This weekend, the Drug and Device Law Rock Climber hosted a sleepover to say goodbye to her friends as she headed back to college. Somehow, between our last survey of heads on pillows and the convergence on the breakfast table, the number of non-resident young adults increased, prompting the logical question (as we cracked a few more eggs), "How did you guys get here?"
In In re Mortgage Electronic Registration Systems (MERS) Litigation, 2016 WL 3931820 (D. Ariz. July 21, 2016), the United States District Court for the District of Arizona asked a similar question. This is obviously not a drug or device case, but it is relevant to all of us who defend clients in MDLs. In MERS, cases related to the formation and operation of the subject mortgage registration systems were consolidated in an MDL. After the court dismissed a number of associated cases, the plaintiffs filed a Consolidated Amended Complaint ("CAC"). One of the named plaintiffs in the CAC had not been named in the previous complaint and "had never filed a lawsuit that the Judicial Panel on Multidistrict Litigation transferred to [the court]." MERS, 2016 WL 3931820 at *1.
A complicated procedural sequence ensued. The district court dismissed the CAC for failure to state a claim upon which relief could be granted. In its discussion of its dismissal of Count I of the CAC, the court stated, "[The new] alleged Plaintiff . . . is not a named Plaintiff in any member case of this MDL. Accordingly, Plaintiffs' claim cannot rest on allegations relating to [this plaintiff]." Id. at *1. The Ninth Circuit affirmed the dismissal of the CAC except that it reversed and remanded as to Count I. And so, the parties ended up back before the MDL court, where the defendants moved for summary judgment on the new plaintiff's claims. The defendants argued, "[This plaintiff] never filed a lawsuit that the [JPML] transferred to this Court. Rather, [he] was joined when Plaintiffs filed their Consolidated Master Complaint – which is impermissible – and thus, this Court's jurisdiction has not been invoked." Id. at *2 (citations omitted). In the alternative, the defendants asked that the new plaintiff's claims be dismissed for lack of jurisdiction.
The court requested supplemental briefing on the following questions: 1) Does a transferee MDL court have the authority to join 'new' plaintiffs in an MDL when such plaintiffs never filed their own case (nor paid the filing fee) and never had their cases transferred to this Court by the panel on multidistrict litigation; and 2) what was the basis for federal subject matter jurisdiction over the new plaintiff's case. Id. In their supplemental brief, the plaintiffs argued that the new plaintiff's case was properly joined in the MDL because, like other plaintiffs, the defendants were allegedly involved in recording false documents related to the new plaintiff's property. Plaintiffs also argued that the court had diversity jurisdiction over the new plaintiff's claims. The defendants countered, "The jurisdictional issue relating to [the new plaintiff] does not involve whether there was diversity jurisdiction or federal question jurisdiction relating to [his] claims. Rather, the issue is whether the Court's jurisdiction is sufficiently invoked because [the new plaintiff] never filed a lawsuit in this federal court or in any other federal court that was then transferred to the MDL Court by the [JPML]." Id. at *3.
And jurisdiction was not "sufficiently invoked," according to the court, which explained, "Here, Plaintiffs did not request consolidation or assignment of [the new plaintiff's] claims to this Court . . . as a tag-along action to the multidistrict litigation. In actuality, Plaintiffs did not even file [the new plaintiff's] action in the transferee district or in any court, and [he] did not have any civil action pending which could have been transferred to this Court by the Judicial Panel." Id. at *6. In essence, the new plaintiff's name was just added to the caption when the complaint was amended, and the court held, "[N]either Title 28 of the United States Code Section 1407, the Rules of Procedure of the Judicial Panel on Multidistrict Litigation, nor the Local Rules permit a transferee court to join a new plaintiff in the MDL when such plaintiff never filed his own case or had is case transferred to the court by the Judicial Panel." Id.
The plaintiffs tried several other arguments, apparently cherry-picking language from cases that, on examination, actually undercut the plaintiffs' position. (Our co-blogger, Mr. McConnell, counsels associates to always read every single case a plaintiff cites because so many end up cutting against the plaintiff's own arguments.) First, the plaintiffs argued that the new plaintiff was added "by amendment" as contemplated by Rules 20(a) and 15 of the Federal Rules of Civil Procedure, and that this conferred subject matter jurisdiction over the new plaintiff's claims. The court rejected this argument, holding that adding plaintiffs to an MDL "by amendment" would "directly contradict [] the appropriate procedures" for consolidating cases in an MDL. Id. at *7. The plaintiffs also argued that the new plaintiff's claims "ar[o]se out of supplemental jurisdiction" because the new plaintiff was represented by the same firm that represented other plaintiffs. This argument got about the consideration it deserved. The court also pointed out that "in the unique procedural world of an MDL, the authority of the transferee court to handle the case ordinarily ends on conclusion of pretrial proceedings." Id. at *8. Lacking a transferor court, the new plaintiff's case would have no court to which it could be remanded for trial.
The court concluded, "As [the new plaintiff]'s case was never filed or pending in any court prior to its addition to the CAC by Plaintiffs, this is the fatal flaw in Plaintiff's argument. . . . [T]his Court does not have subject matter jurisdiction over [the new plaintiff]'s claims, as this Court's jurisdiction was not sufficiently invoked." Id. at *11. No seat at the breakfast table – claims dismissed.
MERS is a cautionary tale for all of us who practice in the mass tort/MDL space. How many of us would be surprised to learn that plaintiff lawyers were adding names to MDL captions to pad their settlement inventories? Keep track of the JPML's Conditional Transfer Orders, and be sure all of your plaintiffs either filed directly into your MDL or were properly transferred there. We'll certainly be checking from now on.
This article is presented for informational purposes only and is not intended to constitute legal advice.
