Respondents Brief — Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach
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QUESTIONS PRESENTED
1. Whether a district court conducting “pretrial proceedings”
under the express grant of authority in 28 U.S.C. § 1407 is
empowered to order a transfer for trial under 28 U.S.C. § 1404(a).
2. Whether this Court should vacate a judgment entered after
an error-free trial, based solely on petitioners’ claim that the case
should not have been retained in Arizona for trial, when petitioners
never asked the Judicial Panel on Multidistrict Litigation to remand
the action to the transferor court, petitioners have never alleged any
concrete prejudice caused by the locus of the trial, and the sole claim
that survived for trial should have been dismissed as a matter of law
during pretrial proceedings.
——
ill
TABLE OF CONTENTS
Page
Sek. cs ce cee acesececes ii
Es occ cscs cece ce st eceesees V
Eee ck cee scccce sec cncces l
a 2
1. The Lincoln Savings Litigation And Lexecon’s Role
i ahh sess eons 6deeccescc 3
2. Lexecon Settles The Claims Against It To Avoid A
Potentially Disastrous Jury Verdict .............. +
3. Petitioners Sue Class Counsel In Federal
Court In Chicago And The Lincoln Savings
Judge Finds That Petitioners’ Principal
DT SUGGGebeeccrecccccces 5
4. Multidistrict Transfer And Proceedings
a 7
5. Appellate Proceedings In The Court Below ....... 10
SUMMARY OF ARGUMENT ... 0... ccc ccc cece 11
eee esc heey ececcncessdsaces 15
I. THE DISTRICT COURT WAS EMPOWERED TO
TRANSFER THE SOLE SURVIVING
C/o ce bcsccessccccecec. 15
Se IES ccc cc cccccccecece 15
B. The Legislative History And The MDL
IE re oo an
iV
:. . oo ce ce etednueseueeewe 31
i) Se ie te eee eee et 35
ll. IN DECIDING THE TRIAL TRANSFER
MOTION, THE DISTRICT COURT
WAS AUTHORIZED TO SELECT ARIZONA
AS THE APPROPRIATE VENUE ............ 38
Ill. EVEN IF THE COURT WERE TO CONCLUDE
THAT THE TRANSFER DECISION WAS
ERRONEOUS, THERE STILL WOULD BE NO
BASIS FOR REVERSING THE
a eee eee ee 39
A. Petitioners Should Not Now Obtain
Relief They Never Sought From
WE Sau Cc eres cewvecscocees 40
B. Any Error With Respect To The Trial
Transfer Would Be Harmless Error
That Could Not Affect The Result
Cis hee ae we nen eee) 0 6 42
C. The Single Claim That Survived For
Trial Should Have Been Dismissed
As A Matter Of Law During
PURE cecebcecusceccececes 46
D. Any New Rule Regarding Transfer
Should Be Applied Only Prospectively........ 47
IV. PETITIONERS’ ATTEMPT TO SECURE RELIEF
BEYOND THE SCOPE OF THE QUESTION
PRESENTED SHOULD BE REJECTED ........ 48
CURIS cece ccc ese neeeseceseccsencose 50
Vv
TABLE OF AUTHORITIES
CASES Page
In re Agent Orange Prod. Liab. Litig. ,
818 F.2d 145 (2d Cir. 1987), cert denied,
ee ee he weaned éebeecceéae sec 15
In re Air Crash Disaster, 86 F.3d 498 (6th Cir. 1996) ....... 17
In re Air Crash Disaster, 342 F. Supp. 907
Citi ooh hea une 6 6 © ete see 8 oe 18
In re Air Crash Disaster, 737 F. Supp. 391
ete ce eth ckbades ds eeeccesace 17
In re Air Crash Disaster, 342 F. Supp. 1400
i pierce eek ese e obec eens wooe 18
In re Air Crash Disaster, 346 F. Supp. 533
Gees SUED cc wccccccs Om eee ee 18
In re Air Crash Disaster, 476 F. Supp. 44
OT ee eee Tee eee 18
Alaska Airlines v. United States, 399 F. Supp. 906 (N.D.
eb BED 6 6 cee eew JOMerwee 6 0 bee Heer se eccce 18
In re American Continental Corp. /Lincoln Sav. & Loan
Litig., 794 F. Supp. 1424 (D. Ariz. 1992) .......... 3,4
Andrus v. Shell Oil Co., 446 U.S. 657 (1980) ............ 30
Andrus v. Sierra Club, 442 U.S. 347 (1979) ............. 30
In re Anthracite Coal Antitrust Litig. , 436 F. Supp. 402
Ph PTE Des adessSagcaeeeatseccee ccs 18
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. 1971) ................ 19
In re Bendectin Litig. , 857 F.2d 290 (6th Cir. 1988), cert.
denied, 468 U.S. 1006 (1989)... ... 2.2.6... ewes, 17
In re Bomb Disaster, 399 F. Supp. 1400 (J.P.M.L. 1975) .... 18
Braden v. 30th Judicial Circuit Ct., 410 U.S. 484 (1973) .... 23
In re Bristol Bay, Alaska, Salmon Fishery Antitrust Litig. ,
434 F. Supp. SOO G.P.MLL. 1976) .. 2. eee eees 18
In re Brown Co. Sec. Litig., 355 F. Supp. 574 (S.D.N_Y.
Dine GckwnWe GnddeWhcatWhekh ceed ccene cs 18
In re CBS Color Tube Patent Litig. , 342 F. Supp. 1403
Pe ca Widsévddaaseed'e eb eeees 18, 34
vi
Caterpillar, Inc. v. Lewis,
See ED ‘oc caecccteees 14, 39, 44, 45, 46
Chevron Oil Co. v. Huson, 404 U.S. 97 (1971) ........ 14, 47
Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984) ....... 30
City of Springfield v. Kibbe, 480 U.S. 257 (1987) ......... 39
Ex parte Collett, 337 U.S. 55 (1949) .............. 23, 35
Continental Grain Co. v. Barge FBL-585, 364 U.S. 19
erry Tt rt eee EET 38
Davis v. United States, 495 U.S. 472 (1990)... ... 2.2.2... 30
Denver & Rio Grande Western R.R. v. Brotherhood of
R.R. Trainmen, 387 U.S. 556 (1967) ............4.. 44
DeShaney v. Winnebago County Dep't of Social Servs. ,
SS oben cba eeeseadeesccceccs 32
Filmline (Cross-Country) Prod., Inc. v. United Artists
Corp. , 865 F.2d 513 (2d Cir. 1989) ............... 44
In re Fine Paper Antitrust Litig. , 685 F.2d 810 (3d Cir.
1982), cert. denied, 459 U.S. 1156 (1983) .......... 17
In re Food Lion, Inc. Fair Labor Standards Act “Effective
Scheduling ” Litig. , 73 F.3d 528 (4th Cir. 1996) ....... 17
Franklin v. Gwinnett County Pub. Schools, 503 U.S. 60
Dire swehh eee ake taenetie eu bees cece 35
Glasstech, Inc. v. Ab Kyro Oy, 769 F.2d 1574 (Fed. Cir.
DT Senvkd bGdMeecceneMees seers scence es 35
Goins v. United States, 306 U.S. 622 (1939)............. 39
Good Samaritan Hosp. v. Shalala, 508 U.S. 402
Tce iees Aecedgud@esheebesseceseceaces 30
Greyhound Computer Corp. v. IBM Corp., 342 F. Supp.
ie kien a ek eeh be ses secesees 18
Harper v. Virginia Dep't of Taxation,
es tet ewe wenn eee wees ce nee 47
Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) ......... 20
Jack Winter, Inc. v. Koratron Co. , 326 F. Supp. 121
CD EE SO Ss Pee sy eee 18, 19
Johnson v. Continental Airlines Corp. , 964 F.2d 1059
te Re ekie ws 656 enWe eb 6 eb beccess 17
Keene Corp. v. United States, 50S U.S. 200 (1993) ........ 34
Koehring Co. v. Hyde Constr. Co., 382 U.S. 362
ET Terry Tie TTT TLE TTL Tee 39
vil
Kohr v. Allegheny Airlines, Inc. , 504 F.2d 400 (7th Cir.
1974), cert. denied, 421 U.S. 978 (1975) ........... 17
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 (1989) .......... 17, 19, 21, 35
Leroy v. Great Western United Corp. , 443 U.S. 173
ES TR le re re 43
Lindahl v. OPM, 470 U.S. 768 (1985)... ..........044. 34
In re Longhorn Sec. Litig., 573 F. Supp. 274 (W.D. Okla.
Di Ptit tide eerie estab ewes Cbeeensese 17
MacDonald, Somner & Frates v. County of Yolo, 477 U.S.
Deh ct veh bacenee Ob eewebeebénece 46
Magnetic Eng’g & Mfg. v. Dings Mfg. Co., 178 F.2d 866
ee ee ee eee ee 44
In re Mahurkar Double Lumen Hemodialysis Catheter
Patent Litig., 750 F. Supp. 330(N.D. Ill. 1990).... 17, 18
McMillan Park Comm. v. National Capital Planning
Comm'n, 968 F.2d 1283 (D.C. Cir. 1992) ........... 30
In re Molinaro/Catanzaro Patent Litig. , 402 F. Supp. 1404
i ee dso 6s 6's 6 18
Morse v. Republican Party, 116 S. Ct. 1186 (1996) ........ 29
In re Nat'l Student Mktg. Litig. , 358 F. Supp. 1303
i ae ae ee ENE oS 6 ks 5 6 0.0 8 0 18
Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826
eee eit peeled a whe es 6 eee ee 6% 46
In re New York City Mun. Sec. Litig., 572 F.2d 49
BE a ee 16
In re New Mexico Natural Gas Antitrust Litig. ,
402 F. Sapp. S53 G.PLMLL. 1979) .. wc ccc cee 31
Olberding v. Illinois Cent. R.R., 346 U.S. 338 (1953) ...... 43
Pfizer, Inc. v. Lord, 447 F.2d 122
i wie. «hae e eens sae 66 17, 19, 21, 34, 35
In re Plumbing Fixture Cases, 298 F. Supp. 484 (J.P.M.L.
Ee er a re 19, 26
Radzanower v. Touche Ross & Co., 426 U.S. 148 (1976)... .. 37
Regents of the Univ. of Calif. v. Eli Lilly & Co.,
1997 WL 405946 (Fed. Cir. July 22, 1997) .......... 36
Reno v. Koray, 515 U.S. 50 (1995). ..............005. 29
Vili
Schnell v. Peter Eckrich & Sons, Inc. , 365 U.S. 260
Ds cchwhulhedea du cneeuaetene eset a 43
Stewart Org., Inc. v. Ricoh Corp. , 487 U.S. 22 (1988) ...... 38
In re Tax Refund Litig., 723 F. Supp. 922 (E.D.N.Y.
RE Ore Pan eee 17
In re Temporomandibular Joint (TMJ) Implants Prod. Liab.
Litig. , 97 F.3d 1050 (8th Cir. 1996) ............... 21
Texas Rural Legal Aid, Inc. v. Legal Servs. Corp.,
or | 30
Thigpen v. Roberts, 468 U.S. 27 (1984)............. 39, 46
Time, Inc. v. Pape, 401 U.S. 279 (1971) .. 2... 2. ee. 14, 47
United Parcel Serv. v. Mitchell, 451 U.S. 56 (1981) ........ 32
United States v. American Trucking Ass'n, 310 U.S.
EE OOS a ree 30
United States v. LaBonte, 117 S. Ct. 1673 (1997) ......... 30
United States v. National City Lines, Inc.,
8 ee ee 23
In re Viatron Computer Sys. Corp. Litig., 86 F.R.D. 431
ST Ci65 66 bu.e ac ee heats bees 666 18
Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 115
ee 37
Washington Pub. Utils. Group v. United States Dist. Ct. ,
OSS F.26 SID OO Cir. 19GB) wc ccc ccc cces 17
STATUTES AND RULES
rs oe. tee enc debe hbase we band 43
Deri cobcbel es enkeeceasnee abe passim
ance passim
PED hs. ¢ncee eb eeteseenasvesede 16, 33
is ccc ce ee eecetees beet been 27, 29
RIT SEs 05 ¢ectdcecveccesscoescdba passim
EEE cc cc bebvevoccceececccesevus passim
SOUINIED scence dccccccecvesnscés passim
EE hb ws ben wi uwewesenewssces 8, 40, 49
TE Wad bGeseéebbesedoeteoun 29, 32, 33
ars a ok seth va odie eeeaeban passim
sacnced vesesacstewocewded 44, 45
ee. i ceeee.. ) cs butenn acai 8
Ee ee ey ee ee ee 14, 39, 42, 49
Fed. R. Civ. P. 12(0)(6) ....... peeceersevenersscece -)
ES coo ee ec ecbeebeees baevenne’ -)
rr i a eed eee ew ewan as Oe 42
MDL Rule 11(b), 65 F.R.D. 253, 261 (1975) ..4...... 33, 34
DD ¢ la 66's od oe 0k bees 600s eebeekes 21
ii ons obo bee O88 oe 0568 17, 23, 29, 47
CE re ee re 10
Ce ee ee eee ee ee 10, 40, 41
MDL Rule 15(b), 47 F.R.D. 377, 381-82 (1969) ..... 12, 29, 34
LEGISLATIVE MATERIALS
H. Rep. No. 1130, 90th Cong., 2d Sess., reprinted in
a EE eee 21, 25, 26, 28
H. Rep. No. 100-889 (1988)... 0... eee ee 32
se FY % | fA TEPEPEEET Ere 26
§ % © — FRPPPTTRTTTTTETTT Terrie 32
Hearings on H.R. 8276 Before Subcomm. No. 5 of the Comm.
on the Judiciary, 89th Cong., 2d Sess.,
DEE ddan cheek ebeees 6 cand o ceeee 26, 27
Hearings on S. 3815 Before the Subcomm. on Improvements
in Judicial Machinery of the Senate Comm. on the
Judiciary, 89th Cong., 2d Sess. ..........555. 27, 28
SEG ST oe ct ceec cece ee Teves ccveves 28
SUPE EE gcc ceccccescccevcescosese 28
OTHER AUTHORITIES
Administrative Office of the United States Courts,
Judicial Business of the United States Courts,
1996 Report of the Director .= 0.0... 6 ees 37
Report of the Co-Ordinating Committee on Multiple
Litigation Recommending New Section 1407,
Title 28, reprinted in In re Plumbing Fixture Cases,
298 F. Supp. 484, 490 (J.P.M.L. 1968) and in
Hearings on H.R. 8276 Before Subcom. No. 5 of
the Comm. on the Judiciary, 89th Cong., 2d Sess.,
DEE EE, awe ebees bees setedicvennececs 26
> 4
Report of the Proceedings of the Judicial Conference of the
United States, March 18-19, 1965 ................ 26
Manual For Complex Litigation § 5.22 (CCH ed. 1973) ..... 34
1. SSO OS6 >a i 23
J. Moore, et al., Moore’s Federal Practice
hg, SECS een 23, 24
C. Bane, The Electrical Equipment Conspiracies
conte ALE REESE NSE PO 26
P. Howard, A Guide to Multidistrict Litigation,
co aes 17
SUABALS 621 (196 ....................... 26
E. Olliff, Parens Patriae Antitrust Actions for Treble
Damages, 14 Harv. J. Legis. 328 ae 31
ccnp EU DOE Sa eet 20
S. Weigel, The Judicial Panel on Multidistrict
Litigation, Transfer Courts and Transferee Courts,
ae. SEE ee 17
C. Wright, A. Miller & E. Cooper, Federal Practice
and Procedure (2d ed. 1986) .............. 19, 23, 44
IN THE
Supreme Court of the United States
October Term, 1996
No. 96-1482
LEXECON INC.., et ai.,
Petitioners,
vs.
