This post is from the non-Dechert side of the blog.

From the first time that we discussed Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998), and the related MDL concept of Lexecon waivers, we’ve been plenty leery of defendants in cases transferred into multidistrict litigation waiving their retransfer rights under Lexecon and exposing their cases to the “MDL treatment” in bellwether trials.  Last summer’s decision in In re 3M Combat Arms Earplug Products Liability Litigation, 2021 WL 4269173, at *1 (N.D. Fla. Aug. 9, 2021) (“Combat Arms”), gives adds another reason to our qualms.

Some background.  We discussed Lexecon here.  While our previous post explains our view that Lexecon goes further (precluding all MDL-driven trial reassignments regardless of geography), it is widely understood that Lexecon precludes an MDL judge from forcing out-of-state, MDL transferred parties to stand trial in the MDL without their consent.  E.g., Armstrong v. LaSalle Bank National Ass’n, 552 F.3d 613, 616 (7th Cir. 2009); In re Carbon Dioxide Industry Antitrust Litigation, 229 F.3d 1321, 1326-27 (11th Cir. 2000); In re Roberts, 178 F.3d 181, 184 (3d Cir. 1999); Shah v. Pan American World Services, Inc., 148 F.3d 84, 90 (2d Cir. 1998).

Our prior Lexecon posts have detailed various artifices that have been employed to maneuver unwilling defendants into waiving their right to avoid MDL trials, focusing particularly on direct filing.  But Combat Arms describes a new way for the “MDL treatment” to disadvantage Lexecon waiver defendants – this time on substantive law.

While we haven’t researched it thoroughly, some states, such as Georgia and Florida, have enacted “single award” statutes that ban multiple punitive damages awards that “punish” defendants repeatedly for the same conduct.  The Georgia statute, which was at issue in Combat Arms, reads:

In a tort case in which the cause of action arises from product liability, there shall be no limitation regarding the amount which may be awarded as punitive damages.  Only one award of punitive damages may be recovered in a court in this state from a defendant for any act or omission if the cause of action arises from product liability, regardless of the number of causes of action which may arise from such act or omission.

Ga. Code §51-12-5.1(e)(1).  This statute has been held substantive, and therefore applicable in federal court.  E.g., Minott v. Merrill, 2016 WL 5477997, at *2 (M.D. Ga. Sept. 27, 2016); Ellis v. Old Bridge Transportation, LLC, 2012 WL 6569274, at *1 (M.D. Ga. Dec. 17, 2012).

The defendants in Combat Arms waived Lexecon and proceeded to a bellwether trial against (among others) two Georgia MDL plaintiffs.  The trial got the MDL treatment, with a multiple-plaintiff consolidated trial.  We have decried multi-plaintiff trials as inherently prejudicial to defendants, since lay jurors make negative inferences simply from the multiplicity of plaintiffs – and that’s precisely what happened – all of the plaintiffs received identical $2.1 million punitive awards.  2021 WL 4269173, at *1.

The defendants invoked the “one award” provision in opposition to the Georgia-law punitive damages award, but Combat Arms, relying on the “this state” language of the statute, held that it didn’t apply because the MDL court – despite applying Georgia law – was not a Georgia court:

[Defendants] are not entitled to [judgment as matter of law] on this issue because the statute’s plain meaning is to the contrary.  Section 51-12-5.1(e)(1) states that “[o]nly one award of punitive damages may be recovered in a court in this state. . . .  [The two Georgia plaintiffs] are not limited to one punitive damages award because they did not recover punitive damages in a Georgia court.

Id. at *3 (emphasis original in Combat Arms).  The defendants relied on two non-Florida cases that had applied a Florida statute to Florida plaintiffs despite similar language, but the Florida statute – unlike the Georgia statute – had been held procedural and “limited to the courts of Florida.”  Id. (citation and quotation marks omitted).

So the defendant in Combat Arms was held liable for multiple punitive damages awards under Georgia law despite a Georgia statute that:  (1) expressly prohibited that result, and (2) had previously been held substantive and applicable in federal court.

None of that would have been possible had the defendants not waived their Lexecon right to have their MDL cases tried in the originating Georgia court as required by 21 U.S.C. §1407.  Nor would any future Georgia plaintiff in this very large MDL subsequently be entitled to recover punitive damages.  But because the MDL is not in a Georgia court, future Georgia plaintiffs (500 more MDL plaintiffs now being worked up for trial) can ignore §51-12-5.1(e)(1)’s “one award” provision.

So defendants should think long and hard about waiving Lexecon in any MDL.  Watch out for the “MDL treatment.”