Appealability issues in multi-district litigation can present knotty problems. While we (that is, Bexis) came up with the preemption argument that killed off fraud on the FDA claims, the realities of MDL practice meant that, even after winning, there was no appeal. Only when a peripheral defendant – an FDA consultant facing no other claims – filed a “me too” motion was an appealable order created. The consultant’s name was Buckman.
Thus we read with interest the resolution of the MDL appealability issue in Gelboim v. Bank of America Corp., 135 S. Ct. 897 (2015). Gelboim has nothing to do with drugs and devices; it was an anti-trust case. The substantive issue was “anti-trust injury,” which doesn’t matter here except to the extent that the district court held that the plaintiffs didn’t have any cognizable injury. Since the plaintiffs in question didn’t have any other claims, that meant their action was kaput. Time to appeal, right? The district court thought so. 135 S. Ct. at 903-04 (discussing procedural history). In addition, the MDL court issued an order under Fed. R. Civ. P. 54(b), allowing certain other plaintiffs to appeal, even though they had other claims remaining. (A use of Rule 54(b) also produced the Buckman appeal.)
Not so fast! The court of appeals said no. Based on a “strong presumption” that appeals in “consolidated cases” were not final, the Second Circuit (the appeal was from the S.D.N.Y.) dismissed the appeal.
The question before the Supreme Court was whether a particular plaintiff’s action retained its “individual” character – as opposed to becoming “consolidated” with all the other transferred cases – after being shipped to an MDL.
The Supreme Court held that it did. The MDL process is only a pre-trial transfer mechanism. The cases in the MDL remain individual cases:
Cases consolidated for MDL pretrial proceedings ordinarily retain their separate identities, so an order disposing of one of the discrete cases in its entirety should qualify under §1291 as an appealable final decision.
Gelboim, 135 S. Ct. at 904 (footnote omitted).
MDLs are not some sort of unique, sui generis animal. The fact of an MDL transfer did not create any “new and distinctive character” of action. Id. (citation and quotation marks omitted). Rather, when it passed the MDL statute (28 U.S.C. §1407), “Congress anticipated that, during the pendency of pretrial proceedings, final decisions might be rendered in one or more of the actions consolidated pursuant to §1407.” 135 S. Ct. at 904-05.
Thus, not only was the appeal in Gelboim proper, no Rule 54(b) certification was necessary at all. MDL complete dismissals are appealable as of right:
When the transferee court overseeing pretrial proceedings in multidistrict litigation grants a defendant's dispositive motion on all issues in some transferred cases, those cases become immediately appealable while cases where other issues remain would not be appealable at that time.
Ida 904-05 (citation and quotation marks omitted). “It suffices to note that there is nothing ‘interlocutory’ about the dismissal order in the [relevant] action.” Id. at 906.
Thus, fifteen years after the fact, we learn that the Rule 54(b) certification that created Buckman was totally unnecessary. That case (as opposed to the multiple-claim ones involving Bexis’ client) was appealable as of right. Rule 54(b) doesn’t even apply:
While Rule 54(b) can aid parties with multiple-claim complaints . . . the rule, properly read, is of no avail to [this plaintiff]. Rule 54(b) addresses orders finally adjudicating fewer than all claims presented in a civil action complaint. It does not apply to a single claim action nor to a multiple claims action in which all of the claims have been finally decided.
135 S. Ct. at 906. We'll be seeing a lot less use of Rule 54(b) in MDLs.
So what does this mean?
It means a lot more MDL appeals as of right. The beneficiaries will be single-or few-claim plaintiffs like those in Gelboim, who won’t have to ask anybody for permission to appeal once they’ve been thrown out of court. That doesn’t make it necessarily a pro-plaintiff ruling, except procedurally. Substantively, the claims of more minimalistic complaints might even tend to be weaker – as fraud on the FDA turned out to be in Buckman (although in the end, all Bone Screw claims proved less than robust). A greater number of MDL appeals could well produce a greater number of defense wins.
However, the Court’s recognition of MDL appeals of right does two things procedurally. First, it gives plaintiffs (since there are almost always a lot of them in MDLs) an extra avenue to get an appeal, even if the MDL judge isn’t so inclined. Any MDL ruling dismissing a claim can become appealable once a plaintiff is chosen as cannon fodder and all of that plaintiff’s other claims are voluntarily dismissed. Voilà. Appeal as of right.
The other effect of Gelboim is a loss of control by MDL judges. Now that their rulings are appealable as of right, as above, they face losing control over those issues immediately after ruling (provided they are viewed as important enough to scrounge up cannon fodder). Appeals are no longer discretionary Rule 54(b) affairs. The appellate court’s look over a MDL judge’s shoulder will now be somewhat closer and quicker. MDL judges don’t tend to like that, which is understandable. Discretion means more power to mold an MDL and to influence settlement. Just asLexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998) – cited in Gelboim, by the way – crimped the style of MDL judges, so does Gelboim.
Finally, we’d be remiss in not pointing out the interesting implications of footnote 3 in Gelboim. It discusses MDL master complaints, which we have criticized when used as a device to avoid TwIqbal. A master complaint worthy of the name – not one merely for “administrative” convenience – may be a way for MDL judges to treat MDLs as truly consolidated proceedings, outside of the Gelboim holding:
Parties may elect to file a “master complaint” and a corresponding “consolidated answer,” which supersede prior individual pleadings. In such a case, the transferee court may treat the master pleadings as merging the discrete actions for the duration of the MDL pretrial proceedings. No merger occurs, however, when the master complaint is not meant to be a pleading with legal effect but only an administrative summary of the claims brought by all the plaintiffs.
135 S. Ct. at 904 n.3 (citations and quotation marks omitted). It looks like the Supreme Court may be giving MDL judges a choice: an actual master complaint can prevent Gelboim-type appeals of right “for the duration of the MDL,” but not one used as an “administrative” evasion of TwIqbal. Which way will they choose?