The US Supreme Court just issued its decision in an antitrust case called Ellen Gelboim v. Bank of America Corporation. This case arises out of major multi-district litigation (an MDL) centered on allegations that major banks conspired to manipulate the London InterBank Offered Rate (which you probably know as LIBOR) to lower their interest costs on financial instruments sold to investors.
For purposes of Gelboim, the intricate details of the alleged conspiracy are not relevant, but you should know that it led to over 60 actions filed in federal court against the banks.
That sounds like a lot of cases and you might infer from the large number that the defendants must have done something wrong if so many people are suing them. But that isn’t necessarily true.
What happens is that a government agency announces an investigation (or it leaks) or someone has the idea that there is price-fixing, market-allocation, bid-rigging or some related horizontal per se antitrust violation going on.
There are plaintiff law firms all over the country that specialize in bringing these types of lawsuits and when one appears, you see many more very quickly. They follow each other and an antitrust blizzard ensues. It is, in fact, an extremely competitive market among plaintiff firms. And when a big set of cases develop, the plaintiff lawyers are often fighting each other for bigger pieces of the pie more than they battle defendants’ attorneys.
Fortunately, there is a set of procedures that deal with such a situation—Section 1407. This statute created the Judicial Panel on Multidistrict Litigation (JPML), which may transfer the many related actions “involving one or more common questions of fact” to one district court for coordinated or consolidated pretrial proceedings.
Importantly, as the Supreme Court points out, this does not mean that all of the cases are transferred forever into the one district court. They are just there for pre-trial proceedings. Of course, practically speaking, they rarely leave that court as most of these cases are either dismissed or settled. If not, the statute requires that each individual action “shall be remanded by the panel at or before the conclusion” of the pretrial proceedings to the original district court.
I’ve been involved in many of these cases, known as MDLs; they are great fun. Antitrust class action cases alleging horizontal per se conduct are particularly conducive to MDL proceedings.
Gelboim v. Bank of America Corp.
In Gelboim, the district court entertaining the many LIBOR actions (after transfer under the MDL procedures) entered a motion to dismiss order that effectively terminated one of the individual actions, but left the others. The reason for this, explains the Supreme Court, is that the Gelboim-Zacher complaint asserted only a federal antitrust claim while the other cases all stated other federal and state claims. So when the district court granted a dismissal of the federal antitrust claim, the Gelboim-Zacher case was done. The other cases survived with their other claims.
So, not surprisingly, the Gelboim-Zacher plaintiffs sought to appeal. But the Second Circuit dismissed their appeal because the district court’s order didn’t dispose of all of the claims in the consolidated action. So, according to the Second Circuit, the plaintiffs without a case had to wait for everyone else to finish before they could appeal.
The Supreme Court reversed, stressing 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.”
Because the “MDL” is often treated as a single case by the litigants and court, people often forget that it is, after all, merely a procedural mechanism created for convenience and efficiency. The individual cases are still, well, individual.
The Supreme Court did suggest that a district court could use its power under Federal Rule of Civil Procedure 54(b) to avoid the situation where one plaintiff goes to the Court of Appeals before the others to decide a very important issue. Rule 54(b) allows district courts to authorize immediate appeal of dispositive rulings on separate claims in a civil action raising several claims. So if a court dismissed a particular claim, it may allow all plaintiffs affected by that dismissal to appeal it, even though they are still alive in the district court with other claims.
I don’t think this decision is particularly surprising, although it did reverse the Second Circuit. But it will be interesting to see what, if any implications, result. There are so many battles among plaintiff attorneys in these cases that a Supreme Court decision reiterating the individual nature of the cases could likely play into those battles.
Typically a court that receives an MDL case will appoint one or more lead counsel among the plaintiff attorneys after a hard-fought “beauty contest.” But as the case proceeds, practically speaking, the attorneys must still work together, which is often a constant negotiation. I wonder if a decision like this might offer some leverage to the non-lead attorneys, as the Supreme Court stressed the individual nature of the cases and the ability of the individual cases to go forward alone on appeal.