Practice Tip: Filing 'Direct' Cases in an MDL

Is there any problem, then, with filing your case directly with the MDL court? Yes. To begin with, if you want your case tried in your “home” district in order to take advantage of that district's jury pool, you need to consider some relevant documents before you file directly in the MDL District. Unless there is a stipulation or Order in place, the case you file directly may be tried by the MDL judge. Another possible problem you may encounter if you file directly with the MDL is with the choice of law, particularly when it comes to statutes of limitations.

There are three kinds of MDL cases: 1) those cases filed in or removed from district courts around the country and transferred by the MDL Panel pursuant to 28 USCA ' 1407; 2) those diversity cases that are filed in the same district as the MDL court because there is proper jurisdiction and venue; and 3) those cases that are filed directly with the MDL court from outside the MDL District upon invitation from the MDL court.

Trials in Directly Filed MDL Cases

An MDL judge may be able to obtain a global settlement of the entire litigation if the parties can agree on the range of damages the cases will bring on verdict. Often, to get an idea of the value of the cases, the judge will select some typical “bellwether” cases to try first (the term is derived from the notion that if you bell a wether (castrated male sheep) to lead the flock, it would not lead them astray.) By trying such “bellwether” cases, the court and the parties can see what theories are available, evaluate the strengths and weaknesses of the evidence, narrow the breadth of exhibits that were unearthed in discovery and increase momentum toward settlement. For years, MDL judges routinely included any case in the bellwether trials; directly filed and transferred.

But the Supreme Court put an end to that when it decided Lexecon v. Milberg Weiss et. al., 523 U.S. 26 (1998). The Court held that after a case is transferred to the MDL court for pretrial proceedings, it cannot transfer the case to itself for trial. The MDL judge must remand transferred cases back to the original district, the transferor court. Lexecon changed the way an MDL judge chooses bellwether cases by limiting the court to non-transferred cases. If the parties stipulate to waive Lexecon, the judge can then order that transferred case to trial in the MDL court. Thus, if you want your case to be tried elsewhere, you must first make sure such a stipulation or court order is not already in place before you file directly. MDL courts favor such “Lexecon waivers,” as they are called, as without them, the court would be required to choose the bellwether trials from a pool of non-transferred cases that might be too small and homogenous to justify the time and expense to try.

An example of the trial problem arose in Solis v. Lincoln Electric Co., 2006 WL 266530 (N.D. Ohio, 2006), a welding fumes case. A plaintiff who had filed directly in the MDL court and whose case was chosen for a bellwether trial had second thoughts and moved to remand his case to the transferor court (Texas). Evidently, the attorney believed it would be more convenient for the Texas witnesses and the parties to have the case tried there rather than in Ohio. He also favored the “cultural distinctions” between jurors in Texas and Ohio, which he thought would benefit his client. He argued that the MDL transfer statute required the MDL court to remand. The court denied the motion on the grounds that the plaintiff had waived his right for a trial in Texas, the transferor court. First of all, the plaintiff had not objected to a bellwether trial in the MDL court at any prior time. The judge pointed out that when the bellwether cases were being chosen, he directed the plaintiffs to choose cases that presented no Lexecon trial impediments and that any venue objections be waived. Thus, because plaintiff's lead counsel waived any objection on venue, the motion was denied.

Lessons Learned

What this teaches us is that if plaintiff's counsel wants to file his case directly with the MDL he must be careful not to waive his right to a trial in a different district. He can request that defendants stipulate that if he files directly, he does not waive the right to trial in a different district. Or, he can take advantage of Lexecon and merely file in whatever district suits him and let the case get transferred. Plaintiff's counsel must also remember not to urge the MDL Panel to choose a particular district as a proposed MDL court if he eventually wants to have the case tried elsewhere. This might also be used against him as a waiver. Another problem may arise if the plaintiff files an amended complaint in the MDL court after being transferred. This could be viewed as a directly filed case and be chosen by the MDL court for trial under the theory that Lexecon was waived.

In In re Yasmin and Yaz 2011 WL 1375011 (S.D. Ill. 2011) the court held that cases that originated outside the MDL court's jurisdiction and filed directly would be treated as if they were transferred from a judicial district sitting in the state where the case originated factually; however, this is not sufficient, in my opinion, to permit the court to transfer the case to a different district for trial.

