Here is an overview of 28 U.S.C. § 1407, the statute creating the Judicial Panel on Multidistrict Litigation. We will discuss it’s history, review the Panel’s rules of procedure and practice, the limitations set forth in Lexicon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998), and finally, use the asbestos litigation as a case study to think through both the mechanics and limitations of multidistrict litigation practice.
I.HISTORY The Judicial Panel on Multidistrict Litigation was created by an act of Congress in 1968, [28 U.S.C. § 1407]. The job of the Panel is to determine whether federal civil actions pending in different federal districts involve one or more common questions of law and fact, and, if so, whether centralizing the cases for pretrial management would enhance judicial efficiency. The stated purpose of this transfer or “centralization” (the preferred term of art) is to avoid duplication of discovery, to prevent inconsistent pretrial rulings, and to conserve the resources of the parties, their counsel and the judiciary. Since its inception, the Panel has considered motions for transfer in over 1,600 dockets involving more than 200,000 cases and millions of claims.
The MDL Panel consists of seven sitting federal judges who are appointed to serve on the Panel by the Chief Justice of the United States. This appointment, which used to be a lifetime appointment, is now a seven year term. Section 1407 provides that no two Panel members may be from the same federal judicial circuit. The current chairman of the Panel is Judge William Terrell Hodges, who sits in the middle district of Florida. The remaining Panel members are John F. Keenan (S.D. New York), D. Lowell Jensen (N.D. California), J. Frederick Motz (D Maryland), Robert L. Miller, Jr. (N.D. Indiana), Kathryn H. Vratil (D Kansas), and David R. Hanson (C.A. 8th Cir.).
From 1968 to 2002, the Panel has centralized 179,071 civil actions for pretrial proceedings. That number has continued to climb each year. Creation of the Panel was largely driven by the filing of almost 2,000 antitrust suits in 35 U.S. District Courts, containing 25,623 separate claims for damages resulting from price fixing by manufacturers of electrical equipment in the early 1960’s. This tsunami of litigation brought Chief Justice Earl Warren and others in 1962 to create the Coordinating Committee for Multiple Litigation for the United States District Courts. This coordinating committee was the predecessor of what was to become the Judicial Panel on Multidistrict Litigation (hereafter JPML).
By using uniform pretrial discovery orders, national depositions, and centralized document depositories, the Coordinating Committee for Multiple Litigation was able to conclude all of the electrical price fixing cases by 1967. The vice chairman of the coordinating committee, Judge Edwin A. Robson, estimated that, without the ad hoc committee, these price fixing cases would have lingered for as long as 20 years. It was this success that provided the motivation for the early coordinating committee to make procedural improvements to management of multidistrict litigation, and for Congress to create the JPML.
Even though the JPML found its roots in antitrust litigation, the docket is now quite diverse, involving airplane crashes, train wrecks, hotel fires, mass torts (such as those involving asbestos, phen-phen diet drugs and hormone replacement therapy), patent validity and infringements, securities fraud and employment practices. The misperception among many judges and attorneys is that the Panel essentially handled a few large mass tort cases. The truth is, the Panel handles thousands of cases and has substantial staff in Washington, D.C. The threshold questions for the Panel, as mentioned above, is twofold; do the cases contain common issues of law and fact, and will judicial efficiencies would be achieved by transferring the cases for centralized pretrial management. This process will involve the Panel looking at the nature of cases, the numbers of cases, the number of parties, the Panel’s own precedent in similar actions, the chances of inconsistent rulings without centralization, and how far along the respective cases are in litigation.
II. MECHANICS As discussed above, the central issues for a Judicial Panel on Multidistrict Litigation are twofold, are there shared issues of fact and law and will centralization achieve judicial efficiencies. So, how does the JPML become involved in a particular case?
Most transfers arise by a motion of interested party, and generally by a party defendant who wishes to corral all of the similar cases against it in one place in order to reduce its litigation expenses and control discovery. The Panel, however, has the ability to issue a “show cause” order, which arises not by a motion of an interested party, but by the Panel itself. Such a “show cause” order is very rare. Perhaps one of the greatest misconceptions is that the Panel makes substantive decisions about the cases brought before them. The truth is they act merely as a traffic cop, deciding whether the case is appropriate for centralization and where it will be centralized.
