Weeding Out Meritless Claims In Multidistrict Litigation

Just over 50 years ago, Congress passed the Multidistrict Litigation Act, with the intent to make it more efficient for parties to litigate factually similar but geographically dispersed complex cases. While the statute today is virtually unchanged from the original version, what has changed is the number of cases in MDLs.

A decade ago, MDLs represented only 15 percent of the civil caseload. By 2018, however, that number had more than tripled, and MDLs accounted for almost 47 percent of the total civil caseload in the United States.[1] Product liability MDLs alone make up almost 90 percent of pending MDLs.[2]

As the number of MDLs has grown, so has the focus on the MDL process, and whether the process is working. One frequent criticism is that a significant portion of cases filed in any MDL turn out (often at the settlement stage) to be unsupportable.[3]

Why is this the case? It’s likely in part because the MDL process does not have an effective mechanism to weed out nonmeritorious cases early on. This article addresses the meritless claim problem, and analyzes some proposed solutions.

Background

The MDL Act created the Judicial Panel on Multidistrict Litigation. The panel’s job is twofold: to “(1) determine whether civil actions pending in different federal districts involve one or more common questions of fact such that the actions should be transferred to one federal district for coordinated or consolidated pretrial proceedings; and (2) select the judge or judges and court assigned to conduct such proceedings.” The JPML does not look at the merits of each individual case.

All cases that have a common question of fact — whether they are filed before or after the JPML’s decision — are transferred to a transferee judge for pretrial proceedings and discovery. A transferee judge is afforded all powers that any other judge would have in pretrial proceedings. But because of the sheer number of cases in an MDL, judges frequently must focus on global issues rather than on individual claims.

If a transferee judge does not resolve the case by the end of pretrial proceedings, that judge must remand cases back to the district where each case was filed. Historically, the remand rate has hovered around 3 percent,[4] meaning that transferee judges resolve the vast majority of MDLs.

Problem

There is data to show that between 30 and 40 percent of all filed MDL cases turn out (often at the settlement stage) to be unsupportable.[5] While there are many theories why so many meritless claims proceed through the MDL process, part of the problem is the lack of any mechanism to efficiently weed out meritless claims early.

MDL’s closest cousin — class action litigation — relies on Rule 23’s class certification process to weed out meritless claims. But no analogous mechanism exists in the MDL process. Further, the procedural devices used effectively in individual cases — motions to dismiss and motions for summary judgment — are more difficult for courts to address in MDLs, because the number of cases may prevent defendants from determining which cases are good candidates for those devices.

The meritless claim problem is also exacerbated by the evolution of the MDL process from a pretrial case management solution into a type of alternative dispute resolution forum that sets the stage for global settlements.[6] In these cases, MDL plaintiffs may obtain recovery without any court actually looking hard at the merits of each case.[7]

Proposed Solutions

In November 2017, the Advisory Committee on Civil Rules formed a subcommittee to address the problems with MDLs. Several legal industry groups have submitted proposals to the Advisory Committee on how to address the problems. The following three proposals have garnered the most attention.

Amending Rule 26 to Require Plaintiffs to Make Initial Disclosures

Lawyers for Civil Justice has proposed amending Rule 26 of the Federal Rules of Civil Procedure to require plaintiffs to disclose sufficient evidence demonstrating exposure to the alleged cause at issue and harm within the scope of the lawsuit.[8] More specifically, the proposed Rule 26(a)(1) would require that each plaintiff disclose with particularity, within 60 days after filing the case or the MDL transfer, exposure to the alleged cause and specific injury. The rule would also require plaintiffs to submit documentation substantiating both exposure and injury.

On its face, proposed Rule 26(a)(1) would solve the meritless claim problem. It would help courts weed out cases before valuable money and resources are spent. But the amendment would also be costly: The transferee judge would now be responsible for confirming whether the initial disclosure meets 26(a)(1) requirements and taking a hard look at each case. Furthermore, plaintiffs’ lawyers may argue that early disclosure may disadvantage plaintiffs who cannot obtain documents to substantiate their claims within the allotted time.

