This guest post was submitted to us by Ronni Fuchs, a partner at Bexis’ firm, Dechert LLP. She gets the credit (and the blame) for what follows.

From time to time we grapple with the question of the authority of a trial court to which an MDL court remands cases to vacate or reform rulings issued by the MDL court. In re Pharmacy Benefit Managers Antitrust Litigation, No. 07-1151, slip op., 2009 WL 3030370 (3d Cir. Sept. 23, 2009), is instructive because it addresses review of an order entered by a court before the cases being MDL’ed.

The facts are simple. Prior to the creation of an MDL, the transferor court (Judge Eduardo C. Robreno of the U.S. District Court for the Eastern District of Pennsylvania) entered an order compelling arbitration of antitrust issues in the case, finding that the action was subject to an arbitration clause in the underlying contract. The JPMDL then transferred the case to an MDL (Judge John P. Fullam, also of the Eastern District of Pennsylvania, presiding). Judge Fullam vacated the arbitration ruling, stating that “[a]s a general proposition, a transferee judge under the Multidistrict statute may vacate or modify any order of a transferee court bearing upon pretrial matters.”

The Third Circuit panel held that Judge Fullam’s order vacating the arbitration ruling violated the law of the case doctrine, and remanded the case Judge to Fullam with an order to reinstate Judge Robreno’s order compelling arbitration. The Third Circuit addressed the procedural standards for post-transfer vacation of prior orders.

The Third Circuit in Pharmacy Benefit Managers rejected the broad view taken by many – including by the Manual for Complex Litigation 4th – that transferee courts have the inherent power to vacate or modify transferor (that is, MDL) court orders absent extraordinary circumstances. Rather, under the “law of the case” doctrine, the circumstances under which a MDL court could vacate prior orders was quite limited:

[W]e can find nothing in the text of. . .the Multidistrict litigation transfer statute, that authorizes a transferee judge to vacate or modify an order of a transferor judge. Moreover, if [the MDL judge’s] interpretation of the statute were accurate, litigation could begin anew with each MDL transfer. . . . [T]here is nothing in the rules adopted by the Joint Panel on Multidistrict Litigation that authorizes a transferee judge to vacate or modify the order of a transferor judge. Moreover, we do not believe that Congress intended that a “Return to Go” card would be dealt to parties involved in MDL transfers.

Slip op., 2009 WL 3030370, at *6 (citations and footnote omitted). By contrast, the Manual for Complex Litigation, which supported broad MDL court authority, “clearly does not have the force of law.” Id.

The transferor court, the Third Circuit held, has no more power to vacate existing orders than would the transferee court under the law of the case doctrine, had the case never been involved in an MDL:

[T]he power of the transferor court “pass[es] to the transferee judge.” Therefore, if the transferor judge has the power to vacate or modify a protective order when needed, commonsense compels the conclusion that the transferee court must also have the power to vacate or modify a protective order of a transferor court when necessary and appropriate. Concomitantly, absent such need or propriety (i.e., “extraordinary circumstances”), the transferee court simply does not have the power to vacate or modify an existing protective order.

Slip op., 2009 WL 3030370, at *7.

An intriguing question is whether this tells us something about the Third Circuit’s view of the power of courts post-remand FROM the MDL court as well? In other words, under what circumstances can we revisit orders from remanding MDL courts. Do the same standards adopted by the Third Circuit for modification of pre-MDL orders apply to modification of MDL orders? (On that score, see what happened in the Fifth Circuit six weeks ago in In re Ford Motor Co., No. 09-50109, slip op. (5th Cir. Aug. 21, 2009), about which Beck and Herrmann previously posted here.)

Either side (plaintiff or defense) may find itself arguing either side (law of the case vs. something less) of this procedural question, depending upon the order sought to be reviewed. Thus it is not wise to commit to either position in advance. However, in such a situation, if the “extraordinary circumstances” standard of law of the case can be met, any attorney seeking modification of an MDL order after remand would do well to satisfy that standard – even if the transferor court would be willing to revisit the ruling upon some lesser standard.