Managing Complex Litigation In The U.S. MDL: Lessons To Be Learned

Presented at the 2010 OBA Class Action Colloquium.

Introduction

For some years, the law regarding the certification of class actions in Ontario, as well as the rest of Canada, was rather unclear. This situation created significant risk early in the litigation process. As a result, most of the legal battles that determined the future of a potential class action were fought at the certification level. If the class action was ultimately certified, most class actions would settle soon after, without further delay and expense. Today, the law in Ontario and the rest of Canada with regards to certification has matured to the point where there is more predictability, and therefore less risk, around the types of cases which will be successfully certified. As a result, defendants are beginning to approach the certification process more strategically than before, and considering consent to certification, subject to appropriate class definition and common issues.

Given this jurisprudential shift, much of the focus of the parties to a class action has also shifted from the certification motion to the management of the action as a whole through discovery, settlement processes or the completion of the common issues trial. This shift in focus presents new challenges for the judge with the responsibility for case managing the class action. Class actions generally are complex litigation, often involving thousands of absent class members, significant financial exposure, millions of documents, dozens of experts on both sides, and a multitude of fact witnesses. In addition, the issues at stake in the litigation are important to the parties and the absent class members, and often to society as a whole and to the development of the law. Accordingly, the mandate of the case management judge to deliver a just and expeditious resolution of the action through settlement, or through an efficient and timely trial process, is a very complex and demanding task. Effective case management is the new challenge for class action judges, and what is at stake is the future viability of the class action process in Canada. If methods cannot be crafted to make the process expeditious and efficient, the procedural complexities and financial burden will deter future recourse to class actions as the preferred vehicle for the resolution of mass tort issues.

We may then want to look at the pretrial, settlement or trial processes employed in complex litigation elsewhere, and see whether there are lessons which can be imported into our practice here. For the purpose of this paper, we will turn our gaze south of the border to Multidistrict Litigation (MDL) in the United States of America. More specifically, the litigation and pretrial proceedings of three recent mass tort cases were reviewed. These cases are:

Why Focus on the MDL?

MDL processes serve a very specific purpose within the scope of complex and mass tort litigation in the U.S.A. They have traditionally been limited to establishing a centralized forum where related cases are consolidated so that coordinated pretrial discovery can proceed in an efficient and effective manner.¹ The system is confined to federal cases, even though some states may have some equivalent processes, and MDLs deal with the consolidation of both individual lawsuits and class actions.

It is not suggested that the MDL system is a good alternative to our system of bringing class actions in Canada. In fact, one of the reasons why the federal court system is turning to the remedial powers of MDL more frequently than before, is because of recent statutory and judicial discouragement of the use of class actions in the U.S.² The reason why MDL has been chosen for the purpose of this discussion is because of its resemblance to class action litigation, in terms that they both deal with a large number of related claims, and because it happens to be a system where effective case management in the pretrial process has yielded admirable results.

The statistics of MDL proceedings point to the efficiency of this process. By September 30, 2009, there had been 323,258 actions involved in the MDL process during its 40 years of existence. 88,000 actions were pending at the time and 223,126 had been terminated by an MDL court. Only 12,132 cases were not terminated in the process, showing that MDL judges had terminated 95% of the actions before them.³

The speed with which settlements are reached by the parties in MDLs is also impressive. In Vioxx, in only 31 months the parties were able to reach a $4.5 billion global settlement which provided benefits to 32,886 individuals.⁴ In Guidant, the parties were able to reach a $240 million Master Settlement Agreement for 8,550 claimants in just over 24 months.⁵ In Medtronic, the Master Settlement Agreement of $93.75 million was reached less than 18 months after the commencement of the MDL.⁶ Compared with the pace at which similar actions have been moving in Canada, these numbers alone warrant an examination of what makes an MDL so effective in this respect. While there are other factors which are also influential in achieving these outcomes, our thesis is that the MDL judges, armed with wide discretion and experience in case management techniques in the context of complex mass tort litigation, have been instrumental in effecting the just and timely outcomes seen in the Vioxx, Guidant and Medtronic MDLs.

