MULTIDISTRICT LITIGATION - A GUIDE TO COORDINATION
(published June 2000)
INTRODUCTION
Got
trouble in River City? San Francisco? And Miami, too? If two or more related
actions pending in federal district courts may not be dismissed and/or transferred
to the proper venue under traditional methods (e.g., 28 USC § 1404 and
1406), and opposing counsel is irrationally fond of the forum in which he or
she has filed a pesky claim, the actions may still be transferred for coordinated
pre-trial proceedings before a single district judge under 28 U.S.C. 1407,
provided the Judicial Panel on Multidistrict Litigation (the "Panel") agrees.
KRP recently had occasion to file a multidistrict litigation transfer motion
on behalf of a client. Thus, we decided to shed some light on the process under
which thousands of federal court maritime asbestos cases found themselves in
a single court, as well as claims arising out of other noteworthy mass-disaster
cases.
A. THE PENDING ACTIONS MUST INVOLVE COMMON QUESTIONS OF FACT THAT ARE COMPLEX.
Pursuant to 28 U.S.C §1407(a), the Panel may transfer, for pretrial coordination or consolidation, a civil action pending in one district that shares common factual questions with an action pending in another district, where such transfer would promote the just and efficient conduct of the actions and serve the convenience of the parties. To prevail on a motion for transfer, the moving party need not establish that related actions raise identical issues, but only that they present common factual questions. See, e.g., In re Sugar Industry Antitrust Litigation, 395 F. Supp. 1271, 1273 (JPML 1975). Actions raise common factual questions when they necessarily involve testimony from the same witnesses and reliance upon the same documentary evidence. In re Westec Corp., 307 F. Supp. 559, 561 (JPML 1969).
Where questions of fact are virtually identical (i.e., not completely identical), consolidation is clearly appropriate. In re Mid-Air Collision, Fairland, Ind, 309 F. Supp. 621, 622 (JPML 1970).
Similarly, the transfer of a case for coordination or consolidation with an action already pending does not depend on a strict identity of issues and parties. In re Japanese Electronic Products Antitrust Litigation, 388 F. Supp. 565, 567 (JPML 1975). For instance, where separate claims for relief are alleged, only some of which present common questions with other actions, the Panel may, in its discretion, transfer the common claims, while leaving the unique claims pending before the transferor court. See 28 U.S.C. § 1407(a); In re Plumbing Fixture Cases, 298 F. Supp. 484, 489-90, 495 (JPML 1968); see also In re Penn Cent. Securities Litigation, 325 F. Supp. 309, 312- 13 (JPML 1971) (separating and transferring third-party claims, while remanding remaining claims to the districts in which they were filed); In re antibiotic Drugs, 309 F. Supp. 155, 156-57 (JPML 1970) (transferring two counts of an action, while remanding a third count). Thus, the presence of individual issues or legal theories is not an impediment to transfer, where substantial common questions of fact are present and the other statutory requirements are met. In re Air West, Inc. Securities Litigation, 384 F. Supp. 609, 611 (JPML 1974).
When two or more complaints assert comparable allegations against identical defendants based upon similar transactions and events, common factual questions are presumed for purposes of transfer for consolidated or coordinated pretrial proceedings. Still, the common questions of fact must be complex, involving complicated, time-consuming discovery, to warrant transfer. In re lowa Beef Packers, Inc., 309 F. Supp. 1259, 1260 (JPML 1970).
B. TRANSFER MUST PROMOTE THE JUST AND EFFICIENT CONDUCT OF THE ACTIONS.
The essential purpose of § 1407 is to promote the just, speedy and inexpensive determination of related actions pending in different districts. Matter of New York City Municipal Securities Litigation, 572 F.2d 49, 51 (2d Cir. 1978); In re National Student Marketing Litigation, 368 F. Supp. 1311, 1316 (JPML 1972). It is intended to facilitate the litigation of not only antitrust actions, but all actions pending in different districts that raise common issues of fact. In re National Student Marketing Litigation, supra, 368 F. Supp. at 1316. That goal is best met by vesting in one court the authority to manage pretrial proceedings, eliminating the potential for conflicting pretrial rulings by uncoordinated district and appellate courts addressing essentially the same matters. In re Air Crash off Long Island, New York, 965 F. Supp. 5, 7 (S.D.N.Y. 1997). Coordination and/or consolidation is particularly warranted where cases are still in their formative stages, efficiencies derived from their centralized management outweigh any perceived inconvenience or expense to any one party. Moreover, the transferee judge is familiar with their common factual and legal issues. In re Sugar Industry Antitrust Litigation (East Coast), 471 F. Supp. 1089, 1093-94 (JPML 1979); In re Ampicillin Antitrust Litigation, 315 F. Supp. 317, 319 (JPML 1970).
1. There Must Be A Sufficient Number Of Actions To Consolidate.
The fact that there may only be a limited number of related actions is not, by itself, sufficient reason to deny a motion for transfer under § 1407. Indeed, the Panel has held that even cases involving a minimal number of actions may be consolidated where they are nearly equally divided between two districts, and where the filing of more actions in one district may well be expected. See, In re Mid-Air Collision, Fairland, Ind., supra, 309 F. Supp. at 622. Thus, in In re Petroleum Products Antitrust Litigation, 393 F. Supp. 1091, 1092 (JPML 1975), the Panel consolidated two class actions brought by separate states against multiple major oil companies, on the grounds that both actions were substantially similar and raised complex factual issues involving the business practices of the petroleum industry. In reaching this conclusion, the Panel specifically rejected the argument that the number of actions involved was too small to result in any significant economics of scale, and that the presence of defendants and state law allegations unique to both actions precluded transfer.
