Thursday, March 6, 2008

The Law of Unintended Concequences: Warner Lambert v. Kent

The folks over at Drug and Device Law Blog make an excellent observation about the 4-4 decision in Warner-Lambert v. Kent.  Here's the idea:

Pharmaceutical litigation often results in masses of cases being filed.  When there are many cases that all raise common issues of fact or law, it may be duplicative for every federal court where such cases are filed to go through the discovery process or motions.  For example, should the CEO be deposed in litigation, thousands of times?  This would be onerous and wasteful.  Therefore there is a special panel of judges (the Multi-District Litigation Panel) which is statutorily empowered to collect all these cases and transfer them to a single court.  This panel is created pursuant to 28 US 1407 which states:

When civil actions involving one or more common questions of fact are pending in different districts, such actions may be transferred to any district for coordinated or consolidated pretrial proceedings. Such transfers shall be made by the judicial panel on multidistrict litigation authorized by this section upon its determination that transfers for such proceedings will be for the convenience of parties and witnesses and will promote the just and efficient conduct of such actions.

Beck/Hermann point out that since there is a Circuit split on the issue of whether fraud on the FDA claims can go forward, and since many pharmaceutical tort cases are consolidated under the auspices of the Multi District Litigation Panel, the MDL Panel's choice of transferee court will determine the substantive law applicable.  Here is quote from their post:

The court that receives those cases -- the "transferee" court -- will apply local federal circuit precedent to all pretrial rulings.  See In re Korean Air Lines Disaster, 829 F.2d 1171 (D.C. Cir. 1987), and its progeny. Thus, if the MDL Panel chooses to centralize the cases in Cleveland, all Michigan plaintiffs automatically lose under controlling circuit law. But if the MDL Panel chooses to centralize those same cases in New York, Michigan plaintiffs do not automatically lose.

When the DC Circuit affirmed the In re Korean Air Lines Disaster ruling, then Judge Ruth Bader Ginsburg gave three reasons for allowing the transferee court's law to apply: (1) "[a]pplying divergent interpretations of the governing federal law to plaintiffs, depending solely upon where they initially filed suit, would surely reduce the efficiencies achievable through consolidated preparatory proceedings"; (2) "because there is ultimately a single proper interpretation of federal law, the attempt to ascertain and apply diverse circuit interpretations simultaneously is inherently self-contradictory"; and (3) the parties could always seek review by the Supreme Court for an authoritative and final interpretation.  See 829 F.2d 1171, 1176 (D.C. Cir. 1987).  That last condition, of course, is not met because the Supreme Court had the opportunity to decide and gave us a 4-4 non-decision.

But this case is not the last word, nor will it be.  Last year around this time, a court held that the law of the transferor court (that is, the court where the case came from) was binding with respect to the question of class certification because class certification is "not merely a pretrial issue" but instead is "inherently enmeshed with considerations of the trial."  "Neither party should be prejudiced in preparing for trial because the case was removed and transferred to another district in a different circuit." In re Methyl Tertiary Butyl Ether (MTBE) Products Liability Litigation, 241 F.R.D. 185  (S.D.N.Y. Feb 20, 2007).  That court then applied the transferor court's interpretation of the class action rule and certified the class.    

This issue really makes one appreciate the incredible importance of pre-trial proceedings and reminds us again of the trickiness of the substance/procedure distinction.  (This is why we Civil Procedure professors love to teach Erie).  MDL transfer is intended merely to make processing of cases easier, but it does also affect the merits.

What's to be done?  Beck/Hermann urge that the MDL Panel "be beyond reproach" and that the Supreme Court decide the issue for good.  I don't disagree with their suggestion, but I think the MDL Panel is placed in a terrible situation when the outcome of the case is based on transfer and is already known in advance of the transfer.  This leaves them in a position to decide the merits, really, and I don't think that is what the statute creating the MDL intended. 

I have another suggestion.  When faced with such a scenario, the MDL panel might consider transferring and centralizing the cases to several regional forums.  I suggest two forums.  Plaintiffs who filed within the regions covered by the preemption precedent would be consolidated in one court, plaintiffs who filed in the regions covered by the non-preemption precedent would be consolidated in another court.  This would not lead to duplicative discovery because all the cases in region 1 would be dismissed, and all the cases in region 2 would proceed.  This idea violates the principles behind (1) and (2) of then-Judge Ruth Bader  Ginsburg's  rationale, and raises an important question about the tension between the just and efficient conduct of actions in the federal courts.  Centralization is efficient, but is it just to allow the MDL Panel to choose which law applies through their transfer decision, which has to include other factors such as judicial experience, caseload, the spread of cases over the entire system, convenience of the parties in terms of the conduct of discovery and cost of litigation, etc.?     If the Supreme Court doesn't like this outcome, as Beck/Hermann point out, they can decide the issue once and for all.  But for the moment, it seems to me perhaps we can proceed with multiple centralized forums, rather than just one, and solve the problem without driving Article III judges crazy.

The reality is that region 1 cases (those that will be dismissed) will not be brought because the law is clear.   Beck/Hermann are concerned that the plaintiffs will forum shop and all the new cases will now be region 2 cases.  Point taken.  I think the idea that the MDL Panel's decision should reflect the disagreement, rather than effect it, is still right.

I have an article coming out in Tulane Law Review making such a proposal, which should be posted on SSRN soon, and would be interested in learning the thoughts of others about it.

  
ADL

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