United States: And Now A Word From The Panel: An MDL Breakup

Welcome to the latest installment of And Now a Word from the Panel, a column which "rides the circuit" with the Judicial Panel on Multidistrict Litigation as it meets on a bimonthly basis at venues around the country.

As the panel heads to San Francisco, California, for its Sept. 27 hearing session, it continues the trend this year of double-digit petitions for new MDLs being heard at its bimonthly hearing. This month, the panel faces a sizable docket of 10 new MDL petitions for its consideration (with additional petitions deemed moot).

This month's column explores the power of the panel to "break up" – through severance and remand – certain claims in an action otherwise subject to MDL transfer to an existing MDL proceeding. But before exploring a decision on a motion to vacate a conditional transfer order reflecting this principle, let's look at other results from the panel's July hearing session held in Santa Fe, and an overview of the panel's progress this year.

Following the July 26 hearing session, the panel ruled on 13 motions seeking to create new MDL proceedings. This brings the total number of new MDL motions considered this year by the panel to 46. As reflected by the panel's decisions, many of the new petitions failed to pass muster. In denying a whopping 10 motions and granting only three motions, the panel's 2018 "batting average" has now dipped below .500 (22 for 46), to rest at .478.

Of the three new MDL proceedings, two involve product liability claims and one involves antitrust claims. Indeed, more than half of the panel's new MDL proceedings this year are product liability or antitrust litigations. Moreover, there are now 24 MDL proceedings with more than 1,000 individual pending actions, almost all of which involve product liability claims.1

The overall number of pending MDL proceedings has declined to 2112, as compared to 217 just two months ago, with nearly a third of the current MDL proceedings comprised of product liability litigations.3 The panel continues to close out older MDL dockets, terminating a total of 35 existing MDLs this year through mid-September.4

Looking Back: An MDL Breakup?

At its July hearing session, the panel considered (on the papers) a motion to vacate filed by a pro se plaintiff in connection with an ongoing data breach MDL proceeding.5 The Louisiana action at issue included a cause of action designated as one for "gross negligence." That cause of action alleged that the defendants failed to correct inaccurate information on the plaintiffs' credit reports, and failed to safeguard certain information as well as timely notify consumers of various data breaches, including a 2017 data breach.

The plaintiff alleged several other causes of action, including a claim for violations of the Federal Credit Reporting Act, defamation of the plaintiff's character and negligence. The panel's CTO for that action proposed a simultaneous separation and remand of those other causes of action to the transferor court for further proceedings. With the denial of the motion to vacate and lifting of the stay of the CTO, the proposed transfer and remand of certain claims became effective.

This decision highlights the statutory power granted to the panel under 28 U.S.C. § 1407 to "separate any claim, cross-claim, counter-claim, or third-party claim and remand any of such claims before the remainder of the action is remanded." Thus, practitioners should be aware that the panel has the tool in its arsenal to break up an MDL, and sever claims that, in its view, do not belong in an existing MDL proceeding.

This panel decision also highlights a limit on the panel's deference to rulings by the transferor court. One of the plaintiff's arguments against transfer of any causes of action was that the district court in Louisiana had previously denied a motion to sever the gross negligence claim containing the data breach allegations from the rest of the action "so that only those claims are removed to the MDL."6 The transferor court denied the motion, finding that severance would burden the plaintiff, and held that "[t]he burden of litigating his claims simultaneously in two very different forums would be quite high."7

Thus, although the transferor court addressed an issue related to transfer of claims to the MDL proceeding, the panel has the authority to reach its own conclusion regarding the propriety of MDL transfer. While noting that it was "sympathetic to plaintiff's concerns," the panel observed that the reasoning of the transferor court did not bind the panel, which must consider "not just the parties to [the action subject to the CTO], but the parties in the more than 400 actions in the MDL No. 2800."8

This is consistent with the panel's statutory mandate that "[s]uch 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."9

What will the panel's trip to the City by the Bay bring? Will the panel continue in the footsteps of the July hearing and deny most of the motions for new MDL proceedings? Will the number of overall MDL proceedings continue its downward trend (and soon dip below 200)? Stay tuned for our post-Thanksgiving November edition of And Now a Word from the Panel, as the panel heads to this author's home town, the Big Apple – New York, New York – for its Nov. 29 hearing session.

Footnotes

1 MDL Statistics Report - Distribution of Pending MDL Dockets by Actions Pending (Sept. 17, 2018).

2 Id.

3 MDL Statistics Report - Docket Type Summary (Sept. 17, 2018).

4 MDL Statistics Report - Docket Summary Listing (Sept. 17, 2018).

5 In re Equifax Inc. Customer Data Security Breach Litig. (MDL No. 2800).

6 Iraheta v. Equifax Information Services LLC, Civ. Action No. 17-1363, at 6-7 (W.D. La. Apr. 18, 2018).

7 Id. at 8.

8 In re Equifax Inc. Customer Data Security Breach Litig., MDL No. 2800, at 2 (J.P.M.L. Aug. 7, 2018).

9 28 U.S.C § 1407.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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