Opposition Brief — Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach

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No. 96-1482

IN THE

Supreme Court of the United States

OCTOBER TERM, 1996

LEXECON INC., et al.,

Petitioners,

Vv.

MILBERG WEISS BERSHAD HYNES & LERACH, et al.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF IN OPPOSITION FOR RESPONDENTS

MILBERG WEISS BERSHAD HYNES

& LERACH, ET AL.

MICHAEL MEEHAN JEROLD S. SOLOVY

MEEHAN & ASSOCIATES Counsel of Record

33 North Stone, Suite 830 RONALD L. MARMER

Tucson, Arizona 85701 C. JOHN Kocu

(520) 882-4188 JEFFREY T. SHAW

JENNER & BLOCK :

One IBM Plaza, Suite 4400

Chicago, Illinois 60611

(312) 222-9350

Attorneys for Respondents

MILBERG WEISS BERSHAD HYNES & LERACH, ef al.

WILSON - EPEes PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

:

ren

QUESTIONS PRESENTED

1. Whether certiorari should be granted to review the

Ninth Circuit’s holding that a district court conducting

“pretrial proceedings” under the express grant of authority

in 28 U.S.C. § 1407(b) is empowered to order a transfer

for trial under 28 U.S.C. § 1404(a), where that holding

is consistent with the decisions of all courts that have

addressed the issue and with the plain language and legis-

lative history of the applicable statutory provisions.

2. Whether certiorari should be granted to review the

Ninth Circuit’s holding that a transferee district court is

empowered to transfer a case for trial, where petitioners

never identified any error or prejudice resulting from the

exercise of that power in this case, and where petitioners

never asked the Judicial Panel on Multidistrict Litigation

to remand the action to the transferor court, even though

only the Panel is statutorily authorized to order that relief

and petitioners are challenging the facial validity of one

of the Panel’s own Rules.

3. Whether certiorari should be granted to review the

Ninth Circuit’s affirmance of the dismissal of petitioners’

Arizona law claims for malicious prosecution and abuse of

process, where that decision does not conflict with any

prior decision and involves at most a case-specific deter-

mination concerning petitioners’ allegations that does not

present any recurring or substantial question of federal

law.

Page

QUESTIONS PRESENTED ............................................ i

a Vv

STATEMENT OF THE CASE ......................................

EE ae

2. The Lincoln Savings Litigation And Lexecon’s

EES ee 3

3. Lexecon Settles The Claims Against It To Avoid

OB A EERE EES ene ORO 4

4. Lexecon Sues Class Counsel In Federal Court In

Chicago And The Lincoln Savings Judge Holds

That Lexecon’s Principal Allegations Are

EE ES, SS 2 ease 5

5. Multidistrict Transfer And Proceedings In The

ie EEE SE Sy le a

6. Appellate Proceedings In The Court Below........

REASONS FOR DENYING THE WRIT ....................... 11

I. THE PRIMARY QUESTION PRESENTED

DOES NOT WARRANT REVIEW BY THIS

EERE DE SEE ee eed ee OO TE 12

A. The Ninth Circuit’s Decision Does Not Con-

flict With The Decision Of Any Court ............ 12

B. The Ninth Circuit’s Decision Is Correct .......... , y&

1. The Plain Terms Of Sections 1407 And

1404(a) Support The Decision Below...... 15

2. The Legislative History Of Section 1407

Supports The Decision Below ................... 18

C. Review Of The Transfer Question Would Be

IEA ORES eC 20

TABLE OF CONTENTS

Il.

Ill.

iv

TABLE OF CONTENTS—Continued

THIS CASE WOULD PROVIDE AN INAP-

PROPRIATE VEHICLE FOR REVIEWING

THE TRANSFER ISSUE ..........................-.-------

A. There Was No Error Or Prejudice In The

Proceedings Following The Transfer For

B. Petitioners Waived Their Challenge By Fail-

ing To Ask The Multidistrict Panel For A

THE RULE 12(b)(6) DISMISSAL ORDER

WARRANTS NO FURTHER REVIEW .............

ee Es saiinanpartienthignaiiiaanienninaiacnenenains

Page

21

s

v

TABLE OF AUFHORITIES

CASES Page

In re Air Crash Disaster at Detroit Metropolitan

Airport, 737 F. Supp. 391 (E.D. Mich. 1989)... 13

In re Air Crash Disaster at Huntington, W. Va.,

342 F. Supp. 1400 (J.P.M.L. 1973) _.................... 13

In re Air Crash Disaster at Toronto Int'l Airport,

346 F. Supp. 533 (J.P.M.L. 1972) ........................ 13

In re Air Crash Disaster Near Chicago, Illinois,

476 F. Supp. 445 (J.P.M.L. 1979) ............ i aien 13

In re Air Crash Disaster Near Hanover, N.H., 342

A % gg \ * & _ . | 13 .

Alaska Airlines v. United States, 399 F. Supp. 906

I IIT nrcssninniieiinteinnmaiadtinniatinbeinhienincune 13

In re American Continental Corp./Lincoln Sav. &

Loan Sec. Litig., 794 F. Supp. 1424 (D. Ariz.

EE ee Se nT 4

In re Anthracite Coal Antitrust Litig., 436 F. Supp.

a SC ietitecnetedatnetitintscntnntenctinsiniacns 13

In re Antibiotic Antitrust Actions, 333 F. Supp.

299 (S.D.N.Y.), mandamus denied sub nom.

Pfizer, Inc. v. Lord, 447 F.2d 122 (2d Cir.

TET corintesesebeienecteeendieealaihbaahiiihaetaiad bedi tuiateinatiataen 16

In re Bendectin Litig., 857 F.2d 290 (6th Cir.

1988), cert. denied, 488 U.S. 1006 (1989) 13

In re Bomb Disaster at Roseville, Calif., 399

Do CA, BG Gee ee MII ecccctesccncctnncscsencesesee 13

In re Bristol Bay, Alaska, Salmon Fishery Anti-

trust Litig., 424 F. Supp. 504 (J.P.M.L. 1976) .. 13

In re Brown Co. Sec. Litig., 355 F. Supp. 574

EL ee es eer rene 13

Burlington Northern R.R. v. Ford, 504 U.S. 648

Ee eee ee 21

In re CBS Color Tube Patent Litig., 342 F. Supp.

GS I ee eee 13, 15

Caterpillar, Inc. v. Lewis, 117 8. Ct. 467 (1996) . passim

Ex parte Collett, 337 U.S. 55 (1949)... 17, 22

Continental Grain Co. v. Barge FBL-595, 364 U.S.

Baer GI cciniashticsinndapaidapninnmtennntiahasdibtaideatiidsmmpianeenabin 17

In re Dalton, 733 F.2d 710 (10th Cir. 1984) ........ 22

vi

TABLE OF AUTHORITIES—Continued

Denver & Rio Grande Western R.R. v. Brotherhood

of R.R. Trainmen, 387 U.S. 556 (1967) -.............

Filmline (Cross-Country) Prod. v. United Artists

Corp., 865 F.2d 513 (2d Cir. 1989) ......................

In re Fine Paper Antitrust Litig., 685 F.2d 810 (3d

Cir. 1982), cert. denied, 459 U.S. 1156 (1983) ....

In re Food Lion, Inc. Fair Labor Standards Act

“Effective Scheduling” Litig., 73 F.3d 528 (4th

>.)

In re Grain Shipments, 300 F. Supp. 1402

CEPT, BD cecenrcoscrccccsencnceessemseccssenvsccsswsscosssessese

Greyhound Computer Corp. v. IBM Corp., 342

F. Supp. 1143 (D. Minn. 1972) _..........................

Jack Winter, Inc. v. Koratron Co., 326 F. Supp. 121

(N.D. Cal. 1971) ...... eels

Johnson v. Continental Airlines Corp., 964 F.2d

RG GQ O_——————————————

In re Josephson, 218 F.2d 174 (ist Cir. 1954)...

Kohr v. Allegheny Airlines, Inc., 504 F.2d 400 (7th

Cir. 1974), cert. denied, 421 U.S. 978 (1975)......