The practice before the Panel is governed by the rules of procedure of the JPML. A copy of the rules is attached. Two important terms are the “transferee district” and “tag-along actions.” “Transferee district” is the term used for the district court that gets all of the centralized cases pursuant to an order by the JPML. A “tag-along action” is a federal civil action pending in the district court involving common questions of fact with actions previously transferred under 28 U.S.C. § 1407. In terms of vocabulary, please note that the court uses the term “centralized” rather than “consolidated” to reference those cases joined for pretrial management under 28 U.S.C. § 1407.
The JPML will sit in different locations around the country, and will meet at least once per year in Washington, D.C. The headquarters for the JPML is in Washington, D.C. The Panel employs twenty-five staff, four of which are staff attorneys, with one executive attorney. The JPML’s website is www.jpml.uscourts.gov, where you can easily obtain general information about the court including, hearing information, pending MDL’s, panel statistics and current JPML rules of procedure. All pleadings are filed with the Clerk of the Panel, Judicial Panel on Multidistrict Litigation, Thurgood Marshall Federal Judiciary Building, One Columbus Circle, N.E., Room G 255, North Lobby, Washington, D.C. 20002-8004.
What most people in this room will experience is an order conditionally transferring their case from its current venue as a tag-along action. Rule 1.1 states that “a civil action pending in a district court and involving common questions of fact with actions previously transferred under Section 1407,” has been identified as a “tag-along” action and has been conditionally transferred with the MDL docket of the transferee court. Rule 7.2(i), 7.3(a), and 7.5(e) require the parties to notify the Panel of any potential tag-along action in which they are involved. Generally, defendants are highly motivated to provide this list to the clerk of the Panel in order to transfer the entire constellation of cases to a transferee court as soon as possible.
It should be remembered that Rule 1.5 makes it clear that the pendency of a motion, order to show cause, conditional transfer order, or conditional remand order before the Panel concerning transfer or remand of an action pursuant to 28 U.S.C. § 1407, does not affect or suspend orders or pretrial proceedings in the district court in which the action is currently pending. It is only after the actual Panel order to transfer is filed with the clerk of the transferee district court does responsibility for management of the case shift between the transferee and the transferor courts.
Once a motion is filed with the JPML, a letter goes out from the Panel to all the recipients of the motion. The letter will give notice of the filing date, the MDL docket number and caption, the briefing schedule and pertinent Panel policies.
There is no requirement by any attorney who is in good standing with a bar of any district of the United States to seek admission before Judicial Panel on Multidistrict Litigation, nor is it required that you move it for admission before the transferee court. It is, however, not uncommon for attorneys to seek admission before the transferee court as a way of giving deference to the court.
Although there is not enough time to review every rule of procedure of the JPML for this presentation, several of the more important rules should be mentioned. Rules 1.1 through 1.4 set out basic definitions and admission to practice rules. Rule 1.5 tells you what effect a pending motion before the Panel has on your case. (Does not affect orders or pretrial proceedings in the current district court)
Rule 1.6 provides the real meat of the transfer process. The complete original file and a certified copy of the docket sheet for each transferred case is sent by the transferor courts to the transferee court once the transfer order is filed with the transferee district court. Under Subsection (b) of Rule 1.6, even if the case is on appeal, the transferee court is given the original papers to copy. Cross claims and counterclaims will follow the case unless separated out by the JPML order, and then only certified copies of these associated claims will be sent on to the transferee district court.
Under Rule 5.12, the parties are required to file an original and eleven copies of papers submitted for filing with the clerk of the Panel. It should also be noted that no papers shall be left or mailed to a judge of the Panel. Copies of motions for transfer pursuant to 28 U.S.C. § 1407 shall be filed with each district court in which an affected action is pending.
Under Rule 5.13 (a), whenever an original paper and eleven copies is required to be submitted for filing with the clerk of the Panel, one copy must also be submitted on a computer readable disk at the time of filing. The disk need not include attachments. The computer readable disk must be labeled with the MDL docket number. The disk need not be served separately on each party represented by counsel.
