Arguing Class Actions is a monthly column by Adam J. Levitt for the National Law Journal.
Reprinted with permission from the August 5, 2024 edition of the National Law Journal. © 2024 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
Multidistrict litigations are usually complex and often very expensive. A “typical” MDL progresses as follows: cases alleging similar misconduct by the same defendant (or defendants) are filed in various courts across the United States. Following motion practice, the Judicial Panel on Multidistrict Litigation decides whether to transfer and centralize those cases for all pretrial purposes, pursuant to 28 U.S.C. § 1407. Should the JPML rule in favor of transfer, the cases are transferred to and centralized in a single federal court for determination of pretrial issues. The transferee court then appoints plaintiffs’ lead counsel, followed by the plaintiffs filing their master complaint, which the defendants almost inevitably (some might say reflexively) move to dismiss. Assuming that the transferee court sustains the complaint, pretrial issues (including, as applicable, class certification) through summary judgment are handled by the transferee court; and, finally, if there isn’t a global settlement or dismissal on summary judgment, the MDL end-game proceeds in a series of “bellwethers”—trials either in the transferee court or back in the originating courts across the U.S. that, in theory, provide clarity to the parties regarding the merits of the case and help to determine the ultimate parameters for a global resolution.
While the MDL process is clearly essential—indeed, despite its flaws, one shudders to think of the efficiency lost if the process did not exist—MDLs often present unique problems in consumer cases. In a typical consumer case involving, say, the purchase of an allegedly defective good, chances are that the harm was felt in every jurisdiction across the U.S. As a result, the master complaint, even of a seemingly simple case, would need to cover all 50 states, alleging torts that often have subtle variations across jurisdictions. The many-hundred-page complaint would need to be digested by the transferee court, which could decide it must unpack the variability among 50 separate states’ laws as part of its lengthy opinion on the dismissal motion. The result: It often takes an incredibly long period of time, and great expense, to get even the most righteous case going.
The Legal Bellwether
But this year, in In re Oral Phenylephrine Marketing and Sales Practices Litigation, MDL No. 3089, an MDL pending in the Eastern District of New York, the transferee judge, Brian M. Cogan, has presented a different method—the legal bellwether—that should be used more often.
At the highest level, in the Phenylephrine MDL, the plaintiffs allege that the defendants—virtually every major pharmaceutical company—violated state consumer protection laws when they marketed and sold orally ingested products containing the compound phenylephrine. The compound—found in drugs like Sudafed PE and hundreds of other over-the-counter products—is purportedly capable of acting as a nasal decongestant. The plaintiffs allege that the defendants have known since at least 2016 (if not earlier) that phenylephrine, when taken orally, is no more capable of relieving nasal congestion than a placebo. The plaintiffs also allege that the defendants violated federal racketeering laws by, among other things, conspiring to mislead the public and regulators regarding oral phenylephrine’s efficacy.
The Phenylephrine MDL is a big one: It involves high-profile products (billions of dollars of which are sold every year in all 50 states), there were approximately 100 class action complaints filed across the United States that the JPML transferred and centralized, and it involves virtually every major pharmaceutical company and the laws of all 50 states, as well as federal RICO claims. As soon as the JPML transferred this case for MDL treatment, the parties began girding for the 50-state master complaint.
However, at the outset of the case, everyone involved—plaintiffs, defendants, and most importantly, the court—understood that there were in fact two core legal issues that were common to every single case, the resolution of which would likely simplify the entire matter and clarify for everyone just how big the case really is. Those two issues being federal preemption and RICO.
Without getting too in the weeds, “preemption” refers to the notion that enforcement of state law cannot interfere with the operation of federal law. The defendants argue that the plaintiffs’ allegations are “preempted” because they would effectively be requiring the defendants not to do something—sell a specific product with certain representations—that the defendants state they are allowed to do by operation of federal law. The plaintiffs, on the other hand (and, among other things), argue that state consumer laws require the same thing federal law requires: that the defendants not sell misbranded products. Everybody knew going into the case that, in the defendants’ view, preemption could be a silver bullet.
By the same token, the plaintiffs’ RICO claim—a federal cause of action that does not depend at all on the state in which a given class is seeking relief—should have common resolution across all cases. At bottom, the defendants argue that there exists an “indirect purchaser rule” that should prohibit RICO here and that RICO is otherwise “precluded” by operation of the Federal Food, Drug, and Cosmetic Act. The plaintiffs disagree.
How, though, to tee up these issues—legal questions that all parties acknowledge will have a significantly clarifying impact on the MDL writ large—without forcing everyone to go through the time and expense of constructing and litigating a many-hundred-page master complaint including hundreds of plaintiffs who purchased the many hundreds of defendants’ products?
The answer was a “legal bellwether,” created at the outset of the MDL. Upon appointing the Plaintiffs’ Executive Committee and Plaintiffs’ Steering Committee on April 3, Cogan instructed the plaintiffs to file a “bellwether complaint” under New York law within 30 days. That “skinny” complaint would contain a representative sample of New York plaintiffs who purchased the defendants’ products. There was no waiver if a given defendant or given defendant’s product was not described. The goal, instead, was to tee up a motion to dismiss limited to the preemption and RICO issues. The defendants’ motion to dismiss followed in due course, as did the plaintiffs’ opposition.
In sum, motion practice on arguably the single most important legal issues will be completed by Aug. 5, only four months after appointment of leadership, with a decision expected shortly thereafter. A process that could take a year or more will be dealt with in as little as five months and will almost certainly result in all parties understanding the true scope of the case in that short period of time.
These “legal bellwethers” should become the norm, as they benefit everyone. The plaintiffs’ counsel hardly wish to spend precious time and money developing a master complaint alleging hundreds of separate causes of action, if a single legal issue is likely to decide the vast majority of them. By the same token, no defendant likely wants to incur the expense of dealing with a massive master complaint right away and delay resolution of an issue they think should dispose of the case. The court also benefits: It gets to decide the substantial issues right away, potentially avoid deciding unnecessary questions, and move the case faster toward resolution.
In short, given that MDLs are inherently complex and expensive, every opportunity to maximize their efficiency should be taken. Consumers deserve the resolution of their claims sooner rather than later.
Adam J. Levitt is a founding partner of DiCello Levitt, where he heads the firm’s class action and public client practice groups. He can be reached at [email protected].
Thank you to DiCello Levitt senior counsel Dan Schwartz for contributing to this column.