk of the district court of the transferee district and shall be effective when filed. The Clerk of the transferee district court shall transmit a certified copy of the JPML's order of transfer to the Clerk of the district court from which the action is being transferred. An order denying transfer shall be filed in each district wherein there is a case pending in which the motion for transfer has been made.
C. Factors considered by the JPML in determining whether to establish an MDL
The JPML has broad discretion to establish or deny an MDL. Some of the factors (8) which have been discussed as potentially relevant, depending upon the circumstances, include:
* How many common questions of fact (9) are there?
* What is the nature of the common questions?
* How many cases are presently and prospectively involved?
* What is the geographical location of the districts in which the cases are pending?
* Is it anticipated that further cases will be filed, and in what districts?
* Who are the principal witnesses in the cases and where do they reside?
* What detriment, financial or otherwise, will be imposed upon any of the parties by ordering transfer?
* Will transfer result in a substantial saving of duplicative work?
* Will transfer usefully avoid conflicting rulings in the pretrial proceedings of the cases involved?
* Can many of the advantages of transfer be worked out by cooperation among counsel without transfer?
* Are pretrial proceedings already far along in any one or more of the cases?
* Will transfer hasten or delay progress in the cases?
* What is the availability of a judge or judges in the proposed transferee court or courts?
* Will the advantages of transfer overcome the normal desirability of having the same judge who conducts the trial also conduct pretrial proceedings?
* Will transfer impede or promote the prospect of settlement?
* Will transfer serve any ulterior motive of any party or parties, such as forum-shopping?
* If class actions are involved, will transfer make for complexity or for simplification?
* Will transfer unjustly delay or deny any party's right to provisional remedies such as injunctive relief?
* What is the status and possible effect of any appeals pending in any of the cases?
* Will transfer operate to eliminate or avoid an undesirable multiplicity of appeals on similar issues?
Over the years, the JPML has become increasingly willing to establish MDLs. According to the American Lawyer, (10) in the first 15 years of the JPML's existence, the JPML denied motions to establish 19 out of 32 mass tort MDLs. From 1986 to 2006, the JPML denied only 15 out of 130 MDL motions.
As of September 30, 2010, the JPML had transferred 301,221 lawsuits to MDL judges, and more than 102,000 of those lawsuits were still a part of ongoing MDL proceedings. (11) The several hundred MDLs currently pending are varied and include varying types of litigation: air disaster, antitrust, contract, common disaster, employment practices, intellectual property, products liability, sales practices, and security. (12)
D. Judicial Review of the JPML's decision to establish or deny an MDL
No proceedings for review of any order of the JPML may be permitted except by extraordinary writ. (13) Petitions for an extraordinary writ to review an order of the JPML to set a transfer hearing and other orders of the JPML issued prior to the order either directing or denying transfer may be filed only in the court of appeals having jurisdiction over the district in which a hearing is to be or has been held. Petitions for an extraordinary writ to review an order to transfer or orders subsequent to transfer may be filed only in the court of appeals having jurisdiction over the transferee district. There is no appeal or review of an order of the JPML denying a motion to transfer for consolidated or coordinated proceedings.
II. Conducting MDL
An MDL begins when the JPML issues a transfer order assigning a federal judge the MDL for coordinated or consolidated pretrial proceedings. Coordinated or consolidated pretrial proceedings are conducted by the judge or judges to whom such actions are assigned by the JPML. (14) For this purpose, upon request of the JPML, a circuit judge or a district judge may be designated and assigned temporarily for service in the transferee district by the Chief Justice of the United States or the chief judge of the circuit, as may be required. With the consent of the transferee district court, MDL actions may also be assigned by the panel to a judge or judges of the transferee district. The judge or judges to whom such actions are assigned, the members of the JPML, and other circuit and district judges designated when needed by the JPML are permitted to exercise the powers of a district judge in any district for the purpose of conducting pretrial depositions in coordinated or consolidated pretrial proceedings.