Choice of Law in Directly Filed Cases

The other issue counsel has to consider before a direct filing is choice of law. In diversity cases, a district court must apply the substantive law of the state in which it sits, including its conflicts rules. When the case is transferred by the MDL Panel, the MDL court must apply the law of the transferor court, including its conflicts rules. Thus, a case filed in New York would bring New York law with it when transferred to the MDL court, including New York's choice of law rules. But what law will be applied by the MDL court to cases that are filed directly with it? If the case is directly filed, would the MDL court be compelled to apply the law of the state in which it sits? Therefore, before a plaintiff decides to file a direct MDL case, he should first look at the consequences for conflicts of law and statutes of limitations. For example, some states start their statute of limitations running when the plaintiff is injured; others start it running when the plaintiff should have discovered he had a cause of action and others still, permit the statute to start running only when the plaintiff knows he has a cause of action. Of course, the parties can stipulate the choice of law in the MDL court, usually the law of the plaintiff's home state.

A good example of this problem arose in In re Avandia Marketing, Sales Practices and Products Liability Litigation, 2011 WL 4018259 (E.D. Pa. 2011). That litigation involved claims that Avandia, prescribed for diabetics, was causing heart problems. Of course, Pennsylvania law would apply to Pennsylvania plaintiffs who filed directly in the commonwealth. But what about other plaintiffs from other states who filed directly with the MDL court? What statute of limitations is applicable to their claims? Some of the cases involved Wisconsin plaintiffs who were prescribed, bought and ingested the drug in that state. Wisconsin has a three-year statute of limitations; Pennsylvania, where the MDL was located, has a two-year statute of limitations that begins running when the plaintiff should have reasonably discovered when he was injured and his injury was caused by another party's conduct.

The defendants moved under Pennsylvania law to dismiss all Wisconsin cases in which the plaintiffs had filed suit two years or more after their injury. They claimed that because the cases were filed directly with the MDL court, the statute of limitations of Pennsylvania, and not Wisconsin, applied. The court did not decide the issue, stating that the record was too undeveloped at that point.

Conclusion

Practitioners about to file a product liability case should be aware of the above issues which arise when filing directly with an MDL court and consider the consequences discussed. The relative simplification of filing directly with the MDL may bring more problems than it is worth.

Larry Goldhirsch, a member of this newsletter's Board of Editors, is Trial Counsel to Weitz & Luxenberg, P.C.

Once a case has been assigned by the Judicial Panel on Multi-District Litigation (JPML) to a particular court, the judge to whom it is assigned will generally try to have all cases in the 50 states filed there directly. This saves time and money because if the new cases are first filed in federal district court or in state court and are removed, they will immediately be transferred to the MDL court. So, why not take advantage of this valuable vehicle to save time and file directly with the designated district court that is the MDL court?

A stipulation between counsel or a Case Management Order (CMO) that permits such cases to be filed directly in the MDL district without objection by the defendant(s) to the venue are what is needed to file. The stipulation will usually permit any counsel not admitted to that court to appear, so long as counsel is admitted to some federal court in the United States. This would also permit a firm that does a lot of mass tort work to file its cases in one jurisdiction without having to split up its filings among what would otherwise be numerous, different district courts with different substantive laws. It also obviates the necessity of retaining local counsel in each of those courts if the mass tort firm is not practicing in that jurisdiction.

What's the Problem?

Is there any problem, then, with filing your case directly with the MDL court? Yes. To begin with, if you want your case tried in your “home” district in order to take advantage of that district's jury pool, you need to consider some relevant documents before you file directly in the MDL District. Unless there is a stipulation or Order in place, the case you file directly may be tried by the MDL judge. Another possible problem you may encounter if you file directly with the MDL is with the choice of law, particularly when it comes to statutes of limitations.

There are three kinds of MDL cases: 1) those cases filed in or removed from district courts around the country and transferred by the MDL Panel pursuant to 28 USCA ' 1407; 2) those diversity cases that are filed in the same district as the MDL court because there is proper jurisdiction and venue; and 3) those cases that are filed directly with the MDL court from outside the MDL District upon invitation from the MDL court.

Trials in Directly Filed MDL Cases

An MDL judge may be able to obtain a global settlement of the entire litigation if the parties can agree on the range of damages the cases will bring on verdict. Often, to get an idea of the value of the cases, the judge will select some typical “bellwether” cases to try first (the term is derived from the notion that if you bell a wether (castrated male sheep) to lead the flock, it would not lead them astray.) By trying such “bellwether” cases, the court and the parties can see what theories are available, evaluate the strengths and weaknesses of the evidence, narrow the breadth of exhibits that were unearthed in discovery and increase momentum toward settlement. For years, MDL judges routinely included any case in the bellwether trials; directly filed and transferred.

But the Supreme Court put an end to that when it decided Lexecon v. Milberg Weiss et. al., 523 U.S. 26 (1998). The Court held that after a case is transferred to the MDL court for pretrial proceedings, it cannot transfer the case to itself for trial. The MDL judge must remand transferred cases back to the original district, the transferor court. Lexecon changed the way an MDL judge chooses bellwether cases by limiting the court to non-transferred cases. If the parties stipulate to waive Lexecon, the judge can then order that transferred case to trial in the MDL court. Thus, if you want your case to be tried elsewhere, you must first make sure such a stipulation or court order is not already in place before you file directly. MDL courts favor such “Lexecon waivers,” as they are called, as without them, the court would be required to choose the bellwether trials from a pool of non-transferred cases that might be too small and homogenous to justify the time and expense to try.