In re Korean Air Lines Disaster, 829 F.2d 1171

(D.C. Cir. 1987), aff'd on other grounds sub

nom. Chan v. Korean Air Lines, 490 U.S. 122

(aaa

In re Longhorn Sec. Litig., 573 F. Supp. 274

Ve G0 Sl EE

Magnetic Eng’g & Mfg. Co. v. Dings Mfg. Co., 178

oe 0

In re Mahurkar Double Lumen Hemodialysis Cath-

eter Patent Litig., 750 F. Supp. 330 (N.D. Il.

REC a ne nee: oF Enea *

In re Molinaro /Catanzaro Patent Litig., 402

F. Supp. 1404 (J.P.M.L. 1975) -.....................---.--.

In re Nat’l Student Mktg. Litig., 358 F. Supp. 1303

CO EE See

oe Inc. v. Alfonzo-Larrain, 490 U.S.

A eee ee ee eee

Page

Ss

<&s

13

13

vii

TABLE OF AUTHORITIES—Continued

Page

Pfizer, Inc. v. Lord, 447 F.2d 122 (2d Cir. 1971)... 13, 20

In re Tax Refund Litig., 723 F. Supp. 922

CE 13

In re Viatron Computer Sys. Corp. Litig., 86 F.R.D.

i 13

Vimar Seguros y Reaseguros, S.A. v. M/V Sky

Reefer, 115 S. Ct. 2322 (1995)... 20

Washington Pub. Utils. Group v. United States

Dist. Ct., 843 F.2d 319 (9th Cir. 1987)... 13

STATUTES AND RULES

I i

SESE ee eae a

try a idibeenbioneppahibidiniiad act ieast ak 14

EE aA Ee aR ]

EE RR Ree eGR ae 1 16, 24

| A Te ce passim

Ee Ree, 8, 23, 24

EEE TTL a ae aE eA 8 x

EE EC ee

5 rn He: os

Fed. R. Civ. P. 12(b) (6)... cccceecceeees---.. 21, 26, 27

aie 14, 25

MDL Rule 14(e) ........................... 24, 25

EN RRR RENN, "94

LEGISLATIVE MATERIALS

H. Rep. No. 90-1130, reprinted in 1968

es 18, 19

beahsicenhieteinieetieaniadeinesianiiomiienistonsad 19

OTHER AUTHORITIES

Manual For Complez Litigation, Third ( 1995) ........ 14

5A Charles Alan Wright & Arthur R. Miller, Fed-

eral Practice and Procedure (2d ed. 1990) 27

15 Charles Alan Wright, Arthur R. Miller &

Edward H. Cooper, Federal Practice and Proce-

Pe 16, 22

viii

TABLE OF AUTHORITIES—Continued

Comment, The Judicial Panel and the Conduct of

Multidistrict Litigation, 87 Harv. L. Rev. 1001

(| Ee Ee

Gregory R. Harris, Note, Consolidation and Trans-

fer in the Federal Courts: 28 U.S.C. Section

1407 Viewed in Light of Rule 42(a) and 28

U.S.C. Section 1404(a), 22 Hastings L.J. 1289

COTO -cccaidinieegnicientitahlsamidiipianmemeutiaianmese

Patricia D. Howard, A Guide to Multidistrict Liti-

gation, 124 F.R.D. 479 (1989).............--.......00000-+-

Richard L. Marcus, Confronting the Consolidation

Conundrum, 1995 BYU L. Rev. 879.......................

Robert A. Ragazzo, Transfer and Choice of Fed-

eral Law: The Appellate Model, 93 Mich. L.

OL

William W. Schwarzer, et al., Judicial Federalism:

A Proposal to Amend the Multidistrict Litigation

Statute to Permit Discovery Coordination of

Large-Scale Litigation Pending in State and

Federal Courts, 73 Tex. L. Rev. 1529 (1995)...

Stanley A. Weigel, The Judicial Panel on Multi-

district Litigation, 78 F.R.D. 575 (1977).............

Page

14

14

14

14

14

14

14

ee

IN THE

Supreme Court of the United States

OCTOBER TERM, 1996

No. 96-1482

LEXECON INC., et al.,

7 Petitioners,

MILBERG WEISS BERSHAD HYNES & LERACH, et al.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF IN OPPOSITION FOR RESPONDENTS

MILBERG WEISS BERSHAD HYNES

& LERACH, ET AL.

Petitioners seek to keep alive their state law tort claims

without raising any substantive challenge to the disposition

of those claims on the merits. They do so by raising a

procedural question that has provoked no disagreement in

the lower courts—whether a case previously transferred

for pretrial proceedings under the multidistrict litigation

statute, 28 U.S.C. § 1407, can then be transferred for trial

by the transferee judge under 28 U.S.C. § 1404. Peti-

tioners offer little reason to believe that the Ninth Circuit's

resolution of this issue may have been incorrect. In any

event, this case is a poor vehicle for addressing the issue.

First, petitioners have not properly preserved the issue.

They never sought relief from the Judicial Panel on Multi-

district Litigation, even though the Panel was the sole

2

tribunal that could have awarded the relief petitioners

sought and even though petitioners were challenging the

validity of one of the Panel’s own Rules. Second, peti-

tioners have not alleged that they were prejudiced in any

way by the locus of the trial. In the absence of a showing

of prejudice, as this Court recently held in closely analo-

gous circumstances, see Caterpillar, Inc. y. Lewis, 117

S. Ct. 467 (1996), there would be no basis for overturn-

ing the judgment entered below even assuming that the

transferee court erred in retaining the case for trial. The

petition should be denied.

STATEMENT OF THE CASE

At the core of this litigation are the materially mislead-

ing statements made by petitioners, first in assisting Charles

Keating’s efforts to defraud bank regulators and the invest-

ing public, and tater in falsely portraying the settlement in

the underlying litigation involving Lincoln Savings & Loan

Association (“Lincoln” or “Lincoln Savings”). Petitioner

Lexecon Inc. (“Lexecon” ) prepared false reports for Lin-

coln Savings to submit to federal and State regulators. In

those submissions, despite having received regulators’ re-

ports showing extensive regulatory violations and criminal

activity involving Lincoln Savings, Lexecon represented

that “Lincoln is sound,” is “safer than comparable thrifts,”

and is “safer than when acquired.” That is why Lexecon

was named as a defendant in Lincoln Savings. That also

is why Lexecon failed to obtain dismissal of the claims

against it, failed to obtain summary judgment after dis-

covery, and failed to obtain a directed verdict after a four-

month jury trial. Just as jury deliberations were about to

commence, Lexecon settled the underlying litigation by

paying the Lincoln Savings class more than $700,000 to

avoid what would have been, in the words of the judge

who presided at trial, a “possible catastrophic verdict.”

Then, Lexecon undertook a new campaign of deception:

Lexecon filed this case against class counsel, alleging that

3

the class’ claims against Lexecon were “baseless,” that

those claims were “terminated in Lexecon’s and Fischel’s

favor,” and that Lexecon “voluntarily” had decided to

“benefit the Class” by paying it more than $700,000.

Nearly all of Lexecon’s claims were dismissed by the dis-

trict court during pretrial proceedings, and the one re-

maining claim was rejected by the jury at trial.

1. The Parties.

As noted above, this action arises from federal class

action litigation prosecuted in the District of Arizona

after the collapse of Lincoln Savings. Petitioner Lexecon

was a named defendant in Lincoln Savings. Petitioner

Daniel R. Fischel was one of the principals of Lexecon.

Respondents are the law firm of Milberg Weiss Bershad

Hynes & Lerach, along with several of its present and

former partners ( collectively the “Milberg Defendants” ),

and the law firm of Cotchett, Illston & Pitre, along with

its present and former partners (collectively the “Cot-

chett Defendants”), all of whom served as counsel for the

Lincoln Savings class.

2. The Lincoln Savings Litigation And Lexecon’s Role In

That Litigation.

Lincoln Savings involved multiple lawsuits brought in

various districts against Charles Keating, American Con-

tinental Corporation (“ACC”), its subsidiary Lincoln

Savings, and approximately one hundred other defendants,

including Lexecon. By the end of that litigation, class

counsel (respondents here) had secured a $1.2 billion

jury verdict and more than $240 million in settlements for

their clients.