A transfer may be ordered after a motion with notice to all affected parties. (15) The JPML may also act on its own by issuing a Show Cause Order why the case should not be transferred, and permitting the parties to respond to it before the transfer order is issued. (16)
A. Transfers and "Tag Along" Actions
The procedure for transfer changes when an MDL already exists to which a later-filed case or cases should be transferred. Such "tag-along actions" are defined as any "civil action pending in a district court and involving common questions of fact with actions previously transferred under Section 1407." (17) When the case is a tag-along, the JPML may simply issue a transfer order on the same basis as its prior order(s). (18) Parties served with the transfer order may object to it within fifteen days by notice of opposition, and within an additional fifteen days must file a motion to vacate the conditional transfer order along with a brief. (19)
Panel Rules 7.1 and 7.2 pertaining to tag-along actions contain several additional, miscellaneous provisions, including that:
(a) Potential "tag-along actions" filed in the transferee district require no action on the part of the JPML, and requests for assignment of such actions to the Section 1407 transferee judge should be made in accordance with local rules for the assignment of related actions.
(b) Upon learning of the pendency of a potential "tag-along action" and having reasonable anticipation of opposition to transfer of that action, the JPML may direct the Clerk of the JPML to file a show cause order instead of a conditional transfer order.
(c) Failure to serve one or more defendants in a potential "tag-along action" with the complaint and summons as required by Rule 4 of the Federal Rules of Civil Procedure will not preclude transfer of an action under Section 1407. Any such failure may be submitted by a defendant as a basis for opposing the proposed transfer if prejudice can be shown. The inability of the Clerk of the JPML to serve a conditional transfer order on all plaintiffs or defendants or their counsel shall not render the transfer of the action void but can be submitted by such a party as a basis for moving to remand as to such party if prejudice can be shown.
(d) A civil action apparently involving common questions of fact with actions under consideration by the Panel for transfer under Section 1407 which was either not included in a motion to consolidate or was included in a motion that was filed too late to be included in the initial hearing session, will ordinarily be treated by the JPML as a potential "tag-along action."
(e) Any party or counsel in actions previously transferred under Section 1407 or under consideration by the JPML for transfer under Section 1407 shall promptly notify the Clerk of the JPML of any potential "tag-along actions" in which that party is also named or in which that counsel appears. (20)
B. What happens once the transfer order is issued?
According to Ten Steps to Better Case Management: A Guide for Multidistrict Litigation Transferee Judges, an article prepared by the JPML and the Federal Judicial Center, (21) once the transfer order is issued the transferee court should promptly schedule a conference with counsel.
The transferee court often appoints lead and liaison counsel. (22) In addition, in some MDL proceedings, transferee court must also appoint members to a Plaintiffs' Steering Committee or a Defendants' Steering Committee. In an MDL, it is not uncommon for Plaintiffs' counsel to form allegiances or alliances with other Plaintiffs' counsel and to have many Plaintiffs' attorneys attempt to be recognized on the Plaintiffs' Steering Committee. This committee leads the strategic decision making for all Plaintiffs, performs much of the work on behalf of the MDL Plaintiffs, and essentially controls the litigation. Members of the Plaintiffs' Steering Committee, assuming the case ends in a global settlement, are known to be well-compensated for their efforts on the committee, and often will get a percentage of both federal and state court settlements in which the fruits of their efforts in discovery or in putting together trial packages are used by other attorneys.
Following the appointment of counsel, the transferee court will likely choose to issue an initial Case Management Order ("CMO"). Counsel should meet and confer and attempt to reach agreement as to the initial CMO. Most MDL courts coordinate the litigation through the use of CMOs. Many current MDLs have public websites in which CMOs may be accessed. CMOs are used to set deadlines for filing a consolidated Amended Complaint (if appropriate), establishing guidelines for consolidated discovery, creation of Plaintiffs' fact sheets and deadlines for their completion, scheduling periodic warning letter deadlines to either keep cases moving or have them dismissed, setting protocols for obtaining medical records, filing and briefing of motions to dismiss, Daubert motions, discovery deadlines for fact witnesses, deadlines for expert witness disclosure (as to general causation and specific causation), summary judgment deadlines, and a multitude of other issues that arise in MDL proceedings.
