Law

            Multidistrict Litigation – the name says it all.  It is an amalgamation of related cases from multiple federal district courts across the country.  Think about the journey a single case in an MDL may take.  Plaintiff files in state court.  Defendants remove the case to federal court based on diversity.  But as soon as the case is assigned a new docket number, defendants file a notice of tag-along with the Judicial Panel on Multidistrict Litigation and the case moves again – this time to whatever district has been assigned the MDL.  Now the case probably gets a little time to rest while pre-trial discovery and motion practice and maybe even a few bellwether trials take place.  But, if that isn’t the end of the litigation, the case may get remanded back to the district court from whence it came.  Now multiply that by a few hundred or a few thousand cases and it’s a whole lot of paperwork (or probably more accurately, a whole lot of keystrokes). 

              So, it has become a more common practice for MDL courts to enter orders allowing plaintiffs to file their cases directly into the MDL – an option that would normally be foreclosed to most plaintiffs because venue would be improper.  It is a case management tool.  Once an MDL is established and it is apparent which cases belong in it, the parties and the court recognize that the tag-along process simply adds another unnecessary layer of red tape and delay.    Plaintiffs, however, usually aren’t willing to give up home court advantage and so issues of proper venue and forum convenience are typically reserved until the time of remand.  At that time the parties usually try to agree to which federal district court a directly filed MDL case should be sent for further proceedings and most often it is the district where the plaintiff resided at the time of filing. 

               In either the tag-along scenario or the direct filing scenario, MDLs are a breeding ground for choice of law questions.  At a minimum, there are at least two different jurisdictions involved and that is just considering where the case itself was filed or transferred.  That doesn’t account for other things like defendant’s state of residence or whether plaintiff’s current state of residence is different than the state where the injury occurred.  And choice of law can be a big issue – like in two recent MDL cases:  Wahl v. General Electric Co., 2015 U.S. App. LEXIS 8477 (6^th Cir. May 22, 2015) and   In re Tylenol (Acetominophen) Mktg., Sales Prac. and Prods. Liab. Litig., 2015 WL 2417411 (E.D. Pa. May 20, 2015) (Terry v. McNeil-PPC, Inc.).

            In Wahl, at issue was whether Tennessee’s rather unique statute of repose applied and therefore barred plaintiff’s claims.  In that case, the district court had already concluded that it did and we discussed that decision here.  In the Tylenol case, Terry, the question was whether Alabama’s wrongful death statute (which only provides punitive damages) or New Jersey’s punitive damages and wrongful death statutes applied.  With New Jersey’s preclusion of punitive damages for FDA approved drugs, the choice of law could have a significant impact on plaintiff’s potential recovery. Unfortunately, the court held that Alabama law applied. 

            Terry involved a litigation tourist, a plaintiff-resident of Alabama, who filed suit the “new-fashioned” way in state court in Pennsylvania against Johnson & Johnson, a New Jersey corporation, and McNeil, which plaintiff argued was a Pennsylvania corporation and defendant argued was a New Jersey corporation.  Terry, 2015 WL 2417411 at *2.  Whichever was correct, there was complete diversity and so defendants removed the case to federal court where it was then tagged to the MDL which also happened to be pending in the Eastern District of Pennsylvania.  Id.  While the general rule is that a federal court sitting in diversity must apply the choice of law rules of the state in which the court sits, MDL courts typically “apply the choice of law rules of the court from which the case was transferred.”  Id.  Here those two are one and the same, so it is hardly controversial that the court applied Pennsylvania’s choice of law rules. 