Rule 5.2 sets forth the requirements for service of papers filed. Of particular interest is 5.2(d), which requires the clerk of the Panel to create a “Panel service list” containing the names and addresses of the designated attorneys and the party or parties they represent. This becomes the master list to be used for the service of papers filed. In order to reduce the costs for tag-along parties, Rule 5.2(e) allows the service rule to be satisfied by serving all liaison counsel. The liaison counsel designated by the transferee district court shall receive copies of all Panel orders concerning their particular litigation, and shall then be responsible for the distribution to the parties or their counsel for whom each liaison is assigned to represent..
Rule 7.2 sets out the manner in which 1407 motions are to be filed, and the process by which the clerk of the Panel notifies the recipients of the motion of the filing date, caption, MDL docket number, briefing schedule, and pertinent Panel policies. Rule 7.2(c) makes it clear that a response to the motion must be filed within 20 days after the filing of a motion, and that a failure to do so will be treated as“acquiescence” to the action requested in the motion. It should be noted, however, that there have been many denials of such motions, even when there has not been a response filed by any other interested party opposing the motion. If opposing briefs have been filed, the rule then allows responsive briefs to be filed within five days.
“Show cause” orders, under Rule 7.3, set out the process and procedures when the transfer is being sought upon the initiative of the Panel itself. Authority for issuing a “show cause” order is pursuant to 28 U.S.C. § 1407(c)(i). An example of how this might come about was demonstrated in the asbestos litigation. After several federal judges from different jurisdictions wrote a letter to the JPML suggesting that all asbestos cases be consolidated pursuant to 28 U.S.C. § 1407. The JPML then issued a “show cause” order in all of the asbestos cases.
The process for a JPML show cause order is very similar to the process for a motion to transfer. When a transfer of multidistrict litigation is being considered on initiative of the Panel, an order will be filed by the Clerk of the Panel (with itself) asking the parties to “show cause” why the action or actions should not be transferred for centralized pretrial proceedings. Parties then have 20 days to respond in support of, or in opposition to, the order, with an additional 5 days being permitted to respond to any new information that arises after the 20 day deadline.
Any tag-along action is governed by Rule 7.4. Once the JPML learns of the tag-along action as defined in Rule 1.1 [remember parties are required to report all known related actions to the JPML], it will issue an order transferring the tag-along action to the transferee court which is in charge of the centralized cases. The clerk, however, serves this order on the tag-along party or parties to the litigation, but does not send it to the clerk of the transferee court for fifteen (15) days after the order is entered. The purpose for not serving it upon the transferee court is to allow each party the opportunity to oppose the “conditional transfer order.” This will afford the parties the opportunity to inform the court of its opposition by filing a notice of opposition.
The conditional transfer order does not become effective until it is filed with the clerk of the transferee district court (Rule 7.4(e)). It should also be noted that any tag-along action already in the district of the transferee court will not require a JPML transfer order – the transferee court will have its own jurisdictional power to centralize the case if needed.
Under Rule 7.4 (d), if the conditional transfer of a tag-along action is objected to [notice of opposition], the 15 day JPML stay will be continued (the order will not be mailed to transferee court), and the objecting party will file a motion under Rule 7.4(d) to vacate the conditional transfer order, along with the supporting brief. Examples of acceptable opposition would be that the action is no longer pending and has been dismissed, or, perhaps, that the case is in the middle of a trial and should not be interrupted. The motion to vacate the conditional transfer order will then be set for a hearing.
Once cases are centralized before the transferee court, the transferee court has the jurisdiction to regulate discovery, rule on motions, including dispositive motions, and oversee settlement negotiations. In reality, most centralized cases under 28 U.S.C. § 1407 are resolved and not remanded for trial. If pretrial matters do result in the dismissal of the actions, either by summary judgment or settlement, then the cases are remanded to their original venues for trial. Normally, remand happens at the suggestion of the transferee court. The transferee court notifies the JPML that the case is now ripe for trial, and remand is ordered by the JPML. Remand, however, can also take place by motion of any party or by the JPML’s own initiative. Anytime the initiative comes from the JPML, it is done by a “show cause” order or a conditional remand, and the parties are provided the same opportunity to oppose the remand that they had to oppose the original motion to transfer.