Following the establishment of CMOs for the management of the cases, the transferee court handles the types of pretrial issues the court would typically handle in a single case dealing with discovery disputes and motion practice.
C. Issues relating to federal and state court coordination
It is very important for the success of the MDL and coordinated proceeding process for the transferee court to attempt to obtain the cooperation of state court judges handling the same litigation. In addition, it is important for the transferee court to attempt to gain the cooperation of Plaintiffs' counsel who are handling state court cases. If a Plaintiffs' attorney has many federal and state court cases, a position on the Plaintiffs' Steering Committee may be used by the court to prevent that attorney from getting ahead of the federal MDL in state court actions.
The statute is silent on what procedures to follow to coordinate related cases when some are pending in state court and some are pending in federal court. (23) Federal and state courts have been forced to devise their own means of coordinating efforts to avoid duplicative discovery and rulings from one court that interfere with another. Some of these options include judicial advisory committees and employment of a special master. (24)
D. What happens after pretrial proceedings are completed?
When pre-trial proceedings, including discovery and dispositive motions, have been completed, the JPML must remand the action to the transferor court for trial. (25) Some transferee courts have made efforts under the general transfer rule (26) to transfer the cases to themselves for trial, and, in fact, the JPML used to have a rule memorializing the self-assignment power. The Supreme Court rejected that previous Panel Rule and efforts at self-assignment under Section 1404, relying on the plain language of the statute:
In sum, none of the arguments raised can unsettle the straightforward language imposing the Panel's responsibility to remand, which bars recognizing any self-assignment power in a transferee court and consequently entails the invalidity of the Panel's Rule 14(b). (27) Milberg may or may not be correct that permitting transferee courts to make self assignments would be more desirable than preserving a plaintiffs choice of venue (to the degree that [section] 1407(a) does so), but the proper venue for resolving that issue remains the floor of Congress. (28)
Obviously, if the MDL court has dismissed a case on summary judgment or otherwise, no remand is required. (29) A remand may be made on the initiative of the transferee court, on the Panel's own initiative, or by motion of any party. (30) There is reluctance by the JPML to remand if the transferee court has not suggested it, as suggested by the plain language of Rule 10.3:
RULE 10.3: MOTION TO REMAND
(a) Requirements of the Motion. If the Clerk of the Panel does not enter a CRO, a party may file a motion to remand to the tranferor court pursuant to these rules. Because the Panel is reluctant to order a remand absent the suggestion of the transferee judge, the motion must include:
(i) an affidavit reciting whether the movant has requested a suggestion of remand and the judge's response, whether the parties have completed common discovery and other pretrial proceedings, and whether the parties have complied with all tranferee court orders.
(ii) a copy of the transferee district court's final pretrial order, if entered. (31)
When the panel is prepared to remand because of advice from the transferee judge or for its own reasons, it issues a conditional remand order, and parties may give notice and then move to vacate it, in a procedure analogous to that described in the tag-along discussion above. (32) Section 1407(a) also clarifies that each transferred action shall be remanded by the panel at or before the conclusion of pretrial proceedings to the district from which it was transferred unless it shall have been previously terminated, but provides that the panel may separate any claim, cross-claim, counter-claim, or third-party claim and remand any of such claims before the remainder of the action is remanded. (33)
E. Does the "Law of the Case" doctrine apply after a case has been transferred by the JPML?
The "Law of the case" is a concept that posits that when a court decides on a rule of law, the court's decision should continue to govern the same issue in later stages in the same case. (34) The concept has been developed for consistency and to avoid reconsideration of matters, once decided, during the course of a single lawsuit.
