Latest Thinking

Pinnacle Device Defendants Waive Goodbye to MDL Court

The Pinnacle Acetabular Cup System, a hip-implant device, is the subject of a massive Multidistrict Litigation (MDL), consolidating over 9,300 plaintiffs’ product-liability actions in the Northern District of Texas.  See In re DePuy Orthopaedics, Inc., 2017 WL 3768923 (5th Cir. 2017).

Under the MDL statute, 28 U.S.C. § 1407, actions transferred to an MDL court must be remanded back to the federal district court from whence they came at or before the conclusion of pretrial proceedings.  In other words, MDL courts cannot try transferred actions.  Of course, the parties are also free to waive any improper-venue and personal-jurisdiction objections and try the case before the MDL judge.  These are known as Lexecon waivers—named after the Supreme Court case holding that an MDL court has no statutory authority to try cases that did not originate in the district in which the MDL judge sits.

A while back, the MDL court in Pinnacle held a series of bellwether trials:

  • A single action, originating from the District of Montana, where the jury found for the defendants—designers, manufacturers, and distributors, of the Pinnacle Device;
  • An action consolidating five Texas plaintiffs, where the jury returned a $502 million verdict for the plaintiffs; and
  • An action consolidating six California plaintiffs, where the jury returned a $1.04 billion verdict for the plaintiffs.

Crucially, the defendants contended that, while they waived their Lexecon objections as to the first two bellwether trials, they did not do so as to the third—or any forthcoming trials.  The MDL judge, on the other hand, disagreed.  The Court found that the defendants had represented—through approval of a series of special master’s reports, among other things—that they had agreed to a permanent and global waiver of their Lexecon objections.  Therefore, the MDL court issued an order setting for trial an action consolidating ten New York plaintiffs.

The defendants moved to vacate the order and to dismiss the consolidated action for want of personal jurisdiction and improper venue.  The MDL court denied both motions and set trial for September 5, 2017.

The defendants then petitioned the Fifth Circuit for a writ of mandamus to prevent the New York-plaintiffs trial from proceeding.  A writ of mandamus is an extraordinary remedy.  In essence, it is a court order requiring an inferior governmental official to fulfill their official duties to correct an abuse of discretion.  Mandamus is only appropriate where (i) the petitioner has shown a clear and indisputable right to the writ; (ii) the court is satisfied that the writ is appropriate under the circumstances; and (iii) the petitioner has no other adequate means to attain the desired relief.

Although the Fifth Circuit denied the defendants’ petition, it’s unlikely that defeat has ever tasted so sweet.  Judge Jerry Smith, writing for two separate majorities, bent the rules (just a bit) to ensure that the MDL court would not continue to force the defendants to try extra jurisdictional actions in the Northern District of Texas.

As Judge Gregg Costa pointed out in his concurrence, the Supreme Court has advised lower courts that a petitioner’s first requirement is to demonstrate that mandamus is the only adequate remedy. As both Judge Costa and Judge Smith determined that the usual and ordinary remedy of post-trial appeal was sufficient, the court’s inquiry could have (and arguably should have) ended there.

But Judge Smith, joined by Judge Edith Jones, eschewed that rigid approach and looked into the substance of the defendants’ purportedly global and permanent Lexecon objections.  Ultimately, the two concluded that the defendants unambiguously waived their objections only as to the first two bellwether trials.  And that the MDL court seriously erred by declaring that the defendants had globally and permanently waived their objections to venue and personal jurisdiction.  The two added that the MDL court “clearly abused” its discretion in finding otherwise, and, in so doing, reached a “patently erroneous” result.  Moreover, mandamus would have been appropriate had Judge Smith not joined Judge Costa in finding that direct appeal was an adequate form of remedy.

By fashioning this see-saw majority—effectively splitting the difference between Judge Costa and Judge Jones—Judge Smith ensured that the September 5 trial would not proceed as scheduled.  Nor would the MDL court try any other cases originating outside of the Northern District of Texas.  In fact, Judge Costa (derisively) mused:  “After being told by a court of appeals that it reached a ‘patently erroneous’ result, what district court is going to go forward with the trial Petitioners are trying to prevent?”

But doesn’t this seem like the correct result?  By tacitly overturning the MDL court’s essential holding, Judge Smith ensured that certain cases would not proceed to trial in violation of federal law.  But by denying the defendant’s petition, he also preserved the specialness of the writ of mandamus within the Fifth Circuit.  In other words, even though the defendants appear to have gotten everything they asked for, the court’s decision will not serve as bad precedent for litigants looking for an end-run around adverse rulings on routine denials of motions to dismiss for lack of personal jurisdiction and improper venue.

Apparently, sometimes losing can be just as good as winning.  We’ll keep an eye on this and other MDL-related issues here at the Monitor.

The post Pinnacle Device Defendants Waive Goodbye to MDL Court appeared first on Weil Gotshal | Product Liability Monitor.