Using State Test Cases to Settle Multidistrict Litigation? A Comment on “Mass Litigation Governance in the Post-Class Action Era”

J. Maria Glover, Mass Litigation Governance in the Post-Class Action Era: The Problems and Promise of Non-Removable State Actions in Multi-District Litigation, 5 J. Tort Law 3–46 (2012). In so arguing, Professor Glover suggests a strategy that bears some limited resemblance to one that Francis McGovern previously identified: a “de facto cooperative strategy of a marketplace of litigation in state courts and consolidated discovery and settlement in federal court.” Francis E. McGovern, Toward a Cooperative Strategy for Federal and State Judges in Mass Tort Litigation, 148 U. Pa. L. Rev. 1867, 1891 (2000). The strategy “would treat each case resolved by traditional litigation as a data point, while treating the overall litigation process as an information system. Eventually, an adequate number of cases will be resolved, providing sufficient information to make informed decisions regarding the litigation as a whole; the mass tort will become mature. At this point, it might be possible to achieve a global outcome.” Id. at 1882. In noting the weaknesses of this strategy, Professor McGovern argued that trials were more likely to take place in plaintiff-oriented jurisdictions. “While the defense-oriented jurisdictions defer, the plaintiff-oriented jurisdictions proceed to provide data points, with a resulting asymmetry of information.” Id. at 1891.

Professor Glover draws a sharp distinction between “full test cases” in state court, i.e. “selected independent cradle-to-grave parallel state proceedings” and “test trials” which are usually “known as bellwether trials.” Glover, supra note 1, at 5 J. Tort Law 31 (2012).

There is a third kind of case that may remain in state court after formation of an MDL: cases that plaintiff’s counsel (and in rare cases, plaintiffs themselves) have locked into state court without actually understanding what they were doing. These cases are not relevant to the analysis.

The Standard Fire Insurance Co. v. Knowles, 133 S. Ct. 1345, 1350 (2013) (“[F]ederal courts permit individual plaintiffs, who are the masters of their complaints, to avoid removal to federal court, and to obtain a remand to state court, by stipulating to amounts at issue that fall below the federal jurisdictional requirement.”).

28 U.S.C. § 1441(b)(2) (“A civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.”).

28 U.S.C § 1332(d)(3) (authorizing a “district court … in the interests of justice and looking at the totality of the circumstances [to] decline to exercise jurisdiction under [the Class Action Fairness Act] over a class action in which greater than one-third but less than two-thirds of the members of all proposed plaintiff classes in the aggregate and the primary defendants are citizens of the State in which the action was originally filed” after considering certain factors).

§ 28 U.S.C. § 1332(d)(4)(B) (requiring a district court to decline to exercise jurisdiction under the Class Action Fairness Act if “two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are citizens of the State in which the action was originally filed.”).

28 U.S.C. § 1332(d)(4)(A) (requiring a district court to decline to exercise jurisdiction under the Class Action Fairness Act if (1) “greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed,” and (2) “at least one defendant … is a citizen of the state in which the action was originally filed” provided certain other requirements are satisfied).

28 U.S.C. § 1332(d). The Class Action Fairness Act grants diversity jurisdiction if one class member is diverse from a defendant and the aggregate amount in controversy is in excess of $5 million. § 1332(d)(2). My discussion assumes that jurisdiction under the Multiparty, Multiforum Trial Jurisdiction Act (MMTJA) is not available. See 28 U.S.C. §§ 1369, 1441(e). The MMTJA has a very narrow scope, but if a case falls within it, defendants have breathtaking power to remove covered cases from state to federal court. See § 1441(e).

See Linda S. Mullenix, Class Actions Shrugged: Mass Actions and the Future of Aggregate Litigation, 32 Review of Litigation 591 (2013).

See 1332(d)(11). Section 1332(d)(11)(B) excludes certain civil actions from jurisdiction, including “claims joined upon motion of a defendant.” The Seventh Circuit in Anderson v. Bayer, 610 F3d 390 (7th Cir. 2010), held that plaintiffs could avoid jurisdiction under the mass action provisions of the Class Action Fairness Act by asserting the claims of fewer than 100 plaintiffs in each complaint. See also Tanoh v. Dow Chemical Co., 561 F. 3d 945 (9th Cir. 2009) (holding the same). For a comprehensive discussion of the mass action provisions of the Class Action Fairness Act, see Mullenix, supra note 10.

