We've complained before about MDL "master" or "consolidated" complaints being used to deprive defendants of the ability to pursue their rights to seek dismissal on TwIqbal and other pleading-related grounds. In individual actions, defendants have the right to put the plaintiffs' pleadings to the test required by Rules 8 and 12. That has not necessarily been the case in MDLs, where plaintiffs frequently take the position that master complaints, no matter how prolix, are merely "administrative" conveniences that should not be subject to any review under the rules.
There has not been much appellate discussion of the use of master complaints in MDLs. We found a rather extensive discussion in a recent decision, Bell v. Publix Super Markets, Inc., 982 F.3d 468 (7th Cir. 2020), that – being about food and purported economic losses – is otherwise not something most of our readers would come across. The question of the status of the MDL complaints in Bell arose in the context of the timeliness of appeals from the dismissal of two "consolidated" MDL complaints. Id. at 474.
The jurisdictional question in turn depended on when "final judgments" were entered against the claims in certain MDL consolidated complaints. Id. at 488. While not a formal judgment, the order stated that the defendants against which those complaints were filed were "dismissed from this litigation." Id. Plaintiffs thereafter failed to take an appeal for more than the 150 days specified in Fed. R. Civ. P. 58(c) and F.R.A.P. 4(a)(7) necessary for judgments to become final by what amounts to adverse possession. That gave plaintiffs the usual 30 day period to file a notice of appeal. As Bell pointed out, "[p]laintiffs missed that deadline by more than three months." Id.
The "default rule" in MDLs "is that separate actions transferred for those pretrial proceedings retain their separate identities," including – Bell states − "especially" in situations requiring "entr[y of] final judgments and pursuing appeals." Id. at 489. In the "default" situation, dismissal of any MDL plaintiff's individual complaint creates "an appealable final judgment." Id. (citing Gelboim v. Bank of America Corp., 574 U.S. 405, 413 (2015)).
But this "default" status can be changed. "[T]ransferee courts and parties may choose to manage those cases in ways that can change that default rule and give up the separate identities of the original suits transferred to the MDL litigation." Id. (citations omitted).
And a major way of doing that is the use of consolidated master complaints. Quoting a footnote in Gelboim – that we told our readers at the time had "interesting implications" – Bell stated:
"Parties may elect to file a 'master complaint' . . . which supersede[s] prior individual pleadings. In such a case, the transferee court may treat the master pleadings as merging the discrete actions for the duration of the MDL pretrial proceedings." . . . This separate rule may apply to a tool that transferee judges and parties often use to manage multidistrict litigation. . . . [D]istrict courts often direct plaintiffs to file "a consolidated complaint . . .[a]nd then . . . simply resolve one of the claims in the master complaint without entering judgment in the individual action. . . . The district court uses this administrative complaint to manage the litigation."
982 F.3d at 489-90 (Gelboim citations omitted).
So what is the "legal effect" of such an MDL consolidated complaint? That depends on how an MDL court and the parties treat it. Id. at 490. Bell adopted the Sixth Circuit's approach taken in In re Refrigerant Compressors Antitrust Litigation, 731 F.3d 586 (6th Cir. 2013), a pre-Gelboim case. Did they "treat the consolidated complaint as the "operative pleading" or merely "an administrative summary"? The "relevant signals" for such an evaluation:
include (1) how the plaintiffs labeled the new complaint, (2) whether the plaintiffs served the defendants with the new complaint instead of the original pleadings, (3) whether key deadlines were set in relation to the new complaint, (4) whether the court entertained motions to dismiss the consolidated complaint, and (5) whether the parties and the court looked solely to the allegations in the consolidated complaint when arguing and deciding such motions.
Bell, 982 F.3d at 490 (citing Refrigerant Compressors). Concentrating on how an MDL master complaint was actually treated by the court and the parties prevents anyone "from springing traps by treating a consolidated complaint as the real complaint in the district court but then denying its importance and effect once a party tries to appeal." Id.
That's all fine and good – but we think Bell's preclusion of "spring[ing] traps" rationale has broader applicability. It should preclude MDL plaintiffs from using master complaints as "traps" to deny MDL defendants the ability to exercise their rights under Fed. R. Civ. P. 8 & 12 to test the master complaint's compliance with TwIqbal, as we decried in the posts that we linked to at the beginning of this one. Another Sixth Circuit case recently held, "an MDL court's determination of the parties' rights . . . must be based on the same legal rules that apply in other cases." In re National Prescription Opiate Litigation, 956 F.3d 838, 841 (6th Cir. 2020).
[T]he law governs an MDL court's decisions just as it does a court's decisions in any other case. . . . [T[he relevant law takes the form of the Federal Rules of Civil Procedure. Promulgated pursuant to the Rules Enabling Act, those Rules are binding upon court and parties alike, with fully the force of law. . . . MDLs are not some kind of judicial border country, where the rules are few and the law rarely makes an appearance. . . . Nor can a party's rights in one case be impinged to create efficiencies in the MDL generally.
Id. at 845 (citations, including to Gelboim, omitted).
Bell further pointed out that "the dangers of ambiguity can be avoided if the court and the parties decide explicitly, from the beginning, the legal status of the consolidated complaint(s)." 982 F.3d at 490. Thus, we highly recommend that defendants in MDLs make clear from the outset that, by agreeing to consolidated master complaint, they are not in any way waiving their right to bring motions to enforce TwIqbal pleading standards – and that, failing an agreement to this effect, they reserve the right to move against each individual complaint (as Gelboim and Bell both held) individually under Rules 8 and 12. Consolidated MDL pleadings cannot be, as some MDLs have unfortunately treated them, as "heads" plaintiffs satisfy TwIqbal, "tails" defendants cannot raise TwIqbal at all.
Originally Published by Reed Smith, January 2021
This article is presented for informational purposes only and is not intended to constitute legal advice.