Comity Versus Unitary Law: a Clash of Principles in Choice-of-law Analysis for Class Certification Proceedings in Multidistrict Litigation

• Publication year: 2009

SEATTLE UNIVERSITY LAW REVIEWVolume 33, No. 2WINTER 2010

Comity Versus Unitary Law: A Clash of Principles in Choice-of-Law Analysis for Class Certification Proceedings in Multidistrict Litigation

Austin V. Schwing(fn*)

I. Introduction

When the Judicial Panel on Multidistrict Litigation (Panel) transfers class action cases to a transferee court for pretrial purposes, a fundamental and potentially case-dispositive question arises: Which circuit's law will the transferee court apply to the class certification determination? As described below, district courts are divided into two camps on this issue. One camp, following the principle of comity, applies the transferor courts' law. The other camp, following the principle of unitary law, applies its own circuit's law. This Article describes the clash of principles underlying these two approaches, explains why neither approach produces satisfactory results under the current multidistrict litigation system, and presents a solution to end the division on this important choice-of-law issue.

Under the multidistrict litigation (MDL) procedure, the Panel assigns multiple federal lawsuits to a single district court (transferee court) for pretrial proceedings.(fn1) The MDL assignment is technically for pretrial proceedings only, and unless the transferred cases are resolved during pretrial proceedings, the Panel must remand the cases back to the courts from which they were transferred (transferor courts) for trial.(fn2) The choice-of-law issue for class certification is of paramount importance because there are several significant conflicts between the circuits' case law. Examples include critical issues such as the rigor with which courts examine experts' opinions in connection with class certification,(fn3) the availability of pursuing monetary relief under a Federal Rule of Civil Procedure 23(b)(2) injunctive relief class,(fn4) the possibility of using fluid recovery,(fn5) and other issues that can make or break class certification. Thus, on a practical level, the law that applies to the class certification decision is a pivotal issue that can mean the difference between a multimillion-dollar class action and an insignificant individual lawsuit worth as little as a few dollars.

In the last few years, the transferee courts that have grappled with the choice-of-law question for class certification have resolved the issue differently; some courts applied the law of the transferor courts and some applied their own circuit's law. On a philosophical level, this divide represents a clash of fundamental legal principles: comity versus unitary law. The principle of comity is the belief that courts should, under the proper circumstances, voluntarily defer to another jurisdiction's laws.(fn6) The principle of unitary law is the belief that courts should adhere to a single, uniform law to foster consistency and efficiency.(fn7) In the MDL class certification context, the principle of comity suggests that the transferee court should apply the law of the transferor courts because the transferee court is merely handling the cases during the pretrial phase of the litigation and the cases must be remanded to the transferor courts for trial. In contrast, the principle of unitary law suggests that the transferee court should apply its own law because there can be only one proper interpretation of federal law and the transferee court is bound to follow its own circuit's precedent.

Under the current MDL procedure, which requires cases to be remanded for trial, both the comity approach and the unitary law approach have major intractable flaws. As described below, strict adherence to the comity approach is inefficient, can produce inconsistent results, and can require a district court to ignore its own circuit's controlling precedent, even to the point of violating the Constitution of the United States. Strict adherence to the unitary law approach, on the other hand, can significantly impact the parties' rights and, under certain circumstances, lead to inefficiency.

This Article explores the choice-of-law quandary and its important role in MDL class action litigation, explains why the current approaches to the choice-of-law issue are ineffective, and offers a possible legislative solution. Specifically, Part II describes the MDL process generally to provide a basis for discussion. Part III describes the general choice-of-law rules in MDL proceedings. Part IV describes the case law addressing choice-of-law issues in MDL class certification proceedings. Part V describes the major flaws that exist when applying the comity approach or the unitary law approach to the class certification decision. Part VI offers a solution: Congress should change the MDL rules to eliminate the requirement of remand to the transferor courts, which will further consistency in class action MDL cases, increase judicial efficiency, and eliminate most of the problems district courts currently face in examining choice-of-law issues in MDL class action cases. Part VII provides concluding remarks.

II. The Multidistrict Litigation Process Generally

When civil actions involving one or more common questions of fact are pending in different districts, the Panel may transfer those actions to a single district for coordinated or consolidated pretrial proceedings under the MDL process.(fn8) This Part describes the circumstances under which the Panel will transfer cases filed in multiple districts to one district for pretrial proceedings and explains the remand requirement for trial.

A. The MDL Transfer

The district court to which the Panel transfers the actions is typically called the "transferee court," and the district courts from which the cases are transferred are typically called the "transferor courts." The Panel will transfer the cases when it will serve the "convenience of parties and witnesses and will promote the just and efficient conduct of such actions."(fn9) The MDL procedure aims to eliminate duplicative discovery, avoid conflicting rulings and schedules, reduce litigation costs, and conserve the time and effort of the parties, attorneys, witnesses, and courts.(fn10)

The Panel determines where to transfer the actions. Unrestricted by venue considerations, the Panel may transfer the actions to any federal district court.(fn11) The Panel may consider a number of factors when determining the transferee court, including whether (1) the parties prefer a particular district;(fn12) (2) a particular district is geographically convenient and accessible to the litigants;(fn13) (3) cases are already pending in a particular district;(fn14) (4) a particular district court judge has already invested significant time in developing familiarity with the issues likely to arise in the actions;(fn15) (5) a particular action was filed early or has advanced pro-cedurally;(fn16) (6) the evidence, parties, and witnesses are located in a particular district;(fn17) (7) a potential transferee court has room on its docket;(fn18) and (8) a district has a judge experienced in handling multidistrict litiga-tion.(fn19) As described below, however, this transfer is for pretrial purposes only.

B. The MDL Remand Requirement

Transferee courts make only pretrial decisions; the Panel must remand the cases back to the transferor courts for trial. The controlling authority on this issue is Lexecon Inc. v. Milberg Weiss Bershad Hynes and Lerach.(fn20) In that case, the Supreme Court held that a district court conducting "pretrial proceedings" could not invoke the venue transfer sta-tute(fn21) to assign a case to itself for trial.(fn22) The Court interpreted 28 U.S.C. § 1407's use of the words "shall be remanded by the panel"(fn23) as mandating the remand of the transferred cases back to the transferor courts for trial.(fn24) Lexecon made clear that the Panel was obligated to remand any transferred case to its originating court when pretrial proceedings had concluded.(fn25)

Lexecon is highly significant because it changed the landscape of MDL proceedings. Prior to Lexecon, the vast majority of cases that entered into the MDL process were transferred to the transferee court for all purposes, including trial.(fn26) Transferee courts frequently transferred the cases to themselves under the Rules of Procedure set forth by the Panel.(fn27) That practice ground to a halt when the Supreme Court prohibited self-transfer in Lexecon.(fn28)

Interestingly, the Court did not pass judgment on the wisdom of § 1407's remand requirement.(fn29) Indeed, the Court noted that it "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 found that a strict reading of § 1407 required the Panel to remand transferred actions back to the transferor courts for trial.(fn30) Ultimately, the Court concluded, if § 1407's remand requirement was to be eliminated, "the proper venue for resolving that issue remains the floor of Congress."(fn31)

Notwithstanding Lexecon, most cases do not go to trial, and therefore the practical impact of MDL consolidation is that the transferee court usually decides the fate of the cases.(fn32) For example, the transferee court may decide whether to strike a fatal blow to the cases through a motion to dismiss, summary judgment, or class certification determination. Alternatively, the transferee court may allow the cases to survive...