A Brief History of MDL

During the 1960s, more than 1800 civil actions involving conspiracy allegations among electrical equipment managers were brought across 33 federal district courts.⁷ These arose in the wake of successful criminal antitrust prosecutions advanced by the U.S. government.⁸ To coordinate discovery and the litigation of this massive enterprise, Chief Justice Earl Warren created the Coordinating Committee for Multiple Litigation of the U.S. District Courts. The Committee was very successful in ensuring that judges and attorneys involved in the litigation cooperated to coordinate pre-trial proceedings, including: 1) scheduling of coordinated pretrial discovery proceedings; 2) utilization of national depositions with lead counsel chosen for plaintiffs and defendants; and 3) establishment of a central document depository containing over 1,000,000 documents.⁹

In the aftermath of this experience, the Committee recommended a more formalized procedure for handling multiple actions involving similar issues.¹⁰ Following this recommendation, the U.S. Congress amended the Judicial Code in 1968 and enacted the statutory provision which gave rise to MDL: 28 U.S.C. § 1407. The process was designed to involve the transfer of actions which were pending in different districts and which involved "one or more common questions of fact" to any district for "coordinated or consolidated pretrial proceedings".¹¹ The purposes of these transfers were to provide convenience to parties and witnesses and promote the just and efficient conduct of such actions.¹²

The authority to order such transfer rests with the Judicial Panel on Multidistrict Litigation (JPML), located in Washington D.C. The Panel consist of seven federal district and circuit court judges appointed by the Chief Justice of the U.S. Supreme Court, each from different circuits.¹³

The Transfer Process

For a case to be eligible for transfer, it must be pending in federal court and four of the seven members of the JPML must agree with the transfer.¹⁴ The Panel can transfer a case to any other district in the country (transferee district), and this must not necessarily be the district in which the claim was initially brought (transferor district).¹⁵ The Panel's transfer order will assign a title and number to the MDL and will identify the related actions currently pending in districts outside the selected transferee forum that are being transferred pursuant to 28 U.S.C. § 1407.¹⁶ These cases, together with any related actions originally filed in the transferee district and those subsequently filed, constitute the MDL.¹⁷

The main criteria provided by U.S.C. § 1407 in determining whether the transfer of a case to MDL is appropriate are: 1) the existence of common questions of fact; 2) the convenience of the parties and witnesses; and 3) the just and efficient conduct of the proceedings. Some commentators have added that the Panel also considers a variety of other factors, including the progress of the action, the size of the litigation, the number of pending actions and the districts in which these actions were originated, the possibility of conflicting rulings, minimizing duplicative discovery, familiarity of a transferee judge with the issues of the action, agreement by all parties that the transfer is appropriate, docket conditions, and the availability of judicial resources.¹⁸

Similar to a transfer for case management under Rule 77 of the Ontario Rules of Civil Procedure, the agreement of the parties to the action is neither necessary for a transfer to MDL nor sufficient for a transfer to take place. A transfer may be made by motion of the parties or by the JPML on its own initiative.¹⁹ However, transfer by the Panel itself is commonly limited to "tag-along" cases, which share factual questions with a case that has already been transferred to a different district.²⁰

Both individual actions and class actions can be transferred as part of an MDL. Once the cases are consolidated, a transferee court can further decide to certify all or some of the cases as a class action, if the conditions for certification are met.²¹

A transfer decision by the Panel is only reviewable by extraordinary writ in the court of appeal for the circuit in which the transferee court is located.²² There is no option to appeal a decision denying transfer to MDL.²³ The Panel may separate any claim, cross-claim, counterclaim, or third-party claim and remand any of such claims to the originating court before the remainder of the action is remanded; however, this is rather uncommon.²⁴

Selecting a Transferee Court

A judge in charge of an MDL has a great impact on the litigation and the outcome of the case assigned to him or her. In deciding the transferee district, the JPML will normally consider the same factors associated with the decision to transfer the case generally, as well as a few others related to the parties' place of business, the dockets and resources available in the district, and the willingness and experience of a particular judge to handle an MDL.²⁵ This last factor is probably the most significant one.