Amending Rule 11 to Sanction Lawyers Who File Frivolous MDL Cases

Others argue that transferee judges should use Rule 11 sanctions to deter plaintiffs from filing unsupportable claims.[9] Rule 11 allows district courts to sanction attorneys or parties who submit pleadings for an improper purpose or that contain frivolous arguments or arguments that have no evidentiary support.

Judges already use Rule 11 sanctions when lawyers file unsupported claims. For example, in a current tobacco MDL, a district court judge imposed $9.1 million in sanctions on two law firms that it determined had filed 1,250 unsupportable claims.

But this solution may create a chicken-and-egg problem: Courts cannot determine whether sanctions are appropriate until after cases are shown to be unsupportable. In other words, Rule 11 sanctions may not weed out meritless cases early enough in the MDL process.

Using Lone Pine Orders

Still others argue that Lone Pine orders can solve the problem.[10] A Lone Pine order is a court order that requires a plaintiff to make a threshold evidentiary showing of an element or elements of the plaintiff’s claim. Several MDLs have effectively used Lone Pine orders to manage the cases.

Lone Pine orders have the advantage of being flexible, so that transferee judges retain autonomy to best resolve the case. But this flexibility may lead to inconsistent rulings between similar MDLs, and unless a judge issues the order early, resources may already be spent before it is issued. Additionally, any nonmandatory mechanism presents the risk that transferee judges will not apply it.

Conclusion

The three proposals discussed above may be part of the solution to solve the meritless claim problem. Though it is premature to predict which, if any, of the proposals will be incorporated to guide future MDLs, the creation of the MDL Subcommittee and the submission of comments from many sources indicate the potential opportunity for rules changes to address the problem.

Two high-profile MDLs — the Monsanto Roundup and national prescription opiate MDLs — are beginning bellwether trials in 2019. These bellwether trials may help the subcommittee conclude which rules changes are warranted. The first Monsanto bellwether trial began this week; the first opiate bellwether trial is set for Oct. 21, 2019.

Originally published on Law360 (Subscription required)

[1] Lawyers for Civil Justice, Rules 4 MDLs: Calculating the Case 6 (2018).

[2] Id.

[3] Unsupportable means the claimant did not use the product involved or did not suffer an injury, or the statute of limitations has run. Advisory Committee Rules of Civil Procedure, MDL Subcommittee Report, Nov. 1, 2018 at 142. See also Malini Moorthy, “Gumming Up the Works: Multi-Plaintiff Mass Torts,” U.S. Chamber Institute for Legal Reform, 2016 Speaker Showcase, The Litigation Machine, http://www.instituteforlegalreform.com/legal-reformsummit/2016-speaker-….

[4] Elizabeth Chamblee Burch, Remanding Multidistrict Litigation, 75 La. L. Rev. 399, 400-01 (2014).

[5] Advisory Committee Rules of Civil Procedure, MDL Subcommittee Report, Nov. 1, 2018 at 142. See also Moorthy, “Gumming Up the Works,” supra.

[6] In re Mentor Corp. Obtape Transobturator Sling Prods. , MDL No. 2004, 2016 U.S. Dist. LEXIS 121608, at*7-8 (M.D. Ga. Sept. 7, 2016).

[7] Id.

[8] Lawyers for Civil Justice, MDL Practices and the Need for FRCP Amendments: Proposals for Discussion with the MDL/TPLF Subcommittee of the Advisory Committee on Civil Rules 4 (2018), https://www.uscourts.gov/sites/default/files/suggestion_18-cv-x_0.pdf.

[9] Advisory Committee Rules of Civil Procedure, MDL Subcommittee Report, Nov. 1, 2018 at 147-48.

[10] Duke Law Center for Judicial Studies, MDL Standards and Best Practices 89-90 (2014), https://judicialstudies.duke.edu/sites/default/files/centers/judicialstudies/MDL_Standards_and_Best_Practices_2014-REVISED.pdf.