Chapter § 4.11 Other Considerations and MDL-Related Issues

• Jurisdiction: United States
• Publication year: 2020

§ 4.11 Other Considerations and MDL-Related Issues

[1] Choice of Law

We begin with the basic principle that, in an action based on diversity of citizenship, a federal court must apply the substantive law of the state in which it sits, including that state’s choice of law rules.²²⁶ The majority of diversity cases transferred to an MDL are filed in, or removed to, federal courts and transferred to the MDL by the Panel.²²⁷ In such cases, “the MDL court must apply the law of the transferor forum, that is, the law of the state in which the action was filed, including the transferor forum’s choice-of-law rules.”²²⁸ Plaintiffs who reside in the MDL court’s judicial district might file their diversity cases in the MDL court. In these instances, “the MDL court must apply its own state law,” including the choice of law principles of the state in which it sits. But what choice of law rules apply when plaintiffs who do not reside in the MDL district nonetheless “direct file” their diversity cases directly into the MDL? The majority of courts “have stated that it is appropriate to apply the choice of law rules of the ‘originating’ jurisdiction (i.e., where the case would have [been] brought but for the [case management order] permitting direct filing), rather than the choice of law rules of the MDL Court.”²²⁹

[2] Circuit Splits

When there are circuit splits on the interpretation of federal law, which interpretation should the transferee court follow? In a decision in the 1970s, the Panel suggested that the transferee court should apply the interpretation of federal law that was adopted in the circuit in which the case was filed.²³⁰ More recently, however, then-Judge Ruth Bader Ginsburg authored a decision in In re Korean Air Lines holding that a transferee court should apply the law of the circuit where it sits when interpreting federal law: “[W]e deal here . . . with a transfer under 28 U.S.C. § 1407 . . . We have held . . . that the law of a transferor forum on a federal question . . . merits close consideration, but does not have stare decisis effect in a transferee forum situated in another circuit.”²³¹ Most courts have followed the holding in In re Korean Air Lines.²³²

[3] The New Class Action?

In recent years, the MDL has become more attractive for resolving complex litigation, particularly because of the difficulty of meeting class certification requirements.²³³ In other words, in MDLs, plaintiffs obtain the perceived benefits of aggregation, including the push for a global settlement, without meeting the demanding requirements of the class certification. Some judges have...