Shortly after the Lincoln Savings lawsuits were filed, the

Judicial Panel on Multidistrict Litigation (“Panel” or

“MDL Panel”) transferred them under 28 U.S.C. § 1407

to the District of Arizona, to be supervised by the Hon.

Richard M. Bilby. The class claims “against Lexecon

4

arose from Lexecon’s preparation, for submission by

ACC/Lincoln to federal and state banking regulators, of

false reports advocating the purported safety of Lincoln’s

operations and the value of Lincoln’s assets. The class

claimed that by issuing those false reports, Lexecon wrong-

fully assisted in propping up Lincoln Savings long enough

for ACC/Lincoln to sell millions of dollars of worthless

securities. In re American Continental Corp./ Lincoln

Sav. & Loan Sec. Litig., 794 F. Supp. 1424, 1448 (D.

Ariz. 1992).

After extensive discovery, Lexecon filed a motion for

summary judgment, which Judge Bilby denied in a pub-

lished opinion. Jd. at 1448-49: Pet. App. 5a. The court

observed that Lexecon’s reports asserted that Lincoln Sav-

ings was both “sound” and “safe,” even though Lexecon

knew about Lincoln’s prior wrongdoing, having received

and reviewed a Federal Home Loan Bank Board examina-

tion report that catalogued Lincoln’s “extensive regulatory

violations.” The court concluded that material issues of

fact existed as to the “false or misleading” nature of

Lexecon’s representations. 794 F. Supp. at 1448-49.

The claims of the class against Lexecon and the other

remaining defendants proceeded to trial in March 1992.

Judge Bilby, sitting as an MDL transferee judge, trans-

ferred the litigation to his courtroom for trial without

objection from Lexecon. After a four-month trial, Lexe-

con filed a motion for directed verdict. The court denied

that motion, citing evidence that Lexecon had recklessly

“shut [its] eyes” to palpable wrongdoing. CR113 Ex. B

at 11948."

3. Lexecon Settles The Claims Against It To Avoid A Jury

Verdict.

On June 22, 1992, as jury deliberations were about to

commence, Judge Bilby and counsel for Lexecon and the

?“CR” refers to the record below and “LSCR” refers to the

record in Lincoln Savings.

5

class participated in an in-chambers settlement conference.

Having recently lost its motion for directed verdict, Lexe-

con stated that it wished to avoid a jury verdict but did

not want to be perceived as having “settled” for fear of

the effect that might have on Lexecon’s professional repu-

tation. Pet. App. Sa. Attempting to accommodate Lexe-

con’s purported concern, Judge Bilby and class counsel

agreed to a settlement that was Structured so as not to

appear to be a standard settlement. Under that agree-

ment, Lexecon ultimately paid over $700,000 to the class

in exchange for being dismissed. Pet. App. 6a. After

Lexecon settled, jury deliberations commenced as to the

remaining defendants. The jury found all of them liable

and assessed damages that totaled $3 billion. LSCR4044-

47. Judge Bilby later remitted the award to a total of

$1.2 billion. LSCR4325.

4. Lexecon Sues Class Counsel In Federal Court In Chicago

And The Lincoln Savings Judge Holds That Lexecon’s

Principal Allegations Are “False.”

On November 25, 1992, petitioners filed this diversity

action in the Northern District of Illinois against the

Milberg Defendants, the Cotchett Defendants, and other

class counsel. Petitioners alleged state law claims for

malicious prosecution, abuse of process, tortious inter-

ference, defamation, and commercial disparagement. CR]

“{ 2-6; Pet. App. 6a. Petitioners charged that Lincoln

Savings was “terminated in Lexecon’s and Fischel’s favor,”

that class counsel “implicitly acknowleg[ed] the lack of

merit in their complaint” by agreeing to a settlement with

Lexecon, and that Lexecon “voluntarily” decided to “bene-

fit the Class” by “returning the professional fees paid to

it by Lincoln and Keating.” CR1 9 63-64, 92.

On December 7, 1992, Judge Bilby, who was presiding

over the still-pending Lincoln Savings litigation, convened

a hearing by telephone with class counsel and Lexecon’s

6

trial counsel.’ Judge Bilby expressed grave concern over

Lexecon’s allegations, suggested that Lexecon may have

perpetrated a “fraud on the Court,” and directed the par-

ties to file submissions explaining “why I shouldn’t . . . set

aside the dismissal of this case without prejudice and rein-

State the plaintiffs’ claim.” CR18 Ex. E at 6. During a

subsequent court session, Judge Bilby expressed vexation

over Lexecon’s characterization in its complaint of its pay-

ment to the class as “voluntary,” stating “you have no right

to come in and misrepresent to a judge in Chicago...

what this, quote, settlement or resolution was, because... .

it wasn’t any voluntary payment on your part.... I can

put up with ornery lawyers, I can put up with contentious

lawyers, but I can’t put up with the kind of stuff that

absolutely misrepresents what was done in my chambers

by a group of lawyers.” CR18 Ex. K at 44-45.

On December 31, 1992, Judge Bilby issued an order

“to clarify the terms and conditions” of the dismissal of

Lexecon. See Pet. App. 7a-8a n.2. That order outlined

Lexecon’s principal allegations in the suit against class

counsel and held those allegations to be “false” (id.):

The Court finds these paragraphs [Compl. 9€ 63, 64,

and 92] to be a false description of the conditions

under which Lexecon was dismissed from [the Lin-

coln Savings] case. . . . [I]t does not meet with reality

and is factually incorrect. ‘

Judge Bilby emphasized that Lexecon’s payment to the

class was not “voluntary,” but was made so that Lexecon

would not have to face a “catastrophic verdict” (id.):

[A]t no time did this Court treat Lexecon’s self-

serving statements as representing “voluntary” con-

? Although trial had concluded, no final judgment had been entered

because various settlements and other matters had not been com-

pleted. A final judgment order ultimately was entered in Lincoln

Savings in March 1994. CR431 Ex. B.

-

duct. Lexecon did not wish to submit its case to the

jury and this Court's “resolution” was the bargained-

for method of avoiding a possible Catastrophic verdict.

In January 1993. petitioners appealed Judge Bilby’s

December 31, 1992 order to the Ninth Circuit. Recog-

nizing the case-dispositive significance of that order, Lexe-

con described the order in its Opening brief as “tanta-

mount to a declaratory judgment in favor of Milberg

Weiss as defendants in the Chicago lawsuit.” Br. 19. The

Ninth Circuit dismissed petitioners’ appeal as premature

because a final judgment in Lincoln Savings had not yet

been entered. In March 1994, Judge Bilby entered final

judgment (CR431 Ex. B), but petitioners failed to appeal

from that judgment, and thereby abandoned their oppor-

tunity to challenge the findings made in the December 31,

1992 order.

5. Multidistrict Transfer And Proveedings In The District

Of Arizona.

trict of Arizona, where Judge Bilby was to preside over

the litigation along with the remainder of Lincoln Sav-

ings. As the Ninth Circuit observed in this case, Lexecon

was no stranger to the District of Arizona.” Pet. App.

later made against Lexecon in Arizona, and consented to

the permanent transfer of the Lincoln Savings case to

Arizona for trial.

After the Panel issued its conditional transfer order,

Judge Bilby recused himself because of his personal in-

volvement in the settlement negotiations in Lincoln Sav-

ings. Pet. App. 61. Thus, in June 1993; in accordance

with Section 1407( b)’s provision that MDL Proceedings

8

may be conducted by more than one judge, the Panel

issued a final transfer order transferring the lawsuit to

the District of Arizona, to be supervised by the Hon.

John M. Roll. Pet. App. 100a-02a. The propriety of

that order never has been challenged by petitioners and

cannot be challenged now. See 28 U.S.C. § 1407(e)

(“[nJo proceedings for review of any order of the panel

may be permitted except by extraordinary writ pursuant

to the provisions of title 28, section 1651, United States

Code”) *

In November 1993, Judge Roll, who formerly had been

a judge of the Arizona Court of Appeals, issued an order

dismissing petitioners’ Arizona state law claims for mali-

cious prosecution and abuse of process pursuant to Rule

12(b)(6). Pet. App. 80a-99a. In December 1993, the

Milberg Defendants moved for summary judgment with

regard to petitioners’ remaining claims. CR177; CR181.

