Rescuing Multidistrict Litigation from the Altar of Expediency

Article excerpt

Carter G. Phillips Gene C. Schaerr*' Anil K Abraham**

I. INTRODUCTION

One of the more disturbing developments in our judicial system in the wake of mass tort and other complex litigation is the willingness of courts to depart from clear and unbending procedural requirements-thereby sacrificing key structural protections embodied in those requirements-in the name of judicial economy or efficiency. The notion that judicial process must be compromised because of the perceived exigencies of expansive litigation is well illustrated by the widespread misinterpretation of 28 U.S.C. 1407 as allowing so-called "self-transfers" in cases involving multidistrict litigation (MDL). This practice is lawless, as Judge Alex Kozinski has conclusively demonstrated in a recent dissent.1 But the practice nevertheless has been perpetuated among the lower federal courts in the erroneous belief that it promotes judicial economy. This concession to perceived expediency at the expense of judicial process, however, has not gone unnoticed. The United States Supreme Court has granted certiorari to review the legality of self-transfers in Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach (In re American Continental Corp. /Lincoln Savings & Loan Securities Litigation).2

The legal issue presented in the Lexecon case is the proper interpretation of 28 U.S.C. 1407, a question that has already been examined in a scholarly fashion both by Judge Kozinski in his Ninth Circuit dissent and in numerous articles mentioned in that opinion.3 For the most part, these arguments do not bear repeating here, except to provide a framework for the issues that have not been as thoroughly considered, viz., the policy implications of permitting self-transfers in cases consolidated under the MDL statute. Analysis of those policy concerns reveals plainly that Congress was correct to insist that consolidated cases be returned to their transferor courts for trial. That practice best serves the interests of plaintiffs, defendants, and the federal courts. The policy debate over these competing transfer schemes should inform both the Court's judgment in deciding the legal question (at least marginally) and Congress's judgment about whether to amend the statute (assuming that the Supreme Court decides to reverse the Ninth Circuit's decision, as we believe it will). Accordingly, this Article will provide the first attempt to analyze the policy issues underlying self-transfer in the context of the Lexecon case.

When Congress enacted the MDL statute, it exercised its prerogative to make difficult policy choices and struck a specific balance between concerns of judicial efficiency and the rights of litigants. In so doing, Congress authorized the Judicial Panel on Multidistrict Litigation (JPML) to transfer related cases pending in district courts around the nation to a single district court, permitting a unitary disposition of common pretrial issues. The statute directs that the cases be remanded to their transferor courts once the pretrial issues have been resolved.

Section 1407 thus advances judicial efficiency, but at the cost of partially compromising the right of litigants to individualized adjudication of their claims. In enacting this provision, Congress has determined, correctly in our view, that such a compromise does not impose too great a cost in return for the benefits generated by the compromise-i.e., that the more efficient use of pretrial judicial resources outweighs the harm to litigants. In other words, Congress has considered the policy implications of transfers in the MDL context and, in the very text of 1407, has struck what it deemed to be the appropriate balance between judicial efficiency and the rights of individual litigants.

Unsatisfied with Congress's judgment in this policy matter, the federal courts charged with managing multidistrict litigation have refused to apply the statutory scheme as Congress wrote it. …