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So what is an MDL?

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Many folks have recently seen or perhaps heard of the Vioxx, Celebrex, Bextra, Ortho Evra, Guidant and Medtronic “MDLs” in the media. So what is an “MDL”? Well, its shorthand for multidistrict litigation. The first thing you need to know about multidistrict litigation is that its not the same thing as a class action. A class action is a lawsuit where a few people sue on behalf of themselves and others similarly situated but the latter folks aren’t individually named in the suit. For example, two people could sue on behalf of thousands of other people who signed the same finance agreement that contained an alleged illegal interest rate. If the court agreed that the claims were similar and that resolving the named plaintiffs’ claim would also resolve all the claims of the un-named class members, then the judge would certify the class. If the named plaintiffs win at trial, then so do the un-named plaintiffs.

Multidistrict litigation is very different from a class action. Here are some basic aspects of multidistrict litigation. Although some States have multidistrict litigation, most of it is conducted in the federal courts. Here’s how it works. Assume that a drug is suddenly pulled off the market because a recent clinical study reveals its dangerous and has injured people. When word gets out, claimants go to attorneys across the country. These attorneys begin filing suits against the manufacturer in various federal district courts. If enough suits are filed against the same manufacturer for the same drug and for the same or similar injury, a federal court or perhaps the manufacturer or even the plaintiffs’ lawyers will ask the Judicial Panel on Multidistrict Litigation in Washington, D.C. to create an MDL proceeding. This Panel will hold a hearing and decide whether to create an MDL proceeding, and if so, where it will be located. Typically, but not always, it will be located in a federal court that already has a number of these particular cases.

Once the MDL court is established, then all the federal courts in the country that have these same type of cases will transfer their cases to the MDL court. As a result, all of the cases are now before one court who then manages the pre-trial proceedings for all those cases as though there was only one case. For example, there may be a thousand individual cases in an MDL, but one ruling will decide an issue for all. These rulings are of a general nature and don’t usually delve into the specifics of an individual case. The idea is that it is much more efficient to have one ruling on a general issue than having one thousand rulings by many judges on the same issue.

The MDL proceeding is managed by the federal judge with the help of the claimants’ and defense attorneys involved. Typically, a plaintiffs’ steering committee is created, its members are appointed by the MDL judge, and it is responsible for representing all the claimants in the MDL. The idea is to have a limited number of experienced attorneys handle the pre-trial proceedings for all MDL claimants. Typically, there will be a lead counsel for both sides and they are responsible for conferring about issues. This process greatly reduces the number of attorneys who actually are involved in the pre-trial proceedings.

Another interesting practice in some, but not all, MDLs, is the use of “tolling” agreements. Most folks understand that if injured, the law requires them to file suit within a specific time, or their claim will be barred. These time periods, usually called statutes of limitations, vary from state to state in the length of time allowed to sue and how those time periods are computed. A “tolling” agreement between the plaintiff and the defendant “tolls” the running of the statute of limitations as long as the agreement is in effect. What this practice enables attorneys to do in an MDL proceeding is to reduce the actual number of cases that are filed in court and transferred to the MDL court. This reduces legal fees, costs and the impact on the courts and their staffs in handling potentially thousands of cases. Instead, the claimants under the tolling agreement become a part of the MDL action just as if they were filed in court. These claimants can participate in a settlement or be filed in court once the MDL is complete. If filed in court, the claims aren’t barred by the statute of limitations as long as they weren’t barred before the tolling agreement was signed, or are still within the statute of limitations if filed before the expiration of the statute of limitations-taking into account the time tolled. For example, if the statute of limitations is three years, and one year had run when a tolling agreement was signed, then the claimant would have the remaining two years to file suit once the tolling agreement was terminated-even if that termination happened more than three years from the injury.

So what happens in these MDL proceedings. Not every MDL will be run the same way; different judges have different techniques or even philosophies about how to get the job done. Some judges just oversee the discovery process (which is designed to obtain the basic facts of the case), rule on discovery disputes, and decide important issues about whether evidence that the drug could cause the injuries complained of is relevant and reliable enough to be presented to a jury. This approach was used in the Phenylpropanolamine (PPA) MDL. Other judges oversee the discovery process but actually have jury trials on a few cases that were actually filed in their own court. The idea here is to use the rulings and verdicts in these trials to resolve issues in all cases, and also to help the attorneys and clients to reach a quicker settlement. This approach is being used in the Vioxx MDL.