Glover, supra note 1 at 5 J. Tort Law 29 (2012).

Professor Glover demonstrates that state actions parallel to federal MDL exist, but does not establish that the cases in state court are sufficiently diverse to permit the accurate valuation of the parallel suits in federal MDL. See Glover, supra note 1 at 10 and 27–29. She notes, for example, that in 2009 the Judicial Panel on Multidistrict Litigation consolidated all federal cases involving claims that the drug Chantix caused serious medical injuries. She goes on to remark that at least 28 suits in New York (Pfizer’s principal place of business) and one suit in Illinois had not been removed. Her discussion does not reveal how many of the New York suits were brought on behalf of New York citizens and how many were brought by citizens of other states who wished to lock their action in state court pursuant to what is now 28 U.S.C. § 1441(b)(2). In any event, I am skeptical that these cases lend empirical support to her argument that “data from state-court proceedings would emerge from a range of real world conditions—conditions involving judges from different states, locally sourced juries (where relevant), and perhaps quite importantly, different state court procedures against which the relevant substantive state laws were enacted.” Glover, supra note 1 at 29.

McGovern, supra note 1 at 1883.

Id.

I assume for purposes of this paper that only removal jurisdiction is available under the mass action provision of the Class Action Fairness Act. CAFA’s text so indicates. See 28 U.S.C. §1332(d)(11)(A) (“For purposes of this subsection and section 1453, a mass action shall be deemed to be a class action removable under paragraphs (2) through (10) if it otherwise meets the provisions of those paragraphs”). But the question has not been resolved by the courts.

28 U.S.C § 1332(d)(11)(C)(i) (“Any action(s) removed to Federal court pursuant to [Section 1332(d)(11)] shall not thereafter be transferred to any other court pursuant to section 1407, or the rules promulgated thereunder, unless a majority of the plaintiffs in the action request transfer pursuant to section 1407.”). Cf. In re Darvocet, Davron and Propoxyphene Products Liability Litigation, 2013 WL 1635469 (J.P.M.L. April 17, 2013) (holding that CAFA’s bar on the transfer of mass actions without the consent of a majority of plaintiffs does not apply when the mass action provision is only one basis for the transfer).

McGovern, supra note 1 at 1883.

Id. (noting that such lawyers “tend to screen their clients carefully, prepare their cases individually, set each one for trial, and seek premium individual compensation”).

Glover, supra note 1 at 5 J. Tort Law 28 (2012) (“First, and perhaps as part of an initial coordinated set of decisions by all of the state judges and the MDL judge involved in a particular mass dispute, some of these state proceedings could be chosen for expedited treatment as independent—and yes, to some quite purposeful degree, redundant—test cases for an overall settlement.”) (emphasis in original).

For discussion of informal cooperation between federal and state judges, see, e.g. William W. Schwarzer, Nancy E. Weiss, & Alan Hirsch, Judicial Federalism in Action: Coordination of Litigation in State and Federal Courts, 70 Va. L. Rev. 1689 (1992); McGovern, supra note 1. Professor McGovern has noted that those state judges most amenable to informal coordination with the MDL are often the most defendant-friendly. See McGovern, supra note 1 at 1891 (explaining that defense-oriented jurisdictions are more likely to defer to federal courts, whereas plaintiff-oriented jurisdictions are more likely to generate their own trials, settlements, and verdicts). Although Professor McGovern’s observations were made in the context of pretrial coordination, for reasons discussed in the text, I believe plaintiff-friendly state judges might well be reluctant to expedite or stay state cases to facilitate a settlement in the federal MDL.

