MDLs are supposed to follow the Federal Rules of Civil Procedure.  That’s the reminder the Sixth Circuit gave in In re National Prescription Opiate Litigation, 956 F.3d 838, 844 (6th Cir. 2020):

[T]he law governs an MDL court’s decisions just as it does a court’s decisions in any other case. . . .  Here, the relevant law takes the form of the Federal Rules of Civil Procedure.  Promulgated pursuant to the Rules Enabling Act, those Rules are binding upon court and parties alike, with fully the force of law. . . .  Respectfully, the district court’s mistake was to think it had authority to disregard the Rules’ requirements . . . in favor of enhancing the efficiency of the MDL as a whole. . . .  But MDLs are not some kind of judicial border country, where the rules are few and the law rarely makes an appearance.  For neither §1407 nor Rule 1 remotely suggests that, whereas the Rules are law in individual cases, they are merely hortatory in MDL ones.

Id. at  844 (citations omitted).  More recently the Civil Rules Committee made the same point in approving new Fed. R. Civ. P. 16.1:  “The Rules of Civil Procedure, including the pleading rules, continue to apply in all MDL proceedings.”  Comment to Rule 16.1(b)(3)(A).

Bad things happen – usually to defendants – when an MDL adopts practices designed to cut procedural corners that the drafters of the rules put there for a reason.

Our latest example is In re Philips Recalled CPAP, Bi-Level PAP, & Mechanical Ventilator Products Litigation, 2025 WL 1322162 (W.D. Pa. May 7, 2025).  The defendant settled – we think wisely – the personal injury and related claims brought in this MDL litigation.  Being out of pocket a substantial sum due to the settlement, the defendant brought a third-party action seeking contribution from another defendant that allegedly marketed a cleaning chemical that made things worse.  Id. at *1.  Unfortunately for the defendant, multiple procedural shortcuts agreed to before the settlement came back to haunt it, and cost it a significant chunk of those claims.

The decision described the extra-procedural procedures that were the culprits:

The master personal injury complaint was filed in this transferee court pursuant to an agreed-upon pretrial order.  The third-party complaint in issue asserted contribution claims arising from payments made or which will be made to individuals who participated in a settlement and (1) had their claims identified on a census registry, but did not file a separate case; (2) filed separate cases that were transferred to this court pursuant to 28 U.S.C. §1407; (3) had separate cases locally filed in this court; and (4) directly filed cases in this court pursuant to a pretrial order, with the intent that the case would be “remanded” at the conclusion of pretrial proceedings to another district.

Id. (footnotes omitted).  Thus, this MDL featured not one, not two, but three notorious MDL rules dodges that we’ve criticized previously:  master complaints, census registries, and direct filing.  Put them together and the defendant acting as third-party plaintiff lost jurisdiction over some of the claims it sought to bring.

As for the master complaints, there were three of them, filed by consent, after “plaintiffs’ leadership counsel explained that [they] were being filed as an ‘administrative vehicle,’” whatever that meant.  Id. at *2.  Such complaints meant that plaintiffs never had to take the time to “draft[] unique personal injury complaints.  Id. at *3.  Master complaints, which are nowhere mentioned in the federal rules, id. at *15, are chameleons, either “administrative” or “operative” “based on the behavior of the district court and parties.”  Id. at *16.  Here, in practice the parties chose to treat the master complaints as “operative” despite plaintiffs’ misleading earlier statements.  Id.

The census registry as well “was jointly proposed by the parties.”  Id. at *3.  Without ever filing complaints, such “participants” provided some information about their supposed claims in return for tolling the statute of limitations.  Id.

Direct filing was also allowed.  Plaintiffs from anywhere in the country could skip the transfer process provided by the MDL statute and file in the MDL, as long as they “identif[ied]” where “the action would otherwise have been filed,” “which shall be the presumptive place of remand.”  Id. at *3.  No Lexecon waivers (see here if you want to know what those are) were made.  Id.  Service was essentially done away with altogether – uploading a short-form complaint to the MDL website was sufficient.  Id. at *5.

All of this was extended, again by agreement, to the defendant’s third-party actions.  Id. at *5-6.