If the remand is being sought by a party, a motion is filed pursuant to Rule 7.6(d). The Panel is normally reluctant to order a remand absent a suggestion of remand by the transferee court, and, for that reason, any party so moving is required to accompany their motion with an affidavit addressing the following:
(A)Whether the movant had requested a suggestion of remand from the transferee court, how the court responded to any request, and if no such request was made, why; (B)Whether all common discovery and other pretrial proceedings have been completed in the action sought to be remanded, and if not, what remains to be done; and (C)Whether all orders of the transferee district court have been satisfactorily complied with, and if not, what remains to be done; and a copy of the transferee district court’s final pretrial order, where such order has been entered. Rule 7.6(d)(i) through (ii).
If any party opposes a conditional remand order, they have fifteen (15) days in which to file such notice of opposition with the clerk of the Panel, and the clerk of the Panel then will not transmit any order to the clerk of the transferee district court until further order by the Panel. The clerk of the Panel then will notify the parties of the briefing schedule. As with other notices of opposition, the opposing party has fifteen (15) days from the date it filed its notice of opposition to file its motion to vacate the conditional remand order and its brief in support. If nothing is timely filed, the court will treat such failure as a withdrawal of your opposition, and the clerk of the Panel will transmit the conditional remand order to the transferee district court. Rule 7.6(f).
Rule 16.1 governs all hearing sessions and oral argument. These are held at a place and time ordered by the Panel. Oral argument at these hearings is extremely limited because of the number of attorneys and parties involved. Most arguments are only two to three minutes, and sometimes argument is limited to only one minute. Interviews with the judges who sit on the Panel suggest that attorneys should not try to argue the substance of their case or the legal merits of their case. They should quickly address the threshold issues for transfer, i.e., whether the case shares common issues of law or fact, and whether judicial efficiency would or would not be achieved. It has been said that the characteristics of good advocacy is professionalism, a civil disposition, but, most importantly in MDL oral arguments, brevity. An argument the Panel has heard a thousand times is “don’t send our case to MDL because there is a motion to remand pending and the case will probably be remanded.” This generally has not stopped the court from transferring the case to a centralized MDL docket.
Oral argument is governed by Rule 16.1(b), which requires that each party filing a motion or a response also file a separate one-page statement in support of, or against, oral argument. Such statements are captioned, “Reasons Why Oral Argument Should [Need Not] Be Heard.” Only those counsel who have filed a motion, or a written response to a motion or order, will be permitted to argue orally, unless they have been given leave by the Panel for good cause shown. Rule 16.1(e). In general, there is a bias against the allowing any oral testimony before the Panel, which will be allowed only if permitted pursuant to Rule 16.1(h).
III.LIMITATIONS When cases became centralized for pretrial management, it also made a lot of sense to have the transferee court to also try the case when needed. It was common practice, therefore, to “self transfer” or remand the case or cases to the transferee court once the case or cases were ripe for trial. The transferee court handled all of the pretrial matters, probably ruled on motions for summary judgment, resolved discovery disputes, and, in the process, acquired an extensive understanding of the facts, legal issues and personal dynamics involved in the case. Self transfer for trial worked well until Lexicon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998) was decided, which held as follows: Federal District Court conducting pretrial proceedings pursuant to multidistrict litigation statute has no authority to invoke change of venue statute to assign transferred case to itself for trial. Citing 28 U.S.C.A. § 1404, Subsection A, 1407 Subsection A. The common practice of self-transferring cases for trial had come to an end. The irony of the Lexicon case bringing about such dramatic change in the way MDL cases were handled after remand for trial is that the Lexicon, Inc. case should never have been a part of the MDL in the first place. Lexicon, Inc. was a law and economics consulting firm which believed it had been maligned by the Milberg Weiss firm, and other plaintiffs’ firms, during the Lincoln Savings and Loan Litigation. It was only one claim against several plaintiffs firms. It did not have anything to do with the underlying claims of most plaintiffs against Charles Keating and the American Continental Corporation. It should have been separated out and remanded back to its local venue a long time before the savings and loan litigation was over.
The reality was that no one was paying much attention to the claim until the Savings & Loan cases were over. The current defendants (the plaintiff law firms) were comfortable with the judge they had come to know during the resolution of the Savings & Loan cases and did not want the claim being transferred back to its original venue. Lexicon, Inc. did not want this judge to handle its revived defamation case against the class action law firms and the rest is history. Justice Souter delivered the unanimous opinion of the Court, holding that a district court conducting pretrial proceedings pursuant to section 1407(a) has no authority to invoke section 1404(a) to assign a transferred case to itself for trial.
