When MDL judges go rogue

July 3, 2014

Five years ago, the Judicial Panel on Multidistrict Litigation assigned Michael McCuskey, then chief judge of the federal district court in Urbana, Illinois, to oversee consolidated class action claims that the roofing company IKO Manufacturing misled customers about the quality of certain organic asphalt shingles. McCuskey accepted the assignment in December 2009, but just four months later, he informed lawyers for IKO and the purchasers that he was swamped with other cases. Before he’d done much of anything in the shingle litigation, McCuskey turned the case over to the only other judge in the courthouse, Harold Baker.

Neither judge, nor any of the lawyers in the shingle litigation, went to the trouble of informing the MDL panel about the reassignment, even though the MDL panel has exclusive authority to appoint the judges who preside over big consolidated cases. The MDL judges continued to send tag-along suits against IKO to McCuskey, presumably unaware that all he did was pass them in turn to Baker. Only in February 2014, four years after the unauthorized transfer and a couple of months before McCuskey retired from the federal bench, did the MDL panel formally order that the shingle litigation be transferred to Baker.

By then, as the 7th U.S. Circuit Court of Appeals explained in an unusual opinion Wednesday, Judge Baker had already denied class certification to shingle purchasers. According to the 7th Circuit, that ruling — and every other decision Baker made in the IKO shingle case before the MDL panel’s transfer order in February 2014 — exceeded the scope of Baker’s authority under the rules of procedure for multidistrict litigation. Because the MDL panel had assigned the case specifically to McCuskey, wrote Judge Frank Easterbrook for an appellate panel that also included Chief Judge Diane Wood and Judge Michael Kanne, McCuskey’s unauthorized decision to shift the MDL from his docket to Baker’s was “a foul-up in the process.”

But ultimately, the 7th Circuit said — in what seems to be the first appellate opinion to address a trial judge’s unauthorized transfer of an MDL docket — this was a problem of procedure, not of subject matter jurisdiction. And because neither side had objected to Baker’s takeover of the IKO case, the appeals court said, the 7th Circuit did not need to decide whether the MDL court’s after-the-fact transfer order would retroactively have given Baker authority to rule on class certification.

I have to say that the opinion’s analysis of Baker’s jurisdiction was a bit of an anticlimax, considering the irritation Easterbrook and Wood expressed about the unauthorized transfer at oral arguments in June. Easterbrook interrupted class counsel Samuel Issacharoff of New York University a mere two sentences into his argument to ask whether Judge Baker even had authority to rule on class certification. Issacharoff, who wasn’t involved in the roofing shingle case in the lower court, agreed that was an “extremely troubling” question. He said he didn’t think Baker was empowered to rule at the time he denied class certification, but added that because the MDL panel has since appointed him, simply vacating Baker’s previous denial would be a waste of time because the trial judge would just make the same finding on remand and the class would be back at the 7th Circuit with the same appeal in six months.

Easterbrook said he was sure Baker had no authority to have decided class certification before the MDL panel put him in charge in February. McCuskey’s purported transfer of the case in 2010, Easterbrook said, “had no more legal effect than the Chicago Tribune assigning it.”

An exasperated Wood asked IKO lawyer Christopher Murphy of McDermott Will & Emery, who has been involved with the case since 2009, why no one had spoken up when McCuskey first moved the case to Baker without the MDL panel’s authorization. “If we had gone back to the panel and said, ‘Take this away from Judge Baker,’ let’s be realistic, we would have had a very upset pair of judges,” Murphy said. He told the 7th Circuit that the class hadn’t raised the issue either. “Don’t put the burden on us,” Murphy said, which prompted Easterbook to respond, “We have a problem about what to do. Bluster isn’t going to solve our problem.”

The 7th Circuit’s solution lay in a question from Judge Wood, who suggested that Baker’s lack of authority might be just a matter of case processing and not his substantive jurisdiction. She ordered both sides to brief the issue. IKO submitted a rather perfunctory five-page memo noting the dearth of case law. The more extensive class brief, filed by Issacharoff, agreed that there’s no case law on the particular questions Wood asked, but explained that there’s actually a gap in the MDL rules. One rule specifies that consolidated cases are transferred to specific judges; another that they’re transferred to particular districts.

That ambiguity, the brief said, supports Wood’s suggestion that the problem in the shingle litigation was just procedural, especially because the MDL panel seemed to acknowledge in its transfer order in February that Baker was already handling the case.

“The defect in the administration of this case is not a matter of a lower court arrogating to itself a power that has been withheld by Congress, but rather sloppiness in administrative procedures,” the class brief said. “Given that no party objected or claims to have been harmed by this, and given the investment of four years of litigation resources, treating the deficiency as if it were indeed jurisdictional appears unwarranted.”

That’s the approach the 7th Circuit adopted in Wednesday’s opinion, deciding that it might as well proceed to the merits of the shingle purchasers’ appeal. And ironically, it turned out to be a smart move for Issacharoff to argue for the jurisdiction of a judge who had consistently ruled against the class. Judge Easterbrook and his panel colleagues proceeded in Wednesday’s opinion to conclude that Baker had misapplied the U.S. Supreme Court’s holdings in Comcast v. Behrend and Wal-Mart v. Dukes. They vacated his class certification denial and ordered him to reconsider certification using their plaintiff-friendly interpretation of damages for consumer classes.

On Thursday, I asked Issacharoff whether the 7th Circuit decision gives trial judges carte blanche to transfer MDL dockets without asking the MDL panel. He said no. What this case highlighted, Issacharoff said, is an administrative flaw: the time lag between a judge surrendering an MDL — typically because of retirement or death — and the MDL panel issuing a transfer order. The MDL panel, he said, ought to institute an unambiguous policy on transfers to eliminate the lag.

I left a phone message for IKO lawyer Murphy but didn’t hear back.

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