Opening the door for bias: the problem of applying transferee forum law in multidistrict litigation.

• Author: Hill, Mark A.

INTRODUCTION

Quick, what part of the federal court system is appointed exclusively by the Chief Justice of the United States Supreme Court, (1) allows parties as little as one minute to make their case, (2) and acts upon approximately 36,000 civil actions a year (3) from every corner of the country? If you answered the Judicial Panel on Multidistrict Litigation (JPML) then you probably either work in complex litigation or were tipped off by the Note's title. In truth multidistrict litigation (MDL), over which the Panel presides, is one of the legal world's best kept secrets. (4)

MDL sidesteps traditional rules of procedure to efficiently consolidate large numbers of similar cases for pretrial proceedings. In order to achieve these massive efficiency gains, the JPML is vested with rather extraordinary power to consolidate and transfer litigation. The potential for abuse of this power justifies close scrutiny of the Panel's decisions, especially when the location of consolidation could have an adverse effect on a group of litigants. Exactly one such case arises out of a simple choice of law rule, which mandates that a court receiving an MDL docket should apply its own circuit's law to decide federal questions. When there is a circuit split on a dispositive pretrial issue, this rather innocuous-sounding rule effectively allows the Panel to decide MDL cases based solely on the location of consolidation. While there is no evidence that the Panel has been abusing its power, this choice of law rule opens the door for bias to enter into an increasingly important part of the federal judicial system, and it thus deserves attention.

Part I of this Note provides an overview of the MDL process, while Part II details how federal choice of law issues provide an opening for bias. Finally, Part III reviews various prophylactic measures and concludes that mandating the use of transferor court law in the MDL context is the easiest and most effective means to prevent JPML bias.

1. THE MDL PROCESS

   1. The Genesis and Purpose of Modern Multidistrict Litigation

      Over the latter sixty years of the twentieth century, a variety of factors contributed to a vast expansion of federal litigation. (5) As courts' dockets began to fill, some judges noted the growing issue of dispersed and duplicative litigation. In 1941, within the context of a district court's refusal to enjoin a patent infringement action already decided by another district court, Judge Maris of the Third Circuit noted:

      The economic waste involved in duplicating litigation is obvious. Equally important is its adverse effect upon the prompt and efficient administration of justice. In view of the constant increase in judicial business in the federal courts ... public policy requires us to seek actively to avoid the waste of judicial time and energy. Courts ... should therefore not be called upon to duplicate each other's work in cases involving the same issues and the same parties. (6) Judge Marls understood that the federal court system was beginning to face a crisis of resources, and his concern foreshadowed the creation of a procedural solution to growing dockets and duplicative actions: multidistrict litigation. The roots of modern MDL stem from the early 1960s, when Chief Justice Warren--responding to over 1800 civil actions related to conspiracy allegations spread across thirty-three districts--created the Coordinating Committee for Multiple Litigation of the United States District Courts. (7) Through voluntary agreement, the committee coordinated and consolidated discovery, established a casewide document clearinghouse, and utilized national depositions. (8) Due in large part to these measures, the cases were "disposed of by 1968, far earlier than had been anticipated." (9) Following this success, the Committee drafted and recommended to Congress the passage of a formal mechanism for case consolidation, centered upon a standing judicial panel. (10) This legislation, (11) which was to become the multidistrict litigation statute, (12) was meant to "provide centralized management under court supervision of pretrial proceedings of multidistrict litigation to assure the 'just and efficient conduct' of such actions" and to minimize the "possibility for conflict and duplication in discovery and other pretrial procedures in related cases." (13) Put simply, in instituting MDL, Congress sought to promote a convenient and efficient process which avoided potentially conflicting contemporaneous court rulings (14) and instituted a speedy and inexpensive mechanism for determination. (15)

      The legislation, codified at 28 U.S.C. [section] 1407, authorized the creation of the Judicial Panel on Multidistrict Litigation, which consisted of seven circuit and district judges each from different judicial circuits, appointed by the Chief Justice of the United States Supreme Court. (16) While there is no statutory term limit, the modern practice instituted in 2000 by Chief Justice Relinquist is to appoint members of the Panel to staggered seven-year terms. (17)