MILBERG WEISS BERSHAD HYNES & LERACH, et ai.,
Respondents.
On Writ Of Certiorari To The United
States Court Of Appeals For The Ninth Circuit
BRIEF FOR RESPONDENTS
MILBERG WEISS BERSHAD HYNES & LERACH, et al.
The law firm of Milberg Weiss Bershad Hynes & Lerach,
along with Patrick Coughlin, William S. Lerach, Kevin P. Roddy,
‘Leonard B. Simon, Melvyn I. Weiss, Patricia Hynes, Michael C.
Spencer, and Stephen R. Steinberg (the “Milberg respondents”) file
this brief for respondents. '
STATUTES INVOLVED
The multidistrict litigation statute, 28 U.S.C. §§ 1407(a), (b),
(e), (f), and (h), and the federal transfer statute, 28 U.S.C.
§ 1404(a), are reprinted in the appendix.
' The remaining respondents — the law firm of Cotchett, Illston & Pitre,
along with Joseph Cotchett and Susan Iliston (the “Cotchett
respondents”) — will file a separate brief.
2
STATEMENT OF THE CASE
Petitioner Lexecon Inc. (“Lexecon”) was a defendant in the
massive litigation arising from the failure of the Lincoln Savings &
Loan Association that was consolidated in the District of Arizona.
Lexecon was named because it had prepared reports for federal and
state regulators in which, despite having received regulators’ reports
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.” In the Lincoln Savings case, Lexecon failed to obtain
dismissal of the claims against it, failed to win summary judgment
after extensive discovery, and failed to obtain a directed verdict after
a four-month trial. Ultimately, as jury deliberations were about to
commence, Lexecon paid the Lincoln Savings class more than
$700,000 to avoid what would have been, in the words of the trial
judge, a “possible Catastrophic verdict.”
Lexecon and one of its principals, Daniel R. Fischel, then
attempted to revive the dispute in another forum — filing this case
against respondents, who served as counsel for the Lincoln Savings
Class, alleging that the claims of the class were “baseless,” that those
claims were “terminated in Lexecon’s and Fischel’s favor,” and that
Lexecon had not settled but had decided “voluntarily” to “benefit the
class” by paying it more than $700,000. Unsurprisingly, the Judicial
Panel on Multidistrict Litigation (“MDL Pane!” or “Panel”) concluded
that this new case involved questions in common with the still-pending
Lincoln Savings litigation and transferred the case to the District of
Arizona, where it was assigned to a new district judge. That court
either dismissed or granted summary judgment for the defendants on
nearly all of petitioners’ claims. After the court transferred
petitioners’ sole remaining claim to Arizona for trial under section
1404(a), the jury unanimously rejected that claim. Petitioners,
without identifying any error or unfairness in the trial, now seek to
overturn the final judgment based solely on the assertion that the trial
transfer was improper.
3
1. The Lincoln Savings Litigation And Lexecon’s Role In That
Litigation.
Lincoln Savings involved multiple lawsuits brought in various
districts against Charles Keating, American Continental Corporation
(“ACC”), its subsidiary Lincoln Savings, and approximately one
hundred other defendants, including Lexecon. Those lawsuits were
all transferred by the MDL Panel under 28 U.S.C. § 1407 to the
District of Arizona, to be supervised by the Hon. Richard M. Bilby.
By the end of that litigation, class counsel had secured a $1.2 billion
jury verdict and more than $240 million in settlements for their
clients.’
The claims against Lexecon 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 plaintiff
class alleged that Lexecon, by issuing those false reports despite
having reviewed government analyses detailing Lincoln’s criminal
misconduct, wrongfully assisted in propping up Lincoln Savings long
enough for ACC/Lincoln to sell millions of dollars of worthless
securities. Jn re American Continental Corp./Lincoin 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 published opinion. /d. at
1448-49. The court observed that Lexecon’s reports asserted that
Lincoln Savings was both “sound” and “safe,” even though Lexecon
* The summary of facts that follows is derived principally from judicial
decisions. In contrast, petitioners’ statement of facts is derived principally
from the highly creative allegations in their complaint. See Pet. Br. 3-4. As
shown below, those are the same allegations that were declared false by the
Lincoln Savings tial judge and éismissed by the district court below in a
decision that was affirmed by the Ninth Circuit. With the Court’s denial of
certiorari as to the second question presented in this case, petitioners have
reached the end of the road in their efforts to revive their rejected allegations
concerning what happened in Lincoln Savings. In these circumstances,
petitioners’ continued portrayal of those same allegations as being factual is
both misleading and highly inappropriate
4
knew about Lincoln’s prior wrongdoing, having received and
reviewed a Federal Home Loaa Bank Board examination report that
catalogued Lincoln’s “extensive regulatory violations.” The district
court further observed that “Lexecon knew of Ivan Boesky’s plea of
guilty to insider trading violations, and of [the Federal Home Loan
Bank Board's] concerns about ACC/Lincoln’s holdings in the Boesky
high yield fund” — junk bond holdings that materially contributed to
Lincoln’s eventual collapse. In those circumstances, the court
concluded that material issues of fact existed as to the falsity of
Lexecon’s representations. /d. at 1448-49; J.A. 32.
In March 1992, Judge Bilby, sitting as an MDL transferee judge,
transferred the litigation to his regular docket for trial. Lexecon,
although now arguing that such a transfer order is contrary to section
1407, voiced no objection to the transfer for trial. After a four-
month trial, Lexecon filed a motion for directed verdict. The court
denied the motion, concluding that substantial evidence had been
adduced showing that Lexecon had prepared false reports lauding
Lincoln was engaging in criminal activities and providing unreliable
information:
(Lexecon] knew all of these bad things about Lincoln. They'd
read them. They were writing this report to help . . - [Lincoln’s
counsel] respond to it. . . . [I]t’s obvious that there is a jury
ag to whether they [Lexecon] weren’t in it much deeper
CR113 Ex. B at 11946-47°
2. Lexecon Settles The Claims Against It To Avoid A
Potentially Disastrous Jury Verdict.
On June 22, 1992, as jury deliberations were about to
commence, Judge Bilby and counsel for Lexecon and the class
GTR” Meters to the record below. “LSCR” refers to the record in Lincoin
ngs.
5
participated in an in-chambers settlement conference. Lexecon 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 reputation. J.A. 32. Attempting to accommodate
Lexecon’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 “unusual arrangement,” Lexecon ultimately
paid over $700,000 to the class in exchange for being dismissed. J.A.
32-33.
After Lexecon settled, the jury found all of the remaining
defendants liable and assessed damages of $3 billion. LSCR4044-47.
Judge Bilby later remitted the award to $1.2 billion. LSCR4325.
3. Petitioners Sue Class Counsel In Federal Court In Chicago
And The Lincoln Savings Judge Finds That Petitioners’
Principal Allegations Are “False.”
On November 25, 1992, Lexecon and Fischel filed this diversity
action against the Milberg respondents, the Cotchett respondents, and
other class counsel, asserting claims of malicious prosecution, abuse
of process, tortious interference, defamation, and commercial
disparagement. CRI; J.A. 33. Petitioners alleged that Lincoln
Savings “was terminated in Lexecon’s and Fischel’s favor,” that class
counsel “implicitly acknowledgfed] the lack of merit in their
complaint” by agreeing to dismiss Lexecon, and that in paying
$700,000, Lexecon “voluntarily” decided to “benefit the class” by
“returning the professional fees paid to it by Lincoln and Keating.”
CRI {{ 63-64, 92. Apparently hoping to avoid having to defend
those factual claims in a forum familiar with the actual underlying
events, petitioners chose to file the case in the Northern District of
Illinois, a judicial district with no connection to the controversy except
for the fact that Lexecon is headquartered there.
On December 7, 1992, Judge Bilby, who was presiding over the
still-pending Lincoln Savings litigation, convened a hearing by
6
telephone with class counsel and Lexecon’s trial covunsel.‘
Judge Bilby expressed grave concern over petitioners’ allegattions in
the Chicago action, including the contention that Lincoln Savimgs had
been terminated in Lexecon’s favor: “(Certainly I would not have
been a party to any resolution of this case if I thought it was gcoing to
be the basis for someone saying well, Lexecon won the case. sos 5
think that this Court has been misused and misled.” CR18 Epx. E at
5-6. Judge Bilby directed the parties to file submissions expllaining
“why I shouldn't . . . set aside the dismissal of this case without
prejudice and reinstate the plaintiffs’ claim.” Jd. at 6. During a
subsequent court hearing, Judge Bilby told Lexecon “you have no
right to come in and misrepresent to a judge in Chicago . . .. What
this, quote, settlement or resolution was, because . . . it wasrt’t any
voluntary payment on your part... . I can put up with cornery
lawyers, I can put up with contentious lawyers, but I can’t put usp 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; see id. at
49-50 (“[Lexecon] wanted to get out of having to go to that jury. oe
[I]t was a bargained-for deal. I mean, how can you say it any/ other
way than that?”); id. at 48-49 (“[T]he allegations on Page 24 arre just
— false. . . . I mean, it sounds like Lexecon’s Santa
aus.”).
On December 31, 1992, Judge Bilby issued an order “ i
, , to cclari
the terms and conditions” of the dismissal of Lexecon. J.A. me
n.2. That order outlined petitioners’ principal allegations iin the
Chicago suit against class counsel and stated:
* Although the Lincoln Savings tri
gs tral had concluded, no final judgmernt had
been entered because various settlements and other matters had nott been
or A final judgment order was not entered until March 1994.
’ The court explained that “[a]s this dismissal was wi judicce [i
. : . . . as without :
retained jurisdiction... to clan the terms and conditions of tht disse
A 33 n2. The court added that “pursuant to Fed. R. Civ. P. 60(a) the «Court
of its own initiative may correct any errors or omissions of the record.” Id.
5
The Court finds these paragraphs [Compl]. ¢{ 63, 64, and 92) to
be a false description of the conditions under which Lexecon was
dismissed from [the Lincoln Savings] case. . . . [I]t does not
meet with reality and is factually incorrect.
J.A. 34.n.2. The court emphasized that Lexecon’s payment to the
class was not “voluntary,” but was made so that Lexecon would not
have to face a “possible catastrophic verdict.” CR383 Ex. 3 at 3 n.1.
In January 1993, Lexecon appealed Judge Bilby’s December 31,
1992 order to the Ninth Circuit. Recognizing its case-dispositive
significance, Lexecon described the order in its opening brief as
“tantamount to a declaratory judgment in favor of Milberg Weiss as
defendants in the Chicago lawsuit.” Br. 19. The Ninth Circuit
subsequently dismissed Lexecon’s appeal as premature because a final
judgment in Lincoln Savings had not yet been entered. J.A. 35. In
March 1994, Judge Bilby entered final judgment. /d. However,
Lexecon chose not to renew its appeal from that judgment, and thus
allowed the findings made in the December 31, 1992 order to become
final and not subject to further review. /d.
4. Miultidistrict Transfer And Proceedings In The District Of
Arizona.
In February 1993, the MDL Panel issued a conditional order
transferring petitioners’ Chicago lawsuit to the District of Arizona,
where Judge Bilby was to preside over the litigation along with the
remainder of Lincoln Savings. As petitioners note, among the reasons
cited by the MDL Panel for its conclusion that transfer was
appropriate were that there was an extensive document depository in
Arizona, there was an opportunity for coordination with non-final
settlements, and there was a potential for coordination with a pending
Ninth Circuit appeal. J.A. 18-19; Pet. Br. 7. That appeal, as
petitioners fail to mention, was Lexecon’s own appeal of Judge
Bilby’s December 31, 1992 order finding petitioners’ key allegations
in this case to be false.*
As the court of appeals in this case observed, “Lexecon, to put
it gently, was no stranger to the District of Arizona” because this
entire case arose there. J.A. 44. Lexecon, a sizeable firm that
provides services nationwide, had performed in Arizona the
professional services for Charles Keating that were challenged in
Lincoln Savings. Moreover, before it was sued, Lexecon was
retained as an expert to assist another defendant in the Lincoln
Savings litigation pending in Arizona. After it was sued, Lexecon
defended against the claims of the Lincoln Savings class in Arizona,
raised no objection to the permanent transfer of the Lincoln Savings
case to Arizona for trial, and acquiesced in Judge Bilby’s retention of
jurisdiction in Arizona to oversee Lexecon’s settlement with the
Lincoln Savings class. Finally, in this litigation, Lexecon successfully
urged application of Arizona law to its key claims. Pet. App. 86a.
