Comments on Federal Rule of Civil Procedure 16.1

Introduction

The commentators are judges assigned to the Complex Civil Litigation Program for the Superior Court of the State of California for the County of Los Angeles. Some commentators have served as the original organizers of the Complex Litigation Program, including a former Presiding Judge for the County of Los Angeles. Our commentators have managed mass torts in state court involving wildfires, pharmaceutical products, defective medical devices, and public nuisances arising from novel liability theories, to identify a few categories of our complex judges' workload. We hope to bring to the discussion lessons learned and best practices that we believe will further develop the case management rules for multidistrict litigation (MDL) envisioned by the proposed F.R.C.P. 16.1. These comments reflect our own professional views and experience and are not the official position of the Los Angeles County Superior Court or of the California courts generally. Further, none of these comments refers to a particular case or indicates what the signatories would do in a case in the future.

The commentators believe the Rule is a good idea and orients judges and counsel to the court case management principles that effective case management requires. We agree with the introduction to the Committee Notes stating that the Rule can generally guide courts handling complex litigation, especially non-MDL aggregations. Early vetting, two-way discovery, and coordination with overlapping litigation in state court will help move along meritorious claims while eliminating meritless ones.

The MDL statute is over 50 years old. Its basic outline is straightforward. The Judicial Panel for Multidistrict Litigation (J.P.M.L.) consolidates cases for all pretrial proceedings in a single federal district court. Like the coordinated state trials in California, the pretrial proceedings include core discovery, early dispositive motions, and motions in limine. The MDL judges also bifurcate trials of specific claims of plaintiffs and oversee settlements that may resolve large numbers of cases comprising the MDL.

The statutory charge is to promote the just and efficient conduct of MDL actions. An MDL judge may "exercise such inherent powers as are necessary to manage and complete those pretrial proceedings." Although section 1407 is a procedural statute, it creates a complex consolidated litigation process that makes exercising the court's inherent power uniquely necessary.

MDL actions are volume-based litigation. Plaintiff's lawyers in MDLs generate revenue through economies of scale because litigation costs per client decline the more clients a firm acquires. As of 2020, 95 percent of all claims pending in MDL actions involve mass torts, which frequently benefit from tools developed to manage complex litigation.

Some commentators believe there should be incentives to identify or eliminate meritless claims. We agree that the transferee court should take action early in the life of an MDL to determine whether the aggregation includes claims that are meritless and should not have been filed. The plaintiff and the plaintiff's attorney typically possess critical information about any potential harm before the case commences, and the plaintiff's counsel should exercise appropriate prescreening before filing such actions.

Commentators recommend an initial gatekeeper approach and frontloading initial disclosures. The Rule might suggest that the transferee judge in mass tort personal injury cases require attorneys to go further than basic Rule 11(b)(3) representations to the court and to certify within a short period of time post-filing that counsel has undertaken a diligent review of the plaintiff's available medical records, exposure information, and information about the use of the item or drug. The goal of such order is to eliminate baseless claims derived from mass marketing. The Rule should prompt judges to consider adopting initial mandatory discovery disclosures before party-driven discovery.

This approach should benefit early assessment and may enhance early resolution of actions. Such early disclosures are particularly beneficial in product liability and pharmaceutical cases. Encouraging transferee judges to use more cooperative models of discovery in MDL actions can be part of the solution to many of the fundamental problems arising from the filing of unvetted cases in MDLs.

Comment on (a) and accompanying Committee Note:

Subsection (a) of the proposed Rule recommends that the transferee court schedule an initial management conference after the MDL Panel orders the transfer of actions. We suggest this subsection also state that the transferee court should stay all included actions pending further order of the court at the Initial MDL Management Conference (if the MDL Panel itself does not order a stay of the transferred actions).

As we understand the MDL Panel Rules, before a transfer order is issued by the MDL Panel, the court before which a potentially included case is pending maintains pretrial jurisdiction. Rules of Procedure of the Judicial Panel on Multidistrict Litigation, Rule 2.1(d). Therefore, before the MDL Panel orders transfer of an action, the (potential) transferor court may continue to hear and rule on motions and supervise ongoing discovery (although the court also may exercise its discretion to stay the case pending a decision by the MDL Panel). See Manual for Complex Litigation, Annotated, section 22.35 at p. 504 (4th ed. 2023).

It is much more difficult to manage a case that has undecided motions or discovery disputes pending. A transferee court that receives such a case must unravel what already has been done by the parties in order to mesh future litigation activity in that case with motion practice and discovery in other cases that are part of the MDL. It is best that all litigation activity be temporarily stayed while the parties in the cases brought together by the MDL discuss among themselves and with the court an expeditious and economical plan for the litigation as a whole (subject of course to the parties' ability to request an exception to the temporary stay).

