The Donovan Law Group

Has the MDL 2179 Court Overreached Its Authority?

Has the MDL 2179 Court Overreached Its Authority?

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Supreme Court Decision Poses an Interesting Dilemma for the BP Oil Spill Trial Court

Tampa, FL (April 11, 2012) – The Supreme Court has held that a district court conducting pretrial proceedings pursuant to 28 U.S.C. §1407(a) has no authority to invoke 28 U.S.C. §1404(a) to assign a transferred case to itself for trial. Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998).

On April 8, 2012, Selmer M. Salvesen, a clam farmer in Florida, filed a Motion to Vacate Order and Reasons [As to Motions to Dismiss the B1 Master Complaint] (Rec. Doc. 3830 dated August 26, 2011) with the MDL 2179 court. Mr. Salvesen’s Motion to Vacate poses an interesting dilemma for the BP Oil Spill trial court: (a) Does the court grant the motion to vacate the B1 order thereby derailing the MDL 2179 runaway train? or (b) Does the court ignore the Supreme Court decision in Lexecon in the name of judicial discretion, judicial efficiency, judicial economy and political expediency?

The Lexecon Rule

Justice Souter, in delivering the opinion of the Court in Lexecon, explained 28 U. S. C. §1407(a) authorizes the Judicial Panel on Multidistrict Litigation (the “Panel”) to transfer civil actions with common issues of fact “to any district for coordinated or consolidated pretrial proceedings,” but imposes a duty on the Panel to remand any such action to the original district “at or before the conclusion of such pretrial proceedings.” “Each action so transferred shall be remanded by the panel at or before the conclusion of such pretrial proceedings to the district from which it was transferred unless it shall have been previously terminated.” 28 U.S.C. §1407(a).

Justice Souter pointed out that the Panel’s instruction comes in terms of the mandatory “shall,” which normally creates an obligation impervious to judicial discretion. Anderson v. Yungkau, 329 U. S. 482, 485 (1947).

Moreover, the Supreme Court found that neither the statute’s language nor legislative history can unsettle §1407’s straightforward language imposing the Panel’s responsibility to remand, which bars recognizing any self-assignment power in a transferee court and consequently entails the invalidity of the Panel’s Rule 14(b).

The legislative history tends to confirm that self-assignment is beyond the scope of the transferee court’s authority. Justice Souter noted that the same House Report that spoke of the continued vitality of §1404 in §1407 cases also said this:

The proposed statute affects only the pretrial stages in multidistrict litigation. It would not affect the place of trial in any case or exclude the possibility of transfer under other Federal statutes…..The subsection requires that transferred cases be remanded to the originating district at the close of coordinated pretrial proceedings. The bill does not, therefore, include the trial of cases in the consolidated proceedings.” H. R. Rep. No.1130, 90th Cong., 2d Sess., p. 4 (1968) (Emphasis added)

The comments of the bill’s sponsors further suggest that application of 28 U.S.C. §1407 would not affect the place of trial. See, e.g., Multidistrict Litigation: Hearings on S. 3815 and S. 159 before the Subcommittee on Improvements in Judicial Machinery of the Senate Comm. On the Judiciary, 90th Cong., 1st Sess. Pt. 2, p. 110 (1967) (Sen. Tydings) (“[W]hen the deposition and discovery is completed, then the original litigation is remanded to the transferor district for trial”). Both the House and the Senate Reports stated that Congress would have to amend the statute if it determined that multidistrict litigation cases should be consolidated for trial. S. Rep. No. 454, 90th Cong., 1st Sess., p. 5 (1967). (Emphasis added)

MDL 2179

In order to efficiently manage MDL 2179, the court consolidated and organized the various types of claims into several “pleading bundles.” The “B1” pleading bundle includes all claims for private or “non-governmental” economic loss and property damages.  There are between 100,000 – 130,000 individual claims encompassed within the “B1” pleading bundle.

Rather than allege claims under the Oil Pollution Act of 1990 (“OPA”) (which governs the MDL 2179 cases alleging economic loss due to the BP oil spill) and the Outer Continental Shelf Lands Act (“OCSLA”) (which governs the MDL 2179 personal injury and wrongful death actions and borrows the law of the adjacent state as surrogate federal law), the PSC made the unfathomable decision to allege claims under a hodgepodge of statutes.

In the B1 First Amended Master Complaint, the PSC states, “The claims presented herein are admiralty or maritime claims within the meaning of Rule 9(h) of the Federal Rules of Civil Procedure. Plaintiffs hereby designate this case as an admiralty or maritime case, and request a non-jury trial, pursuant to Rule 9(h).”

Under general maritime law, the PSC alleges claims for negligence, gross negligence and willful misconduct, and strict liability for manufacturing and/or design defect. Under various state laws, the PSC alleges claims for nuisance, trespass, and fraudulent concealment. Under the Florida Pollutant Discharge Prevention and Control Act, Fla. Stat. § 376.011, et seq., PSC alleges a claim for strict liability. The PSC also seeks: (a) punitive damages under all claims; and (b) a declaration by the Court that the conduct of BP and its agents and representatives, including the Gulf Coast Claims Facility (“GCCF”), in obtaining releases and/or assignments of claims against other parties, persons, or entities is not an obligation of BP under OPA.