Until Congress amends the statute, all transferred cases which become ripe for remand will be returned to its original venue for trial, thereby respecting the plaintiffs’ choice of forum. The only exception to this rule is under the 1976 amendments to 28 U.S.C. § 1407, the Panel can transfer actions brought under the Clayton Act to the transferee court for trial.
IV.ASBESTOS PRODUCT LIABILITY LITIGATION
The asbestos product liability litigation presented a challenge to the federal court system of historical proportions. If Chief Justice Warren had thought 2000 price fixing cases was a big problem, he would have been overwhelmed by the asbestos litigation. The asbestos cases present an interesting case study to examine how the JPML evaluates cases when deciding to centralize them for discovery purposes.
A typical MDL situation would be a small number of defendants having being sued by a few plaintiffs to perhaps a couple of thousand plaintiffs. They share common facts and issues of law and have very similar damages. In the asbestos litigation, the cases had many distinguishing factors which the JPML found to be troubling.
When the JPML was first approached with the asbestos cases back in the 1970’s, it issued a show cause order. The litigation, as it was packaged in the show cause order, consisted of 103 actions pending in 19 districts. Six of the actions were brought as class actions on behalf of employees of three different plants that manufactured asbestos products. There were a total of 80 defendants in the 103 actions the order sought to be transferred for centralized management under 28 U.S.C. § 1407. In re Asbestos Insulation Material Products Liability Litigation, 431 F.Supp. 906 (JPML 1977).
After the briefing and hearing by the affected parties, the JPML found that many of the asbestos actions had been pending for several years, that there had been a voluntary sharing of common aspects of discovery, that there was a lack of commonality among the parties, that the circumstances of exposure were predominantly individual in each action, that the questions of disease causation was an individual issue, that the liability of each defendant is predominantly an individual question, that local issues predominated in the discovery process, and that medical personnel and medical records would be found locally. Finally, the JPML did not find a significant possibility of inconsistent or overlapping class action determinations. The Panel, therefore, vacated the “show cause” order. It is also of interest that almost all of the defendants and plaintiffs in the cases opposed transfer.
Fast forward 14 years – and the JPML came to a much different conclusion in In re Asbestos Products Liability Litigation (No. VI), 771 F.Supp. 415 (JPML 1991). On November 21, 1990, a letter signed by eight federal district judges responsible for many asbestos actions in their respective districts cited a serious problem they were having with asbestos personal injury litigation. As the title of the docket number suggested, this was the sixth time that the Panel had considered the transfer of asbestos litigation. It had previously considered transfers of asbestos litigation in 1977, 1980, 1985, 1986 and 1987. Despite all the prior denials, the court held as follows:
On the basis of the papers filed and the hearing held, the Panel finds that the actions in this litigation involve common issues of fact relating to injuries or wrongful death allegedly caused by exposure to asbestos or asbestos containing products, and that centralization under § 1407 in the Eastern District of Pennsylvania will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation. So what changed? The Panel held that, in short, “We are persuaded that this litigation has reached a magnitude, not contemplated in the record before us in 1977, that threatens the administration of justice and requires a new streamlined approach.” The Panel went on in its decision to say that the transaction costs were exceeding the victims’ recovery by nearly two to one, and that exhaustion of the defendant’s assets threatened the ability of claimants to recovery. They found that the heyday of individual adjudication of asbestos mass torts lawsuits had long passed. The backlog was eroding the ability of individuals to adjudicate their claims. They compared the situation to one of the limited fund class actions. It was also believed that, unlike in 1977, many of the parties no longer opposed a centralized approach to resolving claims. Those cases that were not in trial, and were not already in the Eastern District of Pennsylvania, were transferred to the Honorable Charles R. Winer for coordinated or consolidated pretrial proceedings.
In conclusion, regardless of whether you love or hate what 28 U.S.C. § 1407 has done to your case in particular, you have to admire the creativity of a federal judicial system to respond to the demands of mass complex litigation. If the MDL process fairly strives to strike a balance between the need for judicial efficiency the rights of individual parties, then the resources needed for justice should be preserved for generations to come |