After the Panel issued its conditional transfer order, Judge Bilby
recused himself because of his involvement in Lexecon’s settlement
negotiations in Lincoln Savings. J.A. 33. As a result, the MDL
Panel issued a final order transferring the lawsuit to the District of
Arizona for supervision by the Hon. John M. Roll. J.A. 17-19.
Although petitioners now assail the propriety of that order, see Pet.
Br. 6-7, they chose not to challenge the order at the time and cannot
do so now. See 28 U.S.C. § 1407(e) (“No 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, a former judge of the Arizona
Court of Appeals, issued an order dismissing petitioners’ Arizona
* As they did in their petition, petitioners also seek to leave the incorrect
impression that respondents requested transfer to Anzona to avoid unfavorable
rulings that the district court in Chicago already had made. Pet. Br. 6. In fact,
the Milberg respondents 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 substantive ruling. CR12.
ee
ee
9
state law claims for malicious prosecution and abuse of process
pursuant to Rule 12(b)(6). J.A. 35; Pet. App. 80a-99a. In December
1993, the Milberg respondents moved for summary judgment on
petitioners’ remaining claims, CR177, CR181, but petitioners
successfully moved under Rule 56(f) to defer resolution of the
summary judgment motions pending further discovery. CR185;
CR192. In August 1994, although discovery had not yet been
completed and respondents’ 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 ruled that the motion was premature because discovery was
ongoing, but that petitioners could renew their motion after discovery
closed. CR311.’
On April 24, 1995, Judge Roll entered summary judgment in
favor of the Milberg respondents on all of petitioners’ claims, except
for a defamation claim based on a letter to the editor of The National
Law Joumal. J.A. 36; Pet. App. 64a-79a. The district court held as
a matter of law that the majority of the letter’s contents were not
defamatory, but that a jury question existed as to whether one passage
was actionable. Pet. App. 69a-73a.
Thereafter, on May 5, 1995, Judge Roll transferred the case to
the District of Arizona pursuant to section 1404(a) for trial of that
remaining defamation claim. J.A. 20-21. Petitioners responded by
petitioning the court of appeals for a writ of mandamus, which the
court denied. J.A. 22-27. On July 25, 1995, trial commenced in
Tucson, and on August 1, 1995, the jury returned a unanimous
” After Judge Roll decided to hold petitioners’ remand request in abeyance
until the close of discovery, petitioners moved for reconsideration. CR328.
When that failed, petitioners asked Judge Roll to recuse himself. CR343.
Petitioners then attempted to fortify their recusal motion by portraying Judge
Roll’s senior colleague, Chief Judge Bilby, as an occurrence witness who
inevitably would appear at tnal. In addition, petitioners subpoenaed Judge
Bilby for his deposition and demanded production of his bench files — a
litigation stratagem that prompted the United States Attorney for the Distnct
of Arizona to intervene with a successful motion to quash. CR386, CR 394,
CR430.
10
Prosecution and abuse of process claims, and further argued that the
district court's later order transferring the sole surviving claim for
trial was barred by 28 U.S.C. § 1407(a). JA. 37-44, 48-55.
However, petitioners did not assign any error in the court’s conduct
Of trial proceedings, did not identify any prejudice resulting from the
unanimous judicial precedents. J.A. 37-44. Moreover, the court
concluded that petitioners were in no position to complain about that
result, having failed to request a remand from the MDL Panel, even
though only the MDL Panel could order that relief:
a tl te
1]
therefore, properly proceeded to conduct a trial on the single
remaining defamation claim, following the completion of the
pretrial proceedings.
J.A. 43-44."
SUMMARY OF ARGUMENT
1. Petitioners seek to claim for themselves the “high road” of
fidelity to statutory language and congressional intent. In fact,
petitioners seek to have this Court rewrite the actual text of section
1407(a) and ignore the operative language of section 1407(b), which
directs that transferee district courts “shall” conduct all “pretrial
proceedings.”
First, contrary to petitioners’ contentions, section 1407(a)
concerns the authority of the Panel, not that of the transferee district
court. Section 1407(a) does not impose any duty on the transferee
district court; instead, section 1407(a) provides that unless the MDL
action has been terminated, the cases “shall be remanded by the panel”
when pretrial proceedings are concluded. That distinction between
the duties of the MDL Panel and those of the transferee district court
is important, as the court below and other courts have recognized.
Section 1407(a) reflects Congress’ determination to confer on the
Panel an extraordinary power to transfer related cases to one judicial
district — including a district in which personal jurisdiction and venue
otherwise would not exist. In granting the MDL Panel that
extraordinary transfer power, Congress limited the Panel’s authority
to transfers for pretrial proceedings. Congress did not, as petitioners
point out, authorize the MDL Panel to transfer cases for trial. But
section 1407(a) does not say anything about limiting the transferee
district court’s power to rule on traditional transfer motions brought
under section 1404(a). In deciding motions to transfer under section
1404(a), district courts can order transfer only to districts where the
actions might have been brought. Thus, Congress imposed a
. The Ninth Circuit also affirmed the dismissal of petitioners’ malicious
prosecution and abuse of process claims. J.A. 48-55. This Court declined to
12
limitation on the Panel’s extraordinary power to transfer cases to any
district, including one in which personal jurisdiction and venue are
lacking, but Congress did not say anything to suggest that MDL
district courts lack authority to consider traditional transfer motions.
Second, petitioners also fail to respect the “plain language” of
section 1407(b), which, unlike section 1407(a), does concern the
powers of the transferee district court. Section 1407(b) provides that
the transferee district court “shall” conduct “pretrial proceedings” in
MDL actions. That authority is granted without limitation because
Congress intended that upon transfer, the transferee court would
supervise pretrial proceedings in the same way as it would in any
other case. There is no basis to infer, as petitioners suggest, that the
transferee court’s power to conduct pretrial proceedings is limited sub
silentio by the duty to remand imposed in a separate subsection
dealing only with the scope of the MDL Panel’s extraordinary
transfer powers. If Congress truly had intended to limit the transferee
district court’s authority to conduct pretrial proceedings, it would
have done so directly, in describing the transferee court’s powers in
subsection (b), rather than indirectly, by imposing a limitation on the
MDL Panel’s extraordinary transfer powers under subsection (a).
In addition to ignoring the governing language of section 1407,
petitioners disregard material aspects of the history of its passage,
which further undermine petitioners’ contentions. Section 1407 was
drafted by a special Committee of the Judicial Conference chaired by
Chief Judge Alfred P. Murrah of the Tenth Circuit. In presenting the
proposed legislation to Congress, the Murrah Committee specifically
confirmed that cases might be transferred under section 1404 during
consolidated pretrial proceedings. Moreover, within months of the
enactment of section 1407, the first MDL Panel, chaired by Chief
Judge Murrah, promulgated an MDL Rule expressly recognizing that
MDL transferee judges have the same power to transfer cases for trial
under section 1404(a) as they would in any other case. 47 F.R.D.
377, 381-82 (1969) (MDL Rule 15(b)). The historical record thus
*trongly supports the conclusion that the judges who wrote section
1407, and the Congress that ultimately enacted it, intended that
section 1404(a) transfers could be ordered by transferee judges
conducting “pretrial proceedings” under section 1407(b).
13
Finally, Congress acquiesced in the practice challenged in this
case in 1976, when it enacted section 1407(i:). In that provision,
Congress revisited its prior determination to limit the MDL Panel’s
transfer authority to pretrial proceedings and decided to authorize the
MDL Panel to transfer for pretrial and trial purposes a category of
antitrust cases to any district. That provision is significant, among
other reasons, because its introductory clause lists the impediments to
transfers for trial purposes, but fails to list section 1407(a). Thus,
Congress did not perceive any impediment to trial transfers imposed
by section 1407(a). Moreover, the introductory clause expressly
refers to section 1404, which shows that in 1976 Congress was well
aware of the role that section 1404 transfers could play in section
1407 proceedings and acquiesced in that role.
2. Petitioners are equally incorrect in arguing that, even if a
transferee court has the power to grant a trial transfer under section
1404(a), it cannot transfer the case to its own district. That argument
is not within the question presented. In any event, such a transfer is,
in fact, to an “other district” within the meaning of section 1404(a)
because it changes the district in which the case otherwise would be
tried.
3. Even assuming that Congress did intend that all MDL cases
be remanded to their original districts for trial, that conclusion would
not justify reversal of the judgment below.
First, petitioners never requested a remand from the MDL
Panel — the sole tribunal empowered by the plain language of section
1407 to order that relief. Any duty to remand that may be imposed
by section 1407 rests on the Panel. The Panel, in turn, has
promulgated rules of procedure authorizing parties to file remand
motions directly with the Panel. By failing to comply with the
express statutory language and applicable MDL rule, petitioners
deprived the Panel of the opportunity to evaluate petitioners’ facial
attack on the MDL rule that authorizes the trial transfer procedure
challenged in this case. Moreover, by doing so, petitioners also
avoided the statutory command that all Panel rulings shall be
reviewable only by a petition for writ of mandamus.
14
Second, allowing petitioners to raise the remand issue after the
entry of a final judgment would be particularly indefensible, because
Because petitioners have not claimed any error in the trial or
prejudice resulting from its location, any error in the district court’s
trial transfer order was plainly harmless. As this Court unanimously
held last year in rejecting another plaintiff's challenge to a federal
court judgment on the basis of an erroneous refusal to remand, the
result petitioners seek is “incompatible with the fair and unprotracted
administration of justice.” Caterpillar, Inc. v. Lewis, 117 §. Ct. 467,
477 (1996). Petitioners do not even mention, let alone address,
Caterpillar in their brief.
Third, the trial transfer issue need never have arisen because the
sole defamation claim that survived for trial should have been
dismissed as a matter of law during pretrial proceedings. See Time,
Inc. v. Pape, 401 U.S. 279 (1971).
Finally, even if this Court were to announce a new rule
overturning 30 years of MDL precedent, that new rule should be
ame" prospectively. See Chevron Oil Co. v. Huson, 404 U.S.
).
| 4. Petitioners ask this Court to vacate all orders, apparently
including the district court’s summary judgment rulings, that were
entered “after the conclusion of consolidated pretrial proceedings.”
purposes of trial." Because the district court’s summary judgment
rulings were entered before the transfer order, and because the
court's authority to enter those rulings is beyond dispute, petitioners’
2 a Aly it le
15
attempt to expand the potential relief encompassed by the question
presented for review should be rejected.
ARGUMENT
I. THE DISTRICT COURT WAS EMPOWERED TO
TRANSFER THE SOLE SURVIVING CLAIM FOR
TRIAL.
Throughout their brief, petitioners blur important distinctions
among sections 1407(a), 1407(b), and 1404(a). When those
distinctions are fully understood, it becomes clear that Congress never
had any intention of barring section 1404(a) trial transfer orders by
MDL transferee courts.
A. The Plain Language.
Section 1407(a) concerns the authority of the Panel. That section
establishes a procedure for transferring related cases pending in
multiple districts to a single district for consolidated pretrial
proceedings. A significant innovation of that statute is that it vests in
a single tribunal, the MDL Panel, the authority to consolidate related
cases in “any district,” regardless of whether personal jurisdiction and
venue would have been proper in that district. See 28 U.S.C.
§ 1407(a); In re Agent Orange Prod. Liab. Litig., 818 F.2d 145, 163
(2d Cir. 1987) (citation omitted) (“‘[t}ransfers under section 1407 are
simply not encumbered by considerations of in personam jurisdiction
and venue’”), cert. denied, 484 U.S. 1004 (1988).
Unlike section 1407(a), which concerns the authority of the
MDL Panel, section 1407(b) defines the authority of the district
courts to which MDL cases are transferred. Among other things,
section 1407(b) mandates that the district court “shall” conduct
“pretrial proceedings.” See 28 U.S.C. § 1407(b). Section 1407(b)
does not contain any limitation on the transferee court’s authority to
conduct pretrial proceedings.
Like section 1407, section 1404(a) provides for transfers of civil
actions, but there also are key differences. Section 1404(a) authorizes
16
“a district court” to transfer civil actions for all purposes including
trial, which is a broader power than Congress gave the MDL Panel
under section 1407(a). But the district court's broad power to
transfer civil actions for trial is also subject to a significant limitation.
Unlike the MDL Panel’s extraordinary power to transfer cases to
districts without regard to personal jurisdiction or venue, a district
court can order a section 1404(a) transfer only to a “district or
division where [the action] might have been brought.” 28 U.S.C.
§ 1404(a); see In re New York City Mun. Sec. Litig., 572 F.2d 49, 51
(2d Cir. 1978) (Friendly, J.) (“§ 1407, unlike §§ 1404 and 1406,
authorizes transfer of an action ‘to any district’ and not simply to a
district where the action could have been brought. The use of this
different language was deliberate; indeed, the limitation in § 1404 was
one of the reasons why it was necessary to enact § 1407... . »
Ignoring the distinct features of those three provisions,
petitioners isolate one passage in section 1407(a) and use it to
challenge the result below. Specifically, petitioners rely on the clause
providing that section 1407 actions “shall be remanded by the panel”
at the conclusion of pretrial proceedings unless they have been
terminated. According to petitioners, because Congress limited the
MDL Panel’s extraordinary authority to order a transfer to a district
in which personal jurisdiction and venue would not otherwise exist,
that limitation on the MDL Panel under section 1407(a) should be
interpreted by this Court as a limitation on the transferee district
court’s authority to rule on a traditional trial transfer motion under
section 1404.