2. The Pending Actions Must Be Similarly Situated.
In selecting an appropriate forum to which to transfer an action, the Panel favors a court in which pretrial proceedings in a related action are not significantly more advanced than those in the action to be transferred, to promote litigation efficiency. (In re L. E. Lay & Co. Antitrust Litigation, supra, 391 F. Supp. at 1056.) See also, In re Grand Funk R.R. Trademark Litigation, 371 F. Supp. 1084, 1085 (JPML 1974); In re Disposable Diaper Patent Validity Litigation, 362 F. Supp. 567, 568 (JPML 1973).
3. The Transferee Court Should Be Familiar With The Factual And Legal Issues Raised By The Related Actions.
Another important consideration in consolidating related actions is the familiarity of the transferee court with the factual and legal issues common to them, as well as the discovery needs of the parties. Ordinarily, the Panel's preferred practice is to transfer an action to a forum where related actions are already pending before an experienced and capable judge who has become familiar with the legal and technical issues involved. In re Stirling Homex Corp. Securities Litigation, 388 F. Supp. 567, 569-70 (JPML 1975); In re Suess Patent Infringement Litigation, 331 F. Supp. 549, 550 (JPML 1971). Accordingly, the Panel has ordered transfer even in the face of alleged state law claims.
4. The Interests Of Judicial Comity Must Be Furthered By Transfer.
Coordination of related actions is disfavored where a motion regarding a substantive issue is under consideration by the transferor court, or where that court has already ruled on the merits of the very claims and actions that a party seeks to transfer. In re Cessna Aircraft Distributorship Antitrust Litigation, 460 F. Supp. 159, 162 (JPML 1978). The interests of judicial comity are served, however, where transfer avoids the problem of inconsistent rulings on issues of fact and law common to all of the actions. Thus, in In re Peruvian Road Litigation, 380 F. Supp. 796, 798 (JPML 1974), the Panel transferred related actions on the grounds that transfer would enable the defendants to jointly present their challenge of jurisdiction to the transferee court and eliminate the possibility of inconsistent decisions. at 798; cf., Utah v. American Pipe & Const. Co., 316 F. Supp. 837, 839 (C.D. Cal. 1970).
5. Transfer Must Further The Interests Of Judicial Economy And Prevent Duplicative Discovery.
Another primary objective of § 1407 is to avoid duplication of effort by parties and the courts before which related actions are pending. In re Photocopy Paper, 305 F. Supp. 60, 62 (JPML 1969); In re Library Editions of Children's Books, 299 F. Supp. 1139, 1142 (JPML 1969). Thus, coordination of pretrial proceedings in a single forum is clearly appropriate in order to conserve the time and resources of the parties, witnesses and judiciary. See In re Motion Picture Licensing Antitrust Litigation, 468 F. Supp. 837, 842 (JPML 1979).
6. Transfer Should Not Unduly Inconvenience Parties Or Witnesses.
Given that some inconvenience to someone is inevitable when cases are transferred, In re IBM, 302 F. Supp. 796, 799 (JPML 1969), the opposition of parties to transfer of related actions to a single district is not by itself determinative where the statutory prerequisites are otherwise satisfied. In re Asbestos Insulation Material Products Liability Litigation, 431 F. Supp. 906, 910 (JPML 1977); In re Aviation Products Liability Litigation, 347 F. Supp. 1401, 1404 (JPML 1972). Indeed, the Panel has the power to order transfer even if all the parties oppose transfer. In re Asbestos Insulation Material Products Liability Litigation, supra, 431 F. Supp. at 910. Transfer is appropriate even when it would effectively deprive parties of the opportunity to participate personally in pretrial trial proceedings due to their physical conditions or financial status. In re Air Crash Disaster at Toronto Int'l Airport, July 5, 1970, 346 F. Supp. 533, 534 (JPML 1972). Similarly, the prospect of counsel having to incur additional travel expenses is insufficient to preclude transfer under § 1407. In re Antibiotic Drugs, 303 F. Supp. 1056, 1057 (JPML 1969); In re Plumbing Fixtures, 302 F. Supp. 795, 796 (JPML 1969).
Moreover, the transferee judge may order that no party need participate in pretrial proceedings unrelated to that party's interests. To the contrary, discovery and other pretrial proceedings that relate to unique claims or particular parties can proceed concurrently with common pretrial proceedings, thereby permitting litigation to proceed expeditiously in all areas. In re Continental Grain Co., Inc., 482 F. Supp. 330, 332 (JPML 1979). For that reason, written discovery and depositions regarding a party's claims can still be completed where that party resides.
CONCLUSION
Consolidation of two or more related actions pending in different federal district courts will ensure optimal coordination of the issues common to them, avoid duplicative discovery and settlement negotiations (resulting in less attorneys fees and costs), conserve judicial resources, and prevent the potential for inconsistent rulings in these, and potential tag-along actions. Accordingly, where alternative formal and informal means of transfer fail, transfer under 28 U.S.C. § 1407 remains a viable option to achieve the same ends, at least temporarily.
