Lexecon Inc. v. Milberg Weiss Bershad Hynes & LerachLexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach
delivered the opinion of the Court. †
Title
I
In 1992, petitioners, Lexecon Inc., a law and economics consulting firm, and one of its principals (collectively, Lexe-con), brought this diversity action in the Northern District of
Lexecon then filed this ease in the Northern District of Illinois charging that the prior class action terminated in its favor when the respondent law firms’ clients voluntarily dismissed their claims against Lexecon as meritless, amounting to nothing more, according to Lexecon, than a vendetta. When these allegations came to the attention of Judge Bilby, he issued an order stating his understanding of the terms of the resolution agreement between Lexecon and the class-action plaintiffs.
Milberg, joined by Cotehett, then filed a motion under
The Panel ordered a transfer in early June 1993 and assigned the case to Judge Roll, noting that Lexecon’s claims “share questions of fact with an as yet unapproved settlement involving Touche Ross, Lexecon, Inc. and the investor plaintiffs in the Lincoln Savings investor class actions in MDL-834.” App. 18. The Panel observed that “i) a massive document depository is located in the District of Arizona and ii) the Ninth Circuit has before it an appeal of an order [describing the terms of Lexecon’s dismissal from the Lincoln Savings litigation] in MDL-834 which may be relevant to the Lexecon claims.” Ibid. Prior to any dispositive action on Lexecon’s instant claims in the District of Arizona, the Ninth Circuit appeal mentioned by the Panel was dismissed, and the document depository was closed down.
In November 1993, Judge Roll dismissed Lexeeon’s state-law malicious prosecution and abuse of process claims, applying a “heightened pleading standard,”
In August 1994, Lexecon moved that the District Court refer the ease back to the Panel for remand to the Northern District of Illinois, thus heeding the point of Multidistrict Litigation Rule 14(d), which provides that “[t]he Panel is reluctant to order remand absent a suggestion of remand from the transferee district court.” The law firms opposed a remand because discovery was still incomplete and filed a coun-termotion under § 1404(a) requesting the District of Arizona to “transfer” the case to itself for trial. Judge Roll deferred decision on these motions as well.
In the meantime, the Arizona court had granted the law firms’ § 1404(a) motions to assign the case to itself for trial, and simultaneously had denied Lexecon’s motions to request the Panel to remand under
Trial on the surviving defamation claim then went forward in the District of Arizona, ending in judgment for Milberg, from which Lexecon appealed to the Ninth Circuit. It again appealed the denial of its motion for a suggestion that the Panel-remand the matter to the Northern District of Illinois, and it challenged the dismissal of its claims for malicious prosecution and abuse of process, and the entry of final judgment in favor of Cotehett. Lexecon took no exception to the Arizona court’s jurisdiction (as distinct from venue) and pursued no claim of error in the conduct of the trial.
A divided panel of the Ninth Circuit affirmed, relying on the Panel’s Rule 14 and appellate and District Court decisions in support of the District Court’s refusal to support remand under
II
A
In defending the Ninth Circuit majority, Milberg may claim ostensible support from two quarters. First, the Panel has itself sanctioned such assignments in a rule issued in reliance on its rulemaking authority under
The second source of ostensible authority for Milberg’s espousal of the self-assignment power here is a portion of text of the multidistrict litigation statute itself:
“When civil actions involving one or more common questions of fact are pending in different districts, such actions may be transferred to any district for coordinated or consolidated pretrial proceedings.”28 U.S. C. § 1407(a) .
Although the statute limits a transferee court’s authority to the conduct of “coordinated or consolidated” proceedings and
Likewise, at first blush, the statutory limitation to “pretrial” proceedings suggests no reason that a
Beyond this point, however, the textual pointers reverse direction, for
“Each action so transferred shall he remanded by the panel at or before the conclusion of such pretrial proceedings to the district from which it was transferred unless it shall have been previously terminated.” § 1407(a) (proviso without application here omitted).
The Panel’s instruction comes in terms of the mandatory “shall,” which normally creates an obligation impervious to judicial discretion.
Anderson
v.
Yungkau,
As the Ninth Circuit panel majority saw it, however, the inconsistency between an expansive view of “coordinated or consolidated pretrial” proceedings and the uncompromising terms of the Panel’s remand obligation disappeared as merely an apparent conflict, not a real one. The “focus” of
A like use of blinders underlies the Circuit majority’s conclusion that the Panel was not even authorized to remand the ease under its Rule 14(c), the terms of which condition the remand responsibility on a suggestion of the transferee court, a motion filed directly with the Panel, or the Panel’s
sua sponte
decision to remand. None of these conditions was fulfilled, according to the Court of Appeals, which particularly faulted Lexecon for failing to file a remand motion directly with the Panel, as distinct from the transferee court.