As discussed by Galligan and Arsenault:

The MDL transferee judge's crucial role in settlement heightens the interest of both sides in his or her selection. In complex litigation, courts are authorized and expected to take an active role in shepherding the case to resolution."²⁶

Judge Heyburn discusses that an ideal candidate to manage MDL litigation is one "with some existing knowledge of one of the cases to be centralized and who may already have some experience with complex cases, if the new docket appears to require it".²⁷

Ultimately, the Panel's goal is to pair an experienced, knowledgeable, motivated, and available judge in a convenient location with a particular group of cases. The Panel therefore attempts to apply those factors in a given docket in the manner that will most benefit the litigants and the judiciary. The Panel's sole purpose is to benefit the system as a whole rather than a particular party or a particular point of view within the litigation.²⁸

Case Management in MDL

As Professor McGovern of Duke University Law School once said:

The most prominent judges in the first half of the twentieth century were the opinion writers; the most recognized judges now are case managers. In the context of mass torts, the role of the judge can be analogized more to a "player."²⁹

The U.S. Manual of Complex Litigation, Fourth, with which all counsel participating in MDLs are expected to be familiar,³⁰ discusses the importance of judicial involvement as part of the general principles of complex litigation. With regard to what effective case management entails, the Manual says the following:

It is active. The judge anticipates problems before they arise rather than waiting passively for counsel to present them. Because the attorneys may become immersed in the details of the case, innovation and creativity in formulating a litigation plan frequently will depend on the judge.

It is substantive. The judge becomes familiar at an early stage with the substantive issues in order to make informed rulings on issue definition and narrowing, and on related matters, such as scheduling, bifurcation and consolidation, and discovery control.

It is timely. The judge decides disputes promptly, particularly those that may substantially affect the course or scope of further proceedings. Delayed rulings may be costly and burdensome for litigants and will often delay other litigation events. The parties may prefer that a ruling be timely rather than perfect.

It is continuing. The judge periodically monitors the progress of the litigation to see that schedules are being followed and to consider necessary modifications of the litigation plan. Interim reports may be ordered between scheduled conferences.

It is firm, but fair. Time limits and other controls and requirements are not imposed arbitrarily or without considering the views of counsel, and they are revised when warranted. Once established, however, schedules are met, and, when necessary, appropriate sanctions are imposed for derelictions and dilatory tactics.

It is careful. An early display of careful preparation sets the proper tone and enhances the court's credibility and effectiveness with counsel.³¹

The JPML transfers cases to the transferee court for "coordinated or consolidated pretrial proceedings".³² This is indeed a broad power and it necessarily encompasses issuing pretrial orders, resolving pretrial motions (including discovery motions, motions to amend, motions to dismiss, motions for summary judgment, and motions for class certification), attempting to facilitate settlement or establishing parameters for how the trial will be conducted.³³

In practice, there is only one true limit on a transferee court's discretion over cases transferred to it by the JPML, namely that a transferee court cannot unilaterally transfer cases to itself for trial. While this issue was not settled for many years, the U.S. Supreme Court defined this limitation in Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach,³⁴ noting that the MDL statute not only authorizes the JPML to transfer for coordinated or consolidated pretrial proceedings, but obliges the Panel to remand any pending case to its originating court, if not resolved.³⁵ The exception to this, as will be discussed later, is the ability of MDL judges to try a selection of test or "bellwether" cases, as part of the pretrial process of the larger action.³⁶