Petitioners’ argument is not persuasive. There is no reason to
believe that, in legislating the duties of the MDL Panel under section
1407(a), Congress intended by implication to bar the transferee
district court from adjudicating one type of motion that is frequently
filed in the federal district courts during pretrial proceedings — a
transfer motion under section 1404. To be sure, section 1407(a)
reflects Congress’ determination to limit the MDL Panel’s
extraordinary authority to transfer related actions to a single district
without regard to personal jurisdiction and venue requirements.
Congress limited that power to transfers for pretrial proceedings. But
nothing in that provision suggests any intent on the part of Congress
A © ee et eet a ee et ee eee.
Ee ee eee
17
to foreclose MDL district courty from using preexisting statutory
authority to transfer MDL actions under section 1404(a) to districts
where the actions “might have been brought,” or from otherwise
exercising their Article III powers to the fullest extent.
Indeed, every court that has considered the issue since Congress
enacted section 1407 almost 30 years ago has rejected petitioners’
reading of the statute. See Jn re Korean Air Lines Disaster, 829 F.2d
1171, 1178 (D.C. Cir. 1987) (D. H. Ginsburg & Williams, JJ.,
concurring) (“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.”),
aff'd on other grounds sub nom. Chan v. Korean Air Lines, 490 U.S.
122 (1989); Pfizer, Inc. v. Lord, 447 F.2d 122, 124-25 (2d Cir. 1971)
(per curiam); In re Fine Paper Antitrust Litig. , 685 F.2d 810, 819-20
(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 & n.7 (4th Cir. 1996); accord MDL Rule 14(b);
P. Howard, A Guide to Multidistrict Litigation, 124 F.R.D. 479, 479
(1989); S. Weigel, The Judicial Panel on Multidistrict Litigation,
Transferor Courts and Transferee Courts, 78 F.R.D. 575, 581
(1977). So established is the transfer procedure at issue that the
Manual for Complex Litigation itself provides that “the transferee
judge may transfer cases for trial to any district, including the § 1407
transferee district, permitted by 28 U.S.C. § 1404.” Manual for
Complex Litigation, Third § 31.132, at 254 & n.807 (1995).°
* See also In re Air Crash Disaster, 86 F 3d 498, 512 (6th Cir. 1996); Jn 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 (9th Cir. 1988), Johnson v.
Continental Airlines Corp., 964 F.2d 1059, 1061 (10th Cir. 1992); Jn re
Mahurkar Double Lumen Hemodialysis Catheter Patent Litig., 750 F. Supp.
330, 332 (N.D. Ill. 1990) (Easterbrook, J., sitting by designation); /n re Air
Crash Disaster, 737 F. Supp. 391, 393 (E.D. Mich. 1989); Jn re Tax Refund
Litig., 723 F. Supp. 922, 923-24 (E.D.N. Y. 1989); Jn re Longhorn Sec. Litig.,
573 F. Supp. 274, 276 (W.D. Okla. 1983), Jn re Viatron Computer Sys. Corp.
Litig., 86 F R.D. 431, 432 (D. Mass. 1980); Jn re Air Crash Disaster, 476 F.
18
The statutory provision setting forth the powers of MDL
transferee courts is not section 1407(a), which deals with the powers
of the MDL Panel, but sectior. 1407(b). The plain language of
section 1407(b), which petitioners would have this Court ignore,
provides in mandatory terms that “pretrial proceedings shail be
conducted by a judge or judges to whom such actions are assigned by
the judicial panel on multidistrict litigation.” 28 U.S.C. § 1407(b)
(emphasis added). As the MDL Panel confirmed shortly after the
passage of section 1407, the term “pretrial proceedings” self-evidently
includes rulings on transfer motions under section 1404(a): “A
transferee judge under Section 1407 has the responsibility for all
pretrial proceedings in litigation assigned to him and the [section
1404(a)] motion before [the transferee court] is certainly a ‘pretrial’
motion.” In re CBS Color Tube Patent Litig., 342 F. Supp. 1403,
1404-05 (J.P.M.L. 1972).
Numerous other courts have confirmed that same point. As
Judge Easterbrook stated while sitting by designation as a section
1407 transferee judge: “One 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(a).” Jn re Mahurkar
Double Lumen Hemodialysis Catheter Patent Litig., 750 F. Supp.
330, 332 (N.D. Ill. 1990) (emphasis added); accord Greyhound
Computer Corp. v. IBM Corp., 342 F. Supp. 1143, 1145 (D. Minn.
1972); In re Antibiotic Antitrust Actions, 333 F. Supp. 299, 302-03
Supp. 445, 450 (J.P.ML. 1979); Jn re Anthracite Coal Antitrust Litig., 436
F. Supp. 402, 403-04 (J.P.M.L. 1977); Jn re Bristol Bay, Alaska, Salmon
Fishery Antitrust Litig., 424 F. Supp. 504, 507 (J.P.M.L. 1976); Jn re
Molinaro/Catanzaro Patent Litig., 402 F. Supp. 1404, 1405-06 (J.P.M._L.
1975), Alaska Airlines v. United States, 399 F. Supp. 906, 912 (N.D. Cal.
1975), Jn re Bomb Disaster, 399 F. Supp. 1400, 1403 (J.P.M.L. 1975); Jn re
Nat'l Student Mkag. Litig., 358 F. Supp. 1303, 1304 (J.P.M.L. 1973); Jn re
Brown Co. Sec. Litig., 355 F. Supp. 574, 577 (S.D.N.Y. 1973); In re Air
Crash Disaster, 346 F. Supp. 533, 534 (J.P.M.L. 1972); Jn re CBS Color
Tube Patent Litig., 342 F. Supp. 1403, 1404-05 (J.P.M.L. 1972); Jn re Air
Crash Disaster, 342 F. Supp. 1400, 1403 & n.4 (J.P.M_L. 1973); Jn re Air
Crash Disaster, 342 F. Supp. 907, 909 (D.N.H. 1971); Jack Winter, Inc. v.
Koratron Co., 326 F. Supp. 121, 123 (N_D. Cal. 1971).
a es
|
19
(S.D.N.Y.), 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). Indeed, although Professor
Charles Alan Wright appeared as an amicus supporting the petition
for certiorari in this case, the treatise on federal practice that he co-
authored with Professors Arthur R. Miller and Edward H. Cooper
confirms 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 C. Wright, A. Miller
& E. Cooper, Federal Practice and Procedure § 3866, at 620 (2d ed.
1986).
Congress’ straightforward and unqualified command that MDL
transferee judges “shall” conduct “pretrial proceedings” reflects its
intent that transferee judges would have the same Article III power to
render appropriate relief in an MDL action as they would have in any
other civil action. As the MDL Panel observed almost 30 years ago,
an MDL consolidation order transfers entire ‘civil actions,’” not
“‘civil actions or parts thereof.’” Jn re Plumbing Fixture Cases, 298
F. Supp. 484, 489 (J.P.M.L. 1968). Thus, when a civil action is
transferred to the transferee judge, the judge’s power to conduct
“pretrial proceedings” is unlimited:
[T]he transfer scheme contemplates that a transferee court will
adjudicate transferred cases no differently than cases originally
filed before it. This is apparent throughout the scheme, from the
point of transfer to the final disposition of the case. Rather than
confine the transferee judge merely to presiding over the pretrial
phase of cases that may be resolved finally in the transferor
courts, section 1407 transfers jurisdiction over whole cases to
the transferee court; upon transfer, the transferor courts retain
no jurisdiction whatsoever. Indeed, Congress contemplated that
transferred cases might never return to the transferor courts, but
instead might be settled or resolved by summary judgment in the
transferee court, or else transferred under section 1404(a) to that
same transferee court for joint trial.
Korean Air Lines, 829 F.2d at 1178 (D. H. Ginsburg & Williams, JJ.
concurring); see also Illinois Brick Co. v. Illinois, 431 U.S. 720, 763
20
(1977) (Brennan, J., joined by Marshall and Blackmun, JJ.
addressing in dissent an issue not reached by the Court) (“(T}ine
Judicial Panel on Multidistrict Litigation is empowered by 28 U.S.C.
§ 1407 to transfer cases involving common questions of fact to
district for coordinated pretrial proceedings . . . [and] [a]fter pretria]
transfers under this section, cases can be consolidated and transferred
to the same district for trial pursuant to the transfer power under
§ 1404(a).”)."°
The dissent below questioned whether section 1404 motions fal]
within the scope of the “pretrial proceedings” that a transferee court
is authorized to resolve. J.A. 63-65. But the dissent’s view of the
Statute is based in part on the notion that a transferee court should be
considering only “motions that implicate more than a single case” and
1S Constrained to leave motions that affect only one case unresolved
for months or years. J.A. 64. Proceeding from that unique view
which finds no support in the Statutory language, the dissent next
Proposed that still another limitation be engrafted onto the term
“pretrial proceedings.” Specifically, the dissent proposed that
transferee courts only should supervise discovery, and that they may
not rule on dispositive motions. J.A. 64-66 & n.7; but see
R. Ragazzo, Transfer and Choice of Federal Law: The Appellate
Model, 93 Mich. L. Rev. 703, 751-52 (1995) (theory that transferee
courts lack power to rule on section 1404 motions and dispositive
motions, and should limit themselves to discovery matters, “is
contrary to the language of the MDL Act, which gives the MDL court
the power to conduct coordinated ‘pretrial’ proceedings, not merely
discovery proceedings”). Given the extent to which the dissent
departs from the plain meaning of the Statutory language, petitioners
7 The United States made the same point in its brief amicus curiae in Illinois:
Brick: “After pretnial transfers by the Panel [under section 1407], cases cam
be consolidated and transferred to the same district for trial under Section
1404(a).” See Br. at 25-26.
21
understandably do not urge this Court to adopt the dissent’s analysis
of section 1407(b)."'
Instead, as noted above, petitioners argue that section 1407(a)
should be interpreted to narrow the scope of section 1407(b). But the
plain terms of section 1407(b) categorically authorize the transferee
court to exercise full Article II] powers in conducting “pretrial
proceedings.” Petitioners’ argument, seeking to limit that plain
statutory language, is based entirely on the supposed implications of
language in section 1407(a) that are not well founded. Section
1407(a) provides that “[eJach action so transferred shall b: remanded
by the panel at or before the conclusion of such pretrial
proceedings . . . unless it shall have been previously terminated.” 28
U.S.C. § 1407(a) (emphasis added). By that ianguage, Congress
sought to ensure that the MDL Panel’s extraordinary authority to
transfer actions to any district would apply only to pretrial
proceedings. Nothing in section 1407(a) addresses a transferee
district court’s power to exercise preexisting statutory authority to
transfer actions under section 1404(a) to districts in which the action
“might have been brought” — a power that is unambiguously
encompassed by section 1407(b)’s authorization to conduct “pretrial
proceedings.” Thus, as the court of appeals correctly held,
petitioners’ textual argument is unavailing because section 1407(a) is
concerned with “creating and dr .aing the functions of the JPML, not
(with) redefining or circ .scribing the traditional powers of the
district court to which a .se has been transferred” — powers that are
addressed in section ’ J7(b). J.A. 41; accord Pfizer, 447 F.2d at 124
(emphasis in orig’ .l) (the “shall be remanded” clause “deals only with
the powers c’ .ne Multidistrict Litigation Panel, and not the powers
of the judge to whom the case has been assigned”).
" In reality, the authority of transferee courts to rule on dispositive motions is
beyond reasonable dispute. See, e.g., Korean Air Lines, 829 F.2d at 1178 (D.
H. Ginsburg & Williams, JJ., concurring); /n re Temporomandibular Joint
(TMJ) Implants Prod. Liab. Litig., 97 F.3d 1050, 1055 (8th Cir. 1996), MDL
Rule 14(a), H. Rep. No. 1130, 90th Cong., 2d Sess., reprinted in 1968
U.S.C.C_AN. 1898, 1900 (“the transferee district court would have authority
to render summary judgment’).
22
Petitioners nevertheless seek to salvage their section 1407(a)
argument by contending, first, that a transferee court’s powers cannot
exceed those of the MDL Panel because the transferee court’s powers
are delegated by the Panel. Pet. Br. 16-17. That contention is
meritless. A transferee court's powers are not delegated by the MDL
Panel; those powers are created by Congress in the statute itself.
Moreover, virtually everything that transferee courts are authorized
to do — as Article III courts empowered to adjudicate all pretrial
proceedings, including dispositive motions — is beyond the authority
of the MDL Panel.
| When petitioners purport to address the question of congressional
intent, they are no more persuasive. Petitioners repeatedly point out
that consolidated proceedings under section 1407 are limited to
“pretrial proceedings."-Pet. Br. 17-19. But that begs the question
whether Congress intended by that limitation on the MDL Panel’s
extraordinary transfer power to restrict the transferee court’s
authority to rule on traditional motions to transfer under section 1404.
In fact, there is no indication whatever that Congress so intended. As
shown in the next section, Congress was fully aware of section 1404
and intended that it would play a role in MDL cases. See p. 25 infra.
Under those circumstances, it would have been strange indeed for
Congress to have gone about barring section 1404 transfers by
transferee courts, not directly, by adding express limiting language to
section 1407(b), but indirectly, by imposing a remand duty on the
MDL Panel in section 1407(a)."”
In the end, petitioners’ argument reduces to the notion that there
is an irreconcilable conflict between reading section 1407(b) as
allowing trial transfers by transferee judges and section 1407(a)’s
requirement that the Panel remand the case “to the district from which
it was transferred” at the conclusion of pretrial proceedings. But
again, petitioners’ argument ignores the fact that those provisions
” Rather than explain the logic of their position, iuoners seek to persuade
this Court by citing a litigation position taken in a brief by the Millbere Weise
firm as counsel in an unrelated case Pet. Br. 16n.4. But the fact that Milberg
Weiss honored its fiduciary duty to present an argument for a client on an issue
of law that tus Court has not yet resolved obviously is entitled to no weight.