An example of the trial problem arose in Solis v. Lincoln Electric Co., 2006 WL 266530 (N.D. Ohio, 2006), a welding fumes case. A plaintiff who had filed directly in the MDL court and whose case was chosen for a bellwether trial had second thoughts and moved to remand his case to the transferor court (Texas). Evidently, the attorney believed it would be more convenient for the Texas witnesses and the parties to have the case tried there rather than in Ohio. He also favored the “cultural distinctions” between jurors in Texas and Ohio, which he thought would benefit his client. He argued that the MDL transfer statute required the MDL court to remand. The court denied the motion on the grounds that the plaintiff had waived his right for a trial in Texas, the transferor court. First of all, the plaintiff had not objected to a bellwether trial in the MDL court at any prior time. The judge pointed out that when the bellwether cases were being chosen, he directed the plaintiffs to choose cases that presented no Lexecon trial impediments and that any venue objections be waived. Thus, because plaintiff's lead counsel waived any objection on venue, the motion was denied.

Lessons Learned

What this teaches us is that if plaintiff's counsel wants to file his case directly with the MDL he must be careful not to waive his right to a trial in a different district. He can request that defendants stipulate that if he files directly, he does not waive the right to trial in a different district. Or, he can take advantage of Lexecon and merely file in whatever district suits him and let the case get transferred. Plaintiff's counsel must also remember not to urge the MDL Panel to choose a particular district as a proposed MDL court if he eventually wants to have the case tried elsewhere. This might also be used against him as a waiver. Another problem may arise if the plaintiff files an amended complaint in the MDL court after being transferred. This could be viewed as a directly filed case and be chosen by the MDL court for trial under the theory that Lexecon was waived.

In In re Yasmin and Yaz 2011 WL 1375011 (S.D. Ill. 2011) the court held that cases that originated outside the MDL court's jurisdiction and filed directly would be treated as if they were transferred from a judicial district sitting in the state where the case originated factually; however, this is not sufficient, in my opinion, to permit the court to transfer the case to a different district for trial.

Choice of Law in Directly Filed Cases

The other issue counsel has to consider before a direct filing is choice of law. In diversity cases, a district court must apply the substantive law of the state in which it sits, including its conflicts rules. When the case is transferred by the MDL Panel, the MDL court must apply the law of the transferor court, including its conflicts rules. Thus, a case filed in New York would bring New York law with it when transferred to the MDL court, including New York's choice of law rules. But what law will be applied by the MDL court to cases that are filed directly with it? If the case is directly filed, would the MDL court be compelled to apply the law of the state in which it sits? Therefore, before a plaintiff decides to file a direct MDL case, he should first look at the consequences for conflicts of law and statutes of limitations. For example, some states start their statute of limitations running when the plaintiff is injured; others start it running when the plaintiff should have discovered he had a cause of action and others still, permit the statute to start running only when the plaintiff knows he has a cause of action. Of course, the parties can stipulate the choice of law in the MDL court, usually the law of the plaintiff's home state.

A good example of this problem arose in In re Avandia Marketing, Sales Practices and Products Liability Litigation, 2011 WL 4018259 (E.D. Pa. 2011). That litigation involved claims that Avandia, prescribed for diabetics, was causing heart problems. Of course, Pennsylvania law would apply to Pennsylvania plaintiffs who filed directly in the commonwealth. But what about other plaintiffs from other states who filed directly with the MDL court? What statute of limitations is applicable to their claims? Some of the cases involved Wisconsin plaintiffs who were prescribed, bought and ingested the drug in that state. Wisconsin has a three-year statute of limitations; Pennsylvania, where the MDL was located, has a two-year statute of limitations that begins running when the plaintiff should have reasonably discovered when he was injured and his injury was caused by another party's conduct.

The defendants moved under Pennsylvania law to dismiss all Wisconsin cases in which the plaintiffs had filed suit two years or more after their injury. They claimed that because the cases were filed directly with the MDL court, the statute of limitations of Pennsylvania, and not Wisconsin, applied. The court did not decide the issue, stating that the record was too undeveloped at that point.

Conclusion

Practitioners about to file a product liability case should be aware of the above issues which arise when filing directly with an MDL court and consider the consequences discussed. The relative simplification of filing directly with the MDL may bring more problems than it is worth.

Larry Goldhirsch, a member of this newsletter's Board of Editors, is Trial Counsel to Weitz & Luxenberg, P.C.