Petitioners responded by filing a Rule 56(f) motion to

defer resolution of the motion pending further discovery.

Judge Roll granted Lexecon an opportunity to conduct

discovery in order to respond to the summary judgment

motion. CR 192.*

In August 1994, although discovery had not yet been

completed and defendants’ summary judgment motions

remained pending, petitioners filed a motion requesting

that Judge Roll suggest to the MDL Panel that it remand

the case to Chicago. CR288. Judge Roll determined that

% Petitioners incorrectly contend that the Milberg Defendants

filed a motion with the Panel “[a]fter six months of pretrial pro-

ceedings” had occurred in Chicago, during which the presiding

judge supposedly made several rulings against defendants. Pet. 5.

In fact, the Milberg Defendants filed a notice of related action

with the Panel on February 9, 1993, before defendants filed any

responsive pleading and before the Chicago judge made any rul-

ing. CR12.

* Petitioners leave the impression that defendants did not move

for summary judgment until after petitioners moved for a remand in

August 1994. Pet. 7. In fact, defendants filed those motions more

than seven months before petitioners requested a remand.

9

the question of remand was premature because discovery

was Ongoing, but ruled that petitioners could renew their

request after discovery closed. CR311. After discovery

closed, petitioners renewed their request. CR409. At no

time did petitioners ever request relief from the Panel.

On April 24, 1995, Judge Roll entered summary judg-

ment in favor of the Milberg Defendants on all of peti-

tioners’ claims, except for a defamation claim based on a

letter to the editor of The National Law Journal. Pet.

App. 64a-79a. Judge Roll also entered summary judg-

ment in favor of the Cotchett Defendants on all of peti-

tioners’ claims. /d.

On May 5, 1995, Judge Roll transferred the case to

the District of Arizona pursuant to Section 1404(a) for

trial of the one remaining claim. Pet. App. 61a-62a. Peti-

tioners responded by petitioning for a writ of mandamus,

which the Ninth Circuit denied. Pet. App. 55a-60a. On

July 25, 1995, trial commenced in Tucson on the defama-

tion claim, and_on August 1, 1995, the jury returned a

unanimous verdict in favor of defendants. Pet. App. 53a-

54a.

6. Appellate Proceedings In The Court Below.

On appeal, petitioners challenged the authority of the

district court to transfer the case for trial. However, peti-

tioners did not complain of any error in the court’s con-

duct of the trial proceedings, did not identify any prejudice

resulting from the fact that those proceedings took place

in Tucson rather than in Chicago, and did not allege any

jurisdictional or venue defects associated with proceeding

in the District of Arizona. Petitioners’ sole contention

was that they were entitled to start this litigation over

again in Chicago because, by virtue of the district court's

allegedly erroneous refusal to suggest a remand to the

MDL Panel and the related transfer order, petitioners

were deprived of their initial choice of forum.*

5 Petitioners also complained that the district court should have

suggested a remand before adjudicating long-pending summary

10

Petitioners also challenged the district court’s Rule

12(b)(6) dismissal of their malicious prosecution and

abuse of process claims, contending that they had alleged

the necessary elements of those claims under Arizona law,

and that all the allegations had to be taken as true even

though the Lincoln Savings trial judge had entered a final,

unappealed order establishing a number of them to be

false. Because the district court entered its Rule 12(b) (6)

dismissal before petitioners requested a remand, however,

petitioners did not challenge the court's authority to ad-

judicate that motion.

The Ninth Circuit affirmed. Pet. App. la-52a. With

regard to the district court’s transfer order, the Ninth

Circuit concluded that the district court’s authority to

transfer the case for trial under Section 1404(a) is con-

firmed by the relevant Statutory language and legislative

history, the Rules promulgated by the MDL Panel, and

unanimous judicial practice. Pet. App. 1 la-18a.

“With regard to the district court’s Rule 12(b)(6) dis-

missal of petitioners’ malicious ion and abuse of

process claims, the Ninth Circui emphasized that it re-

viewed that dismissal “de novo, with all factual allegations

taken as true and construed in the light most favorable to

Lexecon.” Pet. App. 21a. The Ninth Circuit further

emphasized that in assessing the sufficiency of petitioners’

pleadings, it confined its review to those pleadings except

insofar as it looked to court orders in Lincoln Savings

that bore directly on petitioners’ claims. Pet. App. 22a-

23a. Applying those settled Principles, the Ninth Circuit

agreed with the district court that petitioners failed to

State a claim for either malicious prosecution or abuse of

process under Arizona law. Pet. App. 21a-28a.

judgment motions, but similarly did not assign any legal or factual

error in the actual adjudication of those motions. Petitioners have

not challenged in this Court the propriety of the summary judg-

ment proceedings.

1]

REASONS FOR DENYING THE WRIT

The petition should be denied because the primary

question presented has been answered consistently by the

lower federal courts for many years, has seldom been the

subject of dispute by litigants, and could not affect the

result here in any event.

1. The Ninth Circuit’s trial transfer determination does

not conflict with the decision of any court. No court ever

has denied the authority of a transferee district court,

while conducting “pretrial proceedings” under Section

1407, to adjudicate Section 1404(a) transfer motions, as

expressly authorized by the MDL Panel’s own Rules. The

reason is that the practice comports with the plain lan-

guage of Sections 1407 and 1404(a) and with the appli-

cable legislative history.

2. Even if the transfer question warranted review in

the abstract, this case would not be an appropriate vehicle

because a ruling on the question could not affect the out-

come. Although petitioners argue that the district court

abused its discretion in refusing to Suggest a remand and

in proceeding instead to preside at trial, they have never

disputed that the district court had jurisdiction and venue

to conduct those proceedings. Nor have petitioners ever

assigned any error in the actual conduct of trial or alleged

any prejudice resulting from those proceedings, other than

to contend that petitioners’ initial choice of forum was

frustrated. Those omissions are dispositive because “[o]n

the hearing of any appeal or writ of certiorari in any

case, the court [is required to] give judgment . . . without

regard to errors or defects which do not affect the sub-

stantial rights of the parties.” 28 U.S.C. § 2111. As this

Court unanimously held earlier this Term in rejecting a

similar attack on a judgment rendered by a federal court

of competent jurisdiction, solely on the basis of an errone-

ous refusal to remand, the result petitioners seek here is

“incompatible with the fair and unprotracted administra-

tion of justice.” Caterpillar, Inc. v. Lewis, 117 S. Ct.

467, 477 (1996).

12

In addition, the Ninth Circuit's holding concerning

transfer warrants no further review because petitioners

never sought a remand from the MDL Panel, which is the

only tribunal empowered to order the relief petitioners

desired. Petitioners have waived any right to complain

that they never received the relief that only the MDL

Panel could grant. Indeed, given that petitioners’ conten-

tions directly attack the facial validity of one of the Rules

of Procedure promulgated by the Panel, and that petition-

ers have deprived the Panel of any Opportunity to pass on

that attack in the first instance, it would be especially

inappropriate to grant review.

3. The dismissal of petitioners’ malicious prosecution

and abuse of process claims likewise does not warrant re-

view. In affirming that dismissal, the Ninth Circuit ap-

plied wholly uncontroversial rules for assessing the suffi-

ciency of pleadings. That ruling does not conflict with the

decision of any court, and at most involves a Case-specific

determination that presents no substantial or recurring

issue of federal law.

I. THE PRIMARY QUESTION PRESENTED DOES

NOT WARRANT REVIEW BY THIS COURT.

A. The Ninth Circuit’s Decision Does Not Conflict With

The Decision Of Any Court.

The Ninth Circuit’s affirmance of the district court’s

trial transfer order warrants no review because, as peti-

tioners themselves concede (Pet. 20), that decision does

not conflict with the decision of any court. To the con-

trary, every court that has confronted the issue—including

eight different courts of appeals—either has approved or

recognized without criticism the power of transferee dis-

trict courts to order changes of venue for trial to their

own districts under Section 1404(a). E.g., In re Korean

Air Lines Disaster, 829 F.2d 1171, 1178 (D.C. Cir.