Because the adjudication or settlement of state cases may affect the settlement value of an MDL and because the Plaintiff’s Steering Committee may have access to discovery and other resources that plaintiffs’ attorneys in state court might find useful, it might nonetheless be in the interest of all of those representing plaintiffs to cooperate, at least to some limited extent. Cf. Howard M. Erichson, Informal Aggregation: Procedural and Ethical Implications of Coordination Among Counsel in Related Lawsuits, 50 Duke L.J. 381, 386–87 (2000) (explaining that “[b]y coordinating their efforts, lawyers for similarly situated plaintiffs can access more thorough information, avoid working at cross-purposes, and finance the litigation more powerfully and efficiently,” thereby “leveling the playing field with defendants”); Byron G. Stier, Resolving the Class Action Crisis: Mass Tort Litigation as Network, 2005 Utah L. Rev. 863, 892–93, 896–909 (discussing how plaintiffs’ counsel increase their abilities and efficiently sue defendants by adopting a network approach to mass tort litigation).

Myriam Gilles, Tribal Rituals of the MDL: A Comment on Williams, Lee & Borden, Repeat Players in Multidistrict Litigation, 5 J. Tort Law 173–180 (2012).

For other excellent discussions of the value of decentralization in the resolution of mass torts, see, e.g. Elizabeth Chamblee Burch, Dissaggregating, 90 Wash. U. L. Rev. 667 (2013); Alexandra D. Lahav, Recovering the Social Value of Jurisdictional Redundancy, 82 Tul. L. Rev. 2369 (2008).

See, e.g. Eldon E. Fallon, Jeremy T. Graybill, & Robert Pittard Wynne, Bellwether Trials in Multidistrict Litigation, 8282 Tul. L. Rev. 2323 (2008). That said, not all bellwether trials in MDL have been presided over by the MDL judge. See, e.g. Trial Template for Welding Fume Litigation at 4 n.12 (June 4, 2010), available at http://www.ohnd.uscourts.gov/assets/Clerks_Office_and_Court_Records/MDL/1535/03cv17000/03cv17000Doc2389.pdf (noting that two other federal judges sitting in the same district as the MDL judge had presided over two of the eight bellwether trials in the Welding Fume Litigation) (cited in James Fallows Tierney, Economic Theory of Bellwether Trials (Feb. 2, 2011) (unpublished manuscript), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1754231).

Indeed, even CAFA mass action cases that were not transferred under Section 1407 might be used as bellwethers—or even test cases—if there had been the requisite informal cooperation and coordination between plaintiffs’ attorneys in those cases and the MDL attorneys. That said, serious questions may be raised about the extent to which it is appropriate for a federal judge handling a mass action to coordinate with a parallel MDL in view of the statutory provision barring the inclusion of mass action cases in an MDL absent the consent of a majority of the plaintiffs in the mass action.

See, e.g. In re Motor Fuel Temperature Sales Practice Litigation, 711 F. 3d 1050 (9th Cir. 2013) (denying request for an intercircuit assignment for the trial of cases that had been remanded after the MDL judge indicated her willingness to travel from Kansas to California to try the cases). Chief Judge Kozinski, in denying the required certificate of necessity, noted that the chairman of the Committee on Intercircuit Assignments had endorsed transfers of this sort:

I have encouraged MDL judges to take intercircuit assignments to try cases in transferor courts if the MDL cases cannot be resolved pretrial. We think that promotes judicial efficiency (1) by helping to prevent MDL cases from starting over and going to the back of the docket of transferor courts when the MDL Panel remands the cases for trial to the transferor courts, (2) by drawing on the knowledge that the MDL judge has obtained by her/his work on pretrial issues, (3) giving MDL judges control over their proceedings, and (4) maximizing the federal judiciary’s use of excellent and willing judges … in the MDL process.

In an earlier paper, Professor Glover recognized that having more than one judge preside over bellwether trials would represent an improvement over current practice. See J. Maria Glover, The Structural Role of Private Enforcement Mechanisms in Public Law, 53 WM. & Mary L. Rev. 1137, 1214 (2012) (noting that having one judge preside over bellwether trials may “lead to the export of an aberrant MDL judge’s idiosyncratic regulatory views to the entire nation” and suggesting as one possible reform “requiring a certain number of bellwether trials by a variety of MDL judges”).

Glover, supra note 1 at 5 J. Tort Law 30 (2012).