The Third Circuit in In re Pharmacy Benefit Managers Antitrust Litig., (35) recently applied the "law of the case" doctrine to an MDL proceeding. In In re Pharmacy the transferee judge vacated an order of the transferor court compelling arbitration. The transferee judge asserted that "as a general proposition, a transferee judge under the Multidistrict statute may vacate or modify any order of a transferor court bearing upon pretrial matters." (36) The Third Circuit disagreed, ruling that after transfer by the JPML, the transferee court's discretion to modify or vacate orders of the transferor court is limited by the law of the case doctrine. (37)
III. Encouraging global settlement discussions and bellwether trials
In litigation today, ADR and settlement discussions are considered part of pretrial proceedings. The rules of many state and federal courts require some form of ADR prior to trial. One of the values of an MDL is that it brings before a single judge all of the federal cases, parties, and counsel comprising the litigation. As such an MDL provides an unique opportunity for the negotiation of global settlements. (38) In Lexecon. v. Milberg Weiss, (39) the U.S. Supreme Court held that the transferee court did not have the authority or jurisdiction to retain transferred cases for trial, and each case must be tried in the district in which they were filed.
Prior to the Supreme Court's decision in Lexecon, the transferee judge was able to make the most of the opportunity to encourage settlement and hold cases not settled or otherwise dismissed in the transferee district for trial. Post-Lexecon, MDL courts have constructed alternatives that permit the transferee court to resolve multidistrict ligation through trial while remaining faithful to the Lexecon limitations. One alternative, the bellwether (40) trial, provides a particularly effective means of promoting global settlements.
Initially, courts attempted to use the results of bellwether trials to not only bind the individual participants in the trial, but to also bind related claimants. (41) The current approach to bellwether trials in the MDL context is to try bellwether matters filed within the transferee court and utilize the results for informational purposes with respect to potential for global resolution. (42) The purpose of these informational bellwether trials is not to resolve the many cases pending in an MDL in one representative proceeding, but instead to provide meaningful information and experience to everyone involved in the litigation. (43)
The transferee court, by the temporary national jurisdiction that is conferred upon it, is placed in a unique position to encourage and facilitate global settlements in MDL cases. If an MDL is dissolved and the cases are remanded back to the districts from which they originated, it becomes exceedingly difficult to organize and achieve a global settlement of related claims. The initiation and management of the bellwether trial process by the transferee court is one way in which transferee courts can contribute to the settlement process.
In addition to being used for nonbinding informational purposes, bellwether trials are often used for testing various theories and defenses in a trial setting. As a "testing ground", bellwether trials provide a basis for settlement or for resolving common issues or claims. If a representative group of claimants are tried to verdict, the results of such trials can be beneficial for litigants who desire to settle such claims by providing information on the value of the cases as reflected by the jury verdicts. (44) Additionally, bellwether trials can precipitate and inform settlement negotiations by indicating trends and providing guidance on how similar claims may fare. (45)
