For the unfamiliar, MDLs coordinate and consolidate pretrial proceedings for just and efficient case management. Through 28 U.S.C. § 1407, the Judicial Panel on Multidistrict Litigation (JPML) has the authority to transfer federal civil actions pending in more than one district and involving common questions of fact to any district for coordinated and consolidated pretrial proceedings. Pursuant to 28 U.S.C. § 1407, the JPML must determine that transfer “will be for the convenience of the parties and witnesses and will promote the just and efficient conduct of such actions.”
The MDL mechanism is frequently used by mass tort litigants in the twenty-first century, but, increasingly, the system’s flaws are exposed. This article explores (1) a brief history of MDLs and their purpose, (2) the MDL system’s ailments, and (3) suggested paths to reform.
The MDL System’s Early Years
MDLs arose from the successful prosecution of antitrust laws against electrical equipment manufacturers in the 1960s. Nearly 2,000 private treble-damage actions involving 25,000 claims were filed in 35 federal judicial districts. To manage them, U.S. Supreme Court Chief Justice Earl Warren appointed nine federal judges to a Coordinating Committee for Multiple Litigation. The committee disposed of the cases, primarily through voluntary cooperation in consolidated pretrial proceedings and through settlements. Seeing wisdom in the coordination of complex litigation, Congress in 1968 enacted 28 U.S.C. § 1407, thereby creating the JPML.
Somewhat surprisingly, given the ever-increasing proliferation of mass tort MDLs, through much of its initial years the JPML regularly declined to create mass tort MDLs, including, famously, in the asbestos litigation. This initial skepticism and general resistance finally gave way in 1991 with the approval of the first nationwide asbestos MDL transferring 26,639 personal injury actions to the Eastern District of Pennsylvania. Almost 30 years later, the asbestos MDL is still going strong. Today both plaintiffs’ attorneys and defense counsel recognize advantages of MDL proceedings for mass torts. Aggregation of claims can maximize fair and efficient case management, minimize duplication, reduce cost and delay, enhance the prospect of settlement, promote consistent outcomes, and increase procedural fairness.
The need for the MDL system is supported by JPML statistics demonstrating its heavy use. Between 1968 and 2019, the JPML considered motions for transfer in over 2,900 groups of cases, or “dockets,” centralizing some 722,146 actions or claims. Of the dockets considered by the JPML, 1,168 motions to transfer did not result in centralization.
In 2019, MDL proceedings had grown to more than 50 percent of the federal court docket for the first time ever, comprising 202 MDLs pending in 46 different federal districts, in 32 different states, and before 160 different transferee judges. Seventy of the 202 MDLs (over one-third) were product liability cases, an increase from 16 percent in 2005. Of those 70 MDLs, 50 percent involved pharmaceutical products or medical devices or both. Today, 9 of the top 10 MDLs by active case number concern medical device or pharmaceutical product liability, and these 9 make up 98,036 of 133,382 total active cases. Obviously, the need for the MDL system exists in mass tort litigation, so what is the problem?
The Bad Habits of the MDL System
The MDL system’s problems and associated proposals for reform garnered initial support almost exclusively from the defense bar. However, the plaintiffs’ bar has also vocalized its concerns over the MDL system and is active in the debate over proposed reforms. We focus here on four of the primary problems plaguing the system.
First, the rules governing pleadings, discovery, motion practice, and appellate review are often applied inconsistently, if at all. Without standardized rules, ad hoc practices develop and create unpredictability and variation from jurisdiction to jurisdiction, a situation that uniform MDL consolidation was intended to prevent. Further, attempts to apply the current Federal Rules of Civil Procedure to the MDL context can be unworkable because they do not contemplate requests, motions, and protective orders in a proceeding with 10,000 plaintiffs.
Second is the proliferation of meritless claims in MDL actions. Some estimates indicate more than 40 percent of claimants in an MDL are unable to establish something as basic as evidence of exposure to the alleged harm or product identification. Judges in several mass tort MDLs have reprimanded counsel for the meritless tagalong cases. These meritless claims convey false information and artificially inflate the size of the litigation, making it difficult to evaluate settlement and select meaningful bellwether cases for trial. Meritless claims also increase the overall costs of the litigation to all parties and may make global resolution more difficult.