1
This analysis, too, is unpersuasive; it just ignores the fact that the statute places an obligation on the Panel to
B
Milberg proffers two further arguments for overlooking the tension between a broad reading of a court’s pretrial authority and the Panel’s remand obligation. First, it relies on a subtle reading of the provision of
Second, Milberg tries to draw an inference in its favor from the one subsection of
“[notwithstanding the provisions of section 1404 or subsection (f) of this section, the judicial panel on multi-district litigation may consolidate and transfer with or without the consent of the parties, for both pretrial purposes and for trial, any action brought under section 4C of the Clayton Act.”
Milberg fastens on the introductory language explicitly overriding the “provisions of
Subsection (h) is not merely valueless to Milberg, however; it is ammunition for Lexecon. For the one point that subsection (h) does demonstrate is that Congress knew how to distinguish between trial assignments and pretrial proceedings in cases subject to
C
There is, finally, nothing left of Milberg’s position beyond an appeal to legislative history, some of which turns out to ignore the question before us, and some of which may support Lexeeon. Milberg cites a House Report on the bill that became
If it has anything to say to us here, the legislative history tends to confirm that self-assignment is beyond the scope of the transferee court’s authority. The same House Report that spoke of the continued vitality of
“The proposed statute affects only the pretrial stages in multidistrict litigation. It would not affect the place of trial in any case or exclude the possibility of transfer under other Federal statutes.
“The subsection requires that transferred cases be remanded to the originating district at the close of coordinated pretrial proceedings. The bill does not, therefore, include the trial of cases in the consolidated proceedings.” H. R. Rep., at 3-4.
The comments of the bill's sponsors further suggest that application of
D
In sum, none of the arguments raised can unsettle the straightforward language imposing the Panel’s responsibility to remand, which bars recognizing any self-assignment power in a transferee court and consequently entails the invalidity of the Panel’s Rule 14(b). See
III
The remaining question goes to the remedy, which Milberg argues may be omitted under the harmless-error doctrine. Milberg posits a distinction between a first category of eases erroneously litigated in a district in which (absent waiver) venue may never be laid under the governing statute, see
Olberding
v.
Illinois Central R. Co.,
Milberg’s argument assumes the only kind of statute entitled to respect in accordance with its uncompromising terms is a statute that categorically limits a plaintiff’s initial choice of forum. But there is no apparent reason why courts
Nor is Milberg correct that our recent decision in
Caterpillar Inc.
v.
Lewis,
Accordingly, the judgment of the Court of Appeals is reversed, and the ease is remanded for further proceedings consistent with this opinion.
So ordered.
Notes
Justice Scaua joins this opinion, except as to Part II-C.
The Ninth Circuit stopped short of expressly inferring a waiver from Lexecon’s failure to file a motion for remand directly with the Panel, and any inference of waiver would surely have been unsound. Although the Panel’s Rule 14(e)(i) does authorize a party to file such a motion, Rule 14(d) comes close to saying that only under extraordinary circumstances will such a motion be granted without a suggestion of remand by the transferee court. (The Rule reads: “The Panel is reluctant to order remand absent a suggestion of remand from the transferee district court.”) Therefore, even if a party may waive the
In this ease, moreover, one can say categorically that a motion before the Panel would have failed; the transferee court denied Lexecon’s motion for a remand suggestion simultaneously with an order assigning the case to itself for trial, thus exercising the authority that the Panel’s Rule 14(b) expressly purported to recognize. Under the Panel’s own rules, in sum, Lexecon never had a chance to waive a thing.
It is well to note the limitations of a related argument. It may be tempting to say that the incompatibility of a self-assignment under
See n. 2, supra.
Because we find that the statutory language of
In its brief to this Court, Milberg suggests that any decision rejecting multidistrict litigation courts' practice of ruling on
Milberg's brief also argues that petitioners are not entitled to relief because the only claim that survived for trial should have been dismissed during pretrial proceedings. We do not address the propriety of the District Court’s decision to allow this claim to go forward; the issue falls outside the question on which we granted certiorari. See this Court’s Rule 14.1(a) (“Only the questions set forth in the petition, or fairly included therein, will be considered by the Court”).
Although Cotehett’s request for an order of dismissal under