Comment on (b) and (c)(1) and accompanying Committee Notes:

We recognize that many MDL transferee judges have taken an active role in marshalling the available plaintiff firms, both for the preliminary purpose of designating "coordinating counsel" in advance of the Initial MDL Management Conference and to establish Plaintiffs' Leadership Counsel for the duration of the MDL. In our experience, the court need not undertake this role. It is better initially to stand back and let the multiple plaintiff firms who have clients with claims in the MDL attempt to organize themselves.

The use of the term "may" in subsection (b) and the term "whether" in subsection (c)(1) supports our view that the MDL judge should use discretion before any particular plaintiff firms are selected to be first among equals by having a "coordinating" role or a court-selected Plaintiffs Leadership role. The draft Comments regarding subsection (c)(1) impliedly presume that affirmative efforts by the Court to select Plaintiffs' Leadership is desirable. We suggest this language be re-worded in a more balanced fashion to recognize the risks in both outward appearances and judicial ownership of the work of Plaintiffs' Leadership when the leadership is chosen primarily by the Court and not by voluntary private ordering by the advocates.

An aggressive effort by the Court to organize the representation for one side of a litigated dispute and then to manage the work of such lawyers may seem to imply that the Court is a kind of guarantor of the adequacy of the representation and a champion of the outcome to be obtained by the legal team created by the Court's efforts. This is contrary to the Court's role as a disinterested neutral managing a complex mass tort proceeding. The draft comment to subsection (c)(1) implies that the Court has a fiduciary duty to mass tort plaintiffs to ensure the adequacy of their representation. That is not supported by the law and is an undertaking by the Court that should not be accepted without clear justification. These are not class actions; each plaintiff has selected a lawyer, and the importance of this threshold action by the willing plaintiff should be recognized and honored.

We have found the plaintiff firms can arrange a reasonable division of labor and financial commitment among themselves in most cases, given a moderate amount of time to negotiate and draft work-sharing agreements and a method of dispute resolution. This private ordering can still provide the necessary efficiencies achieved by clear lines of communication between Plaintiffs' Leadership and defendant(s). When plaintiffs' counsel organize cost-sharing and dispute resolution among themselves, the MDL court is relieved of the need to closely supervise time sheets, cost disbursements and associated matters which otherwise may consume a large amount of judicial effort (or, alternatively, require use of Special Masters at further eventual expense to the lawyers and thus, inevitably, to the parties themselves). As and when the appearing plaintiff firms present a workable leadership structure, we have no problem with judicial endorsement of the proposed arrangement. We discuss below how plaintiffs with lawyers outside the leadership structure should be allowed to control their own cases in due course.

We recommend that the comments suggest the Court should designate Plaintiffs' Leadership only after the lawyers demonstrate over a period of weeks of effort that they cannot organize themselves or if the leadership team chosen collectively by the plaintiffs demonstrates clearly that it is unable to effectively coordinate plaintiffs' collective efforts. In such instances, the Court should clarify why it has undertaken to select a leadership team - so that some such Plaintiffs' Leadership can be put in place - and that the Court is not thereby trying to be the guarantor of the adequacy of such leadership or endorsing the actions of the selected leadership group (consistent with the court's duty to remain neutral).

Comment on (c)(1)(E) and accompanying Committee Note:

Regarding preparing a joint report on behalf of plaintiffs, the Comment says that the report may reflect parties' divergent views. This is appropriate, but the Comment also says it may be necessary for the court to give priority to leadership counsel's pretrial plans. We suggest the court apply its own good judgment as to appropriate case management and the priority of case activity after considering everyone's views. We agree with the current draft comment that the MDL court must "take care not to interfere with the responsibilities non-leadership counsel owe their clients." They should be encouraged to take advantage of discovery and other resources created by the court in coordination with Plaintiffs' Leadership and defendant(s), but in due course they should be allowed to bring their cases to trial, failing settlement, with such additional preparation as they show they reasonably need, even if this involves additional discovery beyond that sought by Plaintiffs' Leadership. These efforts may be prudently stayed by the MDL court while it attempts to move the majority of the pending claims to early bellwether trials and/or settlement activity.

Comment on (c)(1)(F) and accompanying Committee Note:

The draft rule in subsection (c)(1)(F) presumes that an MDL court has the power "to establish a means for compensating leadership counsel." This is a reference to the frequent practice in MDLs of establishing a court-ordered "common benefit fund" by which each plaintiff's case is taxed some percentage of any recovery to pay for attorney fees and attorney costs incurred by Plaintiffs' Leadership. In common application, this tax is imposed on all plaintiffs in the federal MDL cases whether or not they want the help of Plaintiffs' Leadership and whether or not their chosen lawyer is part of Plaintiffs' Leadership. In some cases, the federal MDL judge also imposed this same tax on plaintiffs who filed in state court and never were subject to federal court jurisdiction.

