Chapter § 4.05

• Jurisdiction: United States

§ 4.05 Limitations on the Panel’s Section 1407 Transfer Authority

[1] No Involvement in Substance or Merits of Case

The MDL Panel’s direct involvement in a case effectively ends once it transfers actions. Section 1407 does not give the MDL Panel any power to decide procedural or substantive issues in the transferred litigation. It reserves those matters for the transferee judge to decide, although one knowledgeable observer noted that the Panel often remains informed and informally involved in an MDL even after concluding its formal statutory role.⁷⁹

[2] Must Transfer Entire Case

As introduced in section 4.04, the MDL Panel lacks authority under section 1407 to transfer individual issues (or parties).⁸⁰ For instance, the Panel lacks authority to bifurcate cases by transferring liability issues for pretrial resolution but not damage issues. This limitation on the Panel’s transfer power must be distinguished from its recognized authority to transfer one or more entire claims, while remanding other claims that are appropriate for section 1407 consolidation back to the transferor court.⁸¹ Indeed, section 1407(a) expressly states that the Panel “may separate any claim, cross-claim, counter-claim, or third-party claim and remand any of such claims before the remainder of the action is remanded.”⁸² The distinction between the Panel’s power to transfer entire claims and its inability to transfer individual issues means the Panel lacks a power equivalent to that of district courts under Federal Rule of Civil Procedure 42—i.e., to “order a separate trial of one or more separate issues.”⁸³

[3] Transfer for Pretrial Purposes Only

Another limitation on the MDL Panel’s transfer authority is that consolidation is only for pretrial proceedings, not trial. Section 1407 authorizes the Panel to transfer cases to a transferee court “for coordinated or consolidated pretrial proceedings,” but the Panel must remand an action “at or before the conclusion of . . . pretrial proceedings to the district from which it was transferred unless it shall have been previously terminated.”⁸⁴ While transferee courts initially accepted that this language limited their power over transferred cases to managing pretrial matters, a custom known as “self-transfer” developed whereby these courts would invoke section 1404(a) to transfer such cases to themselves for trial.⁸⁵ The Panel’s Rules of Procedure in fact explicitly authorized this practice.⁸⁶

The self-transfer practice ended abruptly with the Supreme Court’s decision in Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, holding that a transferee court conducting pretrial proceedings has no authority to assign a transferred case to itself for trial.⁸⁷ Construing section 1407’s text, the Court held that it could not be read to allow “a transferee court’s self-assignment to trump the provision imposing the Panel’s remand duty.”⁸⁸...