What better way to celebrate winter than with polar bears? The following guest post, written by Pearson Bownas of Jones Day, discusses the recent Polar Bears decision by the MDL Panel. This work is entirely Pearson’s; neither Beck nor Herrmann had anything to do with it:

The belief that polar bears cover their black noses with a paw to camouflage themselves in the snow and ice while hunting has been generally discredited. But did you know that polar bears may have helped to open the eyes of the Judicial Panel on Multidistrict Litigation? It’s true: polar bears may have helped the Panel to see an opportunity that it has historically overlooked to promote efficiencies other than those relating to discovery of defense-side facts bearing on core liability issues.

I explored this missed opportunity in an article co-authored with half of this blog’s dynamic duo, Mark Herrmann, titled “An Uncommon Focus on ‘Common Questions’: Two Problems with the Judicial Panel on Multidistrict Litigation’s Treatment of the ‘One or More Common Questions of Fact’ Requirement for Centralization,” published in the multidistrict litigation symposium issue of the Tulane Law Review, 82 Tulane L. Rev. 2297 (2008). There, we traced the origins of the MDL Panel back to the Coordinating Committee for Multiple Litigation of the United States District Courts (the “Coordinating Committee”). The Coordinating Committee was created in 1962 to deal with an explosion of over 1800 civil antitrust conspiracy and price fixing claims filed against manufacturers of electrical equipment in thirty-five district courts. The Coordinating Committee was charged with “considering discovery problems arising in multiple litigation with common witnesses and exhibits.” Philip C. Neal & Perry Goldberg, “The Electrical Equipment Antitrust Cases: Novel Judicial Administration,” 50 A.B.A. J. 621, 623 (1964) (quoting letter from Chief Justice Warren to the Honorable Edwin A. Robson (Jan. 26, 1962)). The Coordinating Committee’s efforts were, accordingly, aimed primarily at streamlining the discovery process by eliminating duplication. It did this by, for example, recommending that the district judges presiding over the cases vacate all previously served discovery, require the plaintiffs to serve one common set of discovery requests, and require the defendants to establish document repositories open to all plaintiffs.

While the MDL Panel was created as a direct result of the Coordinating Committee’s successful work, its statutory mandate seems much broader than mere discovery management. The MDL Panel may transfer actions pending in different districts that share “one or more common questions of fact” when transfer “will be for the convenience of parties and witnesses and will promote the just and efficient conduct of such actions.” 28 U.S.C. § 1407(a). Nevertheless, many of the Panel’s decisions have appeared to focus largely on the same core liability discovery management issues that the Coordinating Committee was limited to.

For example, in In re Engle Progeny Tobacco Products Liability Litigation, the MDL Panel refused to centralize multiple smoking and health cases pending in federal courts that arose from the Florida Supreme Court’s decision to decertify a class of all Florida smokers at the end of the second phase of trial proceedings, but to permit all of the “Phase I” factual findings to have res judicata effect in future individual suits brought by former class members. These Phase I findings included that cigarettes cause certain diseases, that nicotine is addictive, that the defendants’ cigarettes were defective and unreasonably dangerous, and that the defendants made deliberate false or misleading statements to smokers. Engle v. Liggett Group, Inc., 945 So. 2d 1246, 1257 n.4 (Fla. 2006).

The tobacco manufacturer defendants asked the MDL Panel to centralize the Florida smokers’ individual cases so that uniform determinations could be made on common questions, such as the nature and factual extent of the effect, if any, of the preserved factual findings in the individual cases, the criteria that the individual plaintiffs must satisfy to prove membership in the former class to obtain the benefits of those findings, and the kind and quality of evidence needed to prove satisfaction of those criteria. While these were common questions, the uniform resolution of which by a single judge would have made the proceedings more “just and efficient,” the MDL Panel denied the manufacturers’ motion to centralize because “discovery on common factual issues [had already] occurred in the underlying state court action . . . .” In re Engle Tobacco Progeny Tobacco Prods. Liab. Litig., MDL No. 1887, 2007 U.S. Dist. Lexis 96327, at *2 (J.P.M.L. Dec. 12, 2007). Thus, notwithstanding the other potential benefits of centralization, the MDL Panel declined to centralize the cases because there was no common discovery to be coordinated.

So where do polar bears fit in all of this?