We invite the Committee to consider the academic literature as to whether these common benefit funds are lawfully imposed. While it is true that "common fund" taxes on actual recoveries obtained for the benefit of many have been imposed for decades where litigation success already has created an actual fund, it is questionable whether these authorities allow federal MDL courts to create an anticipated revenue source without regard to the actual benefits provided by Plaintiffs' Leadership in a given MDL. The practices developed in MDLs over the years create a revenue pool which, in turn, generates obvious competition for the opportunity to share in this money by selection to serve in a Plaintiffs' Leadership position created by the court. In simple terms, taxing a portion of any recoveries that might occur in a mass tort case (whether by verdict and judgment or by settlement), creates a strong incentive to participate in Plaintiffs' Leadership and to incur "billable hours." This then may force the Court to manage the work of such leadership by reviewing progress billing for hours and costs incurred (often via use of Special Masters) and reviewing litigation strategies employed.

These problems are discussed at length by Professor Charles Silver and Professor Robert Pushaw in two recent articles. Charles Silver, "The Suspect Restitutionary Basis for Common Benefit Fee Awards in Multi-District Litigations," 101 TEX. L. REV. 1653 (2023); Robert J. Pushaw, Jr. and Charles Silver, "The Unconstitutional Assertion of Inherent Powers in Multidistrict Litigations," 48 BYU L. REV. 1869 (2023). District Judge Vince Chhabria also carefully reviewed the sources of a federal district court's power to impose a common benefit tax in his decision in 2021 regarding a request by Plaintiffs' Leadership for approximately $800,000,000 in the Roundup MDL. In re Roundup Prods. Liab. Litig., 544 F.Supp.3d 950, 958-62 (N.D.Cal. 2021). A detailed defense of the practices that have developed in MDLs was published by District Judge Eldon E. Fallon in 2014. Eldon Fallon, "Common Benefit Fees in Multidistrict Litigation," 74 LA. L. REV. 371.

We suggest the Comments should, at a minimum, acknowledge that the legal basis for the application of these assessments in mass tort litigation to unwilling plaintiffs remains open for debate. Conversely, we agree with the concept that cost-sharing agreements between willing plaintiffs and their chosen lawyers as a matter of private ordering of leadership/work-sharing agreements amongst such plaintiffs are acceptable and desirable. The distinction is that such arrangements are voluntary, not imposed by the asserted power of the Court, and that the Court, therefore, is relieved of the duty of ongoing supervision of such expenditures. The willing parties can consign the task of resolving disputes about agreed common-benefit expenses to other willing neutrals via arbitration, isolating the Court from any such supervisory duties.

Comment on (c)(3) and (c)(4) and accompanying Committee Note:

An early focus of complex litigation (indeed of all litigation) should be on the principal factual and legal issues. Reducing uncertainty about the most important facts and about key legal issues encourages consensual dispute resolution.

The first case management conference provides a fundamental opportunity for early assessment to determine if a more cooperative model of initial mandatory disclosure will work. The transferee judge may inquire whether the plaintiff's attorney has engaged in prefiling due diligence and whether both sides are amenable to initial disclosure of discovery. The transferee judge may identify non-meritorious claims early in the litigation's lifecycle using plaintiff fact sheets and may require certification of prefiling due diligence. The Court may require plaintiffs to offer straightforward information (including limited documentation authorizations); to identify the injury, the exposure, and the identity of the plaintiff's lawyers; and to state whether plaintiffs have sought compensation for a similar injury, illness, or condition and the compensation sought and obtained. Finally, the Court may track compliance with the plaintiff's fact sheets and precertification review in addressing allocations impacting common benefit funds (if the Court determines it has authority to impose such allocations).

Comment on (c) (11) and accompanying Committee Note:

Subsection (c) (11) of the proposed Rule recommends the parties identify related actions that have been filed or are expected to be filed in other courts and consider possible methods for coordinating them. The draft committee notes recognize that many state court systems have mechanisms for consolidating separate actions in their courts, and there may be overlap with the MDLs.

Based on our experience, there are many reasons why parties may not include state court actions in an MDL. The absence of complete diversity, faster resolution in state court, the plaintiff's desire to avoid common assessments, and loss of control over the litigation commonly drive the selection of state court jurisdiction. Even if cases are not removable, there are several reasons that state courts may track the MDL and benefit from coordination.