1987) (D. H. Ginsburg & Williams, JJ., concurring in

panel opinion), aff'd on other grounds sub nom. Chan

13

v. Korean Air Lines, 490 U.S. 122 (1989); Pfizer, Inc.

v. Lord, 447 F.2d 122, 125 (2d Cir. 1971); In re Fine

Paper Antitrust Litig., 685 F.2d 810, 820 (3d Cir. 1982),

cert. denied, 459 U.S. 1156 (1983); In re Food Lion,

Inc. Fair Labor Standards Act “Effective Scheduling”

Litig., 73 F.3d 528, 532 (4th Cir. 1996); In re Bendectin

Litig., 857 F.2d 290, 295 (6th Cir. 1988), cert. denied,

488 U.S. 1006 (1989); Kohr v. Allegheny Airlines, Inc.,

504 F.2d 400, 402 (7th Cir. 1974), cert. denied, 421

U.S. 978 (1975); Washington Pub. Utils. Group v.

United States Dist. Ct., 843 F.2d 319, 326 (%h Cir.

1987); Johnson v. Continental Airlines Corp., 964 F.2d

1059, 1061 (10th Cir. 1992).*

So established is the power that it long has been

memorialized in the MDL Panel’s own Rules and in the

* See also In re Mahurkar Double Lumen Hemodialysis Catheter

Patent Litig., 750 F. Supp. 330, 382 (N.D. Ill. 1990) (Easterbrook,

J., sitting by designation); In re Air Crash Disaster at Detroit

Metropolitan Airport, 737 F. Supp. 391, 393 (E.D. Mich. 1989) ; Jn

re Tax Refund Litig., 723 F. Supp. 922, 924 (E.D.N.Y. 1989) ;

In re Longhorn Sec. Litig., 573 F. Supp. 274, 276 (W.D. Okla. 1983) ;

In re Viatron Computer Sys. Corp. Litig., 86 F.R.D. 431, 4382

(D. Mass. 1980); In re Air Crash Disaster Near Chicago, Illinois,

476 F. Supp. 445, 450 (J.P.M.L. 1979) ; In re Anthracite Coal Anti-

trust Litig., 436 F. Supp. 402, 403-04 (J.P.M.L. 1977) ; In re Bristol

Bay, Alaska, Salmon Fishery Antitrust Litig., 424 F. Supp. 504,

507 (J.P.M.L. 1976) ; Alaska Airlines v. United States, 399 F. Supp.

906, 912 (N.D. Cal. 1975) ; In re Molinaro/Catanzaro Patent Litig.,

402 F. Supp. 1404, 1405-06 (J.P.M.L. 1975): In re Bomb Disaster

at Roseville, Calif., 339 F. Supp. 1400, 1405-06 (J.P.M.L. 1975);

In re Nat'l Student Mktg. Litig., 358 F. Supp. 1303, 1304 (J.P.M.L.

1973) ; In re Brown Co. Sec. Litig., 355 F. Supp. 574, 577 (S.D.N.Y.

1973); In re Air Crash Disaster at Toronto Int'l Airport, 346

F. Supp. 533, 584 (J.P.M.L. 1972); In re Air Crash Disaster at

Huntington, W. Va., 342 F. Supp. 1400, 1403 n.4 (J.P.M.L. 1973) ;

In re CBS Color Tube Patent Litig., 342 F. Supp. 1403, 1404-05

(J.P.M.L. 1972); Im re Air Crash Disaster Near Hanover, N.H.,

342 F. Supp. 907, 909 (D.N.H. 1971) ; Jack Winter, Inc. v. Koratron

Co., 326 F. Supp. 121, 123 (N.D. Cal. 1971) ; In re Grain Shipments,

300 F. Supp. 1402, 1404 (J.P.M.L. 1969).

14

Manual for Complex Litigation. MDL Rule 14(b) pro-

vides :

Each transferred action that has not been terminated

in the transferee district court shall be remanded by

the Panel to the transferor district for trial, unless

ordered transferred by the transferee judge to the

transferee or other district under 28 U.S.C. § 1404(a)

or... § 1406.

The Manual for Complex Litigation concurs:

[T]he [MDL] transferee judge may transfer cases

for trial to any district, including the § 1407 trans-

feree district, permitted by 28 U.S.C. § 1404. ...

This procedure may enable the transferee judge to

transfer some or all of the cases to the judge’s own

court for trial.

Manual for Complex Litigation, Third § 31.132 at 254

& n.807 (1995); accord Patricia D. Howard, A Guide to

Multidistrict Litigation, 124 F.R.D. 479, 479 (1989);

Stanley A. Weigel, The Judicial Panel on Multidistrict

Litigation, 78 F.R.D. 575, 581 n.42 (1977).’

The absence of a conflict on the question is by itself

a strong reason to conclude that petitioners have failed

7 Although acknowledging the lower courts’ unanimous approval

of the transfer practice at issue, petitioners and the dissenting judge

below insist that “not a single commentator” has found statutory

support for that practice. Pet. 15. In fact, commentators repeatedly

have done so. Robert A. Ragazzo, Transfer and Choice of Federal

Law: The Appellate Model, 93 Mich. L. Rev. 703, 751-52 (1995) ; see

Gregory R. Harris, Note, Consolidation and Transfer in the Federal

Courts: 28 U.S.C. Section 1407 Viewed in Light of Rule 42(a) and

28 U.S.C. Section 1404(a), 22 Hastings L.J. 1289, 1325-26 (1971);

Comment, The Judicial Panel and the Conduct of Multidistrict

Litigation, 87 Harv. L. Rev. 1001, 1017-23, 1030-32 (1974). Many

additional commentators have recognized the practice without criti-

cism. E.g., William W. Schwarzer, et al., Judicial Federalism: A

Proposal to Amend the Multidistrict Litigation Statute to Permit

Discovery Coordination of Large-Scale Litigation Pending in State

and Federal Courts, 73 Tex. L. Rev. 1529, 1534 (1995); Richard

L. Marcus, Confronting the Consolidation Conundrum, 1995 BYU

L. Rev. 879, 885.

15

B. The Ninth Circuit's Decision Is Correct.

The transfer issue also warrants no further revi -

Cause the prevailing rule followed by the Ninth Circus

is fully consistent with the plain language of Sections 1407

and (1404( a) and with the relevant legislative history.

Petitioners contend that there is an irreconcilable conflict

between those two statutes so that, in cases governed by

Section 1407, Section 1404 cannot apply. But that con-

flict is illusory. Taken together, those provisions establish

that “Congress contemplated that transferred cases might

never return to the transferor courts, but instead might

be . . . transferred under Section 1404(a) to that same

transferee court.” Korean Air Lines, 829 F.2d at 1178

(D. H. Ginsburg & Williams, JJ., concurring).

The trial transfer order affirmed by the Ninth Circui

ircuit

finds ample Support in the plain terms of Section 1407,

as well as in the equally plain terms of Section 1404(a).

Section 1407, The trial transfer order at issue was ex-

pressly authorized by Section 1407 (b), which qunetein

the MDL transferee judge to conduct “pretrial proceed-

ings. 28 U.S.C. § 1407(b). The term “pretrial proceed-

ings” plainly includes rulings not only on dispositive mo-

tions but also on motions for transfer under Section

1404(a). See In re CBS Color Tube Patent Litig., 342

F. Supp. 1403, 1404-05 (J.P.M.L. 1972) (“{a] transferee

judge under Section 1407 has the responsibility for all

pretrial pr ngs in litigation assigned to him and the

[Section l (a)] motion before [the transferee court}

1s Certainly a ‘pretrial’ motion”); In re Mahurkar Double

Lumen Hemodialysis Catheter Patent Litig., 750 F. Supp

330, 332 (N.D. Ill. 1990) (Easterbrook, J., sitting by

16

designation) (“[o]ne of the pretrial questions within my

province is whether to accept the magistrate’s report and

transfer the action to Illinois (that is, to me) under

§ 1404 ... . Mahurkar’s [Section 1404] motion is

granted”); Grevhound Computer Corp. v. IBM Corp.,

342 F. Supp. 1143, 1145 (D. Minn. 1972) (same);

In re Antibiotic Antitrust Actions, 333 F. Supp. 299, 303

(S.D.N.Y.) (same), mandamus denied sub nom. Pfizer,

Inc. v. Lord, 447 F.2d 122 (2d Cir. 1971); Jack Winter,

Inc. v. Koratron Co., 326 F. Supp. 121, 123 (N.D. Cal.

