United States: The Multi-District Litigation Statute Needs Rewriting

Last Updated: December 19 2016
Article by James Beck

It's hard to believe that, with over half of all cases pending in the federal courts now docketed in multi-district litigations ("MDLs"), the statutory basis for all this litigation is but one section of the United States Code:

  1. 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. Such transfers shall be made by the judicial panel on multidistrict litigation authorized by this section 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. Each action so transferred shall be remanded by the panel at or before the conclusion of such pretrial proceedings to the district from which it was transferred unless it shall have been previously terminated: Provided, however, 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.
  2. Such coordinated or consolidated pretrial proceedings shall be conducted by a judge or judges to whom such actions are assigned by the judicial panel on multidistrict litigation. For this purpose, upon request of the panel, a circuit judge or a district judge may be designated and assigned temporarily for service in the transferee district . . . The judge or judges to whom such actions are assigned, the members of the judicial panel on multidistrict litigation, and other circuit and district judges designated when needed by the panel may exercise the powers of a district judge in any district for the purpose of conducting pretrial depositions in such coordinated or consolidated pretrial proceedings.
  3. Proceedings for the transfer of an action under this section may be initiated by −
    1. the judicial panel on multidistrict litigation upon its own initiative, or
    2. motion filed with the panel 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.

[Procedures for the JPML deliberations on creating MDLs, notice, and filing of transfer orders]

  1. [Composition of JPML]
  2. [Restrictions on appealability of JPML orders]
  3. The panel may prescribe rules for the conduct of its business not inconsistent with Acts of Congress and the Federal Rules of Civil Procedure.
  4. [Peculiar to antitrust]
  5. [Peculiar to antitrust]

28 U.S.C.A. §1407.

That's it. There are as many subsections of the MDL statute (2) peculiar to antitrust as there are governing the substance of what MDLs are intended to accomplish.

Given the percentage of the federal docket now represented by MDLs – and in particular MDLs involving prescription medical products – it's high time for Congress to revisit (repeal and replace?) the MDL statute. How are MDLs assigned under current law? The statute offers no guidance. How are these monsters to be organized? Ditto. To what extent, if at all, can MDL judges depart from the federal rules in pursuit of "just and efficient" procedures. Ditto. We could go on....

Moreover, recent grotesque miscarriages of MDL procedures, mostly but not exclusively involving so-called "bellwether" trials, cry out for a legislative fix. Indeed, given that the current statute specifies that "such actions may be transferred to any district for coordinated or consolidated pretrial proceedings," the source of an MDL judge's authority to try anything is quite questionable under the current language.

MDLs as currently situated suffer from two fundamental flaws that distort what Congress was attempting to accomplish back in 1968 when §1407 was created and in 1976, when it was last amended. First, expansion of First Amendment protection has permitted an explosion of lawyer advertising. Such mass solicitation – much of it financed by third parties with no interest beyond stirring up litigation, has led to massive numbers of cases being filed with little or no pre-suit investigation. These cases, which could not survive individually, clog everything up in MDLs, intimidate both judges and defendants by their sheer numbers, and persist for years. Perpetuation of meritless claims by MDLs has been a complaint at every conference we've attended over the past few years. MDL judges are also well aware of the problem:

[T]he Court had to waste judicial resources deciding motions in cases that should have been dismissed by plaintiff's counsel earlier − cases that probably should never have been brought in the first place. Enough is enough.

In re Mentor Corp. Obtape Transobturator Sling Products Liability Litigation, 2016 WL 4705827, at *1 (M.D. Ga. Sept. 7, 2016) (resorting to Rule 11 sanctions).

These hide-the-ball practices have become so notorious that, as we discussed recently, the Seventh Circuit found an abuse of discretion to award a plaintiffs' MDL counsel a quantum meruit recovery after being fired – because counsel might not have done any work that deserved a fee. Dobbs v. DePuy Orthopedics, Inc., ___ F.3d ___, 2016 WL 7015648, at *4 (7th Cir. Dec. 1, 2016) (quantum meruit "applies when the attorney did 'much work,' which still requires analyzing the factors used to determine a reasonable fee. . . . We do not intend to insinuate that some lesser award is required") (citations omitted). Allowing MDLs to become warehouses for meritless litigation is directly contrary to the "just and efficient" conduct of litigation that was the original raison d'être for the statute. Now, it's more like the Field of Schemes − "build it and they will sue."

