And Now a Word from the Panel: MDL Forum Selection
Welcome to the latest installment of "And Now a Word from the Panel," a column which "rides the circuit" with the Judicial Panel on Multidistrict Litigation as it meets on a bimonthly basis at venues around the country.
At its March hearing session in Phoenix, Arizona, the panel significantly improved its 2017 MDL statistics by granting six MDL petitions, although denying an equal number of MDL motions. With these latest decisions, the panel improved its 2017 "batting average" to above .400 (.412 to be more precise), now having created a total of seven new MDLs and denying ten MDL motions for the year.
This is a vast improvement from its .200 average, following the January hearing session when the panel granted only one MDL motion. In addition, the overall number of pending MDL proceedings increased by a notch, with a total of 234 pending MDL proceedings, up from 233 just two months ago. The panel continues to clear out the MDL dockets, terminating a total of 17 existing MDLs this year through mid-May.1
Interestingly, of the seven new MDL proceedings in 2017, six arise from product liability actions. In this month's edition, we will take a closer look at the one non-product liability MDL established by the panel following its March hearing session — In re Qualcomm Antitrust Litig. (MDL No. 2773). In particular, the decision illustrates a host of issues pertaining to MDL practice, including a nuance relating to MDL venue selection, one of this column's favorite MDL topics.
But before exploring venue, let's take a closer look at another facet of panel practice addressed by the same decision — when will the panel exclude a potentially related action from a new MDL proceeding. In fact, the panel's decision provides two examples of when an action will be excluded: one excluded based on the panel's reasoning and the other as a matter of statutory mandate.
Looking Back: Which One Does Not Belong?
At its March hearing session, the panel considered an MDL motion arising from a series of actions against Qualcomm relating to the licensing of standard essential patents (SEPs), including the licensing on "fair, reasonable and non-discriminatory" (FRAND) terms, for certain processors used in cell phones.
The panel considered seven actions for inclusion in an MDL proceeding, six of which were putative nationwide class actions filed by cell phone purchasers.2 Those putative class actions asserted similar claims for violations of federal and state antitrust laws, as well as violations of consumer protection laws.
The seventh action was an individual action filed by a cell phone manufacturer (Apple) against Qualcomm. It involved certain common claims with the other six actions, including monopolization in violation of federal and state law, among other claims.
Nevertheless, for purposes of MDL centralization, the panel ultimately determined that the dissimilarities of the seventh action outweighed the similarities with the other six actions in that it: (1) was an individual action, rather than a putative class action; (2) asserted unique contract and patent claims arising from a rebate program allegedly necessitated by Qualcomm's conduct; and (3) alleged that Qualcomm retaliated against Apple for Apple's responding to certain requests made by foreign antitrust regulators.
In granting the MDL motion, but excluding that seventh (individual) action from the MDL proceeding, the panel found that inclusion of that action "could significantly complicate the proceedings and cause delay or other inefficiencies."3
Addressing concerns of potential inefficiencies resulting from an action outside the MDL involving some common discovery, the panel stated that it was "convinced that any common discovery can be coordinated among the parties and the involved courts."4
The Qualcomm decision illustrates an additional exception to transfer. The original MDL motion sought centralization of yet an eighth action, an enforcement action filed by the Federal Trade Commission. As the panel noted, the MDL statute expressly bars transfer of "any action in which the United States is a complainant arising under the antitrust laws."5 In light of that provision, the movants withdrew the request to include the FTC action in an MDL proceeding.
Looking Back: Forum Selection
The panel's decision also affords us the opportunity to address the interplay between MDL venue and forum selection clauses.
With respect to the individual action considered by the panel, the panel observed that Apple's contract with Qualcomm included a forum selection clause, requiring the action to be venued in "in state or federal court in San Diego County, California"6 (for federal cases, the Southern District of California), a district other than where the panel decided to assign the cases (the Northern District of California).
Although the panel ultimately excluded that action from MDL consideration which mooted the forum selection clause issues, the panel made clear that "[s]uch forum selection clauses do not limit the panel's authority under Section 1407."7 There would be nothing incongruous with an MDL court, entrusted with overseeing pretrial proceedings, deciding claim construction issues, but with trial of the action being held in the transferor court, the venue mandated by the forum selection clause and under the Supreme Court's Lexecon decision.
What MDL venues will the panel select next? Will the panel improve its spring "batting average" at the May hearing session in San Antonio? Will the panel broaden the ranks of MDL proceedings?
Stay tuned for our next edition of "And Now a Word from the Panel" as the panel holds its summer hearing session on July 27 in the warmth of Los Angeles, California — a rare summertime panel destination.