23
relate to different matters: Section 1407(b) addresses the transferee
district court’s traditional power to conduct “pretrial proceedings,”
and section 1407(a) addresses the MDL Panel’s extraordinary power
to consolidate related civil actions in any district. In addition, even
setting aside that important distinction, section 1404 transfers by
MDL district judges are fully consistent with the language of section
1407(a) on which petitioners rely. Section 1407(a) provides that each
MDL case “shall be remanded by the panel,” but the provision goes
on to emphasize “unless the case shall have been previously
terminated.” Plainly, an action is “terminated,” as far as the original
district court and the MDL Panel are concerned, when the action is
transferred under section 1404(a). See, e.g., MDL Rule 14(b) (upon
section 1404(a) transfer, “no further action of the Panel shall be
necessary”); Manual for Complex Litigation, Third, § 31.132, at 254
(1995) (“An action is closed by appropriate orders entered in the
transferee court, without further involvement by the panel or the
original transferor court.”).
Any other reading would be in tension with the broad language
of section 1404(a), which provides that “a district court may transfer
any civil action.” 28 U.S.C. § 1404(a) (emphasis added); see Ex
parte Collett, 337 U.S. 55, 58 (1949) (“The reach of ‘any civil action’
is unmistakable. The phrase is used without qualification, without
hint that some should be excluded.”); 15 C. Wright, A. Miller & E.
Cooper, Federal Practice and Procedure § 3843, at 323 (2d ed. 1986)
(“By its terms, 28 U.S.C.A. § 1404(a) applies to ‘any civil action.’
The courts have resisted all attempts to narrow the sweep of that all-
inclusive phrase.”); 1A J. Moore, et al., Moore's Federal Practice
¢ 0.345[4.-1], at 4336 (2d ed. 1996) (“§ 1404(a) blankets the entire
field of civil actions to include any and all noncriminal proceedings”).
This Court repeatedly has held that the sweeping terms of section
1404(a) apply even to actions governed by special venue provisions.
Braden vy. 30th Judicial Circuit Ct., 410 U.S. 484, 499 n.15 (1973)
(habeas cases); United States v. National City Lines, Inc. , 337 U.S.
78, 80-84 (1949) (antitrust cases); Collett, 337 U.S. at 71-72 (FELA
24
cases); see 17 J. Moore, et al., Moore's Federal Practice § 111.15{1]
(3d ed. 1997).
In sum, petitioners’ so-called “plain language” argument actually
is an invitation to rewrite the governing statutes. Nothing in the
language of section 1407 suggests that Congress did not mean what
it said when it accorded transferee district courts unlimited authority
to conduct “pretrial proceedings” — proceedings that self-evidently
include ordering section 1404(a) transfers in appropriate
circumstances.
B. The Legislative History And The MDL Panel Rules.
Contrary to petitioners’ contentions, Pet. Br. 21-24, the
legislative history of section 1407 strongly supports the unanimous
view of the federal courts that transferee courts are authorized to
adjudicate motions under section 1404. Although petitioners make
much of the language in the House and Senate reports noting that the
MDL Panel's transfer authority under section 1407 would be limited
to authorizing coordinated pretrial proceedings, that is simply a
restatement of a limitation on the Panel’s extraordinary transfer
authority that is made clear by the statute itself. In section 1407,
Congress limited the Panel’s power to consolidate related cases in a
single judicial district without regard to whether personal jurisdiction
and venue requirements were met. Congress restricted that power to
justify an inference that Congress also intended to limit the preexisting
section 1404 powers of district courts, including transferee district
” Petitioners argue that the Congress that passed section 1404 could not have
intended to authorize its use by MDL transferee courts, because section 1407
was enacted later. Pet. Br. 20. But Congress’ intent in passing section 1404
in | 948 is not the issue. Rather, the question is whether Congress, in passing
section 1407 in 1968, intended to preclude transferee district courts from
ruling on traditional section 1404 transfer motions. In this regard, we note that
section 1404 frequently has been applied in actions brought under
subsequently passed statutes containing their own venue provisions. See 17
J. Moore, et ai, Moore's Federal Practice § 111.15{1}, at 111-120 & nn.10
& 11 G3ded. 1997) (FOIA and FIRREA actions).
25
courts, to transfer cases to districts in which those cases might have
been brought.'* Indeed, as the court of appeals recognized, J.A. 41-
42, and as petitioners grudgingly (but explicitly) acknowledge in a
footnote, Pet. Br. 23 n.7, the very congressional reports cited by
petitioners qualify their statements about the desirability of remanding
consolidated cases for trial by stating:
Of course, 28 U.S.C. 1404, providing for changes of venue
generally, is available in those instances where transfer of a case
for all purposes is desirable.
H. Rep. No. 1130, 90th Cong., 2d Sess., reprinted in 1968
U.S.C.C.A.N. 1898, 1902; S. Rep. No. 90-454, at 5 (1967): see also
H. Rep. No. 1130, 1968 U.S.C.C.A.N. at 1900 (emphasis added)
(section 1407 “would not affect the place of trial in any case or
exclude the possibility of transfer under other Federal statutes”).
Thus, Congress plainly intended —.at section 1404 would play a
role in MDL- cases. The only remaining question is whether
Congress intended to limit trial transfer motions to the times when
they can be raised in the original forum — that is, before an MDL
consolidation has occurred or after a case has been remanded. The
historical record provides a definitive answer: Contrary to petitioners’
extravagant contentions, the procedure of transferee courts
considering section 1404 motions is not an unlawful, after-the-fact
“power grab” by a group of federal judges bent on enhancing their
own powers and expanding their already busy dockets. Pet. Br. 18,
25-26, 29, 31; J.A. 57. Instead, that procedure is a lawful means of
resolving complex litigation efficiently and justly that was
‘* Petitioners also resort to sleight of hand in an attempt to make their citations
to the legislative history appear more persuasive. Petitioners note in text that
the House Report contemplated the possibility of future legislation authonzing
the MDL Panel to consolidate cases for purposes of trial. Pet. Br. 23. In the
accompanying foomote, that reference transforms into a statement “that further
Statutory amendments would be necessary to allow a transferee court the
authority to keep a case for trial.” Pet. Br. 23 n.7 (emphasis added). Nothing
in the House Report comes close to making such a statement or to otherwise
supporting pettoners’ contentions. Congress clearly was addressing only the
lumits of the extraordinary power it was conferring upon the MDL Panel
26
contemplated by the original drafters of the statute — a special
Committee of judges of the Judicial Conference who ultimately
became the inaugural members of the MDL Panel and who, within
months of section 1407's enactment, promulgated a rule expressly
authorizing MDL transferee judges to transfer cases under section
1404(a).
The Coordinating Committee for Multiple Litigation, which
drafted section 1407, was initially appointed by Chief Justice Warren
to deal with the hundreds of Electrical Equipment antitrust cases that
flooded the federal courts in the early 1960s. See H. Rep. No. 1130,
1968 U.S.C.C.A.N. at 1899; S. Rep. No. 454, at 3-4: see generally
C. Bane, The Electrical Equipment Conspiracies (1973); P. Neal &
P. Goldberg, The Electrical Equipment Antitrust Cases: Novel
Judicial Administration, 50 A.B.A.J. 621 (1964). Chaired by Chief
Judge Alfred P. Murrah of the Tenth Circuit, the Committee
developed a program of nationwide pretrial coordination for these
cases, including a uniform pretrial discovery schedule, master pretrial
orders, a central document depository, and a series of transfers under
section 1404. See H. Rep. No. 1130, 1968 U.S.C.C.A.N. at 1899:
Hearings on H.R. 8276 Before Subcomm. No. 5 of the Comm. on the
Judiciary, 89th Cong., 2d Sess., Serial No. 21, at 21-22.
As a result of the success of the Murrah Committee, the Judicial
Conference authorized the Committee to study possible statutory
changes needed to facilitate future coordination efforts. At the March
1965 meeting of the Judicial Conference, the Committee presented its
draft of section 1407, which Congress ultimately enacted without
material change. Report of the Proceedings of the Judicial
Conference of the United States, March 18-19, 1965, at 12. The
Murrah Committee’s accompanying report stressed that the judge
designated to preside over pretrial proceedings would have the power
to conduct all such proceedings: “Under proposed § 1407 the
transferee district court would have the usual powers provided by the
Federal Rules of Civil Procedure, including authority to render sum-
mary judgment, to control and limit pre-trial proceedings, and to
impose sanctions for failure to make discovery or comply with pre-
trial orders.” Report of the Co-Ordinating Committee on Multiple
Litigation Recommending New Section 1407, Title 28, reprinted in
27
Plumbing Fixture Cases, 298 F. Supp. 499, and in Hearings on H.R.
8276 Before Subcomm. No. 5 of the Comm. on the Judiciary, 89h
Cong., 2d Sess., Serial No. 21, at 24 The Murrah Committee
further stressed that its proposed legislauon would preserve the power
of the transferee district court to order transfers for trial under section
1404(a), during or at the close of “pretrial proceedings”:
This statute affects only the pre-trial stages in multi-district
litigation. It would not affect the place of trial in any case or
exclude transfer under other statutes (e.g., Title 28, U.S.C.
§§ 1404(a) and 1406(a)) prior to or at the conclusion of pre-trial
proceedings.
Id. (emphasis added). '°
The Judicial Conference approved the bill and it was sent to
Congress, where the key witnesses at House and Senate hearings
were Judge Murrah, other members of his Committee, and the
Committee’s executive secretary. See, e.g., Hearings on S. 3815
Before the Subcomm. on Improvements in Judicial Machinery of the
Senate Comm. on the Judiciary, 89th Cong., 2d Sess., at 51-59
(statement and testimony of Chief Judge Alfred P. Murrah); id. at 4-7
(statement and testimony of Judge Edwin A. Robson); id. at 15-25
(statement and testimony of Judge William H. Becker); Hearings on
H.R. 8276 Before Subcomm. No. 5 of the House Comm. on the
Judiciary, 89th Cong., 2d Sess., Serial No. 21, at 26-36 (statement
and testimony of Judge William H. Becker). At those hearings, the
executive secretary made clear the role played by section 1404
'* The dissent below argued that this language “indicated that a venue transfer
would only be available before or after, but not while, the case was in the MDL
court.” J.A. 79 n.21; see also Pet. Br. 23 n.7. That argument simply misreads
the report. It assumes that the phrases “prior to” and “at the conclusion of”
both modify “pretnal proceedings.” But it makes no sense to suppose that the
Commuttee intended to say that tnal transfers may occur before or after pretnal
proceedings. Pretyial proceedings begin with the filing of the complaint and
end with the commencement of tnal. All section 1404 orders occur during
pretnal proceedings. What the Murrah Committee said was that section | 404
transfers may occur “pnor to” or “at” the conclusion cf pretrial proceedings —
that is, at any tume pnor to trial.
28
transfers in coordinating the Electrical Equipment cases and testified
that although section 1407 was concerned only with pretrial
coordination, it could be used in conjunction with section 1404(a) to
accomplish trial coordination as well:
[Section 1407] provides that such a transfer shall take place
under the provisions of this bill for the pretrial phases of the
litigation, leaving the place of trial where the action began or in
some other district to which the action might conceivably be
transferred under the existing provisions of section 1404(a).
Id. at 23 (emphasis added)."*
Section 1407 passed the Senate without any opposition on
August 9, 1967, substantially as written by the Murrah Committee.
113 Cong. Rec. 22,123-24 (1967); see H. Rep. No. 1130, 1968
U.S.C.C.A.N. at 1898. The House then passed the measure on a
voice vote, after incorporating two amendments proposed by the
Justice Department that are not relevant to this case. 114 Cong. Rec.
4,924-28 (1968). The Senate agreed to the House amendments, 114
Cong. Rec. 9,657 (1968), and President Johnson signed section 1407
into law on April 29, 1968.
On May 31, 1968, pursuant to the authority vested in him by the
newly enacted section 1407, the Chief Justice appointed seven judges
to the first MDL Panel. The first Chairman of the Pane! was Chief
Judge Murrah, who was joined by two other members of the Murrah
Committee — Judges Edwin A. Robson and William H. Becker. The
remaining Panel members were Judges John Minor Wisdom, Edward
Weinfeld, Joseph S. Lord, III, and Stanley A. Weigel. See
'° That sections 1407 and 1404(a) could be used in tandem to accomplish both
coordinated pretrial and trial proceedings likewise was not lost on the bill’s
opponents, who complained during congressional hearings that “if the
authority given by [proposed section 1407] and by § 1404 were combined, the
transfer for discovery could well become a transfer for trial.” Hearings on S.
3815 Before the Subcomm. on Improvements in Judicial Machinery of the
Comm. on the Judiciary, 89th Cong., 2d Sess., at 97 (objection of Phillip
Price). Despite that objection, Congress passed the bill.
29
C. Peterson & J. McDermott, Multidistrict Litigation: New Forms of
Judicial Administration, 56 A.B.A.J. 737, 740 (1970). Within
months, the MDL Panel promulgated a detailed set of rules of
procedure pursuant to the rulemaking authority conferred by section
1407(f). Included in that first set of substantive rules was MDL Rule
15(b), which expressly confirmed the power of MDL transferee
judges to order section 1404(a) trial transfers to their own districts in
the course of conducting “pretrial proceedings” under section 1407:
(b) Actions will be remanded to the district from which they
were transferred unless an order has been signed by the
designated transferee Judge transferring an action to another
district under 28 U.S.C. § 1404(a) or 28 U.S.C. § 1406(a).
Such actions will be remanded by the Panel to the district
designated in the Section 1404(a) or Section 1406(a) order.