1971) (same). Indeed, petitioners’ amicus, Professor

Charles Alan Wright, has confirmed in his treatise that a

motion to transfer under Section 1404(a) is a “pretrial

motion” that “falls naturally within the transferee judge’s

Statutory power to control all pretrial proceedings.” 15

Charles Alan Wright, Arthur R. Miller & Edward H.

Cooper, Federal Practice and Procedure § 3866 at 620

(2d ed. 1986) (further confirming that “there are strong

reasons supporting the practice of using Section 1404(a)

to enable a Section 1407 transferee judge to retain and

determine the merits of the coordinated cases”).

Petitioners and their amicus nowhere address Section

1407(b) or the transferee judge’s statutory power to con-

duct “pretrial proceedings.” Instead, they rest their argu-

ment on a single clause in Subparagraph (a) that ad-

dresses the duties of the Panel—the clause providing that

“{eJach action so transferred shall be remanded by the

panel at or before the conclusion of such pretrial proceed-

ings . .. unless it shall have been previously terminated.”

28 U.S.C. § 1407(a); see Pet. 12; Brief of Amicus

Charles Alan Wright at 3.

As the Ninth Circuit correctly observed, however, that

argument attributes unintended significance to Section

1407(a). The “shall be remanded” clause of Section

1407(a) was concerned with “creating and defining the

functions of the JPML, not [with] redefining or circum-

scribing the traditional powers of the district court to

17

which a case has been transferred.” Pet. App. 15a.

Neither that clause, nor any other provision anywhere in

Section 1407, purports to prohibit the transferee judge

from considering a Section 1404(a) motion in the course

of conducting “pretrial proceedings.”

Section 1404(a). The transferee court's authority to

order trial transfers is further confirmed by the plain lan-

guage of Section 1404(a), which provides that “(flor the

convenience of parties and witnesses, in the interest of

justice, a district court may transfer any civil action to

any other district or division where it might have been

brought.” 28 U.S.C. § 1404(a). Nothing in that cate-

gorical language even suggests that the transfer power

conferred therein cannot be exercised by MDL transferee

judges. To the contrary, as this Court has held, “(t}he

reach of ‘any civil action’ is unmistakable. The phrase is

used without qualification, without hint that some should

be excluded.” Ex parte Collett, 337 U.S. 55, 58 (1949).

Petitioners nonetheless suggest that the transfer order

at issue did not comply with Section 1404(a) because

“that provision only authorizes a district court to transfer

a case to ‘any other district.’” Pet. 12 (emphasis in

original). That suggestion ignores the most natural read-

ing of the statutory phrase “other district”—i.e., as a dis-

trict “other” than the district in which the action was filed.

Under that straightforward reading, the trial transfer at

issue here was to an “other” district. Absent that transfer

order, the trial would have occurred in Illinois. Thus, in

accordance with this Court’s “common-sense approach . . .

in interpreting § 1404(a),” Continental Grain Co. vy.

Barge FBL-585, 364 U.S. 19, 24-27 (1960), there is

every reason to read the statute as authorizing precisely

what occurred here—a transfer for trial from Illinois to

Arizona.

This reading also avoids an odd consequence of peti-

tioners’ proposed interpretation. Under petitioners’ “other”

district theory, Judge Roll as MDL transferee judge could

18

have transferred this case for trial to any other district,

but not to the District of Arizona. That would make no

sense. It is therefore no wonder, as the dissent below

observed (Pet. App. 43a), that no federal court of appeals

ever has addressed, let alone credited, petitioners’ “other”

district theory.

Petitioners and their supporting amicus also suggest

that ordering Section 1404(a) transfers for trial is incon-

sistent in some way with Congress’ 1968 decision to con-

fine Section 1407 to pretrial proceedings, and with Con-

gress’ subsequent determination to extend Section 1407 to

cover trial only in a limited class of proceedings. See

Pet. 12-13; Brief of Amicus Charles Alan Wright at 4-6.

In attempting to attribute dispositive significance to those

actions by Congress, petitioners and amicus conveniently

ignore an important feature unique to Section 1407: it

authorizes transfers regardless of whether the transferee

district is one in which the action could have been brought

originally. In contrast, Section 1404(a) trial transfers can

be made only to districts or divisions where the action

“might have been brought.” 28 U.S.C. § 1404(a). Given

the significant differences in the two statutes, it hardly

follows that by declining to authorize Section 1407 trans-

fers for trial in all civil actions, Congress intended to bar

MDL judges from ordering Section 1404(a) transfers in

appropriate circumstances.

2. The Legislative History Of Section 1407 Supports

The Decision Below.

The Ninth Circuit's decision finds further support in

the legislative history of Section 1407, which reveals that

the MDL statute was intended to expand the judiciary’s

transfer powers, not to preclude or abridge the use of

Section 1404. The House Report states that the term

“pretrial proceedings” in Section 1407(b) broadly encom-

passes “the practice and procedure which precede trial of

an action” (see H. Rep. No. 90-1130, reprinted in 1968

U.S.C.C.A.N. 1898, 1900), and stresses that Section 1407

19

does not prevent transfers under Section 1494(a) (id.

(emphasis added) ):

[T]he bill provides fur the transfer of venue of an

action for the limited purpose of conducting coordi-

nated pretrial proceedings. The proposed statute

affects only the pretrial stages in multidistrict liti-

gation. It would not affect the place of trial in any

case or exclude the possibility of transfer under other

Federal statutes.

Indeed, in discussing the “shall be remanded” clause in

Subparagraph (a), the House Report again suggests the

Possibility of Section 1404(a) transfers (id. at 1901-02

(emphasis added) ):

The subsection requires that transferred cases be

remanded to the originating district at the close of

coordinated pretrial proceedings. The bill does not.

therefore, include the trial of cases in the consoli-

dated proceedings. The experience of the Coordinat-

ing Committee was limited to pretrial matters, and

the Committee consequently considers it desirable to

keep this legislative proposal within the confines of

that experience. Additionally, trial in the originating

district is generally preferable. . . . Of course, 28

U.S.C. 1404, providing for changes of venue gen-

erally, is available in those instances where transfer

of a case for all purposes is desirable.

Accord §. Rep. No. 90-454 at 5 (1967) (“28 US.C.

1404 . . . is available for those instances where transfer

of a case for all purposes is desirable”).

In sum, the trial transfer power unanimously approved

by the courts over the past thirty years is amply supported

by the applicable statutory language and legislative his-

tory. Although petitioners ask the Court to assume an

irreconcilable conflict between Sections 1404(a) and

1407, petitioners’ mode of statutory construction is con-

trary to the usual rule that statutes should be read to

avoid such a conflict and to give effect to both statutes.

20

See, e.g., Vimar Seguros y Reaseguros, S.A. v. M/V Sky

Reefer, 115 S. Ct. 2322, 2327 (1995). That is easily

done here: as the Ninth Circuit held, Section 1404(a)

and Section 1407 are complementary, not conflicting,

statutory tools for resolving complex litigation justly, effi-

ciently, and consistently.

C. Review Of The Transfer Question Would Be

Premature.

Review of the Ninth Circuit’s ruling on the transfer issue

also would be unwarranted because it would be premature.

Prior to this case, according to Judge Kozinski’s dissent,

the only court of appeals decision that had “seriously

addresse[d]” the transfer practice at issue was the Second

Circuit’s 1971 decision in Pfizer v. Lord. Pet. App. 34a

(Kozinski, J., dissenting). In addition, again according

to Judge Kozinski, at least some of the arguments raised

by petitioners had never before been considered by any

court of appeals. /d. at 43a.

