Photo of Bexis

By now, you know the drill:
Plaintiffs file complaints in federal courts in, say, Alabama, Illinois, and Florida. Ordinarily, the choice-of-law rules of the courts in which the cases were filed — Alabama, Illinois, and Florida, respectively — would govern those cases.
But what happens if the Judicial Panel on Multidistrict Litigation transfers all of those cases to New York and orders plaintiffs to file a new master complaint in New York? Do New York’s choice of law rules then apply, because the complaint was filed in New York? Or is the master complaint merely an administrative convenience, so the choice-of-law rules of the original states still apply?
Because we’re odd, we’ve scratched our heads about this issue before.
But there’s another wrinkle.
Ordinarily, if plaintiffs filed complaints in Alabama, Illinois, and Florida, the MDL Panel (normally at the request of the MDL transferee court) would be required, at the end of pretrial proceedings, to remand the cases back to their home courts for trial. See 28 U.S.C. Sec. 1407(a); Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998).
But if the MDL Panel ships the cases to New York and orders plaintiffs to file a master complaint in New York, exactly what would be remanded, and to where?
The New York complaint presumably includes plaintiffs from several states, may include causes of action not pleaded in some or all of the original complaints, and may otherwise differ from the original complaints. When the time comes for remand, what is remanded? The New York complaint? Or the original complaints?
And to where? Is the New York master complaint remanded to Alabama and Illinois and Florida? That puts certain plaintiffs’ claims in play in multiple courts simultaneously. Or are the original complaints somehow resurrected, conformed to pretrial rulings made on the basis of the master complaint, and then remanded?
Lord knows.
The Seventh Circuit has now chimed in on a related issue.
In Armstrong v. LaSalle Bank National Association, No. 07-2280, slip op. (7th Cir. Jan. 13, 2009) (link here), plaintiffs filed complaints in federal courts in Alabama, Illinois, and Florida. The MDL Panel transferred all of the cases to the Northern District of Illinois for coordinated pretrial proceedings. The Illinois judge ordered plaintiffs to file two consolidated cases (on behalf of differently situated plaintiffs), and the plaintiffs did. Plaintiffs also, for the first time, joined LaSalle Bank in one of those complaints, and LaSalle Bank could apparently “only fairly be sued in” Illinois. Slip op. at 3.
The consolidated complaint pleaded that venue was proper in Illinois. Plaintiffs participated in pretrial proceedings in Illinois for several years, during which the Illinois court repeatedly set specific trial dates. Plaintiffs ultimately settled with all defendants other than LaSalle Bank.
At the close of pretrial proceedings, plaintiffs moved for remand under 28 U.S.C. Sec. 1407. (The Seventh Circuit opinion doesn’t tell us to which court — Alabama or Florida — the plaintiffs sought remand.)
The trial judge, concerned that it would be a “nightmare scenario” to retain jurisdiction and try the case, only to learn on appeal that he lacked jurisdiction, granted the motion to remand, but certified two questions about MDL procedure to the Seventh Circuit.
The Seventh Circuit held that “plaintiffs may waive their right to . . . remand and consent to venue in the transferee court, here the northern District of Illinois.” Slip op. at 5. The standard for waiving the right to remand under Section 1407 “must be at least as strong as that employed in” the Seventh Circuit’s previous cases addressing waiver of an arbitration clause. Id. at 7. And even under the arbitration standard, “the defendant has failed to demonstrate waiver here.” Id.
The district court thus “properly granted the plaintiffs request for a suggestion of remand to the [MDL] Panel.” Id. at 13.
What does this case illustrate?
First, it made us gin up some more MDL humor:
Why is MDL practice like Soviet-era Russia?
It is a riddle, wrapped in a mystery, inside an enigma.
Second, if your client intends to seek remand at the conclusion of pretrial proceedings in an MDL transferee court, don’t accidentally waive your right to remand by your conduct. Remind the court, as appropriate during the course of proceedings, that your client ultimately intends to move for remand.