Second, settlement has become the yardstick by which MDL judges "succeed" in their administration of MDLs. As a result, all too many judges resort to procedural methods that seek to bludgeon defendants into offering big dollars to resolve what are mostly worthless claims. Defendants are denied use of Rule 8 and other case-specific motions; denied case-specific discovery; and confronted with novel theories of liability and evidentiary rulings from out of left field. Plaintiffs get to pick only their best cases for bellwether trials, and they routinely dismiss without penalty the defense picks often after defendants have invested a great deal of time and effort in them. The bellwethers trials themselves are hardly representative (even if they started out that way) since they evolve into World War III − ten-week show trials with far more resources invested by both sides than the damages in that case could conceivably justify were the action to have been remanded. Increasingly, these show trials feature multi-plaintiff consolidation so that the inference of "where there's smoke, there's fire" becomes overwhelming. In this respect, the original goal of the MDL process, with respect to settlement, has been lost. That goal was to determine the true value of claims, so that parties can resolve them, not to use sheer numbers to hide worthless claims, or to distort case values with billion dollar outlier verdicts that are representative of nothing, and accomplish little – except to provide fodder for still more advertising.

We frankly have no idea whether or not multi-district litigation is anywhere on the new administrations' radar screen. But we doubt a Trump Administration would be opposed, and the new attorney general might be persuadable. Thus, our clients should definitely make an effort to put MDL reform on the congressional agenda. We've had a lot of experience with MDLs, and we've talked recently with others in the same situation. Thus, here are some amendments to the MDL statute that we'd like to see.

First and foremost, the original purpose of MDLs as a device for "coordinated or consolidated pretrial proceedings" should be vindicated. Since the current "pretrial" language is effectively being ignored, perhaps Congress needs to repeat the language it previously used in CAFA, "solely for pretrial proceedings," at the end of the phrase in §1407(a), cf. 28 U.S.C.A. §1332(d)(9). Congress could be even more explicit, withholding authority from MDL courts to conduct binding jury or bench trials without the continuing consent of all parties. Trial consolidations of multiple plaintiffs alleging only harm from the same product should be expressly prohibited, both in the MDL and after remand. The sheer numbers of clients that plaintiffs' counsel can solicit should never be allowed to trump defendants Due Process rights.

Congress should state that the operative paradigm of a "successful" MDL is not a huge settlement accompanied by a huge payout (such as the "Vioxx model" discussed at ACI). That model leads to too many abuses. The operative instructions should stop being "don't you dare send any cases back," as we have heard expressed. Instead, the expectation should be that only the "good" cases not dismissed by dispositive pre-trial motion will either be settled or remanded – and that "bad" cases, the 95% that no plaintiff-side lawyer would bring individually, will be dismissed.

To further enforce the pretrial nature of MDLs, a time limit (perhaps two years) for how long any case should remain in the transferee court should be imposed. Eliminating trials (bellwether or otherwise) means that the prejudicial consolidations and gamesmanship with case selection become moot, and the potential for punitive evidentiary rulings is much reduced. The number of appeals from MDLs would also be reduced, and appellate courts would face less pressure to affirm or else "waste years of effort."

Eliminating trials would also reduce the problem of MDLs venued in places having nothing to do with the litigation, explainable only as some form of "spread the litigation wealth." Transparent criteria should be developed so that the siting and assignment of MDLs no longer resembles political patronage, which has no place in the federal judiciary. While Congress need not itself decide such siting and assignment criteria, it should set deadlines for the Federal Judicial Center, or some similar expert body, to do so.

To further focus MDLs on pretrial matters, Congress could also direct that the JPML develop clearer rules on: (1) discovery so that "proportional" plaintiff-specific discovery also occurs in MDLs, and courts on remand are presented with trial-ready cases not needing large amounts of case-specific discovery; (2) remanding cases when "proportional" discovery and pretrial motion practice has been completed; (3) management and staging of case remands; and (4) when MDLs should be closed to new cases and/or terminated.

But won't changes that emphasize remand create huge backlogs in the federal courts? Not if Congress puts an end to current MDL practices that allow tens of thousands of unvetted cases to persist for years. These sheer numbers mislead both the courts and the parties about the true scope of the litigation, as many of the so-called "cases" cannot even make it past the minimal hurdles of "Did you use the product?" or "Did you sustain the injury claimed?"