            However, it is worth noting the very attenuated relationship Pennsylvania has to the underlying case.  Defendants cited numerous decisions in which courts had held that McNeil was a New Jersey resident for purposes of diversity jurisdiction.  While the Terry court did not have to decide that issue because the plaintiff was from neither New Jersey nor Pennsylvania, maybe it should have.  Maybe the bigger question was whether the case was properly venued in Pennsylvania at all.  And that’s important because the Terry court acknowledged that in an almost identical case, Lyles v. McNeil-PPC, 12-CV-7263 (D.N.J.), that court ruled that New Jersey law rather than Alabama law applied.  Instead, the Pennsylvania judge found that because he was “sitting in a federal court in Pennsylvania applying Pennsylvania choice of law principles, New Jersey’s interests in this case hold less weight that they did in Lyles.”  Id. at *7.  So, if the case had reached the MDL by way of transfer from New Jersey, it seems like defendants might have had a slightly better chance of arguing for application of New Jersey law because the MDL court would not have also been the transferor court.  A bit confusing admittedly, but worth a second thought about venue right before removal.

             Wahl presents the choice of law question in a direct filing case.  Plaintiff, a resident of Tennessee, opted to file her complaint directly in the gadolinium MDL in the Northern District of Ohio.  When it came time for remand, the parties agreed that this case should be transferred to the Middle District of Tennessee, “the district court of proper venue.”  Wahl, 2015 U.S. App. LEXIS 8477 at *3.   The Tennessee court applied Tennessee’s choice of law rules and as noted above, concluded that Tennessee law required dismissal of plaintiff’s claims.  On appeal, plaintiff argued that the court should have applied Ohio’s choice of law rules which it contends would have barred application of the Tennessee statute of repose. 

            Plaintiff’s argument was based on the standard rule that “when a diversity case is transferred from one federal district court to another, substantive law governing the jurisdiction of the transferor court controls.”  Id. at *5-6.  In what appears to be the first appellate decision on this issue, the Sixth Circuit held that:

Id. at *6.  After a detailed discussion of the case law that led to the development of the standard rule, the court noted that in those cases, “plaintiff’s choice of initial forum was appropriate as to both jurisdiction and venue.”  Id. at *10.  Plaintiff’s choice in a direct-filed MDL case is based on an “accident of bureaucratic convenience.”  Id.  Therefore, there must be an exception to the general rule for direct-filed MDL cases that are then transferred to a more convenient forum, otherwise that “accident” would “elevate the law of the MDL forum.”  Id.  at *11.

            The court found two bases for its decision that direct-filed MDL cases warranted an exception.  First, the court looked to the order governing direct filing in the MDL which specifically stated that the “fact that a case was file directly in MDL 1909 pursuant to this order will have no impact on the choice of law to be applied.”  Id. at *16-17.  Further, plaintiffs conceded both in their complaint and in agreeing to the transfer, that the Middle District of Tennessee was the proper venue for this case.  Id. at *17.  Given all those things, the court concluded that plaintiff “did not subject herself to the jurisdiction of the district court where she filed.  Instead, she took advantage of the procedural mechanism the MDL made available to increase efficiency of filings.”  Id. at *17-18. 

            Second, the court found that transfer of a direct-filed MDL case to the district with proper venue was more like a transfer under 28 U.S.C. §1406(a) rather than a §1404(a) transfer.  A §1404(a) transfer is one that is granted for convenience following plaintiff’s choice of an appropriate forum.  It is because plaintiff’s choice was appropriate that the standard rule applying the law of the transferor court was adopted.  A §1406(a) transfer however, applies when plaintiff files suit in an improper venue, and rather than dismiss the case, the court transfers it to a district in which it could have been brought.  Under Sixth Circuit precedent,   

Id. at *14.  Plaintiff Wahl’s case was transferred from the Northern District of Ohio “because that district was not a proper venue.”  Id. at *18.   It would be equally improper to apply Ohio law where Ohio’s only connection to the case was its administrative designation as the home for the MDL.  While we find ourselves straddling the fence on choice of law issues on a case by case basis, we do think the Sixth Circuit got this one right. 

           

            We should also note that plaintiff’s choice of law arguments were all for naught anyway because the court also held that even if Ohio choice of law rules were applied, Tennessee substantive law would also still apply.