But at some point, the only thing left to do with all these cases is to settle them or try them. Some MDLs are settled individually, others as a group. One type of settlement is for the manufacturer to negotiate with individual claimants and settle their cases or not. Another approach is where the manufacturers agree to pay a set sum of money, and all claimants apply for compensation based on their individual case. This latter approach is usually monitored by the MDL judge, but the settlement awards are determined by neutral masters or arbiters who have experience in this area. Each claimant is typically free to accept or reject the award, but if they accept it, then they give up their claim and release the manufacturer of any further liability.

So what happens if there’s no settlement? This a point where multidistrict litigation differs from class actions. In the multidistrict litigation, all the individual cases that aren’t settled are transferred back to the court they were originally filed in and each case is individually tried to a jury. So, theoretically, all one thousand cases in the MDL court could be transferred back, to the court they were filed in, and every one of them would be tried individually. Contrast that to a class action where there are two named plaintiffs, and one hundred thousand un-named plaintiffs. In the class action, there would be one trial. The only way an un-named plaintiff in the class action would get a trial would be to “opt-out” of the class and go it alone. This is rare, particularly in class actions where each individual recovery is small and couldn’t justify the costs of the litigation standing alone from all the other claims.

Circling back to the beginning, what happens if you have a State case in a State that doesn’t have multidistrict litigation? Well, depending on the circumstances, you may well still end up in the federal MDL proceeding-even if it is against your will. Here’s how that can happen. You file your product liability lawsuit against the manufacturer in your local State court. However, you reside in a different State than the manufacturer does. Most manufacturers are corporations. Corporations can “reside” in the State they were incorporated (created) in, or where they have their principal place of business if the latter is in a State other than where it was incorporated . If neither of these two (or one) places is in the plaintiffs’ state of residence where the suit was filed, so that all parties are from different States, then under federal law the manufacturer can “Remove” the case to the federal court sitting in the State where the suit was filed. This Removal can only happen, though, if the value of the claim is above $75,000. And, the plaintiff has no say in the matter as long as the federal procedural requirements are met.

Removal is a complex legal process, but if used correctly, it can be used to get the State court case into federal court, and once there, it can be then transferred to the MDL court just as if it were originally filed in federal court. Why is Removal permitted? Early in the history of our country, there was concern that out of state defendants wouldn’t get a fair shake in a State court in the hometown or district where the plaintiff resided. The idea was to grant that defendant the right to remove the case to a federal court, who would presumably give the plaintiff a fair trial because federal judges are supposedly impervious to hometown pressures given that they are appointed by the President, confirmed by the Senate and serve life terms on good behavior.

Even today, these same cries of bias and unfairness reverberate in the Congress, media and in legal circles about whether corporations who are defendants can be treated fairly in State courts. Recently, Congress enacted the “Class Action Fairness Act,” which, among other things, allows a defendant to Remove a State Court class action to federal court even though there isn’t “complete diversity” between the plaintiffs and defendants. Instead, it provides federal district courts with original jurisdiction of class actions in which: (A) any class member is a citizen of a state different from any defendant; (B) any member of the plaintiff class is a foreign state, or a citizen or subject of a foreign state, and any defendant is a citizen of a state; or (C) any member of the plaintiff class is a citizen of a state and any defendant is a foreign state or a citizen or subject of a foreign state; and there are 100 or more class members; and the aggregate amount in controversy exceeds $5,000,000. Previously, the law for filing class actions in federal courts required diversity of citizenship between every class representative and also required that every plaintiff seek damages in excess of $75,000. This new law will, in the future, deprive many consumers of their right as plaintiffs to file suit in the forum of their choosing. The reason? Because this new law will enable the defendant corporations to Remove the State court cases to federal court, whereas in the past they couldn’t because of the “complete diversity” rule. If you are keeping score, this one goes into the “win” column for big business, and in the “lose” column for the little guy.

So, now you have an understanding of what an “MDL” is. And, you have an understanding of how it works and why it isn’t a class action. Knowledge is a powerful thing, and now, as a citizen and a consumer, you are more powerful.