In its recent transfer order in In re Polar Bear Endangered Species Act Listing and § 4(d) Rule Litigation, MDL No. 1993 (link here), the Panel centralized four actions pending in two districts even though “[t]his group of cases [was] unlike many others that the Panel routinely encounters because the amount of pretrial discovery may be less onerous than in other litigations and because common legal issues may predominate the unresolved matters.” The Polar Bear cases challenge some or all aspects of the U.S. Fish and Wildlife Service’s listing of polar bear as threatened under the Endangered Species Act, and a related interim final rule promulgated under Section 4(d) of that Act. One of the parties moved to centralize the cases, arguing that “[i]f transfer is not granted and separate actions are maintained, there is great potential for conflicting adjudications regarding, inter alia, the scope and content of the administrative record, intervention, preliminary injunctive relief, the appropriateness of listing of the polar bear under the ESA, and the appropriateness of the Interim 4(d) Rule.” Motion For Transfer Of Actions To The U.S. District Court For The District of Columbia, filed in In re Polar Bear Endangered Species Act Listing and § 4(d) Litig., MDL No. 1993 (dated Aug. 29, 2008), at 4.

At the MDL Panel’s hearing on this motion (which I attended to argue a centralization motion in a case having nothing to do with polar bears), the Panel noted that, because the challenges raised by these lawsuits arose from an already-developed administrative record, there would be little, if any, discovery to be conducted in any centralized proceeding. The attorney representing the Government, which supported the motion to centralize, stressed the importance of avoiding conflicting rulings on the common questions posed in each case. What, she essentially asked the Panel, was the Fish and Wildlife Service to do if one court held that polar bears should be listed as threatened under the Endangered Species Act, and another court held that they should not be? Members of the Panel squarely framed the issue in their questions as whether the Panel could centralize cases simply to avoid conflicting rulings on common questions.

The Panel plainly decided that it could.

In its transfer order, the Panel explained that centralization “will eliminate duplicative discovery” – though it did not identify what discovery it had in mind – “and prevent inconsistent pretrial rulings, particularly those with respect to the identification of the underlying administrative record. Streamlining the pretrial resolution of such issues will avoid potentially conflicting obligations placed upon the federal defendants.”

This decision opens the door for parties in other cases to seek centralization to promote efficiencies other than those involved in plaintiffs taking discovery from defendants on common factual issues, which has been the historical focus of the Panel’s decisions. Defendants, for example, who would prefer a uniform ruling over conflicting ones on common issues arising from common facts, such as the application of a federal preemption or governmental contractor defense, could use the Polar Bear decision as authority to support a motion to centralize. And defendants faced with the risk that different courts in different cases will impose inconsistent obligations relating to common issues now have a stronger argument for centralization to avoid that result.

To be sure, the immediate effect of the Polar Bear decision should not be overstated. For one thing, the Panel may have felt a certain sympathy for the Government’s plight that it may not feel for all private litigants. And the rationale of the decision may be limited to cases that seek some form in injunctive or declaratory relief. Courts applying Fed. R. Civ. P. 23(b)(1)(A), which allows courts to certify a class when, among other things, “the prosecution of separate actions by . . . individual members of the class would create the risk of . . . inconsistent or varying adjudications . . . which would establish incompatible standards of conduct for the party opposing the class,” have held that this standard is not satisfied by the risk that a defendant may be found liable for damages in one case but not liable for damages in another case involving exactly the same issues. See, e.g., Corley v. Entergy Corp., 222 F.R.D. 316, 321 (E.D. Tex. 2004) (“If one plaintiff prevailed but another plaintiff lost, the defendant could act in a consistent manner” by paying the winning plaintiff and not paying the losing one.); Moore’s Fed. Prac. § 23.41[6][a] (“A defendant is not subjected to incompatible standards of conduct merely by exposure to the risk that the defendant might be liable to some plaintiffs and not to others.”) (citing many cases). Instead, courts have generally held that “[o]nly declaratory or injunctive relief will establish standards of conduct and only incompatible declaratory judgments or injunctions will establish inconsistent standards of conduct for the party opposing the class.” Moore’s Fed. Prac. § 23.41[6][a]. So cases involving damages alone may not threaten the type of incompatible results that convinced the MDL Panel to centralize the Polar Bear cases.

Nevertheless, the Polar Bear decision may represent an important first step in the development of the MDL process to accommodate all issues arising from one or more common questions of fact that would promote the “just and efficient conduct of . . . actions,” and not just those relating to the management of common discovery. And, for that, we have the polar bears to thank.