Thus, if this Court were to conclude that the dissent

has cast a new light on the transfer practice challenged

here, the Court would benefit from further consideration

of the matter by the lower federal courts. Because other

litigants are likely to raise Judge Kozinski’s arguments in

other cases, there is no reason to rush to review the first

case in which those arguments made an appearance.

Il. THIS CASE WOULD PROVIDE AN INAPPROPRI-

ATE VEHICLE FOR REVIEWING THE TRANSFER

ISSUE.

Even if the primary question otherwise warranted re-

view, which it does not, this would be the wrong case for

such review because no resolution of the transfer question

by this Court could alter the result reached here. That is

so for two reasons: (1) under 28 U.S.C. § 2111, this

Court’s recent decision in Caterpillar, and numerous other

authorities, the proceedings following the allegedly errone-

21

Ous refusal to remand would have to be sustained because

the district court had jurisdiction and venue to preside

Over those proceedings and petitioners have failed to as-

sign any error or allege any prejudice in the conduct of

those proceedings; and (2) petitioners waived their argu-

— by failing to request a remand from the MDL

anel.

A. There Was No Error Or Prejudice In The Proceed-

ings Following The Transfer For Trial.

Petitioners have never contended that the district court

lacked jurisdiction or venue to conduct the trial. Nor

have they complained of any error in the conduct of those

proceedings; the only ruling that petitioners have ever

challenged as substantively erroneous is the Rule 12(b) (6)

dismissal of their malicious prosecution and abuse of

process claims, but that ruling was a_ pre-trial disposi-

tion, and was made months before petitioners even re-

quested a remand to Chicago. Finally, petitioners never

have contended that they experienced any actual prejudice

because proceedings took place in Tucson rather than in

Chicago. On these facts, no further review is warranted

because any error in the decision below would be harm-

less. See 28 U.S.C. § 2111 (“[o]n the hearing of any

appeal or writ of certiorari in any case, the court shall

give judgment after an examination of the record without

regard to errors or defects which do not affect the sub-

Stantial rights of the parties”) .*

* Petitioners’ contention that they were deprived of their choice

of forum by itself warrants no relief because the choice of venue

is only a privilege that will give way, as Sections 1404(a) and 1407

establish, in appropriate circumstances. See Burlington Northern

R.R. v. Ford, 504 U.S. 648, 651 (1992) (“[vlJenue rules generally

reflect [only] equity or expediency in resolving disparate interests

of parties to a lawsuit in the place of trial”). Indeed, this Court has

held that new statutes concerning venue and transfer—statutes that

clearly can have a direct impact on plaintiffs’ choice of forum—

may be applied retroactively to cases pending at the time of the

statute’s enactments because such statutes are “wholly procedural”

22

To our knowledge, no court ever has reversed a judg-

ment on the merits based on an erroneous transfer where,

as here, (1) trial proceedings took place in a district

where the action could have been brought originally, and

(2) no showing of material error or prejudice was made.

After all, permitting such reversals would give a losing

litigant a second bite at the apple, without any reason to

believe that justice was not done in the first trial. See

Magnetic Eng’g & Mfg. Co. v. Dings Mfg. Co., 178 F.2d

866, 869 (2d Cir. 1950) (“[u]pon an appeal from a final

judgment against it, it will be difficult for the plaintiff to

show that it lost the case because of the handicap of the

transfer”); In re Josephson, 218 F.2d 174, 180 (1st Cir.

1954) (“it is difficult to see” how a reviewing court could

vacate a judgment, entered after an ~‘.egedly erroneous

transfer, where the judgment »’_ .endered in a district in

which the action co'* nave been brought); Filmline

(Cross-Country) Prod. v. United Artists Corp., 865 F.2d

513, 520 (2d Cir. 1989) (“[s]hould [the movant] finally

lose on the merits below, any error in the interlocutory

order” denying a change of venue probably would not

constitute reversible error because the movant “could

hardly show that a different result would have been

reached had the suit been transferred” (internal citations

omitted) ); Jn re Dalton, 733 F.2d 710, 717 (10th Cir.

1984) (recognizing “difficult burden of demonstrating

prejudice” stemming from allegedly erroneous transfer

after entry of final judgment); 15 Charles Alan Wright,

Arthur R. Miller & Edward H. Cooper, Federal Practice

and Procedure § 3855 at 472-74 (2d ed. 1986) (“[t]he

[Section 1404(a)] order can be reviewed on appeal from

a final judgment in the action, although it is very unlikely

to constitute reversible error at that stage of the case”).

Indeed, this Court recently confirmed that when a plain-

tiff receives an adjudication free of error and prejudice

provisions. Denver & Rio Grande Western R.R. v. Brotherhood of

R.R. Trainmen, 387 U.S. 556, 563 (1967): Ex parte Collett, 337

U.S. at 71.

23

in a federal court with jurisdiction and venue—as peti-

tioners did here—considerations of finality, efficiency, and

economy Override any error in a prior refusal to order a

remand to plaintiff's chosen forum. In Caterpillar, Inc. vy.

Lewis, 117 S. Ct. 467 (1996), a defendant improperly

removed a state court case to federal court purportedly on

the basis of a diversity of citizenship. A remand was

erroneously denied. But because certain parties were later

dropped, diversity did exist at the time of trial and

judgment.

On appeal, plaintiff argued that he was entitled to

another trial because he had been erroneously denied

his right to choose the forum. The Court held that his

interests were overshadowed by “considerations of finality,

efficiency, and economy” (id. at 476-77):

These arguments are hardly meritless, but they run

up against an overriding consideration. Once a

diversity case has been tried in federal court, with

rules of decision supplied by state law under the

regime of Erie . . . , considerations of finality, effi-

ciency, and economy become overwhelming. ... To

wipe out the adjudication post-judgment, and return

to state court a case now satisfying all federal juris-

dictional requirements, would impose an exorbitant

cost on our dual court system, a cost incompatible

with the fair and unprotracted administration of

justice.”

*The “considerations of finality, efficiency, and economy”

resulted in this Court's decision in Caterpillar are of Sh

significance in Section 1407 cases. Judicial efficiency and finality

were primary factors motivating its enactment and Congress’ inter-

est in those salutary goals is evident throughout the statute. See

e.g. 28 U.S.C. §1407(e) ( restricting appellate review of Panel

transfer decisions only to mandamus review and thereby ensuring

that transfer decisions would not be subject to review at end of

— amp egrae or to the final judgment in this case

undermine the interests of efficien i i

pe > ened cy and finality that lie at the core

24

Those same considerations would dictate the same re-

sult here. Like the plaintiff in Caterpillar, petitioners’ only

complaint is that their initial choice of forum was frus-

trated. As in Caterpillar, any error in that ruling would

be overcome by “considerations of finality, efficiency, and

economy” that arise from the final judgment in this case,

which was entered after full discovery and a jury trial.

Indeed, that conclusion applies with even greater force

in this case because the federalism concerns that inherently

accompanied the divestiture of state court jurisdiction in

Caterpillar are not present here. In addition, unlike in

Caterpillar, jurisdiction and venue in the District of Ari-

zona existed all along, and petitioners have not suggested

any differences—procedural or otherwise—in the way the

lawsuit would have proceeded had it been litigated in the

Northern District of Illinois rather than in the District of

Arizona. Because “[njothing but a waste of time and

resources would be engendered by remanding to the Dis-

trict Court or by forcing the[] parties to begin anew,” no

further review is warranted. Newman-Green, Inc. v. Al-

fonzo-Larrain, 490 U.S. 826, 838 (1989).

B. Petitioners Waived Their Challenge By Failing To

Ask The Multidistrict Panel For A Remand.

Petitioners’ challenge to the ruling below also is unavail-

ing because they never asked the MDL Panel to remand

the case to Chicago, even after the district court refused

to suggest a remand. Section 1407 provides that remands

to transferor courts are to be made only “by the Panel”

and are reviewable only by a petition for a writ of man-

damus. See 28 U.S.C. §§ 1407(a), (e). The MDL Rules

state that the Panel shall consider whether to remand a

transferred action on: (1) motion of any party; (2) sug-

gestion of the transferee court; or (3) the Panel’s own

initiative. MDL Rule 14(c). Although Rule 14(d) states

that “[t}]he Panel is reluctant to order remand absent a

suggestion of remand from the transferee district court,”

25

Rule 14(c) provides that the Panel can order a remand

without such a suggestion on motion or sua sponte.