Some commentators have looked favorably on federal-state court coordination in such circumstances. The Manual for Complex Litigation recommends that MDL judges "communicate personally with state court judges, who have a significant number of cases in order to discuss mutual concerns, and suggestions," and share "pretrial orders, and proposed schedules." Chief justices from the state courts advise "to take all available and reasonable steps to promote communication between state and federal courts for the purpose of establishing best practices for the management of like kind litigation that spans multiple state jurisdictions, and federal districts."

While the drafters acknowledge the important consequences of parallel state court proceedings for managing the MDLs, they omit the method of identifying such actions and the challenges presented to coordinate federal-state actions. Identification of similar state court actions is the first step in assessing coordination. Thereafter, after consultation with counsel, the MDL judge may contact a state judge coordinating similar consolidated state actions or direct counsel to initiate such contact. We recommend that the transferee judge appoint liaison counsel early in the litigation to identify and report all cases pending in other state court jurisdictions that may be similar or related to the MDL actions. Defense counsel may be in a better position to perform this reporting function.

The benefits of state court litigation coordination efforts with federal MDL are numerous. Coordination between the state and federal court will promote cooperation in scheduling hearings, conducting and completing discovery, and providing access to common discovery work product through shared databases, platforms, and web-based sites available across court systems. Cases tried in state courts may provide a benefit similar to the trial of bellwether cases in federal court; that is, such trials may reduce uncertainty about case value. These benefits can be enhanced if transferee judges and state judges in coordinated proceedings confer regarding selection of cases for trial in the respective proceedings.

The Rule may note that coordination can avoid inconsistencies between federal and state rulings on discovery and privilege issues (insofar as the same or similar rules for privilege apply in both forums). Less advanced state court proceedings may adopt wholly or in part fully developed case management orders and standardized pleadings, as well as adopting protocols for ESI and the like. Some judges have even held joint hearings or conferences with federal and state judges presiding over the presentation of evidence and argument on various issues, including Science Day presentations.

However, we invite the Committee to address the limitations imposed on federal courts regarding the preclusive effects of the MDL judge's rulings on state court actions. In Smith v. Bayer Corp., the MDL Judge "engaged in extensive efforts to coordinate its proceeding with state courts" handling the same drug in related litigation. Despite these cooperative efforts, the federal judge eventually issued an injunction relying on the preclusive effects of the MDL action that resulted in the dismissal of the attempted class claim in the state proceeding. However, the U.S. Supreme Court unanimously held that the Anti-Injunction Act prevented the federal judge from overseeing proceedings outside the MDL. The ruling highlights the limitations on an MDL judge's power over state court cases and provides guidance on the limits of coordinated efforts.

Finally, we reference back to our concerns above as to proposed subsection (c)(1)(F) regarding any use of common benefit funds as a tool to manage relationships between MDLs and state proceedings. For reasons of both comity and respect for the lack of jurisdiction of the federal courts as to parties not before such courts, the federal judiciary should proceed with caution before attempting to spread a common-benefit fund "tax" to cases pending in state dockets. For the same reasons, the MDL judges should understand that discovery produced by a defendant in the MDL on general liability issues is not then "owned" by the MDL Plaintiffs' Leadership or the MDL court such that access to the same discoverable information by the state court plaintiffs and their advocates can be limited by the federal court restricting a defendant from providing discoverable information unless the state court plaintiffs agree to pay a common benefit fund assessment for the benefit of the MDL Plaintiffs' Leadership under the supervision of the MDL judge. The Ninth Circuit in In re Bard IVC Filters Product Liability Litigation, 81 F.4th 897 (9th Cir. 2023), enforced a common benefit fund assessment agreed to in the MDL on a lawyer settling a state court action, but the Ninth Circuit's reasoning was based on that lawyer's stipulation to those terms, which resulted in an order entered in the MDL based on that stipulation.

Conclusion

Based on our experience, a new F.R.C.P. 16.1 along the lines currently proposed will help the bench and bar manage these complicated mass tort cases, including cases pending in our state courts. We have focused our comments on a few parts of the draft rule that we believe will benefit from further consideration and revision. We urge careful consideration of the extent to which a neutral decision-maker should have substantial ownership of the choice of lead plaintiff counsel and ownership, via imposition of a common benefit fund, of the process by which such lawyers receive compensation from plaintiffs who have not themselves hired these lawyers. We also remind the drafters of the rule of the importance of both comity and respect for the jurisdictional limits of an MDL district court's reach when it attempts to control the parties and judges' conduct in parallel proceedings in state court.

Thank you for considering our comments.

Respectfully submitted,

Judge Elihu Berle

Judge David S. Cunningham III

Judge Kenneth R. Freeman

Judge William F. Highberger

Judge Carolyn B. Kuhl

Judge Yvette M. Palazuelos

Judge Stuart M. Rice

Judge Lawrence P. Riff

Judge Laura A. Seigle