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To MDL, or Not? Early Complex Litigation Decisions in the United States

Patrick Oot, partner at Shook Hardy & Bacon LLP, and Jennifer Swanton, legal director and discovery counsel at Medtronic, explore the federal consolidation options when facing multiple matters with similar underlying facts.

Published on 15 May 2023
Patrick Oot, Shook Hardy & Bacon LLP, Expert Focus Contributor
Patrick Oot
Ranked in E-Discovery & Information Governance in Chambers Global
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Jennifer Swanton, Medtronic, Expert Focus Contributor
Jennifer Swanton

§ 1407 MDL or § 1404 Transfer of Venue

Parties faced with growing complex litigation involving one or more common questions of fact in federal court often consider structural alternatives on the path for resolution of the actions. This article is intended to provide a beginner with a quick rundown of federal consolidation options when facing multiple matters with similar underlying facts.

As litigating redundant claims in multiple forums creates significant inefficiencies, a party may seek to consolidate and transfer by way of a “change of venue” motion pursuant to 28 U.S.C. § 1404 to consolidate matters to the first-filed district court under the first-to-file rule.

Alternatively, litigants facing other more complex matters could seek the formation of a multidistrict litigation (MDL) by filing a motion to transfer pursuant to 28 U.S.C. § 1407 with the United States Judicial Panel on Multidistrict Litigation, known informally as the “JPML” or “MDL Panel.” The JPML is a special body within the United States federal court system that manages multidistrict litigation. It was established by Congress in 1968 and has the authority to determine whether civil actions pending in two or more federal judicial districts should be transferred to a single federal district court for pretrial proceedings. If such cases are determined to involve one or more common questions of fact and are transferred, the Panel will then select the district court and assign a judge or judges to preside over the litigation.

Whether a litigant chooses § 1404 or § 1407, the purposes of centralisation are to prevent inconsistent pretrial rulings, avoid duplicative discovery, and conserve the resources of the parties, their counsel and the judiciary. Each transfer method has benefits and pitfalls.

§ 1404 Transfer of Venue

The most straightforward method of consolidation is pursuant to a § 1404 motion in the transferor district to transfer to an earlier-filed transferee district court under the first-to-file rule. While §1404 is the most efficient method to consolidate, a party should consider jurisdictional issues. “A district court has discretion to transfer plaintiff’s action, but only to any other district or division where it might have been brought.” 28 U.S.C. § 1404(a). “The phrase ‘where it might have been brought’ refers solely to districts where [the plaintiff] could have originally filed suit.” (Bozic v United States District Court, 888 F.3d 1048, 1050 (9th Circuit 2018)). Thus, a transfer would be denied where some defendants would not be subject to jurisdiction or where the venue would be improper in the transferee forum as to any defendant. Once past the jurisdictional issue, § 1404 transfer motions usually result in quick rulings from the transferor judge, and the consolidated actions will move forward in the transferee court. A § 1404 transfer is for all purposes – not just coordinated for pre-trial.

§ 1407 MDL

If a litigation involves numerous defendants or a significant number of matters across many districts, filing a § 1407 transfer motion with the JPML might be a consideration, as the JPML has found as many as a dozen cases might not warrant an MDL.

"Litigants should view an MDL as a potential but complex option."

The most significant and important benefit of an MDL is the creation of considerable efficiencies in the discovery and pretrial motion stages of litigation. Just like a § 1404 transfer, a party can avoid facing the prospect of litigating numerous similar actions before a variety of federal judges, which increases the likelihood of inconsistent rulings on key issues. Litigants should view an MDL as a potential but complex option.

MDL: the Last Resort?

The JPML has routinely emphasised that “centralization under § 1407 should be the last solution after considered review of all other options.” (In re Best Buy Co., Inc., Cal. Song-Beverly Credit Card Act Litig., 804 F. Supp. 2d 1376, 1378 (J.P.M.L. 2011)). Consolidation options include § 1404 transfer of the cases, as identified above, or cooperation and coordination among the parties and the involved courts to avoid duplicative discovery or inconsistent rulings.

The JPML tends to deny § 1407 motions “where only a minimal number of actions are involved, the moving party generally bears a heavier burden of demonstrating the need for centralization.” (In re Transocean Ltd. Secs. Litig. (No. II), 753 F. Supp. 2d 1373, 1374 (J.P.M.L. 2010)). The JPML will also deny transfer to an MDL “where a reasonable prospect exists that resolution of Section 1404 motions could eliminate the multidistrict character of a litigation, transfer under Section 1404 is preferable to centralization.” (In re GM LLC Chevrolet Bolt EV Battery Prods. Liab. Litig., 532 F. Supp. 3d 1413, 1414 (J.P.M.L. 2021)). Even where a Section 1404 transfer motion is contested, such a prospect nonetheless exists, particularly where few districts are involved. (In re Allianz Structured Alpha Funds Litig., 544 F. Supp. 3d 1361, 1362 (J.P.M.L. 2021)).

Location, Location, Location

Even when parties on both sides of the litigation have exhausted other centralisation remedies and agree that an MDL is warranted, the JPML may need to resolve a dispute over which district court should oversee the centralised MDL. The Panel considers a number of factors in determining the appropriate forum for an MDL, including:

  • where the largest number of cases is pending;
  • where discovery has occurred;
  • where cases have progressed furthest;
  • the site of the occurrence of common facts;
  • where cost and inconvenience will be minimised; and
  • the experience, skill and caseloads of available judges. (Manual for Complex Litig. § 20.131 (4th ed.)).

Because a destination forum can impact the overall litigation and each plaintiffs’ firm might lobby their venue choice as it may impact plaintiff leadership roles, disagreement and venue jockeying between the joint parties often occurs and the JPML will help by deciding on transferee court out.

MDL Timeline

Even if a § 1407 motion may be the best centralisation path forward, an MDL will most certainly not be the fastest out of the gate. For example, the related motion practice before the JPML – which convenes six to seven times per year – may result in delays when compared to a simple § 1404 transfer motion governed by courts with less restrictive schedules.

A party can anticipate:

  • up to a two-month process between filing and a transfer order;
  • a month for the transferee judge to organise a preliminary case management conference
  • weeks to negotiate foundational case management orders (eg, scheduling orders, confidentiality orders, ESI protocols, fact sheets, service orders, deposition protocols); and
  • time required for coordinating positions with multiple parties, co-defendants and potentially parallel state proceedings.
  • Even on a fast track, an MDL will usually take more time to set up when compared to a simple § 1404 transferred case.

The Wrap

With seven panel hearings in 2022, the JPML consolidated 22 of the 45 transfer motions into MDLs. Antitrust matters (24%) and products liability matters (36.8%) accounted for the overwhelming majority of pending MDLs organised pursuant to § 1407. When facing complex litigation in a significant number of federal district courts, an MDL might be the right approach, but a litigant should consider all options and consequences before filing with the JPML.

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