A Catalyst for Reforming Self-Transfer in Multidistrict Litigation: Lexecon, Inc. V. Milberg Weiss

Article excerpt


Discovery demands in massive, multidistrict litigation ("M.D.L.")1 can place tremendous burdens on the federal court system. Congress enacted a specific M.D.L. statute, 28 U.S.C

1407 (" 1407"), to reduce the burden of discovery demands by providing for temporary transfer of civil actions from multiple districts to a single district for consolidated pretrial proceedings.2 Section 1407 provides for temporary transfer when civil actions involve common issues of fact, transfer is for the convenience of the parties, and transfer will promote judicial efficiency.' District court judges to whom such cases were transferred ("transferee judges") expanded the scope of the M.D.L. statute by invoking the change of venue statute, 28 U.S.C. 1404(a) (" 1404(a)"), to transfer cases to themselves for trial after those cases had been consolidated for pretrial proceedings.4 This judicial practice, known as "self-transfer" or "self-assignment," violated the plain language of the M.D.L. statute,5 which provides that all cases "shall be remanded" at the conclusion of pretrial proceedings.'

Congress enacted 1407 upon the recommendation of the Judicial Conference ("Conference").7 The statute was prompted by a concern that pretrial discovery demands in massive litigation would engulf the federal courts.8 In proposing the M.D.L. statute, the Conference balanced the need for efficient judicial administration with the desire to preserve the parties' original choice of forum.9 The drafters sought to streamline judicial administration by providing for consolidated pretrial proceedings, thus avoiding conflicting and duplicative discovery.lo In deference to the parties' forum choice, the lawmakers required remand at or before the completion of pretrial proceedings, thereby preserving the parties' right to conduct a trial in the district where the litigation originated.ll In addition to these transfer and remand provisions, 1407 created the Judicial Panel on Multidistrict Litigation ("J.P.M.L."), a panel exclusively empowered to authorize transfers pursuant to

1407(a), remand transferred cases to the originating districts, and prescribe rules for conducting its business.l2 Shortly after Congress enacted 1407, transferee judges decided the statute did not go far enough toward achieving judicial efficiency."3 Because 1407(a) orders all cases shall be remanded "at or before the conclusion of such pretrial proceedings,"'4 the judicial efficiency benefits could not be as fully realized as they could under a system that permitted consolidation for pretrial proceedings and for trial.l5 Consequently, transferee judges innovated the practice of selftransfer whereby, pursuant to change of venue statute 1404(a),1 judges transferred cases to themselves for trial, which had been consolidated under 1407(a) for pretrial proceedings.l7

The practice of self-transfer gained support despite the fact that it violated the statute.'8 The J.P.M.L. exceeded its rulemaking power by incorporating self-transfer into its rules of procedure in Rule 14(b).19 Similarly, district and circuit court judges condoned it,' albeit with minimal independent examination.21 Although commentators agreed that self-transfer violated 1407(a),22 many urged Congress to authorize the practice.' The practice of self-transfer developed at the discretion of transferee judges,24 without careful congressional formulation regarding the circumstances under which cases should be consolidated for trial. Since the value of self-transfer as an administrative tool is evident, it is incumbent upon Congress to amend 1407 to permit M.D.L. cases to be consolidated for trial.

Recently, in Lexecon v. Milberg Weiss Bershad Hynes & Lerach ("Lexecon"),25 the Supreme Court reversed a Ninth Circuit decision which had affirmed a transferee judge's power to order self-transfer and conduct trial in the transferee forum.26 Writing in dissent for the Ninth Circuit, Judge Alex Kozinski presaged the Supreme Court's ruling by characterizing self-transfer as "a remarkable power grab by federal judges," because the practice exceeded the authority Congress granted to transferee judges. …