Third, the MDL process needs to address third-party litigation funding, which has grown substantially in recent years. Third-party litigation funding presents serious issues regarding conflicts of interests, ethics, and potential violations of state laws that prohibit a disinterested party from meddling in a lawsuit for personal gain, sometimes called champerty and maintenance. Unknown funding interests have an impact on whether class action counsel will adequately represent the class and whether the funder is vested with undue influence or control over the underlying litigation.
Finally, appellate review is asymmetrical: While plaintiffs can immediately appeal a granted motion to dismiss or for summary judgment because a dispositive ruling is considered a final order, defendants have no instant remedy when dispositive motions are denied. Instead, defendants must wait until a final verdict is reached in one of the cases in the MDL proceedings.
As MDL proceedings have increased as a share of the federal caseload, so too have calls for MDL reform. In August 2017, the Advisory Committee on Civil Rules created an MDL subcommittee to explore revisions to the Federal Rules of Civil Procedure. The MDL subcommittee issued a request to the Federal Judicial Center and others regarding proposals for amending the Federal Rules to address management of MDL proceedings. More recently, in October 2019, 45 general counsel from large companies signed a letter to the advisory committee supporting review of MDL procedures. The general counsels describe MDL proceedings as having reached “a point of crisis.”
The New Tricks: Popular Paths to MDL Reform
Proposals for reform are numerous; here, we focus on a few that have received the most attention from both the plaintiffs’ and defense bars. In August 2017, Lawyers for Civil Justice formalized a request to the advisory committee, asking members to consider various amendments to the Federal Rules of Civil Procedure. The proposed reforms included adding “master complaints” and “master answers” to acceptable pleadings identified in Rule 7, amending Rule 26 to account for early-screening techniques and third-party litigation financing, and creating a vehicle for interlocutory review of pretrial motions via Rule 54.
In its request to the committee, Lawyers for Civil Justice suggested that amending Rule 7 would address concerns surrounding MDL pleadings. Master complaints combine and refine common allegations within a single document that invites a corresponding master answer. Rule 7 does not formally recognize or regulate master complaints or answers despite their widespread use in MDL proceedings. In the absence of formal acknowledgement in the Federal Rules of Civil Procedure, some courts have declined to treat master complaints and answers as pleadings. This is particularly troublesome when it comes to deciding pleadings-based pretrial motions under, for example, Rules 8, 9, and 12. These rules apply specifically to “pleadings,” and MDL litigants are denied some of the traditional protections of the Federal Rules of Civil Procedure when courts decline to recognize master complaints and answers as pleadings. However, the MDL subcommittee has effectively declined to amend Rule 7 to address these concerns, concluding that amending Rule 7(a) to cover “master pleadings” was unlikely to produce significant results.
However, early-screening techniques, including plaintiff fact sheets (PFS), defendant fact sheets (DFS), and Lone Pine orders, have received considerably more attention from the MDL subcommittee members, who recently referred to MDL claim centralization as a “Field of Dreams” problem. JPML consolidation is often followed by the filing of a large number of claims: “If you build it, they will come.” In theory, employing early-screening techniques helps cull unsupported claims from the consolidated proceedings. Early culling can have a direct impact on global settlement, which is often driven by high volumes of cases more than the strength of the actual product liability claims. Plaintiffs have typically objected to early-screening techniques to the extent early screening requires plaintiffs to provide discovery before any formal discovery has occurred and before the plaintiffs are permitted to serve affirmative discovery on the defendants. However, plaintiff and defense counsel have generally agreed that culling unsupported claims may be mutually beneficial. Many experienced mass tort litigators believe that for plaintiffs, fewer and stronger claims often earn premium settlements, cost less, and are more profitable in the long run. It is undisputed that defendants prefer not to bear the cost of defending meritless claims. The use of early-screening techniques enumerated above is relatively widespread in discovery.