47 F.R.D. 377, 381-82 (1969) (emphasis added). That rule is
identical in all material respects to current MDL Rule 14(b)."’
The foregoing history, culminating in the promulgation of a rule
directly addressing the question presented in this case, demonstrates
that Congress never intended to prohibit consideration of section 1404
motions in the months or years during which cases might be
consolidated for pretrial proceedings under section 1407. See, e.g.,
Morse v. Republican Party, 116 §S. Ct. 1186, 1200-03 (1996)
(referring to legislative history and to “history that led to passage” of
the Act at issue); Reno v. Koray, 515 U.S. 50, 59 (1995) (referring
to provision’s “context and history”). Indeed, as Judge Sneed
correctly noted in the majority opinion below, this Court’s decisions
require a presumption, “absent compelling evidence to the contrary,
that the rules promulgated pursuant to section 1407(f) are ‘not
inconsistent with Acts of Congress.’” J.A. 41 n.7; see id. at 42 (citing
" Current MDL Rule 14(b) provides in pertinent part that MDL actions 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 28 U.S.C. 1406. In the event that the transferee judge so
transfers an action under 28 U.S.C. § 1404(a) or 1406, no further action of the
Panel shall be necessary to authorize further proceedings including tnal.”
30
United States v. American Trucking Ass'n, 310 U.S. 534, 549
(1940)).
This Court frequently has emphasized the need for deference to
administrative interpretations of statutes. See Chevron U.S.A. Inc. v.
NRDC, 467 U.S. 837, 843-44 (1984); American Trucking, 310 U.S.
at 549. In American Trucking, the Court held that deference to an
agency's interpretation of a statute is especially appropriate when the
agency itself “suggested the provisions’ enactment to Congress” and
rendered a “contemporaneous construction.” 310 U.S. at 549; see
Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 414 (1993)
(citations omitted) (“we generally will defer to a permissible
interpretation espoused by the agency entrusted with [the statute’s]
implementation” and “[o]f particular relevance is the agency’s
contemporaneous construction which ‘we have allowed to carry the
day against doubts that might exist from a reading of the bare words
of the statute’”); Davis v. United States, 495 U.S. 472, 484 (1990)
(“we give an agency’s interpretation and practices considerable weight
where they involve the contemporaneous construction of a statute and
where they have been in long use”); Andrus v. Shell Oil Co., 446
U.S. 657, 668 (1980) (citations omitted) (administrative practice “‘has
peculiar weight [because] it involves a contemporaneous construction
of [the] statute by the men charged with the responsibility of setting
its machinery in motion’” and is “strong support” for construction of
statute). Those principles plainly apply here.
The dissent below argued that the MDL Rules merit no
deference because they are not the product of formal rulemaking
under the Rules Enabling Act or the Administrative Procedure Act.
J.A. 76. But it is well established that the Chevron principle applies
outside the context of formal administrative actions by executive
agencies. See Andrus v. Sierra Club, 442 U.S. 347, 358 (1979)
(regulations of Council on Environmental Quality interpreting NEPA
entitled to “substantial deference”); McMillan Park Comm. v. National
Capital Planning Comm'n, 968 F.2d 1283, 1287-88 (D.C. Cir. 1992)
(deferring to the Advisory Council on Historic Preservation); Texas
Rural Legal Aid, Inc. v. Legal Servs. Corp. , 940 F.2d 685, 689-90
(D.C. Cir. 1991) (deferring to the Legal Services Corporation); see
also United States v. LaBonte, 117 S. Ct. 1673, 1686-87 (1997)
31]
(Breyer, J., joined by Stevens and Ginsburg, JJ., addressing in dissent
an issue the Court expressly declined to decide) (arguing for Chevron
deference to Sentencing Commission’s construction of statute it
administers). In view of the MDL Panel’s actual participation in the
drafting and passage of section 1407, and the fact that the Panel
consists of seven experienced federal judges appointed by the Chief
Justice, this case would be a strange place to begin making exceptions
to the deference principle.
C. Section 1407(h).
Congress’ addition, in 1976, of a new subsection (h) to section
1407 is a further indication that Congress never understood section
1407(a) as barring section 1404 transfers by MDL transferee courts,
and that Congress in fact acquiesced in that established procedure.
Although petitioners argue that the 1976 amendment supports their
position, precisely the opposite is true.
In section 1407(h), Congress extended the MDL Panel’s section
1407 transfer power to encompass the power to transfer, for purposes
of both pretrial and trial proceedings, a category of parens patriae
cases brought by State Attorneys General under the antitrust laws.
Petitioners suggest that this amendment would not have been
necessary if Congress had interpreted pre-amendment section 1407 as
allowing trial transfers under section 1404(a). Pet. Br. 15. But
petitioners’ line of argument ignores a fundamental difference
between the operation of section 1404(a) and section 1407(h):
Although section 1404(a) restricts transfers to judicial districts “where
[the action] might have been brought,” section 1407(h) authorizes the
MDL Panel to transfer parens patriae actions to any judicial district,
without regard to personal jurisdiction or venue requirements that
might otherwise apply. See E. Olliff, Parens Patriae Antitrust
Actions for Treble Damages, 14 Harv. J. Legis. 328, 353 n.149
(1977) (“[uJnder section [1407(h)], the frustrating requirement that
venue must have been originally proper in the transferee district for
an action to be tried there . . . has been abolished for parens patriae
actions”); see also In re New Mexico Natural Gas Antitrust Litig. , 482
F. Supp. 333, 336 (J.P.M.L. 1979) (fact that all defendants are not
subject to suit in transferee district does not prevent transfer for
32
pretrial proceedings). In addition, petitioners’ argument ignores the
fact that section 1407(h) conferred, for the first time, authority to
order trial transfers by the MDL Panel itself."
In truth, rather than supporting petitioners’ contentions,
Congress’ 1976 addition of subsection (h) shows that Congress never
intended section 1407 to foreclose section 1404(a) trial transfers by
MDL transferee judges. That is revealed by the introductory clause
of section 1407(h), in which Congress took care to identify in explicit
terms any provisions of law that might be construed as limiting the
broad trial transfer power that Congress was conferring on the Panel
for the first time. Section 1407(h) provides:
Notwithstanding the provisions of section 1404 or subsection (f)
of this section, the judicial panel on multidistrict litigation may
consolidate and transfer with or without the consent of the
parties, for both pretrial purposes and for trial, any action
brought under section 4C of the Clayton Act."
'’ Amicus University of California ignores that same distinction in attempting
to derive significance from Congress’ failure to enact proposed amendments
to section 1407 that would have authorized tnal transfers by the Panel in mass
disaster cases. U.C. Amicus Br. 9-10. Amicus also fails to disclose other
aspects of the proposed legislation that Congress might well have considered
more objectionable than expanding section 1407 — such as the provision that
would have extended federal jurisdiction by requiring only minimum diversity
in mass disaster cases. See H. Rep. 102-1085, at 117-18 (1992). That same
minimum diversity feature appeared in the failed 1988 legislation cited by
amicus Washington Legal Foundation (W.L.F. Amicus Br. 10) — a point that
amicus likewise fails to disclose. See H. Rep. No. 100-889, at 10 (1988).
Petitioners’ amici advance other contentions not made by petitioners in
this Court or below, including novel constitutional arguments irrelevant to this
case. Because those contentions have not been preserved or presented by
petitioners, they obviously are not before the Court. See DeShaney v.
Winnebago County Dep't of Social Servs., 489 U.S. 189, 195 n.2 (1989);
United Parcel Serv. v. Mitchell, 451 U.S. 56, 60 n.2 (1981).
'° The legislative history does not illuminate the precise intent underlying the
introductory clause of section 1407(h), but the plain language of that clause
makes it reasonably clear that Congress conferred trial transfer power
“[njotwithstanding . . . section 1404 ” because section 1404(a) provides that
33
Thus, in the introductory clause of section 1407(h), Congress
identified what it considered to be potential impediments to the trial
transfer authority it was conferring, but in doing so, Congress did not
identify section 1407(a). That is significant because under petitioners’
theory of the case, the “shall be remanded” clause of section 1407(a)
would have appeared to Congress to pose a far more formidable
barrier to trial transfers by the MDL Panel than sections 1404 and
1407(f), the two provisions of law that Congress did identify in
section 1407(h). For example, although section 1404(a) merely limits
the number of available judicial districts to which a case may be
transferred for trial, the “shall be remanded” clause of section 1407(a)
requires, according to petitioners, that ail cases transferred by the
Panel be remanded to their original districts for trial. As the plain
language of subsection (h) reveals, however, petitioners’ reading of
the “shall be remanded” clause cannot possibly be correct: If Congress
had shared petitioners’ view that section 1407(a) absolutely bars
transfers of cases for trial, then the expansive power conferred by
section 1407(h) not only would have been “[njotwithstanding the
provisions of section 1404 and subsection (f),” but also
“[njotwithstanding subsection (a) of this section.” Given that
subsection (a) is the provision of section 1407 that defines the basic
jurisdiction of the MDL Panel, Congress surely would have looked
there first in 1976 when it was identifying potential impediments to
the trial transfer authority that it was about to confer on the MDL
Panel.
transfers can be only to districts “where [the action] might have been brought.”
Similarly, Congress conferred tnal transfer power on the MDL Panel
“[{njotwithstanding . . . subsection (f),” which authonzes the promulgation of
the Panel's rules of procedure, because those rules provided at the time of the
amendment that transfers for trial must be made in accordance with the venue
and personal jurisdiction limitations set forth in sections 1404 and 1406. See
Rule | 1(b), 65 F.R.D. 253, 261 (1975) (MDL Rule in effect at tume of passage
of section 1407(h)). Because the whole point of section 1407(h) was to allow
the MDL Panel to order transfers for both pretrial and trial purposes without
regard to personal jurisdiction and venue requirements, Congress conferred
that transfer power “notwithstanding” the foregoing provisions of law.
34
The introductory clause of section 1407(h) is significant in. this
case not only for what it does not say, but also for what it does say —
i.e., its explicit reference to section 1404. That reference evinces
Congress’ awareness in 1976 of the interrelationship between sections
1407 and 1404, which was by then well-established in MDL practtce.
When Congress was considering whether to extend the MDL Pamel’s
section 1407 power to transfer cases without regard for personal
jurisdiction and venue limitations to include the power to tramsfer
parens patriae cases for trial, Congress certainly would have lbeen
aware that transferee courts were universally viewed as having the
power to order trial transfers under section 1404(a) to districits in
which the cases might have been brought.”
It follows that this is an especially appropriate case to invoke the
principle that Congress is presumed to be aware of a consistent and
longstanding interpretation of an existing statute when Congress
amends that statute. See, e.g., Keene Corp. v. United States, 508
U.S. 200, 210-14 (1993); Lindahl v. OPM, 470 U.S. 768, 781-86
(1985). If Congress had disagreed with the MDL Panel’s exiisting
rules, which authorized transferee courts to exercise the same transfer
authority that every federal district court had exercised since section
1404 was enacted in 1948, Congress could have legislated to the
contrary. Because it failed to do so, while simultaneously enacting a
new subsection with an introductory clause that accepts the prevailing
interpretation, Congress acquiesced in the MDL rule and in the line
of judicial decisions uniformly holding that section 1407 poses no
barrier to section 1404(a) transfers by MDL transferee judges. See
® By 1976, there was substantial case law on this issue. See, e.g., Pfizer, 447
F.2d at 125, CBS Color Tube, 342 F. Supp. at 1405. Indeed, the principlle that
section 1407(a) does not foreclose section 1404(a) transfers was so firmly
established by then that the procedure was memorialized in the MDL P'anel’s
rules and in the Manual for Complex Litigation. See MDL Rule 15(b), 47
F.R.D. 377, 381-82 (1969), MDL Rule 11(b), 65 F.R.D. 253, 261 (1975)
(sumilar rule in effect when Congress enacted section 1407(h)), Manwal for
Complex Litigation § 5.22, at 78 & n.227 (CCH ed. 1973) (citing Pfizer for
the proposition that “Section 1404(a) and Section 1407 are not mutually
exclusive remedies but are cumulative, and may both be employed in respect
to a given case”)
35
Franklin v. Gwinnett County Pub. Schools, 503 U.S. 60, 72-73
(1992); see also id. at 78 (Scalia, J., concurring) (“The Rehabilitation
Act Amendments . . . must be read, in my view, not only ‘as a
validation of Cannon’s holding,” . . . but also as an implicit
acknowledgment that damages are available.”).
D. Common Sense.
Finally, construing section 1407 as authorizing trial transfers by
MDL judges makes a great deal of sense. Section 1404(a), by its own
terms, applies to “any civil action” — categorical language that this
Court has stated means just what it says. See Collett, 337 U.S. at 58.
Petitioners’ interpretation of section 1407 would render section
1404(a) all but a dead letter in a common situation in which trial
transfers are particularly likely to be desirable — when multiple
related actions are pending in various districts and already have been
consolidated for pretrial proceedings. It is well established that the
transferor court loses jurisdiction to enter orders in a case once it has
been transferred by the MDL Panel. See, ¢.g., Korean Air Lines,
829 F.2d at 1178 (D. H. Ginsburg & Williams, JJ., concurring)
(confirming that transferor court has no jurisdiction to enter any
orders during the pendency of any pretrial proceedings in the
transferee court); Glasstech, Inc. v. Ab Kyro Oy, 769 F.2d 1574,
1576 (Fed. Cir. 1985) (same). Thus, petitioners effectively contend
that, during the months or years when cases are pending in the
transferee court, no court would have power to order a trial transfer.