Petitioners, however, presented their remand request

only to the district court. They never sought relief from

the MDL Panel, even though the Panel alone could

order the relief petitioners were seeking, and even though

petitioners’ arguments assailed the facial validity of one

of the Panel’s Rules. See MDL Rule 14(b). That failure

should foreclose petitioners from bringing their arguments

here. Congress has seen fit to vest in the Panel—made

up of seven experienced federal judges appointed by the

Chief Justice of the United States—exclusive authority to

order Section 1407 transfers and remands and to promul-

gate MDL Rules of Procedure. Petitioners’ end-run around

the Panel not only threatened to subvert the Panel’s au-

thority and the rules concerning appellate review of Panel

decisions, but also prevented the Panel from addressing

petitioners’ attack on one of its Rules and thus deprived

this Court of the benefit of the Panel's experience and

judgment.

Petitioners defend their failure to take their remand re-

quest to the Panel by contending that they were prevented

from doing so because: (1) the “proper practice” was to

request relief from the district court in the first instance;

and (2) once the district court denied petitioners’ motion

for remand and simultaneously ordered a transfer for trial,

it was too late to go to the Panel. Pet. 18 n.8. But noth-

ing in the MDL Rules barred petitioners from going di-

rectly to the Panel for relief during the months after they

had sought a remand from the district court—or even

after the district court had entered a transfer order that,

according to petitioners, was barred by Section 1407."

™ Certainly, petitioners were far from reticent when it came to

devising and using aggressive tactics to stop the transferee judge

from presiding over the litigation. For example, after Judge Roll

initially decided to hold petitioners’ remand request in abeyance

26

In sum, petitioners’ failure to request a remand from

the only tribunal with authority to grant a remand is

another reason why no further review of this case is

warranted.

Ill. THE RULE 12(b)(6) DISMISSAL ORDER WAR-

RANTS NO FURTHER REVIEW.

Petitioners also seek review of the Rule 12(b)(6) dis-

missal of petitioners’ state law malicious prosecution and

abuse of process claims, not because petitioners question

the district court’s authority to order that dismissal, but

because in affirming that dismissal the Ninth Circuit sup-

posedly engaged in improper fact finding beyond the four

corners of petitioners’ complaint. Review of that question

would be wholly unwarranted because the Ninth Cir-

cuit’s ruling follows the usual rules for adjudicating Rule

12(b)(6) motions, does not conflict with the decision of

any court, and thus at most presents a case-specific issue

concerning the resolution of a routine motion."

First, the Ninth Circuit's affirmance of the dismissal of

petitioners’ state law malicious prosecution claim warrants

until the close of discovery, petitioners promptly moved for recon-

sideration. CR328. When that motion failed, petitioners upped the

ante by asking Judge Roll to recuse himself. CR343. Petitioners

then attempted to fortify their pending motion for recusal by

subpoenaing Judge Bilby, demanding his testimony and production

of his bench files, and thereby necessitating a motion to quash filed

by the United States Attorney for the District of Arizona. CR386,

CR394.

'! Without citation of authority, petitioners contend that their

second question presented need not be considered should the Court

grant certiorari and reverse on the transfer issue, because that

result somehow would render the district court’s and the Ninth

Cireuit’s Rule 12(b) (6) decisions a nullity. Pet. 27 n.9. Particu-

larly in light of this Court’s recent Caterpillar decision, however,

that contention is specious. Indeed, the justification for rejecting

that contention under Caterpillar is particularly strong given that

petitioners never have disputed the MDL transferee judge's author-

ity to adjudicate defendants’ Rule 12(b)(6) motions and do not

do so here.

27

no further review because that decision is in accordance

with accepted standards for adjudicating Rule 12(b)(6)

motions. Although petitioners contend that the Ninth

Circuit ignored the principle that “a court must accept the

truth of all allegations in the plaintiff's complaint” (Pet.

22), the decision below belies that charge (Pet. App.

21a):

We now turn to Lexecon’s appeal from the dismissal

by the district court under Fed. R. Civ. P. 12(b)(6)

of its malicious prosecution and abuse of process

claims. Our review of this dismissal is de novo, with

all factual allegations taken as true and construed

in the light most favorable to Lexecon.

Similarly, it was hardly controversial for the court to have

relied on final orders issued by another federal court in a

related case. See Pet. 22a-23a ‘citing cases); Papasan v.

Allain, 478 U.S. 265, 268 n.i (1986) (in considering

Rule 12(b)(6) motion, “we are not precluded . . . from

taking notice of items in the public record,” including

“historical facts” that form the basis for the claims for

relief); SA Charles Alan Wright & Arthur R. Miller,

Federal Practice and Procedure § 1357 at 299 (2d ed.

1990) (“matters of public record, orders, items appearing

in the record in the case, and exhibits attached to the

complaint” may be considered in adjudicating a Rule

12(b)(6) motion).

Petitioners suggest that “[i]n the court’s view, it is per-

fectly appropriate for a court to use any material in the

‘public record’—which could include, for example, news-

paper articles, investigative reports, and all sorts of public

filings by private parties—as a basis for rejecting, at the

motion to dismiss stage, the factual assertions in a plain-

tiffs complaint.” Pet. 22 (citing Pet. App. 23a). In fact,

the Ninth Circuit neither did nor said anything resembling

petitioners’ account. Instead, on the basis of “ample au-

thority” authorizing judicial notice of “court records in

related or underlying cases” in connection with Rule

28

12(b)(6) motions, the Ninth Circuit looked only to Judge

Bilby’s published summary judgment opinion and his De-

cember 31, 1992 order in determining that petitioners had

failed to state a claim. Pet. App. 22a-23a. As the Ninth

Circuit observed, that approach was not only authorized

by law, but dictated by common sense. /d. at 23a. That

is particularly true given that petitioners themselves re-

ferred to the summary judgment proceedings and the

December 31, 1992 order in their amended complaint.

CR127 € 68-70, 108-11.

Second, the Ninth Circuit's affirmance of the dismissal

of petitioners’ abuse of process claim likewise comports

with well-established principles of law. Although peti-

tioners take a passage from the decision below out of

context and use it to accuse the Ninth Circuit of engaging

in improper fact finding concerning motive (Pet. 24),

the section immediately following the passage cited by

petitioners reveals that the court did no such thing. In-

stead, the Ninth Circuit set forth the complaint’s allega-

tions in light of the substantive elements of an abuse of

process claim under Arizona law, and concluded that even

if all those allegations were accepted as true, they did not

state a claim for relief under Arizona law because the

complained-of conduct either occurred before process is-

sued or constituted a lawful and proper use of process.

Pet. App. 27a-28a. That case-specific application of

Arizona law to the allegations in petitioners’ complaint is

correct, does not conflict with the decision of any court,

and does not warrant review in this Court.

In light of the substantial evidence of Lexecon’s fraud

in Lincoln Savings that Judge Bilby cited in denying

Lexecon’s motions for summary judgment and directed

verdict, and in light of Judge Bilby’s unappealed ruling

that the allegations lying at the heart of the dismissed

claims in this case were “false,” it was neither erroneous

nor improper for the courts below to refuse Lexecon’s in-

vitation to turn a blind eye to those prior orders. Consist-

29

ent with the obligations of good faith and Fed. R. Civ. P.

11, Lexecon’s claims for malicious prosecution and abuse

of process never should have been alleged at all. They

certainly warrant no further review by this Court.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted,

MICHAEL MEEHAN JEROLD S. SOLOVY

MEEHAN & ASSOCIATES Counsel of Record

33 North Stone, Suite 830 RONALD L. MARMER

Tucson, Arizona 85701 C. JOHN Kocu

(520) 882-4188 JEFFREY T. SHAW

JENNER & BLOCK

One IBM Plaza, Suite 4400

Chicago, Illinois 60611

(312) 222-9350

Attorneys for Respondents

MILBERG WEISS BERSHAD HYNEs & LERACH, et al.

Dated: April 17, 1997