The PSC appears to be more interested in ensuring significant economy and efficiency in the judicial administration of the MDL 2179 court rather than in obtaining justice for the MDL 2179 plaintiffs. As noted above, in its B1 First Amended Master Complaint, the PSC alleges claims under general maritime law, not under OPA and OCSLA, thereby assisting the court in expeditiously being able to:

(a) Find, “The Deepwater Horizon was at all material times a vessel in navigation.”

(b) Find, “Admiralty jurisdiction is present because the alleged tort occurred upon navigable waters of the Gulf of Mexico, disrupted maritime commerce, and the operations of the vessel bore a substantial relationship to traditional maritime activity. With admiralty jurisdiction comes the application of substantive maritime law.”

(c) Find, “State law, both statutory and common, is preempted by maritime law, notwithstanding OPA’s savings provisions. All claims brought under state law are dismissed.”

(d) Find, “General maritime law claims that do not allege physical damage to a proprietary interest are dismissed under the Robins Dry Dock rule, unless the claim falls into the commercial fishermen exception.”

(e) Find, “…. That nothing prohibits Defendants from settling claims for economic loss. While OPA does not specifically address the use of waivers and releases by Responsible Parties, the statute also does not clearly prohibit it. In fact, as the Court has recognized in this Order, one of the goals of OPA was to allow for speedy and efficient recovery by victims of an oil spill.”

In re Oil Spill by the Rig Deepwater Horizon in the Gulf of Mexico, on April 20, 2010, – F. Supp. 2d -, 2011 WL 3805746 (Aug. 26, 2011 E.D. La.).

Since the PSC requests a non-jury trial pursuant to Rule 9(h) and alleges claims under general maritime law, rather than OPA and OCSLA, the MDL 2179 court has formulated a trial plan that dispenses with trial by jury and instead conducts a bench trial applying general maritime law.

The Heyburn Rule

The Honorable John G. Heyburn II, Chair of the Judicial Panel on Multidistrict Litigation, addressed the Lexecon decision in his article, “A View From the Panel: Part of the Solution,” 82 Tulane L. Rev. 2225 (2008).  The following is an excerpt from Judge Heyburn’s article.

Judge Heyburn points out that five appropriate strategies are available by which the Lexecon conundrum may be avoided:

(a) Provided the plaintiff is amenable and venue lies in the transferee district, the action could be refiled there.

(b) The parties could also agree to waive objections to venue.

(c) Alternatively, the transferee court could try a “Bellwether” case that was originally filed in the transferee district, the result of which may promote settlement of the transferred actions in the MDL.

(d) Another option, suggested in the Lexecon opinion itself, is for the transferor court to transfer the action back to the transferee court under § 1404(a).

(e) Still another option would be for the transferee judge to follow the action to the transferor court after obtaining an intracircuit or intercircuit assignment.

The MDL 2179 court has failed to avail itself of any of these “appropriate” strategies.

A “Bellwether” trial is sui generis; a “walks like a duck, quacks like a duck, it must be a duck” analysis cannot be used. Judge Barbier cannot try the cases transferred for “pretrial proceedings.” Judge Barbier certainly cannot try all of the plaintiffs’ claims in the aggregate in this proceeding. Nor can the Lexecon decision be circumvented by the device of permitting claimants to file “short-form joinders” injecting themselves into the limitation action. Accordingly, Judge Barbier, at the request of the PSC, formulated a non-jury trial plan which does not seek to adjudicate all the plaintiffs’ claims in the aggregate. Instead, it plans a non-jury trial of “issues” related to “allocation of fault” in the abstract. This novel proposal is still defective, as a trial of “issues” would try parts of actions that under Lexecon the MDL judge must not try and would amount to a class action in a limitations proceeding contrary to Rule 23. Moreover, the Fifth Circuit has held that class actions are not permitted in limitation proceedings. Lloyds Leasing Ltd. v. Bates, 902 F.2d 368 (5th Cir. 1990). Indeed, such a trial resembles an unsanctioned class action in almost everything but name. It does not remotely resemble a “Bellwether” trial.

Although Judge Barbier and the PSC refer to the MDL 2179 court’s “broad discretionary authority,” a “special-procedure” should not be crafted where a mandatory procedure already exists. It is important to remember that the very MDL procedures Judge Barbier and the PSC wish to circumvent were specifically enacted to reduce costs and promote judicial economy. Allowing the MDL 2179 trial plan would be inconsistent with the clear statutory mandate of the multidistrict litigation enabling statute, 28 U.S.C. § 1407(a), and the Supreme Court’s holding in Lexecon. While the need to promote efficiency in litigation is real, it cannot be accomplished by overriding the applicable provisions set forth by Congress. In re: FEMA Trailer Formaldehyde Products Liability Litigation, 2009 WL 2390668 (United States District Court, E.D. Louisiana).

Judge Heyburn describes the Lexecon decision as a “conundrum” which may be avoided by “resourceful” transferee judges. Plaintiff Salvesen respectfully disagrees. The Lexecon decision is not a conundrum. It is not an obstacle which judicial discretion may circumvent in the name of judicial efficiency, judicial economy or political expediency. It is the law.

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