There is no reason to believe that Congress would have intended
such a result. As the Second Circuit concluded in Pfizer, MDL
transferee judges must be able to adjudicate trial transfer motions lest
there be a lengthy “gap” during which litigants have no recourse:
This conclusion would clearly seem to comport with the essential
purpose of section 1407 to “promote the just and efficient
conduct” of complex multidistrict litigation. Since it is
reasonably clear that, subsequent to a section 1407 transfer, and
prior to a remand, the transferor court has no authority to
entertain a section 1404(a) motion or any other motion, to hold
that the transferee court also has no section 1404(a) authority
36
would mean that all proceedings on any section 1404(a) motion
would have to be suspended for the entire period of pretrial, the
cases remanded to a number of different districts, and then each
district judge consider separate 1404(a) motions. The inevitable
result would be further extensive delay in litigation which
already is among the most time consuming to appear on the
federal dockets. We see no reason to sanction such a result.
447 F.2d at 125.
Requiring section 1404(a) motions to be held in abeyance until
they can be presented to the transferor court on remand, in addition
to introducing needless delay, would impair the efforts of transferee
courts to bring order out of the chaos of numerous competing
lawsuits. It is undeniable that there are mamy MDL cases in which
the most sensible way to resolve the matter would be a trial conducted
by the judge who has developed a full understanding of the
controversy during months or years of pretrial proceedings.*' Under
petitioners’ view of the statute, however, unless most or all of the
transferor courts agree with that assessment and send the cases back
to the transferee court, the benefits of consolidation for trial will be
lost. Those decisions, in turn, will be made by judges who have the
least knowledge of the litigation, and no knowledge of the “big
picture,” because they will have had no involvement with the case
since entry of the initial consolidation order.
Petitioners seek to dignify that irrational outcome by portraying
it, without any support for doing so, as a “carefully crafted legislative
>! Peutioners speculate that transferee courts will tend to abuse their power to
order tnal transfers in cases where they are not justified under the standards of
section 1404(a). But the Court should not lightly assume that federal judges
are prone to be self-aggrandizing by holding on to cases improperly. Nor
should it be surpnsing that tnal transfers are sometimes ordered in MDL cases.
Petitioners’ unsupported assertions to the contrary notwithstanding, Pet. Br.
20-21 n.6, it is fully legitimate for courts to give weight to the “judicial
economy” produced by trying a case where it is already pending, before a court
that has become fully familiar with the issues. See, e.g., Regents of the Univ.
of Calif. v. Eli Lilly & Co., 1997 WL 405946, at **4-5 (Fed. Cir. July 22,
1997).
37
compromise.” Pet. Br. 19. But rather than supposing that Congress
deliberately created a structure bound to produce such anomalous
results, it makes far more sense to conclude that Congress understood
that section 1404 transfers by transferee courts would be used in
conjunction with section 1407 transfers by the MDL Panel. In
conferring on the Panel extraordinary authority to consolidate cases
without regard to personal jurisdiction and venue limitations,
Congress chose not to empower the Panel to transfer cases for trial.
But at the same time that it was conferring extraordinary new transfer
powers on the MDL Panel, Congress was well aware of the district
courts’ preexisting statutory authority under section 1404 to transfer
cases to districts in which they might have been brought. Inasmuch
as the point of section 1407 was to grant new transfer authority to the
Panel, not to limit the traditional transfer powers of the district courts,
it is reasonable to conclude that Congress intended that the district
courts selected to supervise MDL pretrial proceedings would continue
to exercise the same section 1404 powers that were available to them
in every other case. Tht reading of congressional intent best
effectuates the terms c all the applicable statutory provisions
governing transfer, and best advances the goals that lie at the heart of
those provisions. See Radzanower v. Touche Ross & Co. , 426 U.S.
148, 155 (1976) (statutes are to be read whenever possible to give
effect to all of their terms); accord Vimar Seguros y Reaseguros, S.A.
v. M/V Sky Reefer, 115 S. Ct. 2322, 2327 (1995).
The unanimous acceptance of that reading by the federal courts
over the past 30 years has been key to the use of MDL proceedings
to resolve mass litigation typified by Lincoln Savings. There is no
reason to change course now.~
* The truth of the matter is that prevailing MDL procedures have worked
extremely well. Those procedures have been invoked to bring about the just
and efficient resolution of literally thousands of cases. As of September 30,
1996, the MDL Panel had centralized 109,410 cases for pretrial proceedings
since the advent of section 1407. A total of 57,116 of those cases have been
termunated in the transferee courts, 3,757 cases have been remanded for trial,
and 48,258 cases remain pending in 43 transferee courts. See Administrative
Office of the United States Courts, Judicial Business of the United States
Courts, 1996 Report of the Director 29. Contrary to petitioners’ contentions,
there is no justification, either in law or in common sense, for altering
38
0. IN DECIDING THE TRIAL TRANSFER MOTION, THE
DISTRICT COURT WAS AUTHORIZED TO SELECT
ARIZONA AS THE APPROPRIATE TRIAL VENUE.
The Court also should reject petitioners’ fallback argument that
the District of Arizona was the one place that Judge Roll could not
choose when he ruled on the section 1404(a) motion. Following the
dissent’s lead, J.A. 68-69, petitioners contend that the language in
section 1404(a) stating that a court may transfer an action “to amy
other district or division where it might have been brought” (emphasis
added) bars an MDL transferee court from transferring the case for
trial to its own district. Pet. Br. 19-20. But that argument is not
even within the scope of the question presented, which is whether a
transferee court may transfer a case to itself “notwithstanding section
1407(a)’s explicit command that every such case ‘shall be remanded’”
to the transferor district. Pet. Br. i. The proper interpretation of
section 1404(a) plainly is not encompassed by that question.
In any event, the argument makes no sense. The most natural
reading of the phrase “other district” would be as referring to a district
“other” than the district in which the action was filed and otherwise
would be tried. Under that reading, the trial transfer in this case was
to an “other” district because, absent the transfer order, the trial
would have occurred in Illinois.
Under petitioners’ alternative construction of section 1404, that
provision would have to be read to exclude the possibility of a transfer
to the one district most likely to be the optimum forum for trial — the
However, petitioners’ “strict construction” approach is contrary to this
Court’s “common-sense approach . . . in interpreting § 1404(a),”
Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 24-27 (1960);
see also Stewart Org., Inc. v. Ricoh Corp. , 487 U.S. 22, 31 (1988)
(Congress intended section 1404 motions to be governed by a “flexible
and multifaceted analysis”). Thus, for example, this Court has held
fundamentally the way that the tens of thousands of pending and future MDL
actions are to be adjudicated.
39
that an appellate court is empowered to order section 1404(a) transfers
to other districts or divisions in certain circumstances, even though the
statute provides that only a district court has that power. See Koehring
Co. v. Hyde Constr. Co., 382 U.S. 362, 365 (1966) (“We do not read
28 USC. § 1404(a), providing that ‘a district court may transfer any
civil action,’ as precluding an appellate court, where unusual
circumstances indicate the necessity thereof, from effecting a transfer
by direct order.”). Given that it is appropriate to read “district court”
to mean “appellate court” when it makes sense to do so, as Koehring
establishes, petitioners’ attempt to defeat the transfer in this case by
resort to a cramped and nonsensical construction of the “other district”
clause necessarily must fail.
ffl. EVEN IF THE COURT WERE TO CONCLUDE THAT
THE TRANSFER DECISION WAS ERRONEOUS, THERE
STILL WOULD BE NO BASIS FOR REVERSING THE
JUDGMENT BELOW.
Even assuming that section 1407(a) required this case to be
remanded to Illinois for trial, the proper result would still be
affirmance of the district court’s judgment on the merits. That is
because: (1) petitioners failed to assert their trial transfer argument
in the one forum in which they could have received the relief they
sought, the MDL Panel; (2) any conceivable error would be harmless
under 28 U.S.C. § 2111 and this Court’s recent decision in
Caterpillar, (3) the sole claim still at issue, a single defamation claim,
is facially deficient as a matter of law; and (4) any new rule should be
applied only prospectively.”
» Thus, this Court either should affirm on any of the foregoing alternative
grounds or dismiss the wnt in this case as having been umprovidently granted.
This Court has followed both approaches in similar circumstances. See
Thigpen v. Roberts, 468 U.S. 27, 29-30 (1984) (affirming on alternative
ground), Goins v. United States, 306 U.S. 622, 623 (1939) (dismissing writ
after briefing and oral argument because error assigned turned out to be
nonprejudicial), see also City of Springfield v. Kibbe, 480 U.S. 257, 258
(1987) (dismissing wnt when contentions were found to have been waived)
40
A. Petitioners Should Not Now Obtain Relief They Never
Sought From The MDL Panel.
Even assuming for the sake of argument that petitioners are
correct that a remand became mandatory once pretrial proceedings
ended, the only entity that would have been empowered, and
dutybound, to order a remand was the MDL Panel. Under the plain
language of section 1407, the transferee court is not authorized to
order a remand. As petitioners emphasize so often, section 1407(a)
directs that MDL cases “shall be remanded by the panel.” Moreover,
under the MDL Rules, the transferee court’s sole role is one of
making a suggestion of remand to the Panel. MDL Rule 14(d). It
follows that the appropriate way for petitioners to have sought the
relief they wanted was through a motion to the Panel. The Panel's
own rules set forth detailed provisions for such a motion. See id.
Section 1407(e), in turn, provides the exclusive mechanism for
seeking judicial review of the Panel’s denial of the motion — a
petition for a writ of mandamus filed in a court of appeals.
Petitioners never filed such a motion. As a result, the Panel
itself never was given the opportunity to address petitioners’ challenge
to the MDL rule authorizing trial transfers by transferee courts.
Moreover, the case never proceeded to the appellate court in the form
of a mandamus action in which the Panel was a party and potential
participant, as section 1407(e) would have required had petitioners
followed proper procedures.
Having failed to follow the proper procedure, petitioners should
be barred from raising the remand issue on appeal from a judgment
following a full adjudication of the merits. Petitioners cannot attack
an alleged violation of law by the Panel by appealing from a judgment
entered by the district court. Under no theory did the district court
have a duty to remand the case — because by law it had no power to
do so. Petitioners simply ignore reality by suggesting that the district
court issued a “ruling on a motion to remand,” that the court had no
“discretion to refuse to remand a case,” and that the “district court
must adhere to the same statutory limitations as the JPML in deciding
the remand issue.” Pet. Br. 16-17 & n.5 (emphasis added). In fact,
4)
a transferee court does not order or refuse to order a remand; it
decides only whether to make a suggestion to the Panel.
Congress has seen fit to vest in the Panel — composed 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 promulgate MDL rules of procedure.
Petitioners’ end-run around the Panel not only subverted the Panel’s
authority, but also prevented the Panel from bringing its expert
judgment to bear on petitioners’ facial attack on one of its own rules.
Petitioners’ decision to bypass the Panel also evaded section 1407(e),
which states that review of Panel transfer and remand decisions can
be sought only through a mandamus proceeding. Apparently,
petitioners preferred to retain the option of raising the remand issue
on appeal from a final judgment, and knew that this option would be
foreclosed if they went to the Panel before trial, lost, and then failed
to win relief in an immediate mandamus action. But as Judge Sneed
concluded for the court of appeals, that stratagem should not be
allowed to succeed: petitioners’ failure “to seek succor from the one
source that easily could have granted it” forecloses petitioners from
now seeking it elsewhere. J.A. 43-44.
It is no answer for petitioners to say that the “proper practice” is
to request a suggestion of remand from the district court “in the first
instance.” Pet. Br. 17n.5. Petitioners took the first step under MDL
Rule 14(d) by asking the district court for a suggestion of remand.
But they never took the next step — filing a motion for a remand with
the Panel. Petitioners thus made a deliberate choice not to seek relief
from the only tribunal authorized under section 1407(a) to order a
remand, the MDL Panel.
Nor is it an answer that, by the time of trial, the district court
had entered its trial transfer order under section 1404(a). Under
petitioners’ legal theory, that order was ineffective and void because
of section 1407(a), which they say imposed on the Panel a continuing
duty to remand the case to the district court in which it was filed. If
petitioners were correct, nothing about the section 1404(a) transfer
order would have prevented the Panel from ordering a remand, or
relieved the Panel of the duty to do so. Petitioners cannot
42
simultaneously attack the section 1404(a) order as lawless and use it
as an excuse for failing to seek relief from the one tribunal that could
have granted it under the plain language of section 1407(a) — the
MDL Panel.
B. Any Error With Respect To The Trial Transfer Would
Be Harmless Error That Could Not Affect The Result In
This Court.
It wou'd be particularly inappropriate to allow petitioners to
assert the remand claim now as a basis for overturning the judgment
below for a second reason: Not only did petitioners fail to seek relief
from the MDL Panel before trial, but they have failed to point to any
aspect of the district court proceedings suggesting that they received
anything less than a full and fair consideration of their claims. Under
28 U.S.C. § 2111, the Court is required to address and decide this
issue. Section 2111 expressly provides that “[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 substantial rights of the parties.” Id.
(emphasis added); see Fed. R. Civ. P. 61. Petitioners have not even
suggested any error affecting their “substantial rights.” It follows that
section 2111 mandates affirmance.
The harmless error analysis is particularly straightforward in this
case because it does not require amy “examination of the record.”
Petitioners have never complained of any error in the conduct of the
trial itself. In the Ninth Circuit, they attacked the trial verdict solely
on the basis of the supposedly erroneous trial transfer order.
Moreover, petitioners have never contended, let alone established,
that they were legally prejudiced by the fact that the trial occurred in
Tucson rather than Chicago.”
** Petitioners complain in their statement of background facts that there was
“much popular feeling” against Charles Keating in Anzona (Pet. Br. 9), but
that assertion of indirect prejudice is not one that petitioners made, let alone
supported, in any of their court of appeals filings. The “popular feeling” theory
is a creation of the dissenting judge below, who referred to it in his second (but
not his first) opinion in this case. J.A. 74. The dissent cited no evidence of
43
The only question, therefore, is whether the district court's
section 1404(a) trial transfer order, assuming it was erroneous, is the
type of order that by its very nature affects “substantial rights.”
Petitioners seek to make this point by citing cases in which statutory
venue did not exist. See Pet. Br. 32 (citing Olberding v. Illinois Cent.
