Chapter § 4.04 Factors for Granting a Section 1407 Transfer

• Jurisdiction: United States
• Publication year: 2020

§ 4.04 Factors for Granting a Section 1407 Transfer

Section 1407 enumerates three statutory factors for the MDL Panel to consider in deciding whether to grant a transfer—i.e., whether the actions the moving party seeks to centralize involve common questions of fact and if so, whether transfer will convenience the parties and witnesses and promote the just and efficient conduct of the litigation by allowing a single judge to preside over pretrial proceedings. Beyond these statutory factors, the Panel considers a host of other factors that are derivatives of the judicial efficiency factor. We discuss each factor below.

[1] Common Issues of Fact

Centralization of actions under section 1407 does not require a “complete identity or even a majority of common factual issues.”³⁴ It is generally enough that actions “arise from a common factual core,”³⁵ and those facts are “sufficiently complex or numerous.”³⁶ Rather than rejecting cases that raise some plaintiff-specific factual issues, the Panel leaves it to the transferee judges to (i) employ methods to efficiently manage litigation that involves common and individual issues, such as allowing “discovery with respect to any non-common issues to proceed concurrently with discovery on common issues,” and (ii) determine the “extent and manner of coordination or consolidation” in such litigation.³⁷ However, actions may be unsuitable for transfer where they primarily raise individualized fact issues.³⁸ Also, as discussed at length in section 4.05, the Panel has consistently interpreted section 1407 as not granting it the authority to transfer particular issues in a case. If, for instance, common liability issues exist in multiple cases but damages are unique to each, the Panel will usually not order transfer.³⁹

[2] Convenience of Parties and Witnesses

The “convenience of the parties and witnesses” was a late addition to section 1407.⁴⁰ Although the Senate Report for section 1407 confirms that the Panel should consider this factor in deciding whether to transfer actions, this legislative history also makes clear that the “main purpose of transfer for consolidation or coordination of pretrial proceedings is to promote the ends of efficient justice.”⁴¹ Still, the Panel has generally “required that transfer offer some meaningful reduction in overall inconvenience before it will order transfer.”⁴²

The Panel has traditionally “sought to maximize the convenience of all the parties and witnesses, taken as a whole,” and “rejected attempts to consider the convenience of individual parties and witnesses to the exclusion of others.”⁴³ This distinction is captured neatly in an off-cited excerpt from In re Library Editions of Children’s Books.⁴⁴ There, the Panel rejected the plaintiffs’ argument that, as people “of limited means,” they “should not be compelled to travel to a distant forum” to litigate:

Of course it is in the interest of each plaintiff to have all of the proceedings in his suit handled in his district. But the Panel must weigh the interests of all the plaintiffs and all the defendants, and must consider multiple litigation as a whole in the light of the purposes of the law. ⁴⁵

To be sure, when the Panel considers the factor at hand separately from the others, it typically does so in assessing the appropriate transferee court. For instance, the Panel recently held that the “District of South Carolina is an appropriate transferee forum” because “[o]ne action . . . is pending there, and the district is conveniently located for a number of parties and potential witnesses in the southeastern region of the country.”⁴⁶ Likewise, “the Panel had decided to entrust . . . litigation to the Southern District of New York, where 39 constituent actions and 51 potential tag-along actions are pending,” noting that the district “is conveniently located for many parties and witnesses.”⁴⁷ Yet, the Panel has concluded at times that, even if the transferee forum is inconvenient, “there is usually no need for the parties and witnesses to travel to the transferee district for depositions or otherwise” and the “judicious use of liaison counsel, lead counsel and steering committees will eliminate the need for most counsel ever to travel to the transferee district.”⁴⁸

[3] Just and Efficient Conduct of Litigation

Judicial efficiency is an overarching principle that guides the MDL Panel’s decision-making under section 1407. An early study in the Harvard Law Review makes this point plainly: “Where the Panel finds that consolidation will promote judicial efficiency, arguments based on the . . . finding required by section 1407—that consolidation be for the convenience of the parties and witnesses—are unlikely to succeed.”⁴⁹ Thus, while parties should pay attention to all three statutory factors under section 1407, they may not all determine the outcome of a motion to transfer.⁵⁰ Prudent advocates should focus heavily on whether consolidated pretrial proceedings would promote efficiency given the facts of the particular case before the MDL Panel. Also, as noted above, the MDL Panel considers a host of factors that are not delineated by section 1407 but are considered derivatives of the judicial efficiency factor. The most common of these considerations are discussed below as well as other considerations.

[a] Avoidance of Repetitive, Wasteful Discovery

The MDL Panel generally finds that transfer under section 1407 will eliminate duplicative discovery such that centralization is appropriate when the factual issues that will arise in discovery are numerous, common, and relevant to all of the actions at issue.⁵¹ One example is a case in which the Panel ordered that five separately filed personal injury suits be consolidated for pretrial purposes.⁵² The cases shared common allegations regarding a design defect in some of an automaker’s larger passenger vans that caused them to roll over at an unusually high rate. The MDL Panel observed that “[c]entralization under Section 1407 is thus necessary in order to eliminate duplicative discovery,” before listing several other reasons also favoring transfer.⁵³

The MDL Panel has generally approved transfer for those cases that would require discovery in far-reaching locations.⁵⁴ The assertion that factual or legal claims are primarily local in nature and require local management of discovery, rather than transfer, has not been particularly persuasive to the MDL Panel: “It may be true that transfer for coordinated or consolidated pretrial proceedings as to local issues might not serve the convenience of the parties and their witnesses but it seems clear that such transfer for coordinated or consolidated pretrial proceedings relating to the common questions of fact would indeed serve the convenience of the parties and their witnesses.”⁵⁵

[b] Avoidance of Inconsistent Judicial Determinations

Whether inconsistent judicial determinations can be avoided is also relevant to deciding whether transfer would aid the just and efficient conduct of litigation.⁵⁶ Avoiding conflicts in parallel litigation is maybe most important when there are multiple, parallel, putative class actions. For example, in one case,⁵⁷ six different actions were filed in four different district courts. Five of the six brought their claims on behalf of a putative nationwide consumer class. After finding that the actions shared common facts—whether the defendant misled the public regarding the presence of derivatives in its food product—the MDL Panel had little difficulty in concluding that centralization under section 1407 was necessary to prevent, among other things, “inconsistent pretrial rulings (particularly with respect to the issue of class certification).”⁵⁸ The MDL Panel has held that centralization may prevent inconsistent rulings with respect to many other matters that judges often decide during the course of litigation, including patent claim construction,⁵⁹ injunctive relief,⁶⁰ discovery, privilege, Daubert issues,⁶¹ and preemption,⁶² to name a few.

Notably, when the Panel denies a motion to centralize actions because the risk of inconsistent rulings is slight, it will often “encourage the parties to employ...