The U.S. Supreme Court issued a significant ruling last week for litigants in multidistrict litigation. Multidistrict proceedings (commonly referred to as “MDLs”) consist of multiple civil cases in federal court involving similar factual issues that are coordinated or consolidated for discovery proceedings and pretrial motions before one federal judge. MDLs are intended to achieve efficiency and avoid conflicting rulings that might occur if similar cases were litigated in different courts. Recent examples of MDLs in which Lieff Cabraser plays a leading role include the GM ignition-switch litigation and the Toyota sudden-acceleration lawsuits.
If a case is not dismissed or does not settle while pending before the MDL court, it is sent back for trial to the court in which it was initially brought. What happens, though, if the MDL court issues an order that results in the dismissal of one of the numerous cases included in the MDL, but not all of the other cases? Must the dismissed party wait — potentially years — until the entire MDL has been resolved before filing its appeal?
On January 21, 2015, the U.S. Supreme Court answered this question in Gelboim v. Bank of America Corp. The Court unanimously reversed the Second Circuit’s judgment dismissing, for lack of appellate jurisdiction, certain plaintiffs’ appeal of an MDL court’s dismissal with prejudice of their antitrust claim — the only claim in their case. After the MDL court dismissed their case, plaintiffs sought to appeal, but the Second Circuit sua sponte dismissed the appeal, reasoning that the MDL court’s order was not “final” because other cases were still pending in the MDL.
The Supreme Court’s decision, authored by Justice Ginsburg, resolves a circuit split regarding whether a party whose case has been consolidated for pretrial purposes under 28 U.S.C. § 1407 (the MDL-transfer statute) can appeal a judgment entirely disposing of that case, notwithstanding that other cases within the MDL remain pending.
The Court held that cases consolidated for MDL pretrial proceedings “ordinarily retain their separate identities, so an order disposing of one of the discrete cases in its entirety should qualify under §1291 as an appealable final decision.” Op. at 6-7 (footnote omitted).
Section 1407, the Court observed, “refers to individual ‘actions’ which may be transferred to a single district court, not to any monolithic multidistrict ‘action’ created by transfer.” Id. at 7. The defendant banks’ argument that, in an MDL consolidation, “no appeal of right accrues until the consolidation ends,” would, the Court reasoned, “leave plaintiffs like [petitioners] in a quandary about the proper timing of their appeals.” Id. at 8. That is, given the jurisdictional requirement in the Federal Rules of Appellate Procedure that a notice of appeal in a civil case be filed within 30 days after entry of the judgment or order appealed from, “[i]f plaintiffs whose actions have been dismissed with prejudice by a district court must await the termination of pretrial proceedings in all consolidated cases, what event or order would start the 30-day clock?” Id.
The Court thus endorsed the “sensible solution” that “[w]hen the transferee court overseeing pretrial proceedings in multidistrict litigation grants a defendant’s dispositive motion on all issues in some transferred cases, [those cases] become immediately appealable … while cases where other issues remain would not be appealable at that time.” Id. at 9 (ellipsis in original) (citation and internal quotation marks omitted).
Finally, the Court noted that where parties “elect to file a ‘master complaint’ and a corresponding ‘consolidated answer,’ which supersede prior individual pleadings,” the transferee court “may treat the master pleadings as merging the discrete actions for the duration of the MDL pretrial proceedings”; on the other hand, “[n]o merger occurs … when ‘the master complaint is not meant to be a pleading with legal effect but only an administrative summary of the claims brought by all the plaintiffs.'” Id. at 6-7 n.3 (quoting In re Refrigerant Compressors Antitrust Litig., 731 F.3d 586, 590-92 (6th Cir. 2013)).