DTCI: Use of multidistrict litigation continues to rise

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. (28 U.S.C.A. § 1407(a)).

In 1968, shortly after more than 1,800 civil damage actions involving conspiracy charges for electrical equipment managers were filed in 33 separate federal District courts, Congress enacted 28 U.S.C. § 1407, the MDL Statute, to permit transfer and consolidation of related cases pending in federal District courts (Yvette Ostolaza & Michelle Hartmann, Overview of Multidistrict Litigation Rules at the State and Federal Level, 26 Rev. Litig. 47, 48–49 (2007)). The statute established a multidistrict litigation process that is now the primary means for resolution of complex civil cases, as it allows for coordinated, pretrial discovery that promotes effectiveness and efficiency (Eldon E. Fallon, Jeremy T. Grabill, & Robert Pitard Wynne, Bellwether Trials in Multidistrict Litigation, 82 Tulane L. Rev. 2323, 2324 (2007)).

The Judicial Panel on Multidistrict Litigation, (“JPML” or “MDL Panel”), is charged with creating new MDLs by consolidating related cases pending in federal courts, transferring new cases to existing MDLs, and remanding old cases to their transferor courts once the transferee courts have completed their work, (John G. Heyburn II, A View from the Panel: Part of the Solution, 82 Tulane L. Rev. 2225, 2233 (2008)). In MDL-speak, the court to which cases are centralized is referred to as the “transferee” court, while the court from which cases are transferred is called the “transferor” court, Id. at n. 1. It is the responsibility of the JPML to remand cases that have not been terminated in the transferee court from summary judgment, judgment of dismissal or judgment upon stipulation at the end of pretrial proceedings. The Chief Justice of the Supreme Court designates membership on the seven-member MDL Panel, with one chairman and six associate justices, (See Fallon, supra at 2327 (citing 28 U.S.C. § 1407(c)); Heyburn, supra at 2226). There is no statutory limit on panel terms, although Chief Justice William H. Rehnquist eventually imposed staggered seven-year terms for panel members, (Heyburn, supra at 2227). The panel is made up of judges from federal appellate and District courts, although no two of them are allowed to be from the same circuit, (Heyburn, supra at n.7).

The MDL statute lays out transfer proceedings for initiating multidistrict litigation. Proceedings can be initiated by a motion from either party or from the MDL Panel acting sua sponte, (Ostolaza, supra at 50 (citing 28 U.S.C. § 1407(c)(i)–(ii))). A new MDL motion for transfer requires at least two actions with common questions of fact pending in two different federal District courts, (Court Rules for the United States Judicial Panel on Multidistrict Litigation, United States Judicial Panel on Multidistrict Litigation (August 3, 2015). Once a motion is made, the JPML decides whether to create a new MDL by transferring groups of cases to a District Court in order to conduct pretrial proceedings, (Heyburn, supra at 2227–28).

The JPML has “unusually broad discretion” to carry out this function, (Heyburn, supra at n.16 (quoting In re Collins, 233 F.3d 809, 811–12 (3d Cir. 2000))). For cases transferred by the JPML, proceedings are allowed to continue without consideration for personal jurisdiction over the parties and without having to meet the venue requirements of 28 U.S.C. § 1404, (Heyburn, supra at 2228). When considering transfer motions under the MDL statute, the panel is concerned with two issues: Whether “common questions of fact among several pending civil actions exist such that centralization of those actions in a single district will further the convenience of the parties and witnesses and promote the just and efficient conduct of the actions,” and which federal district and judge will best handle the transferred cases (Id.).

The panel has “considerable and largely unfettered discretion” in ruling on these issues (Id.), and it orders centralization more often than not, (Between 2000 and 2007, the “grant” rate on motions for transfer to new MDLs ranged from 67 percent to 87 percent. From 1970 to 2007, that rate fell below 50 percent only one time, in 1981. Heyburn, supra at 2229). However, former chair of the JPML Judge John G. Heyburn II denied that the panel has a predilection in favor of centralization, (Heyburn, supra at 2229). Instead, he believed that the panel imposes clear standards that are applied “faithfully and consistently,” keeping attorneys from making unfounded motions for transfer. (Id.).

Throughout the 1990s the panel considered a steady 40 to 50 motions to centralize per year. By 2009, the number had tripled to 121. In 2014, 89 motions for MDL status were filed, and it appears from the last decade of filings that the number of new docket requests will remain above 90. This number is not insignificant and accounts for roughly 36 percent of the federal civil caseload. Last year, roughly half of the MDL new filings were denied by the JPML. Antitrust, products liability, sales practices and securities account for the vast majority of pending MDLs. There are currently three MDLs open in the state of Indiana.

Why the increase in new filings? There are several reasons, but two stand out. The federal courts have come to the conclusion that class certification is usually inappropriate for mass tort personal injury cases. Second, segments of both the defense and plaintiff’s bar have built highly successful business models that support the creation and use of an MDL. MDLs also may help the defense by allowing a centralized and streamlined defense.

With the rise of the MDL, we have generally seen fewer cases tried to verdict and more complex global settlements. As a defense attorney, this trend is worrisome since it can become too easy to substitute efficiency for due process. However, many would argue that MDLs provide an effective blueprint for consistent resolutions of complex claims. All agree that there is no easy solution to resolving this growing trend in mass tort litigation.•

• Christopher D. Lee is a partner in the Evansville office of Wooden & McLaughlin and is a member of the board of directors of DTCI. The opinions expressed in this article are those of the author.