But when corporations sue other corporations, jurisdictional issues can get messy – and they did here:  “At least one of the . . . third-party plaintiffs and one of the . . . third-party defendants are citizens of Delaware.”  Id. at *6.  Oops, there goes diversity jurisdiction.  Moreover, the substantive claims, for contribution, are purely state law.  Id.  “Under those circumstances, there is no federal court that could exercise original diversity or federal question jurisdiction over any of the contribution claims.”  Id.

So how about “supplemental” jurisdiction?  That’s a rather slender reed. Are the contribution claims “intertwined and related to the claims at issue in the remainder of this case, i.e., the personal injury claims”?  Id.  Maybe, but those claims have been settled, which is precisely what made contribution ripe for adjudication in the first place.  But this is an MDL, so let’s try anyway:

While there is no federal court that could exercise original jurisdiction over the non-diverse, state law contribution claims, this court may exercise supplemental jurisdiction over those kinds of claims if they are filed in a third-party complaint. 28 U.S.C. §1367. In light of the numerous cases filed in this MDL and the overlapping issues, it would be efficient to resolve the contribution claims as part of this MDL.

Id. at *7. “Efficiency” was the buzz word, but this is not the first time that a settling MDL defendant received the benefit of an MDL court’s discretionary resolution of a related issue, such as supplemental jurisdiction here.

CPAP determined, first (and correctly) that the statute governing supplemental jurisdiction did not preclude retention of the claims.  The limitations on supplemental jurisdiction in diversity cases do not extend to third-party claims asserted by defendants.  Id. at *8 (quoting 28 U.S.C. §1367(b)).  But all supplemental jurisdiction is “purely discretionary,” id. at *9, and the statute specifically mentions “dismiss[al of] all claims over which [the court] has original jurisdiction” as a basis for not exercising it.  Section 1367(c)(3).  Indeed, “it is rare for a court to dismiss the underlying claim, but choose to address a third-party claim.”  CPAP, 2025 WL 1322162, at *9.

That was precisely what all the procedural shortcuts created here – a situation where the defendant, in order to resolve the third-party claims within the MDL, had no ground other than supplemental jurisdiction on which to proceed.  Jurisdiction was further complicated by the MDL statute, which created a “unique procedural world” that required every case, if not resolved, to be remanded by the JPML   Id. at *10.  All MDL cases, even partly settled ones, “remain fundamentally separate actions.”  Id.  Nor does MDL status change jurisdictional fundamentals:

Section 1407 is not a subject-matter or personal jurisdiction statute.  It does not expand the jurisdiction of the [MDL] court. . . .  [J]urisdiction in multi-district litigation is limited to cases and controversies between persons who are properly parties to the cases transferred.

Id. at *11 (citations and quotation marks omitted).  But since the MDL statute included third-party claims, an MDL court “can manage them through pretrial proceedings.”  Id. We’ll be circling back to “pretrial” at the end of this post.

The prior procedural shortcuts forced a distinction between cases “locally” filed in the same district (W.D. Pa.) and those that were direct filed from all over the country.  Id. at *12.  Subject matter jurisdiction is the same – as long as there is diversity.  But “direct filing can affect personal jurisdiction, venue, and choice of law, each of which is waivable and can be overcome by the parties’ consent to the direct filing procedure.”  Id. at *12.  While “consent of the parties” can work a waiver in a direct filing situation, id., whose consent matters?  Is it the consent of the original plaintiffs, who have settled, or the active third-party defendant, who sought Rule 12(b)(1) jurisdictional dismissal?

In CPAP the answer turned on whether there remained an “action” to remand to a transferor (original) court.  If there is no original action, then there is nothing over which an MDL court can assert jurisdiction.  “In other words, fundamental constitutional limits on subject-matter jurisdiction override the desire to achieve efficiency and economy.”  Id. at *13 (discussing In re January 2021 Short Squeeze Trading Litigation, 580 F. Supp.3d 1243, 1254 (S.D. Fla. 2022) (plaintiffs could not initiate an action by joining a “master complaint”)).  Thus, “a plaintiff’s claims are properly before an MDL court only where the plaintiff has first asserted his or her claims in a separate action.”  Id. (quoting Short Squeeze).