The long-term goal of case selection is that the cases selected should accurately reflect the individual categories of cases that compromise the MDL, illustrate the likelihood of success and measure of damages within each respective category, and illuminate the forensic and practical challenges of presenting certain types of cases to a jury. (46) The trial selection is not one size fits all and each transferee court should customize its own trial selection formula after considering all the unique factual and legal aspects specific to the particular MDL. It has been suggested, however, that a three-step process be followed to streamline the trial selection process regardless of the type of MDL. First, the transferee court and the attorneys should catalogue the entire universe of cases that comprise the MDL and divide the cases into distinct, easily ascertainable categories. Second, the transferee court and the attorneys should select a manageable pool of cases, which reflects the various categories and contains cases that are both amenable to trial in the MDL and close to being trial ready. Third, after conclusion of the case-specific discovery, the transferee court and the attorneys should select a predetermined number of individual cases within the sample and set these cases for trial. (47)
IV. Costs and Benefits of an MDL
MDLs offer several advantages. The consolidation and coordination of all federal cases in one court allows for streamlined discovery and, often, one-time production of documents in a single location. (48) In addition, there will be probably be only one deposition of each company witness that will be applicable for all of the federal cases. (49) Of course, because of this, the preparation time for each company witness for a deposition is extensive and the witness may be required to testify on a multitude of subjects in a single deposition. Also, Plaintiffs' counsel are exceptionally prepared for each company witness deposition and the Plaintiffs' Steering Committee may assign teams of Plaintiffs' attorneys to review documents and prepare for the depositions of each company witness. MDL coordination is supposed to reduce the amount of time and money expended on the litigation. (50) In addition, the transferee court's historical knowledge of the litigation often leads to quicker and more consistent pretrial rulings than a defendant would receive from the various federal courts considering the same issues had the cases not been transferred to the MDL. (51) A transferee judge may be more likely to be motivated to devote time and energy to resolving an issue when that issue exists in hundreds of pending cases, as compared to judges facing those same issues in an isolated lawsuit.
(1) The court to which all actions are transferred is the "transferee" court. The court in which the case was originally filed, and to which the case will be remanded for trial after the completion of pretrial proceedings, is the "transferor" court.
(2) 28 U.S.C. [section] 1407(a).
(3) 28 U.S.C. [section] 1407(0 provides that the JPML may promulgate its own rules ("Panel Rules") and it has done so pursuant to this statutory authority. The JPML limits oral argument on JPML petitions to two to five minutes per side.
(4) 28 U.S.C. [section] 1407(a).
(5) 28 U.S.C. [section] 1407(d).
(6) RULES OF PROCEDURE OF THE UNITED STATES JUDICIAL PANEL ON MULTIDISTRICT LITIGATION, Panel Rule 2.1(c), available at http://www.jpml.useourts.gov/Panel_RulesAmended-7-6-2011.pdf (each hereinafter, a "Panel Rule").
(7) 28 U.S.C. [section] 1407(c).
(8) Judge John Heyburn II, the current Chair of the JPML, has indicated that the JPML considers two issues in resolving transfer motions under [section] 1407--(1) whether common questions of fact exist among the pending civil cases such that centralization of the actions in a single district will further the convenience of the parties and witnesses and promote the just and efficient conduct of the cases; and, (2) which federal district and judge are best situated to handle the transferred matters. John G. Heyburn II, Symposium: The Problem of Multidistrict Litigation: A View from the Panel." Part of the Solution. 82 TUL. L. REV. 225, 2228 (2008).
(9) Depending upon the circumstances, the JPML may also consider whether there are common issues of law.
(10) Alison Frankel, It's Over, AM. LAW, December 2006, at 78, 108.
(13) 28 U.S.C. [section] 1407(e). Extraordinary writ is permitted according to the terms of 28 U.S.C. [section] 1651.
(14) 28 U.S.C. [section] 1407(b).
(15) Panel Rule 6.2.
(16) Panel Rule 8.1.
(17) Panel Rule 1.1.
(18) Panel Rule 7.1 (a).
(19) Panel Rules 7.1 (c), (f).
(20) Panel Rule 7.1(a).
(21) JUDICIAL PANEL ON MULTIDISTRICT LITIGATION & FEDERAL JUDICIAL CENTER, Ten Steps to Better Case Management. A Guide .for Multidistrict Litigation Transferee Judges (2009), available at http://www.fjc.gov/ public/pdf.nsf/lookup/mdlguide.pdf/$file/mdlguide.pdf.
