Tuesday, June 10, 2008

Why Congress Has Left Lexecon Alone

Lexecon v. Milberg Weiss, 523 U.S. 26 (1998), is, of course, the Supreme Court case that held that MDL transferee judges lack the power to try cases that were originally filed outside of the transferee court.

(Mass tort lawyers understood that sentence; others may not have. Here it is again, more simply: Suppose a case is filed in federal court in New York. The MDL Panel transfers the case to an MDL transferee judge in Chicago. According to Lexecon, the Chicago judge cannot try that case. When pretrial proceedings end, the Chicago judge must ask the MDL Panel to ship the case back to New York for trial.)

Folks -- even folks on the same side of the "v." -- disagree about the wisdom of the Lexecon rule. On the defense side, some lawyers say that it's silly to have the transferee judge oversee pretrial proceedings for years, become immersed in the issues, and then not have the power to try the cases. But other defense lawyers say that an MDL transferee judge intent on coercing a settlement may refuse to rule on critical issues, and the only way to secure rulings (which may be the route to obtaining victory, rather than a settlement) is to be able to wait out the pretrial process and then ask transferor judges to decide the open questions.

Legislation meant to overturn the Lexecon result has been introduced in several years since the case came down in 1998, but no law has ever come of this. We've often wondered why not. Is there too little political interest in the issue? Was Congress convinced by the argument that MDL transferee judges can become a logjam that only transfer home for trial can break? Or was something else happening here?

At the ALI-ABA conference in Charleston a couple of weeks ago, we heard the answer. A prominent plaintiffs' lawyer (sufficiently prominent to have real knowledge on the subject) explained that the plaintiffs' bar lobbied against the "Lexecon fix" legislation because plaintiffs' lawyers feared that allowing the transferee court to try foreign cases would cause lawyers to lose control of their cases. (A New York lawyer files a case in New York, watches it be transferred to Chicago, and then never sees the case come home. According to the ALI-ABA speaker, that loss of control was not acceptable to a large segment of the plaintiffs' bar.)

We were delighted to hear that explanation, because it satisfied our longstanding curiosity.

It also piqued our interest.

On the one hand, it's possible that plaintiffs' lawyers lobbied against the bill because they feared losing control of their cases.

On the other hand, it's also possible that they lobbied against the bill because they perceive the requirement of remand for trial to create problems for mass tort defendants. When 1000 cases are moving through pretrial proceedings in federal court in Chicago, there are no federal trials. If those pretrial proceedings conclude and the Chicago judge can keep the cases, there's likely to be only one trial at a time -- that's all one judge can handle. But, if the Chicago judge must remand the cases back to their home courts, hundreds of the cases could be set for trial more or less simultaneously. The threat of multiple simultaneous trials can, in certain circumstances, bring even large corporate defendants to the bargaining table. See, e.g., Richard Hazelton, "The Tort Monster That Ate Dow Corning," The Wall Street Journal A19 (May 17, 1995).

Perhaps the plaintiffs' bar lobbied agains the "Lexecon fix" bills not for fear of losing control of cases, but rather for fear of losing an important bargaining chip in mass tort settlement negotiations. (Or perhaps different people were lobbying against the proposed legislation for different reasons.)

As to that question, we suspect that our curiosity will never be satisfied.

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