R.R., 346 U.S. 338 (1953); Schnell v. Peter Eckrich & Sons, Inc..
365 U.S. 260 (1961); Leroy v. Great Western United Corp. , 443 U.S.
173 (1979)). In so doing, they blur the distinction between (1) trial
in a district lacking venue and (2) trial after a case has been
erroneously transferred under section 1404(a) to a district in which
venue was proper — that is, a district “where it might have been
brought.”
Petitioners seek to leave the impression that the locus of the trial
in this case fell within the first category — that is, a district “lacking
venue.” That suggestion is plainly incorrect. There is no doubt that
the District of Arizona had proper venue to try this case, because
virtually all of the underlying events took place there. See 28 U.S.C.
§ 1391(a)(2) (venue exists where “a substantial part” of the underlying
events occurred). That fact alone renders inapposite the improper
venue cases cited by petitioners.
Instead, petitioners’ claimed right to a remand is analogous to a
claim of improper transfer to a proper venue. That is not a basis for
reversal after judgmen following an error-free trial. Plaintiffs’ right
of choice among permissible fora is only a conditional right that
frequently gives way in appropriate circumstances, as the very
existence of sections 1404(a) and 1407 establishes.* To our
record to support the theory that there was any “popular feeling” against —
Keating in Tucson, much less that it was so much greater in Tucson than it was
in Chicago that it might have influenced the outcome with respect to third
parties like petitioners. In fact, there is not a scintilla of support in the record
for the “popular feeling” theory.
* 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 those statutes are “wholly procedural.” Denver & Rio
44
knowledge, no court ever has reversed a judgment on the merits
based on an erroneous transfer when, as in this case: (1) trial
proceedings took place in a district where the action could have been
brought originally (that is, where statutory venue requirements were
satisfied), and (2) no showing of actual prejudice was advanced, let
alone established. After all, ordering reversal in that circumstance
would give the 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. v. Dings Mfg. Co., 178 F.2d 866, 869 (2d
Cir. 1950) (“{uJpon 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”); Filmline (Cross-Country) Prod., Inc. v.
United Artists Corp., 865 F.2d 513, 520 (2d Cir. 1989) (citations
omitted) (“*[sJhould [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’”);15 C. Wright, A. Miller & E. Cooper,
Federal Practice and Procedure § 3855, at 472-74 (2d ed. 1986)
(“The [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 plaintiff
receives an adjudication free of error and prejudice in a federal court
having jurisdiction and statutory venue at the time of judgment — as
petitioners unquestionably did — 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. v. Lewis, 117 S. Ct.
467 (1996), a defendant removed a state court case to federal court
purportedly on the basis of diversity of citizenship. However,
because the district court indisputably did not have subject matter
jurisdiction, plaintiff moved for a remand. In the face of the clear
statutory mandate that “[iJf at any time before final judgment it
appears that the district court lacks subject matter jurisdiction, the
Grande Western R.R. v. Brotherhood of R.R. Trainmen, 387 U.S. 556, 563
(1967), Collett, 337 U.S. at 71.
45
case shall be remanded,” 28 U.S.C. § 1447(c) (emphasis added), the
district court refused to order a remand. The court then proceeded
to supervise pretrial proceedings despite lacking subject matter
jurisdiction to do so. Eventually, certain parties settled and dropped
out of the case. As a result, diversity jurisdiction did exist at the time
of trial and the entry of judgment in favor of defendant.
On appeal, plaintiff argued that he was entitled to another trial
because he had been erroneously denied his right to choose the forum
and because the mandate of section 1447(c), that the case “shall be
remanded” if jurisdiction is lacking “at any time,” was violated.
Despite the undisputed fact that the district court did not have subject
matter jurisdiction at the time the remand motion was made, and the
fact that the case could never have been validly removed to federal
court because the deadline for doing so ran long before there was
complete diversity among the parties, this Court held that plaintiff's
contentions were overshadowed by “considerations of finality,
efficiency, and economy”:
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,
efficiency, and economy become overwhelming. . . . To wipe
out the adjudication post-judgment, and return to state court a
case now satisfying all federal jurisdictional requirements, would
impose an exorbitant cost on our dual court system, a cost
incompatible with the fair and unprotracted administration of
justice.
Id. at 476-77.
Those considerations dictate the same result in this case. Like
the plaintiff in Caterpillar, petitioners complain that their initial
choice of forum was frustrated and that the governing law requires
that their lawsuit “shall be remanded” to the forum in which the case
was filed. Nonetheless, as in Caterpillar, any purported error in that
ruling is overcome by “considerations of finality, efficiency, and
economy” that arise from the final judgment in this case, which was
46
entered in a court of competent jurisdiction after full discovery and an
error- and prejudice-free jury trial.
Indeed, that conclusion applies with even greater force in this
case. Unlike the district court in Caterpillar, which lacked subject
matter jurisdiction for much of the time the case was pending in
federal court, the district court in this case had jurisdiction and venue
to hear the case at all times. Only the plaintiffs’ choice of forum is
at issue. Moreover, in Caterpillar, the limits on removal from state
court that had been raised as a basis for overturning a merits
judgment were premised on fundamental principles of federalism and
comity — considerations far weightier than the right of choice among
the permissible federal fora at issue in this case. Finally, unlike the
Caterpillar plaintiff, petitioners have not suggested any differences 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.
See 117 S. Ct. at 176 n.14 (citing differences between fora raised by
plaintiff). Because “[njothing but a waste of time and resources
would be engendered by remanding to the District Court or by forcing
the[] parties to begin anew,” the decision below must be affirmed.
Newman-Greer,, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 838 (1989).
C. The Single Claim That Survived For Trial Should Have
Been Dismissed As A Matter Of Law During Pretrial
Proceedings.
The decision below should be affirmed for one more reason: the
trial transfer issue should never have arisen because the sole claim
that survived for trial — the defamation claim — should have been
dismissed during pretrial proceedings.” That claim was based upon
a single sentence in a letter written by one of the respondents to the
editor of The National Law Journal, in response to an earlier story in
the same publication. The sentence stated: “Lexecon’s motion for
** Although the legal insufficiency of petitioners’ defamation claim was raised
in the court of appeals as an alternative ground for affirmance, the court did not
reach the issue. Nonetheless, this Court can and should do so. MacDonald,
Sommer & Frates v. County of Yolo, 477 U.S. 340, 346-53 (1986) (affirming
on alternative ground), Thigpen, 468 U.S. at 29-30 (same).
47
summary judgment also was denied by Judge Richard M. Bilby in a
published opinion that details its wrongful activities on behalf of
convicted felon Charles H. Keating, Jr.’s American Continental
Corp. and Lincoln Savings & Loan in fraudulent dealings with federal
regulators.” Pet. App. 71(a). The letter then provided the precise
citation to Judge Bilby’s published opinion. /d. Because the
respondent did not use the word “alleged” in referring to the wrongful
activities detailed in Judge Bilby’s published summary judgment
decision, the district court believed that a fact question existed
concerning whether the respondent had defamed Lexecon. Pet. App.
69-73a.
That defamation claim should have been dismissed as a matter
of law under this Court’s decision in Time, Inc. v. Pape, 401 U.S.
279 (1971), and its progeny. In Pape, this Court reversed a libel
judgment against Time magazine, which had run a story about a
government commission’s report concerning civil rights abuses by
police officers. This Court held that even though the report made
clear that the description of the incident was drawn from allegations
in a civil complaint, the article’s failure to use the word “alleged” in
summarizing those allegations could not give rise to liability. /d. at
290. For the same reason, the defamation claim in this case should
never have survived for trial. The judgment below should therefore |
be affirmed.
D. Any New Rule Regarding Transfer Should Be Applied
Only Prospectively.
Even if this Court were to overturn MDL Rule 14(b) and 30
years of unanimous precedent, which recognize the power of MDL
transferee courts to transfer cases under section 1404(a), that decision
should be applied only prospectively. Such a decision would establish
a new rule of law. Moreover, prospective application of that new
rule would not retard its operation, and retroactive application of the
new rule would produce substantial inequitable results to the parties
here and to those in numerous other MDL actions. See Chevron Oil
Co. v. Huson, 404 U.S. 97, 106-07 (1971); see also Harper v.
Virginia Dep't of Taxation, 509 U.S. 86, 97 (1993).
48
IV. PETITIONERS’ ATTEMPT TO SECURE RELIEF
BEYOND THE SCOPE OF THE QUESTION PRESENTED
SHOULD BE REJECTED.
The question presented for review is limited to whether the
district court had authority to “transfer the case to itself for puirposes
of trial” (emphasis added). Because the defamation claim discussed
above is the sole claim that survived for trial, it is the only claiim that
could be affected by a reversal. All other claims were rejected prior
to trial, on a motion to dismiss or a motion for summary judgment,
and there is no substantial argument about the district court’s authority
to issue those pretrial rulings. Moreover, with regard to the district
court’s rulings on the motions to dismiss, they were affirmed on
appeal by the court of appeals, and this Court declined to grant
further review. With regard to the district court’s summary judigment
rulings, petitioners did not challenge their correctness on appeal.
Petitioners nonetheless appear to suggest that there is more at
stake than a retrial of the defamation claim — that is, that the district
court’s summary judgment ruling may have been improper because
there purportedly were no “consolidated” proceedings ongoing at the
time of that ruling. See Pet. Br. 32 (asking that the Court “vavcate all
district court orders after the conclusion of consolidated pretrial
proceedings”). But even if that issue were properly before the Court,
which it is not, the challenged transfer order was entered ajfter the
district court ruled on the summary judgment motions. Moreover,
the transferee court’s authority to rule on dispositive motions dices not
evaporate at some metaphysical point in time when “consolidated
pretrial proceedings” are deemed concluded. It is cut off only when
the MDL Panel remands the case to another court. Thait never
occurred, given that petitioners never asked the MDL Panel tto enter
such an order.
Consequently, petitioners’ attempt to expand the relief fairly
encompassed by the question presented for review should be rejected.
The only issue left open is the one on which this Court granted review
— the transfer “for purposes of trial.” Thus, in the event that the
transfer order is reversed and further proceedings are required, those
49
proceedings properly would be confined to the sole defamation claim
that survived for trial.
Although they purport to champion the “plain language” of
section 1407(a), the reality is that petitioners ask this Court to rewrite
or ignore the plain language of section 1407(a), section 1407(b),
section 1407(e), section 1404(a), and section 2111. Thus, petitioners
can prevail on the transfer issue only if this Court rewrites section
1407(a) to provide that MDL cases that have not been terminated
“shall be remanded by the transferee court” rather than “by the panel.”
Similarly, petitioners ask this Court to rewrite section 1407(b) to refer
to “pretrial proceedings except for motions to transfer under section
1404(a)” and to rewrite section 1404(a) to authorize a “district court
other than an MDL transferee court” to transfer “any civil action
other than an action previously transferred under section 1407." They
further ask the Court to overlook their failure to go to the Panel, and
section 1407(e)’s mandate that Panel orders be reviewed only through
mandamus proceedings. Finally, petitioners ask this Court to ignore
section 2111's express mandate that this Court “shall” give judgment
without regard to errors that are harmless. In fact, however, the
plain language of the governing statutes cannot be ignored. Nor is
there any reason for this Court to depart from almost 30 years of
settled precedent or to disrupt the effective functioning of established
multidistrict practice.
50
CONCLUSION
The writ of certiorari should be dismissed as improvidently
granted or the judgment below should be affirmed.
Respectfully submitted,
Arthur R. Miller Jerold S. Solovy
1545 Massachusetts Avenue Counsel of Record
Cambridge, MA 02138 Ronald L. Marmer
(617) 495-4111 C. John Koch
Jeffrey T. Shaw
Michael Meehan JENNER & BLOCK
MEEHAN & ASSOCIATES One IBM Plaza, Suite 4400
33 North Stone, Suite 830 Chicago, IL 60611
Tucson, AZ 85701 (312) 222-9350
(520) 883-4188
Paul M. Smith
Thomas J. Perrelli
JENNER & BLOCK
601 Thirteenth Street, N.W.
Washington, D.C. 20005
(202) 639-6000
Attorneys for Respondents
MILBERG WEISS BERSHAD HYNES & LERACH, et al.
Dated: August 18, 1997
APPENDIX
The multidistrict litigation statute, 28 U.S.C. §§ 1407(a), (0), (e),
(f), and (h), provides in pertinent part:
(a) When civil actions involving one or more common questions of
fact are pending in different districts, such actions may be transferred
to any district for coordinated or consolidated pretrial proceedings.
Such 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. Each action so transferred shall be remanded by the pane! at
or before the conclusion of such pretrial proceedings to the district
from which it was transferred unless it shall have been previously
terminated: Provided, however, That the panel may separate any
claim, cross-claim, counter-claim, or third-party claim and remand
any such claims before the remainder of the action is remanded.
(b) Such coordinated or consolidated pretrial proceedings shall be
conducted by a judge or judges to whom such actions are assigned by
the judicial panel on multidistrict litigation. For this purpose, upon
request of the panel, a circuit judge or a district judge may be
designated and assigned temporarily for service in the transferee
district by the Chief Justice of the United States or the chief judge of
the circuit, as may be required, in accordance with the provisions of
chapter 13 of this title. With the consent of the transferee district
court, such actions may be assigned by the panel to a judge or judges
of such district.
(e) No 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.
(f) The panel may prescribe rules for the conduct of its business not
inconsistent with Acts of Congress and the Federal Rules of Civil
Procedure.
2
(h) Notwithstanding the provisions of section 1404 or subsection (f)
of this section, the judicial panel on multidistrict litigation may
consolidate and transfer with or without the consent of the parties, for
both pretrial purposes and for trial, any action brought under section
4C of the Clayton Act.
The federal transfer statute, 28 U.S.C. § 1404(a), provides:
For 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.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.