(22) Lead counsel may be a national counsel who does not live in the jurisdiction of the transferee court; but typically liaison counsel reside within the jurisdiction of the transferee court. It is important for the court to pick these important positions wisely. The court should appoint vigorous and experienced advocates who are constructive problem solvers and civil with their adversaries. Many judges request that counsel submit resumes or descriptions of their prior experience in complex litigation and prior MDL experience. Lead and liaison counsel work closely with transferee court in the administration and coordination of the MDL proceedings.
(23) See MOORE'S FEDERAL PRACTICE, [section] 112.02[a].
(24) See FEDERAL JUDICIAL CENTER, MANUAL FOR COMPLEX LITIGATION (FOURTH), [section] 20.31. (2004).
(25) Id. at [section] 20.133.
(26) 28 U.S.C. [section] 1404 (a).
(27) See 28 U.S.C. [section] 1407(f).
(28) Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 40 (1998) (emphasis added).
(29) Panel Rule 10.1 (a).
(30) Panel Rule 10.1 (b).
(31) Panel Rule 10.3.
(32) Panel Rule 10.2.
(33) 28 U.S.C. [section] 1407(a).
(34) See, for example, Hughes v. State, 490 A.2d 1034, 1048 (De1.1985).
(35) 582 F.3d 432 (3d Cir. 2009).
(36) Id. at 438 (citing Bellevue Drug Co. v. Advance PCS, No. 03-cv-04731, 2006 U.S. Dist. LEXIS 91390 (E.D. Pa. Dec. 19, 2006)).
(37) Id. at 442.
(38) See MANUAL FOR COMPLEX LITIGATION (FOURTH), [section] 20.32 (2004).
(39) 523 U.S. at 40.
(40) The term "bellwether" refers to the ancient practice of placing a bell on a wether (a male sheep) selected to lead a flock. The success of
the choice of the wether depended upon the flock having confidence that the wether would not lead them astray.
(41) See, e.g., Cimino v. Raymark Indus., Inc., 151 F.3d 297, 318 (5th Cir. 1998).
(42) Obviously, the parties involved in the trial would be bound by the decision of the jury or court.
(43) Eldon E. Fallon, Proceedings of the Tulane Law Review Symposium: The Problem of Multidistrict Litigation: Bellwether Trials in Multidistrict Litigation, 82 TUL. L. REV. 2323, 2332 (2008).
(44) Id. at 2337.
(45) Id. at 2338.
(46) Id. at 2343.
(48) Amy Dunn Taylor, Mass Tort Litigation Management and Ethics, 44 S. TEX. L. REV. 483, 490 (2003).
(49) The importance of state and federal cooperation becomes apparent if the defense wants to be able to limit the number of times its company witnesses are deposed.
(50) Danielle Oakley, Is Multidistrict Litigation a Just and Efficient Consolidation Technique? Using Diet Drug Litigation as a Model to Answer this Question, 6 NEV. L. J. 494, 506 (2005-2006).
(51) Taylor, supra note 48, at 490.
Jeffrey R. Johnson is a member of Williams Kastner. He is Chair of Williams Kastner 's Product Liability and Mass Torts Practice Group. Mr. Johnson served as Chair of the Class Action and Multi-Party Litigation Committee of the IADC from 2009 to 2011. His practice emphasizes drug and medical device liability defense, defense of class actions, and general product liability defense. Mr. Johnson was actively involved in the PPA MDL before Judge Barbara Rothstein, in MDL No. 1407, as Williams Kastner served as co-defense liaison counsel. He has also served as local counsel in numerous matters that have been transferred to a MDL transferee court and remanded back to Washington district courts Jor trial. Tami Becker Gomez is an associate in Williams Kastner's Product Liability and Mass Torts Practice Group. Her practice focuses on product liability and medical negligence defense. Ms. Becker G6mez is a graduate of the University of Washington School of Law and received her undergraduate degree from Stanford University.
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|Author:||Johnson, Jeffrey R.; Gomez, Tami Becker|
|Publication:||Defense Counsel Journal|
|Date:||Jan 1, 2012|
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