At the conclusion of pretrial proceedings, cases that have not been terminated in the transferee court as a result of summary judgment, judgment of dismissal, or judgment upon stipulation, must be remanded by the Panel to the transferor courts for trial.³⁷ The transferee court prepares a pretrial order that chronicles the proceedings, summarizes the rulings that will affect further proceedings, outlines the issues remaining for discovery and trial, and indicates the nature and expected duration of further pretrial proceedings.³⁸ The complete pretrial record is also sent to the transferor court.³⁹

The Steering Committees

A particularly interesting aspect of MDL is the appointment of steering committees for the parties and the selection of counsel who will be involved in these committees. Upon transfer, one of the first orders of business is the appointment of lead and liaison counsel, followed by the configuration of a Plaintiffs' Steering Committee (PSC), and in cases involving multiple defendants, a Defense Steering Committee (DSC).

A PSC will typically include some combination of lead counsel and/or executive committee and liaison counsel.⁴⁰ A DSC will commonly consist of representatives of the defendants with the most serious exposure to liability, or in the case of different categories of defendants, one or more representatives from each group.⁴¹ If there are conflictive interests amongst the different defendants, the court may appoint more than one DSC.⁴²

As expected, becoming a member of a steering committee is a competitive endeavour, since it will provide counsel with substantial say over the direction in which the action will develop, and a substantial stake in the financial outcome. As discussed by Galligan and Arsenault:

Many courts note that the main criteria for an appointment are (1) the willingness and ability to commit to a time-consuming process; (2) the ability to work cooperatively with others; (3) professional experience in this type of litigation; and (4) access to sufficient resources to advance the litigation in a timely manner.⁴³

Since their first pretrial orders, transferee judges in an MDL provide guidance with regards to the appointment of counsel for steering committees,⁴⁴ making this process one in which there is significant judicial involvement, with rather effective results. The speed with which these appointments take place, for example, is noteworthy. In the Vioxx MDL, plaintiffs' liaison counsel was appointed only 12 days (February 28, 2005) after the transfer order was issued (February 16, 2005). Defendant liaison counsel was appointed 20 days (March 8, 2005) after the transfer order was granted. Both the plaintiffs' and defendants' steering committee were appointed 51 days after the transfer order (April 8, 2005). In Medtronic, the appointment of lead counsel for both the plaintiffs and defendants and the appointment of the PSC came 48 days (January 24, 2006) after the transfer order was issued (December 7, 2005). In contrast, the appointment of counsel to lead the Vioxx class litigation in Canada involved a carriage battle that lasted over two years, and over one year in both Guidant and Medtronic. The delay in appointment of plaintiff class counsel delayed certification and the forward progress of the action, and posed problems to potential class members in choosing which counsel to join.

The efficiency of the system does come at a price for counsel. Not only is there less deference accorded to counsel and the parties themselves in their decision-making during the pretrial phase, but the level of commitment demanded of members of the steering committee is staggering. Nicholas Drakulich, an experienced U.S. plaintiff attorney in MDL, who was involved in the PSCs of both Guidant and Medtronic, relates that once you become part of the steering committee "it becomes your life".⁴⁵ In addition, "[f]or the lawyer accustomed to the one-on-one mode of litigation and being directly and solely responsible for representing his or her client, the role of a committee member may be a difficult adjustment".⁴⁶ Being a committee member also imposes a great burden of communication and responsibility, not merely to a lawyer's clients, but also to other lawyers and their clients.⁴⁷ Committee members are forced to work with other people as a result of judicial appointment, rather than by their individual choice, and this requires certain skills.

There are significant advantages to be gained from all this interaction, however, as discussed by counsel who have participated in MDLs. There tends to be a division of labour amongst lawyers and law firms based on what they do best. Some firms are better at research and brief writing, others at discovery or e-discovery, some have particular experience with trial preparation and conduct, and others may have better experience working with expert witnesses.⁴⁸

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