United States: And Now A Word From The Panel: Why Not Just Arbitrate?

Welcome to the latest installment of And Now a Word From the Panel, a column which "rides the circuit" with the Judicial Panel on Multidistrict Litigation as it meets on a bimonthly basis at venues around the country.

As the panel heads to the "Big Easy" (New Orleans) – the home court of the panel chair (Judge Sarah Vance) – for its May 30 hearing session, the panel's docket has picked up the pace from a relatively sluggish opening to 2019. The panel will now consider seven new MDL petitions, bringing to 17 the total number of MDL motions considered by the panel this year, with three hearing sessions remaining.

But, as previously noted, regardless of the number of motions and MDL proceedings, the number of actions within the pending MDLs are staggering.

This month's column will explore the interplay between an MDL and arbitration. But before looking at a recent decision as to how the panel views motions to compel arbitration as an alternative to an MDL proceeding, let us explore the broader results from the March hearing session held on opening day in Washington, D.C.

Following the March hearing session, the panel ruled on four motions seeking to create new MDL proceedings. The panel granted three motions and denied one motion, moving the panel's batting average for the year up a notch to an even .600 (six motions granted and four motions denied).

The three new MDL proceedings include two product liability litigations, including the one addressed in greater detail below, and a new intellectual property MDL. The one motion which was denied involved ERISA claims.

The overall number of pending MDL proceedings has declined slightly to 204,¹ as compared to 205 just two months ago. The panel continues to close out older MDL dockets, terminating a total of 12 existing MDLs this year through mid-May.²

Product liability MDLs are now more than a third of the current number MDL proceedings.³ The 204 MDL proceedings now encompass 144,820 actions.⁴ There are now 35 MDL proceedings which have more than 500 individual pending actions, almost all of which are from among the product liability MDLs.⁵

Looking Back: Why Not Just Arbitrate?

At the March hearing session, the panel considered a motion to centralize actions arising from alleged defects in two lines of exterior fiber cement siding products.

In addition to typical arguments in opposition to creation of an MDL proceeding, including that the cases involve different products and case-specific facts, defendants also objected on the ground that it was likely that pending motions to compel arbitration would be granted. Thus, there would be no need for pretrial MDL proceedings.

In rejecting that argument, the panel viewed a motion to compel arbitration as "an assessment of the merits of the actions [which] is beyond the panel's authority."⁶

In deciding whether to create a new MDL, the panel looked to whether "the litigation involves common factual questions, even though defendants predict that they will prevail on dispositive motions prior to commencement of discovery."⁷ The panel's decision illustrates the limits of the panel's authority and its deference to MDL judges to decide even threshold motions that could moot the very existence of the MDL pretrial proceeding.

But this decision is curious, particularly considering a decision from the January hearing session, addressed in our March column. In that earlier decision, the panel noted that the defendants intended to move to compel arbitration in one of the two districts where actions were pending. The panel observed that if the motion to compel arbitration (or Section 1404 transfer motion) were granted, "the multidistrict character of th[e] litigation will be eliminated."⁸

On their face, these decisions appear to reach contradictory results. In particular, in the panel's most recent decision granting the MDL motion, the motions to compel arbitration would have obviated the need for pretrial MDL proceeding "in any of these actions" – mooting the entire litigation.

The takeaway message is that the issue of pending motions is but one factor in the panel's decision-making process. Ultimately, as this column has noted, the decision turns on whether establishing an MDL proceeding involves common issues of fact, and whether centralization will "promote the just and efficient conduct of such actions."⁹

What will summer bring to the panel? Will the panel continue to improve its "batting average"? Will the summer heat bring even more new MDL petitions and actions? Will the panel again consider a party's plea to just arbitrate rather than create an MDL? Stay tuned for our July edition of "And Now A Word From The Panel," as the panel heads northwest to Portland, Oregon, for its July 25 hearing session!

Originally published in Law360

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