Q. What is multidistrict litigation and the JPML?
A. Multidistrict litigation involves at least two federal lawsuits pending in different federal judicial districts. In 1968, Congress enacted the Multidistrict Litigation (MDL) statute (28 U.S.C. § 1407) in an attempt to alleviate the burden that multiple actions pending in courts around the country involving the same issue were placing on the federal judiciary—and primarily in response to a price fixing scheme that had spawned numerous civil and criminal actions. With the enactment of the MDL statute, Congress also created the Judicial Panel on Multidistrict Litigation (JPML), a body empowered to determine whether multiple actions involving one or more common questions of fact are consolidated in a centralized MDL proceedings and where that MDL proceeding will take place.
Importantly, MDL transfer is for pre-trial coordination. As a general matter, under Supreme Court precedent, the MDL court cannot try cases sent to it from other judicial districts and (with the help of the JPML) must send the cases back to their original jurisdictions for trial.
Q. Why would a company/counsel want to consolidate?
A. At a certain point in the life of litigation arising from a single product or issue, there are quite simply “too many holes in the dike to plug.” From a cost and overall case management perspective, there can reach a point where there are just too many cases to fight in too many different courts. Besides the need to monitor each individual case and (often) hire separate local counsel for each case, allowing separate cases to proceed in different jurisdictions places the company at risk of inconsistent rulings or, sometimes more troubling, inconsistent discovery orders in the multiple cases.
Q. Why might they NOT want to consolidate?
A. Creation of an MDL proceeding will often open the floodgates for counsel to file lawsuits, on the theory that they can piggy-back on the work of others in the MDL, while their individual cases may lay dormant for years. This can expose companies to more lawsuits and greater ultimate costs. Also, because the JPML also decides where the MDL proceeding will be located—and determining where the JPML will likely create the proceeding is one of the most difficult decisions to predict (indeed, the JPML can decide to establish the MDL in a jurisdiction not suggested by any of the parties or even where no current actions are pending)—there is a measure of uncertainty when one goes down the path of moving for an MDL proceeding and which judge will be selected or which circuit law will apply.
Q. Who makes the decisions/who is on this panel and how do they get selected?
A. The decision whether to create coordinated MDL pre-trial proceeding is made by a Panel of seven judges, appointed by the Chief Justice of the U.S. Supreme Court. The seven judges are selected from among federal district court and federal appellate court judges, but no two judges on the JPML may be from within the same federal judicial Circuit. The JPML meets every two months (generally on the last Thursday of the month) at various locations around the country, to hear arguments on motions to create MDL proceedings. Decisions are generally issued within a few weeks of the hearing session.
Q. If you don’t get consolidated, do you have any recourse?
A. Not really, in terms of creating an MDL proceeding. Appeals from decisions of the JPML denying transfer are effectively barred by the MDL statute, which provides that “[t]here shall be no appeal or review of an order of the panel denying a motion to transfer for consolidated or coordinated proceedings.” But there are other ways to obtain the benefits of coordination without a formal MDL proceeding. As the JPML itself often acknowledges when it denies a motion to create centralized proceedings, there are other informal methods courts and parties can employ to obtain the efficiencies of coordinated efforts, including informal coordination by federal judges to avoid the duplication of discovery. Parties can seek stays from the local district court judges to allow certain actions to proceed while others remain dormant to avoid duplication of effort. There are also some creative uses of the forum non conveniens transfer statute (28 U.S.C. § 1404) that can effectively transfer multiple actions to a single federal district court without use of the MDL system.
Q. Are there any types of cases that cannot be subject to an MDL proceeding?
A. Under the Class Action Fairness Act of 2005 (CAFA), cases (non-class actions) filed by 100 or more individual plaintiffs whose claims are proposed to be tried jointly in which there is minimal diversity and collectively seeking more than $5 million (known as a “mass action”) are subject to federal jurisdiction. But, in what appears to have been some form of legislative compromise in return for this expansion of federal jurisdiction, such cases removed from state court to federal court cannot be transferred to an MDL proceeding, “unless a majority of the plaintiffs in the action request transfer.”
Q. What is one of the biggest problems that MDL proceedings cannot solve?
A. Under our system of federalism (and the MDL statute), the JPML is powerless to coordinate state courts cases with federal cases arising from the same product or issue. It is not uncommon for parties to try to take an “end-run” around the federal MDL proceeding in an effort to obtain discovery and rulings that are broader than, or at odds with, that of the MDL proceeding. But the good news is that we are seeing more MDL and state courts that are informally coordinating, and some have even held joint federal-state court hearings or issued joint rulings applicable to both federal and state cases. Over the past few years, even the JPML has considered the existence of state court proceedings as a reason to create an MDL proceeding and/or where to locate an MDL, with the suggestion that efforts can be made to coordinate both the federal and state court proceedings.