Id. at 32. Among other things, Professor Glover’s argument fails to grapple with the fact that state cases parallel to a federal MDL will not necessarily be brought in the courts of the state which created the substantive right. Indeed, to the extent a plaintiff’s attorney seeks to lock a case into state court, it will sometimes make sense to file suit in the courts of the state of which the defendant is a citizen. See 28 U.S.C. 1441(b)(2). A forum state, of course, will not necessarily apply its own law to cases brought in its courts. See generally, Peter Hay, Patrick J. Borchers, & Symeon C. Symeonides, Conflict of Laws (5th ed. 2010).

Glover, supra note 1 at 32.

Byrd v. Blue Ridge Rural Electric Cooperative, Inc. 356 U.S. 525, 537 (1958).

For a different view, see Neal Miller, An Empirical Study of Forum Choices in Removal Cases under Diversity and Federal Question Jurisdiction, 41 American U. L. Rev 369, 440 (1992). Mr. Miller treats as a “problem” the “reported failure of the federal courts to rule consistent[ly] with state courts” and the indications that “federal courts follow the technical Erie mandate of predicting what the state high court’s decision would be, ignoring the intermediate appellate court rulings.” Id.

State trial judges, of course, may be bound by the predictions of a state intermediate court of appeals. But the law does not bind federal judges to those predictions. “Wright and Kane, summarizing the state of the law since King and Bernhardt, say that a federal judge ‘need no longer be a ventriloquist’s dummy. Instead he or she is free, just as state judges are, to consider all the data the highest court of the state would use in an effort to determine how the highest court of the state would decide.’ Wright & Kane, Federal Courts § 58, at 396 (6th ed. 2002).” Richard H. Fallon, Jr. ET AL., Hart and Wechsler’s The Federal Courts and the Federal System 570 (6th ed. 2009).

See Thomas O. Main, The Procedural Foundation of Substantive Law, 87 Wash. U. L. Rev. 801, 822 (2010) (“I demonstrate that substantive law is neither aprocedural nor trans-procedural, but rather is constructed with a specific procedural apparatus in mind to vindicate the rights created or the responsibilities assigned by that substantive law. Whether consciously or subconsciously, the drafters of substantive law embed an associated procedure.”).

Id. at 838 (“[I]n circumstances where the application of foreign law is appropriate and necessary, we should incorporate as much of that law as reasonably possible, regardless of whether that law is ‘substantive’ or ‘procedural.’”).

See Sun Oil Co. v. Wortman, 486 U.S. 717, 728 (1988) (holding that statutes of limitation are within the legislative jurisdiction of the forum state and suggesting that the same is true for the “host of other matters generally treated as procedural under conflicts law”).

Hanna v. Plumer, 380 U.S. 460, 476 (1965) (Harlan, J., concurring).

See Hanna v. Plumer, 380 U.S. 460, 472 (1965) (“For the constitutional provision for a federal court system (augmented by the Necessary and Proper Clause) carries with it congressional power to make rules governing the practice and pleading in those courts, which in turn includes a power to regulate matters which, though falling within the uncertain area between substance and procedure, are rationally capable of classification as either.”). Cf. Id. at 476 (Harlan, J., concurring) (“I submit that the Court’s ‘arguably procedural, ergo constitutional’ test moves too fast and far in the other direction.”).

In any event, there is reason to doubt that subtle differences in the law applied by courts will significantly affect the calculation of claim values for purposes of settlement. Too many test cases or bellwether trials likely would be necessary to create a grid that fully takes into account all differences in procedural and substantive law. Any workable set of bellwether trials will necessarily take only very rough account of differences in state substantive law.

For purposes of this article, I put aside questions about the voluntariness of settlements reached in MDL proceedings. Cf. Patrick Woolley, Rethinking the Adequacy of Adequate Representation, 75 Tex. L. Rev. 571 (1997) (arguing that even class counsel—at least as a general matter—should not have the power to impose a settlement on a class member over the class member’s objection). Coercion is more subtle with respect to individual actions consolidated through section 1407, but remains a concern. See, e.g. Howard M. Erichson & Benjamin C. Zipursky, Consent Versus Closure, 96 Cornell L. Rev. 265 (2011).