Source: https://www.druganddevicelawblog.com/2018/10/the-next-lexecon.html
Timestamp: 2019-04-25 10:32:11+00:00

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Home » The Next Lexecon?
We had occasion not long ago to reread closely Lexecon v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998), the Supreme Court decision that clipped the wings of transferee judges in multi-district (“MDL”) litigation by reminding them that the MDL statute, 28 U.S.C. §1407, conferred no authority to try cases. Except for one justice on one section, Lexecon was unanimous. While the result came as something of a shock to the MDL insider community, to the Supreme Court, Lexecon was not a hard case.
While the facts of Lexecon (more accurately, the procedural history, since the issue was wholly procedural) involved a MDL judge’s so-called “self-transfer” of a case originally filed in another state, it’s important to examine what the Lexecon court actually held.
First, the MDL statute “authorizes the Judicial Panel on Multidistrict Litigation to transfer civil actions with common issues of fact ‘to any district for coordinated or consolidated pretrial proceedings,’ but imposes a duty on the Panel to remand any such action to the original district ‘at or before the conclusion of such pretrial proceedings.’” 523 U.S. at 28.
Second, at the time the JPMDL had a rule that, despite the explicit language of the MDL statute of coordination being for “pretrial purposes,” allowed self-transfer for trial. Id. at 32-33. While appellee (which had won at trial – Lexecon is also a poster child for why the MDL system needs interlocutory appeals as of right, see id. at 31) tried to argue that rule as a basis for authority to self-transfer, the Supreme Court held that the JPMDL lacked authority to authorize by rule an action that was ultra vires under its organic statute. The import of such arguments “is simply to ignore the necessary consequence of self-assignment by a transferee court: it conclusively thwarts the Panel’s capacity to obey the unconditional command of §1407(a). Id. at 36 (emphasis added). “[T]he statute places an obligation on the Panel to remand no later than the conclusion of pretrial proceedings in the transferee court, and no exercise in rulemaking can read that obligation out of the statute.” Id. at 36-37.
Thus, once §1407 is used to transfer a case, not even a formal JPMDL rule can oust the statutory requirement to remand back to the original court at the end of coordinated pre-trial proceedings. The Court was clearly in no mood to tolerate gamesmanship in derogation of express statutory language – not even by the JPMDL.
§1407 not only authorizes the Panel to transfer for coordinated or consolidated pretrial proceedings, but obligates the Panel to remand any pending case to its originating court when, at the latest, those pretrial proceedings have run their course.
“Each action so transferred shall be remanded by the panel at or before the conclusion of such pretrial proceedings to the district from which it was transferred unless it shall have been previously terminated.” §1407(a) (proviso without application here omitted).
The Panel’s instruction comes in terms of the mandatory “shall,” which normally creates an obligation impervious to judicial discretion.
The trouble with this creative argument, though, is that the statute manifests no such subtlety. Section 1407(a) speaks not in terms of imbuing transferred actions with some new and distinctive venue character, but simply in terms of “civil actions” or “actions.” It says that such an action, not its acquired personality, must be terminated before the Panel is excused from ordering remand. The language is straightforward, and with a straightforward application ready to hand, statutory interpretation has no business getting metaphysical.
523 U.S. at 37 (emphasis added).
Last and least, appellees argued that because §1407 allowed one type of action (Clayton Act antitrust cases) to be transferred for trial as well as pretrial purposes, power was implicitly conferred to do the same for all MDL cases. No dice. That special exception actually cut the other way, because it “demonstrate[d] that Congress knew how to distinguish between trial assignments and pretrial proceedings in cases subject to §1407,” id. at 38 – and did not allow transfers for trial purposes to any other type of case.
But the question is not whether a change of venue may be ordered in a case consolidated under §1407(a); on any view of §1407(a), if an order may be made under §1404(a), it may be made after remand of the case to the originating district court. The relevant question for our purposes is whether a transferee court, and not a transferor court, may grant such a motion.
523 U.S. at 39 (footnote omitted) (emphasis added). And even such a post-remand §1404 transfer would have to comply with general venue requirements. Id. at 39 n.2. Among other things, as we pointed out here, that would require personal jurisdiction in the district where the MDL judge sat, which depending on where the MDL was situated, might not be the case.
Beyond that, §1407’s “legislative history tends to confirm that self-assignment is beyond the scope of the transferee court’s authority.” Id. at 39. “The bill does not, therefore, include the trial of cases in the consolidated proceedings.” Id. at 40 (quoting House Report at 3-4).
In sum, none of the arguments raised can unsettle the straightforward language imposing the Panel’s responsibility to remand, which bars recognizing any self-assignment power in a transferee court and consequently entails the invalidity of the Panel’s Rule. . . . [Appellee] may or may not be correct that permitting transferee courts to make self-assignments would be more desirable than preserving a plaintiff’s choice of venue . . ., but the proper venue for resolving that issue remains the floor of Congress.
Id. at 40 (emphasis added).
We have engaged in this detailed exegesis on Lexecon as much to demonstrate what the Court didn’t say, as what it did. What is absent from Lexecon’s absolutist reading of §1407 is any mention of state boundaries. Rather the Lexecon court focused entirely on what was allowable in any MDL case initially transferred under §1407, whether that case was first filed in another state or not.
We think that’s critically important. In their zeal to use the threat of trials to bludgeon defendants into settling, some MDL judges have relied upon territorial distinctions that are wholly absent from Lexecon itself. They have sought to create a pool of “bellwether” trial cases from actions originally filed in the same state, or the same judicial district, as the MDL itself.
We think that this questionable practice could be the next Lexecon. Frankly, we don’t think Lexecon allows that.
The basis for the Court’s unanimous holding in Lexecon is what the MDL statute “straightforward[ly]” requires – cases that come to the MDL through to §1407 remain subject to the statute’s absolute remand requirement. There is no exception in Lexecon for trial (as opposed to remand) of cases transferred under §1407 from other district courts in the same state, or even from other judges in the same judicial district. Unless the MDL judge happens to have received such a case through ordinary random assignment, s/he can’t try it – unless it’s first transferred out of the MDL and then retransferred back, if that is possible, under §1404.
No gimmicks allowed; the Court came down hard on gimmickry in derogation of §1407’s express limits in Lexecon.
Along these lines, the Lawyers for Civil Justice has a proposal to condition the conduct of “bellwether” trials in MDLs upon the voluntary – and confidential – consent of all parties. That’s what prompted us to reread Lexecon in the first place. Since a voluntary consent/waiver appears to be the only way to conduct MDL trials (whether called “bellwether” or anything else) consistently with what Lexecon actually held, we recommend that proposal as a possible way to avoid the next Lexecon.
Otherwise we wouldn’t be surprised to see the Supreme Court, when presented with the opportunity, to make MDL “bellwether” trials go the way of the dinosaurs.

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