That brings us to our second basket of proposed amendments. First, MDL judges should be required to follow rules of civil procedure that are intended to cull out weak cases, in particular Rule 8 as applied in TwIqbal. To reduce the workload that eliminating the current evasions of the Federal Rules would entail, defendants should be allowed to file Rule 8/12 motions in the transferor court and have those resolved prior to transfer. A second workload reducer would be to amend §1407 to permit temporary re-transfers (including of directly filed cases). In both instances, transferor courts more familiar with the applicable state's law could help decide case-specific motions.

A Rule 8/12 procedure would weed out cases where basic information within a plaintiff's control is lacking, such as domicile, product identification, prescriber identification, date and type of injury, theory of defect, reliance, and learned intermediary causation (in warning cases). Since this procedure would primarily target factually unsupported claims, perhaps the statute should require a short, verified plaintiff questionnaire limited to this specific information to be filed within 60 days of the transfer of a case to the MDL – with the questionnaire (rather than wildly differing complaints) considered the operative Rule 8 pleading for Rule 12 purposes. To deal with more factually complex issues, inappropriate (but not novel) legal theories, and the rights of defendants to file case-specific summary judgment motions should likewise be preserved, perhaps subject to a similar temporary re-transfer provision.

But won't that make more work for the MDL judge? Probably, and we have two responses. First, the temporary re-transfer provision allowing MDL judges to enlist the help of transferor judges should significantly reduce the amount of extra work. Second, if an MDL judge doesn't want the work, s/he shouldn't volunteer to become a transferee judge in the first place, since judges cannot be assigned MDLs without their consent. It might not be a bad idea to require at least five years on the bench before a judge can seek an MDL assignment.

Numerous other amendments could also lessen the ability of plaintiffs to park large numbers of meritless cases without adverse consequence. First, any amendment to §1407 should include require Lone Pine orders at some relatively early stage of the proceedings – say, six months after transfer – unless waived by all defendants. Second, no consolidated multi-plaintiff complaints should be allowed in MDLs (if anywhere). Mandatory severance of unrelated plaintiffs should be required, with filing fees paid for each case individually. MDLs make more work for court clerks, too, and filing fees should provide some recompense. Third, rather than have defendants pay to track down medical records, it should be the plaintiff's obligation to turn these over, as it is ordinarily, with cost-shifting for omissions for plaintiffs failing to do this. Proportionality principles in discovery should require plaintiffs, as well as defendants, to produce all discovery relevant to their claims and defenses, and to foot the bill under the usual producer pays model. Fourth, at least in states that allow it, defendants should have the right to informally interview willing prescribing/treating physicians (subject to notice).

To combat plaintiffs' use of MDLs as incubators of novel legal theories not previously recognized under relevant state law, we further propose that §1407 – if not the entire federal judiciary – be subject to a "Preservation of State Law" provision along the lines of what we previously proposed here.

Finally, we recognize the toothpaste in the tube problem − that, to the extent that amendments to §1407, along the lines suggested above, make MDLs less attractive to plaintiffs (and the funders of their advertisements that generate so many baseless claims), they will turn to their usual forum-shopping bag of tricks to avoid federal court altogether. One aspect of combatting such a development would be for the United States Supreme Court to overturn the California Bristol-Myers Squibb personal jurisdiction decision on due process grounds. That alone would eliminate a lot of forum-shopping.

A second, legislative, approach would involve one more amendments to §1407 (or perhaps to 28 U.S.C. §1332), that after an MDL has been created, federal jurisdiction and the corresponding right to remove should require only CAFA-style minimal diversity in state court cases that share common questions with the MDL. Indeed, preventing plaintiffs from Balkanizing federal and state proceedings in MDL cases would preclude a great deal of gamesmanship, much of it involving plaintiff-side infighting, and by gathering all cases in one forum, provide a better opportunity for settling those cases that deserve to be settled.

We're not proposing to change substantive law (at least not here). We're not proposing to change Daubert or defenses like preemption. Every one of the proposals we make is procedural – designed to tame the MDL monster and return it to the pre-trial scope that Congress intended when it enacted §1407. Statutory MDL reform along these lines should be a top priority for our colleagues and clients in the upcoming Congress.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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James Beck
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