In 2019, at the direction of the advisory committee, the Federal Judicial Center conducted a study on the use of PFS and other case management tools in MDL proceedings. Between 2008 and 2018, PFS were ordered in 57 percent of all MDL proceedings and in 87 percent of proceedings with more than 1,000 total actions. Lawyers for Civil Justice identified this area as one of the most visible failures of the Federal Rules of Civil Procedure in the MDL context. These early-screening techniques also appear to be evolving—in April 2020, the MDL subcommittee stated that a more promising option might include the use of a “census” as a beginning for an information exchange that might later include a PFS and a DFS. Indeed, and as the MDL subcommittee noted, the “census” idea addresses many of the concerns expressed by reformists—the idea has gained significant traction in 2019 and was discussed in at least four major MDL proceedings. It remains unclear whether the vehicle for reform would take the form of a rules amendment or a judicial education effort, but the MDL subcommittee is expected to continue giving this reform its attention in 2020.
Third-party litigation financing and legal lead generation similarly implicate Rule 26 as an opportunity for MDL reform. Though MDL reform has previously centered specifically on third-party litigation financing, the business of lead generation is booming and has drawn the attention (and ire) of several organizations, including the American Medical Association and the Federal Trade Commission. Lead generators profit by producing as many mass tort plaintiffs as possible. But verifying the merits of these claims is a murky business, one that is compromised by competing interests in financial gain. Amending Rule 26 to require disclosure of third-party litigation financers or lead generators or both would provide transparency to courts and parties so that both discovery and potential settlement value may be appropriately adjusted. Transparency would also help counter the insinuation that a high number of plaintiffs implies defendant guilt. Plaintiffs would benefit from such an amendment as well; indeed, such an amendment to Rule 26 could help plaintiffs with legitimate claims avoid the unjust dismissal of their own claims that may become hidden among non-meritorious and even fraudulent ones. The MDL subcommittee has avoided addressing lead generation specifically, though it has discussed reform involving third-party litigation financing. However, such reform has somewhat stalled within the MDL subcommittee—in October 2019, the subcommittee concluded that third-party litigation financing did not seem particularly pronounced in relation to MDL proceedings. Consequently, further work on any rule amendments for third-party litigation financing in MDL proceedings was suspended. Instead, the subcommittee advocated that the issue remain on the advisory committee’s general agenda in a nod to the issue’s universal applicability.
Interlocutory review is another area of proposed reform receiving increased attention. One approach urges adoption of the Rule 23(f) model used in class certification cases, which leaves the decision to accept an immediate appeal entirely up to the court of appeals. This approach raised concerns with the MDL subcommittee because Rule 23(f) petitions for review likely involve a much narrower band of legal questions than what might arise regarding all pretrial orders in MDL proceedings. Another approach to interlocutory review involves amending Rule 54 to address the issue of inconsistent access to interlocutory review by permitting parties to seek appellate review of material rulings. In 2019, the advisory committee considered whether to draft a “material rulings” amendment. Judge Robert Dow, the head of the MDL subcommittee, observed that either a court rule or legislation is the only available means for accomplishing opportunities for interlocutory appellate review of MDL court rulings. Material rulings might be (among others) rulings on Daubert motions, rulings on preemption motions, decisions to proceed with a bellwether trial, and any ruling that the Federal Rules of Civil Procedure do not apply to the consolidated proceedings.
The defense bar generally argues that expanding immediate access to appellate review would lead to more just and consistent results, provide guidance to future parties and courts, and facilitate timely case resolution without needlessly wasting resources. However, plaintiffs have consistently and vehemently opposed this area of reform, arguing the “final judgment rule” is a fundamental aspect of our judicial system and that there are other available routes to appeal such as through 28 U.S.C. § 1292(b) and mandamus.
Noting the continuing disagreement between plaintiff and defense counsel on this issue, the MDL subcommittee has identified specific sub-issues for future consideration. Such sub-issues include the scope of MDLs to be included in a potential rule change, whether to limit a rule to specific types of orders, whether to focus appellate review on “cross-cutting orders” with the potential to affect numerous cases, whether a rule should call for a statement from the district court judge on whether immediate review would be helpful, and what standard any potential rule should adopt. As the MDL subcommittee has indicated, this area of reform continues to be hotly contested, and we will continue to follow the issue closely in 2020 and likely beyond.
The road to MDL reform is long, and there are many more miles to tread. But keep watching: An old dog, like the MDL system, is perfectly capable of learning new tricks.