So, through waiver and consent, supplemental jurisdiction was at least allowable in direct filed (albeit settled with the direct filer) cases, as well as those filed through statutory MDL channels.  But even that stretch could not extend to settlements with census registrants who never filed a complaint at all.  CPAP broke down the settled plaintiffs into four categories:

• filed cases locally in this court, and this court is the intended home court;
• filed cases in other districts that were transferred to this court by the JPML;
• submitted claims on the census registry and participated in the settlement, but did not file separate complaints; and
• filed short form complaints in the MDL pursuant to PTO #28(b) and this court is not the intended home court.

CPAP, 2025 WL 1322162, at *17 (footnote omitted).

Here’s how the defendant’s contribution claims fared as to each of these procedural postures:

Locally filed cases:  “Relatively straightforward.”  Id. at *17.  “This court may preside over pretrial proceedings, including third-party claims” and thus may exercise supplemental jurisdiction.  Id.

JPML transferred cases:  “[A]lso relatively straightforward.”  Id.  Since there is a “transferor home court,” the necessary MDL Is are dotted and Ts are crossed.  Id.  “At the conclusion of pretrial proceedings, if the case has not settled or been otherwise resolved, this court may recommend to the JPML that it remand those contribution claims to the relevant home courts.” Id.

Census Registry Cases:  This unorthodox MDL procedure came back to haunt the defendant.  Without a case, there is no federal jurisdiction under any theory, no matter how strained.

This court lacks subject-matter jurisdiction over contribution claims related to settlement payments made to individuals who did not file an underlying lawsuit that is properly pending before this court.  For individuals who participated in the settlement by way of the registry, there is no “home court” and the contribution claims related to those claimants are not tethered to a case that is pending before this court.

Id.  Lesson hopefully learned – MDL defendants should never consent to registries.  The risk/benefit ratio is terrible.  Plaintiffs save filing fees and toll the statute of limitations in exchange for providing information they’d have to provide anyway, in exchange for a promise not to file elsewhere, which plaintiffs will inevitably ignore if the MDL ever goes south on them.  In a settlement situation, a “registry does not . . . create a basis for this court to exercise subject-matter jurisdiction over related third-party contribution claims because they are not tethered to a separate case properly pending before this court.”  Id. at *18.  It’s not even a matter of diversity jurisdiction.

Direct filed claims by non-resident plaintiffs:  The underlying personal injury claim was diverse (even though it’s now settled) and probably meets the jurisdictional amount – except “[e]ach directly filed case will need to be reviewed to confirm that subject-matter jurisdiction would be proper.”  Id. at *18 n.25 (this could become an issue down the road if little information is available as to some of the settled plaintiffs).  The later third-party filing does not affect diversity since the non-diverse third-party defendant was not a party when the initial complaint was filed.  Id. at *18 n.24.  So, thanks to the parties’ original waivers, the defendant can proceed with these contribution claims.

But wait, where would these claims be tried if the third-party actions didn’t settle?  More “[u]nintended consequences arising from directly filed cases.”  Id.  Is the marginal utility of direct filing – to defendants, not to plaintiffs (we know all the hassles they avoid) – worth the candle?  Under the MDL statute, there is a problem.

Even though a plaintiff identified in the relevant short form complaint a different district, i.e., what the home court would have been, the stubborn fact remains that the different district is not a home court to which that case can be remanded.

CPAP, 2025 WL 1322162, at *19 (citation omitted).  Unlike the settled plaintiffs, the third-party defendant “preserved its ability to object to venue in the ‘home court.’”  Id. at *20 (citation and quotation marks omitted).  So guess what?  Because of these unorthodox procedures, nobody still knows the answer:

The master personal injury complaint in this case was highly successful in terms of identifying common legal issues and spurring settlement . . . [for those] who asserted personal injuries.  The parties, however, have not had an opportunity to be heard on the specific issues about the “remand” contemplated by PTO #28(b) [allowing the operative master complaint]] and venue.  Accordingly, before taking action, the court will invite briefing and set a status conference. . . .

Id.  Thus, we end with a whimper, not a bang – and apologies to the Bard.  Oh what a tangled web we weave when first we practice to avoid the Federal Rules of Civil Procedure.