Multidistrict Litigation

An MDL. It stands for "multidistrict litigation," a type of legal proceeding designed to help federal courts efficiently manage many related cases filed in different jurisdictions. The federal MDL statute, 28 U.S.C. § 1407, permits the temporary transfer of federal civil lawsuits to one or more district courts for pretrial consolidation or coordination.

It’s 10:00 a.m. when you get The Call. Your company has been sued by the family of a man who died while using your cancer drug, Prolonga. Your general counsel sounds glum.

“The complaint alleges that Mr. Rogers was 85 years old, had Stage Four cancer, was prescribed Prolonga, and died two weeks later.”

Don’t elderly men sometimes die of heart attacks?

“Of course they do. So, causation will be hard to prove, and damages should be limited. We should be in great shape. Unless –“

Unless what?

“Unless the mass tort bar mobilizes, advertises for similar claims and starts filing suits in unfriendly jurisdictions. Fortunately, Prolonga is relatively new to the market and has been used by only a few
thousand patients. We have had very few adverse incident reports. That, coupled with the age and health of the typical Prolonga user, should make us an unattractive target. We should prepare for more lawsuits — perhaps a few, perhaps a dozen or two, but hopefully no more. And we need to think carefully about an MDL.”

A what?

An MDL. It stands for “multidistrict litigation,” a type of legal proceeding designed to help federal courts efficiently manage many related cases filed in different jurisdictions. The federal MDL statute, 28 U.S.C. § 1407, permits the temporary transfer of federal civil lawsuits to one or more district
courts for pretrial consolidation or coordination.

To be eligible for an MDL, a group of lawsuits must involve one or more common questions of fact. The Judicial Panel on Multidistrict Litigation, consisting of seven appellate and district court judges all from different circuits, decides by majority vote whether to create an MDL and where to send
it. The Panel may find an MDL appropriate, even if no party requests or desires one, if it concludes that transfer will serve “the convenience of parties and witnesses and will promote the just and efficient conduct of such actions.”

The district court presiding over an MDL is called the “transferee” court. It has jurisdiction over all pretrial matters in all transferred cases. It can dispose of claims completely through dismissal or summary judgment. It controls the pace and scope of discovery and the limits of expert testimony.
Although it must remand each case to its “transferor” court for the trial itself, most mass tort claims are resolved before then.

The Panel’s selection of the transferee court may affect the outcome of the litigation. There are friendly jurisdictions and not-so-friendly ones. That is why parties sometimes file MDL motions preemptively — to try to steer the case to a receptive judge if transfer seems inevitable. Parties also try to influence the Panel by proposing, when they can, a single, consensus choice for the transferee court, or at least one offered by all plaintiffs and one by all defendants.

In ruling on an MDL motion to transfer, the Panel should not consider whether the proposed transferee courts will be more or less favorably disposed to particular rulings, or which state’s law each court is likely to apply. Instead, the Panel will consider other practical issues, such as geographical convenience: Where are the parties located? Where are the documents and witnesses? Where was the product manufactured? How hard is it for out-of-towners to get to the courthouse?

The Panel also will review the current status of the litigation. Where was the first case filed? Where are most lawsuits pending? Do any courts already have specialized knowledge or experience? Are any familiar with the facts of the case? How advanced are the competing lawsuits? What is the condition of
each court’s docket and available courtroom technology?

Weighing the Pros and Cons

Although an MDL sounds complicated, it provides benefits, both economic and strategic. First, an MDL promotes efficiency. Instead of 10 or 30 or 100 cases pending in different courts across the country, the litigation is coordinated in a single forum. It proceeds in an orderly fashion in a manner
that saves the parties attorneys’ fees and costs.

An MDL also should reduce the disruption to the parties’ business. Without an MDL, key employees could be deposed repeatedly, and a corporate defendant could spend hundreds or thousands of hours responding to similar sets of document requests, interrogatories and requests for admission. In an MDL, however, discovery is coordinated, staged and limited. Most witnesses are deposed only once, with the transcripts and videos made available for use in all related cases. Written discovery on common issues is limited as well. And discovery already completed in some cases might be used in others. These advantages allow the corporate defendant to keep its eye on the ball — making money for its shareholders — and minimize the distraction of litigation.

To be eligible for an MDL, a group of lawsuits must involve one or more common questions of fact. The Judicial Panel on Multidistrict Litigation, consisting of seven appellate and district court judges all from different circuits, decides by majority vote whether to create an MDL and where to send it.

Another advantage of an MDL is consistency. Most important decisions are made by a single judge, who is, or will become, an expert of both the facts and relevant law. Without an MDL, a defendant might win certain battles in some courts and lose the same battles in other courts. That inconsistency
increases a defendant’s exposure and could make it difficult for it to develop a unified discovery or defense strategy. An MDL should provide the defendant with a fuller understanding of the nature and scope of the claims. That in turn should put it in a better position to consider settlement, which it can tackle globally. In many respects, an MDL should make a defendant’s life easier.

But there are disadvantages, too. First, coordination reduces overall delay, and delay can be a defendant’s friend.