   2. The Mechanisms of MDL

      Section 1407 empowers the JPML to determine whether a group of cases should be "coordinated or consolidated" for "pretrial proceedings" and where such cases should be transferred. (18) The Panel can initiate a proceeding to transfer the action either sua sponte or upon motion by a party in the case. (19) Additionally, it evaluates three express statutory considerations in determining whether an action should be transferred. Section 1407 mandates that potential transfers (1) be actions "pending in different districts" and involving "one or more common questions of fact," such that transfer of the actions will (2) "be for the convenience of parties and witnesses" and (3) "promote the just and efficient conduct of such actions." (20) The JPML translates the statutory mandates of convenience, efficiency, and justice into a rough balance of factors based on the context of the particular motion. (21) In general, the Panel favors transfer when it will eliminate duplicate discovery, (22) avoid conflicting rules and schedules, (23) or reduce litigation costs. (24)

      In deciding whether to consolidate pretrial proceedings, efficiency considerations are prominent. Thus, for the Panel, "[t]he greater the factual commonality of the cases, the more likely it is that centralization will benefit the involved parties and the system as a whole." (25) Similarly, the greater the number of actions and the earlier those actions are in pretrial proceedings, the more likely it is that economies of scale will produce efficient litigation. (26)

      Choosing where to consolidate an MDL docket is a difficult question. Three of the most important factors are geographical convenience, the ability of a judge, and the availability of that judge. (27) Thus, in a given docket, if there is a geographical concentration of claims or witnesses, the Panel is more likely to consolidate the claims in that area, (28) and if there is no geographical nexus of claims, the Panel is more likely to consider questions of judicial competence. (29) Additionally, "[t]he willingness and motivation of a particular judge to handle an MDL docket" is a chief consideration when determining where to consolidate because "[t]he Panel has neither the power nor the desire to force an MDL docket upon a district judge." (30) Thus, out of necessity, the members of the Panel must speak directly to a potential transferee judge before any final decision is made on where to consolidate an MDL docket. (31)

      One factor that is not considered in determining whether to consolidate a group of cases, though, is a party's concerns about potential adverse rulings by the transferee court. (32) In fact, the JPML has stated in clear terms that "[w]hen determining whether to transfer an action under Section 1407, ... it is not the business of the Panel to consider what law the transferee court might apply." (33) Thus, the Panel will judge many factors when deciding where to place an MDL docket, but will not officially consider any effect a potential transfer may have on the outcome of the litigation.

      The numbers clearly demonstrate that the Panel generally favors consolidation and "[m]ore often than not" orders centralization. (34) Since 2000, the annual approval rate of an MDL docket request ranges from sixty-seven percent to eighty-seven percent. (35) Recently that number is even higher, with eighty-six percent of MDL docket requests being approved for consolidation in 2006 and seventy-two percent being approved in 2007. (36) While these numbers seem to suggest that the JPML has an overwhelming preference for consolidation, Judge Heyburn, the Panel's chair, argues instead that the high rate of transfer approval is more likely due to the Panel's promulgation and consistent application of clear standards. (37) Practitioners, he argues, are therefore more likely to "refrain from bringing unfounded motions that do not satisfy the prerequisites of [section] 1407." (38) While this argument surely has some merit, the incredibly broad standards of [section] 1407 also favor consolidation. Whatever the cause, the Panel has "considerable and largely unfettered discretion" within its locus of power (39) and has declined to strictly construe the vague statutory requirements. (40)

      Given the Panel's broad discretion, it is important that there are some clear limits circumscribing its powers. Of course, like all other federal courts, the JPML's jurisdiction is limited by Article III of the United States Constitution. Thus, it cannot act upon state court cases, including cases that have been remanded from federal to state court. (41) Additionally, the Panel cannot transfer a case unless the transferor court has subject-matter jurisdiction over it, (42) and, though it is usually a formality, the chief judge of the transferee district must also personally approve each of the MDL dockets transferred to his...