Second, the publicity of an MDL may attract other lawsuits. Some lawyers may run television, radio, print or Internet ads seeking potential plaintiffs to represent or refer to other firms for a fee. This is not to say that these new claims would be frivolous (although some might be). But many new claims
would not be brought without the prodding of commercials. And the more lawsuits the defendant faces, the greater its exposure and the more pressure it will feel to settle.

Third, the combination of claims in a single forum will increase the plaintiffs’ leverage by permitting counsel to pool their resources and to work for the plaintiffs’ “common benefit.”

Imagine 100 Prolonga cases, each worth $100,000. Each $100,000 recovery might generate a contingent fee of between $30,000 and $40,000. This means that the lawyer handling a single case could spend no more than 120 to 160 hours in total to earn $250 per hour. That’s not much time when you consider all that must be done. In some complex cases, it might be reasonable to spend 120 to 160 hours preparing for and taking the deposition of a single, key expert witness alone. Then there are the litigation costs — for factual investigation, expert analysis and testimony, depositions, document production, travel, etc. A lawyer handling a single $100,000 case could only spend $10,000 to $30,000 to generate a recovery that made economic sense.

But with 100 or 1,000 coordinated cases, the plaintiffs can share common expenses, achieve economies of scale and produce a better work product. Cumulatively, for example, with
tens or hundreds of millions of dollars at stake, it would be easy to justify paying $750 per hour to hire the world’s leading expert from Harvard.

An MDL also might give the plaintiffs an organizational advantage. Without an MDL, it might be difficult and time consuming to coordinate dozens or hundreds of plaintiffs’ lawyers from across the country, agree on leadership and litigation strategy, and equitably allocate both the work assignments
and the work product. The scope of that effort alone might discourage some from even trying to organize voluntarily.

The Plaintiffs’ Steering Committee

But in an MDL, organization is court imposed and participation is required. One of the first things, in fact, that a transferee court should do is appoint a plaintiffs’ steering committee (PSC). While the leadership structure varies from one MDL to another, the PSC’s purpose remains the same: to represent effectively and efficiently the common interests of all MDL plaintiffs.

For (fictitious) Prolonga and other products liability cases, there will be factual and legal issues common to all plaintiffs. Did the defendant, for example, act reasonably in marketing the drug? Were its warnings adequate?

Under the supervision and direction of the PSC, volunteer lawyers and paralegals will review documents, take depositions, write briefs, and develop and prosecute the common aspects of the litigation. Ultimately, they will prepare and distribute to all MDL plaintiffs a trial package consisting of
“hot documents,” deposition transcripts and videos, research memoranda, briefs and other materials that a lawyer might need to try the general causation issues in a case. With much of the proof prepackaged, a trial lawyer can focus solely on issues that are unique to his or her client: what did the plaintiff know about the risks of the drug and when? How did the plaintiff ‘s medical condition affect the outcome? What is the appropriate measure of compensatory damages?

Overall, because of the coordination and economies of scale, the defendant could wind up settling weaker cases that it otherwise could have successfully defended.

Nor is there ever a shortage of volunteers willing to serve on a PSC. Most PSC members have their own individual cases, sometimes quite a few. A PSC position permits a lawyer to protect his clients by ensuring that all common issues are well litigated. PSC membership also can provide negotiating
leverage during settlement discussions. Lawyers choose to serve on a PSC to protect their clients’ claims and their own fee interests in those cases.

Plaintiffs’ lawyers also can make money in an MDL without a single client. The transferee court typically collects a “tax” or assessment of four to eight percent of each gross recovery
from all parties that have cases in the MDL or that rely on MDL work product. That assessment is used to compensate those who perform “common benefit work,” and usually is deducted from the attorneys’ fee portion of individual recoveries. In large MDLs, the common benefit fund could total tens of millions of dollars, which would motivate lawyers to join the MDL team.

Class Actions Distinguished

For mass tort defendants, an MDL is often better than a class action, in which a single plaintiff represents numerous others who are similarly situated. Depending on the size of the class, the potential liability could be enormous. Fortunately, the claims likely to be faced in a typical mass tort situation are too case specific to be “classable.”

Before a court can certify a class action, it must find that “there are questions of law or fact common to the class” and that “the claims or defenses of the representative parties are typical of the claims or defenses of the class.” In most litigation involving pharmaceuticals and medical devices, however,
there are unique (i.e., uncommon and atypical) issues of law and fact that preclude class certification. Each plaintiff, for example, has his or her own distinct medical conditions. How one patient tolerates Prolonga might be very different from how another patient does. A class action would be appropriate
in only very limited circumstances.

With many mass torts, there is little to discuss. There are so many parties, so many cases, and so much at stake, the question is not whether the claims should be MDL’d, but how, when and where. With Prolonga, where the number of lawsuits should be relatively small, it’s a much closer call.

Back to The Call:

“We need not decide today whether to request or oppose an MDL. For now, we should interview our key employees and outside experts, and learn the case inside and out. We also must preserve all documents and data relating to Prolonga; there is a lot of it and we need to know what’s there. With all the e-mails, memos, reports and correspondence generated in today’s business world, plaintiffs’ lawyers always seem to find something.”

The author is a former managing partner of a national plaintiffs’ mass tort and class action law firm.

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