[Senate Hearing 109-535]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-535
 
              THE MULTIDISTRICT LITIGATION RESTORATION ACT

=======================================================================

                                HEARING

                               before the

        SUBCOMMITTEE ON ADMINISTRATIVE OVERSIGHT AND THE COURTS

                                 of the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 29, 2006

                               __________

                          Serial No. J-109-91

                               __________

         Printed for the use of the Committee on the Judiciary













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                       COMMITTEE ON THE JUDICIARY

                 ARLEN SPECTER, Pennsylvania, Chairman
ORRIN G. HATCH, Utah                 PATRICK J. LEAHY, Vermont
CHARLES E. GRASSLEY, Iowa            EDWARD M. KENNEDY, Massachusetts
JON KYL, Arizona                     JOSEPH R. BIDEN, Jr., Delaware
MIKE DeWINE, Ohio                    HERBERT KOHL, Wisconsin
JEFF SESSIONS, Alabama               DIANNE FEINSTEIN, California
LINDSEY O. GRAHAM, South Carolina    RUSSELL D. FEINGOLD, Wisconsin
JOHN CORNYN, Texas                   CHARLES E. SCHUMER, New York
SAM BROWNBACK, Kansas                RICHARD J. DURBIN, Illinois
TOM COBURN, Oklahoma
           Michael O'Neill, Chief Counsel and Staff Director
      Bruce A. Cohen, Democratic Chief Counsel and Staff Director
                                 ------                                

        Subcommittee on Administrative Oversight and the Courts

                    JEFF SESSIONS, Alabama, Chairman
ARLEN SPECTER, Pennsylvania          CHARLES E. SCHUMER, New York
CHARLES E. GRASSLEY, Iowa            DIANNE FEINSTEIN, California
JON KYL, Arizona                     RUSSELL D. FEINGOLD, Wisconsin
                 William Smith, Majority Chief Counsel
                Preet Bharara, Democratic Chief Counsel



















                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Hatch, Hon. Orrin, a U.S. Senator from the State of Utah.........     4
Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama....     1
Schumer, Charles E., a U.S. Senator from the State of New York...     3

                               WITNESSES

Hodges, Wm. Terrell, Senior U.S. District Judge, District Court 
  for the Middle District of Florida, and Chairman, Judicial 
  Panel on Multidistrict Litigation, Ocala, Florida..............     5
Thrash, Thomas W., Jr., U.S. District Judge, District Court for 
  the Northern District of Georgia, Atlanta, Georgia.............     7

                         QUESTIONS AND ANSWERS

Responses of Judge Hodges to questions submitted by Senator 
  Schumer........................................................    16

                       SUBMISSIONS FOR THE RECORD

Chamber of Commerce of the United States, R. Bruce Josten, 
  Executive Vice President, Government Affairs, Washington, D.C., 
  letter.........................................................    22
Hodges, Wm. Terrell, Senior U.S. District Judge, District Court 
  for the Middle District of Florida, and Chairman, Judicial 
  Panel on Multidistrict Litigation, Ocala, Florida, statement, 
  attachment, and letters........................................    23
Jaffe, Richard, Office of Legislative Affairs, Administrative 
  Office of the U.S. Courts, statement...........................    57
Judicial Conference of the United States, Leonidas Ralph Mecham, 
  Secretary, Washington, D.C., letter............................    59
Thrash, Thomas W., Jr., U.S. District Judge, District Court for 
  the Northern District of Georgia, Atlanta, Georgia, statement..    61
Van Itallie, Theodore B., Jr., General Counsel, Johnson & 
  Johnson, New Brunswick, New Jersey, letter.....................    75





















              THE MULTIDISTRICT LITIGATION RESTORATION ACT

                              ----------                              


                        THURSDAY, JUNE 29, 2006

                                       U.S. Senate,
  Subcommittee on Administrative Oversight and the Courts, 
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:30 p.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Jeff 
Sessions, Chairman of the Subcommittee, presiding.
    Present: Senators Sessions, Hatch, and Schumer.

 OPENING STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM 
                      THE STATE OF ALABAMA

    Chairman Sessions. The hearing will come to order.
    In 1968, Congress passed the multidistrict litigation 
statute found in Section 1407 of Title 28, U.S. Code. Under the 
multidistrict litigation, or ``MDL,'' statute, when civil cases 
involving common questions of fact are pending in multiple 
Federal district courts, the Judicial Panel on Multidistrict 
Litigation may transfer those cases to a single transferee 
judge for coordinated or consolidated pretrial proceedings. The 
MDL process has resulted in greater efficiency and consistency 
in handling thousands of extremely complex cases, and to date, 
over 228,000 cases involving literally millions of claims have 
been centralized through the MDL process. The cases run the 
gamut of civil litigation--from antitrust claims to Zyprexa's 
product liability litigation--literally A to Z.
    It is also significant that MDL proceedings frequently 
involve millions, if not billions, of dollars in claims and 
potential liability. These cases are often founded on a single 
fact situation, or a single charge of liability that forms a 
basis for compensation. It does not make good sense that each 
one of those cases be retried again and again.
    For nearly the first 30 years of multidistrict litigation 
proceedings, transferee judges would use the venue statute, 28 
U.S.C. 1404(a), in some situations, to transfer cases to the 
transferee district. That is, the judge, in effect, would keep 
that case. The transferee judge would transfer it to his own 
transferee district for trial. That judge would know the facts. 
He had already been involved with the lawyers. He had been made 
familiar through pretrial processes with the nature of the case 
and knew a great deal about it.
    By 1995, of the 39,228 cases transferred for coordinated or 
consolidated proceedings under the MDL statute, 279 of the 
3,787 that ultimately required a trial were actually retained 
by the transferee judges.
    The MDL statute, though, provides that, ``each action .  .  
. transferred shall be remanded by the Multidistrict Litigation 
Panel at or before the conclusion of .  .  . pretrial 
proceedings to the district from which it was transferred''--
transferred originally--``unless it shall have been previously 
terminated.'' That is 28 U.S.C. Sec. 1407(a).
    So in 1998, the Supreme Court unanimously ruled in Lexecon 
v. Milberg Weiss Barshad Hynes & Lerach that this plain 
statutory language, with this mandatory ``shall,'' prohibited 
the transferee judge from retaining those cases for trial. I 
think the Supreme Court had to be said to have followed the law 
that Congress wrote correctly, even though they may have had 
doubts about the wisdom of it.
    In Lexecon, one of the parties argued ``that permitting 
transferee courts to make self-assignments would be more 
desirable than preserving a plaintiff's choice of venue.'' And 
the Supreme Court observed that the respondent ``may or may not 
be correct'' on that point as a policy matter, but noted ``the 
proper venue for resolving that issue remains the floor of the 
Congress.'' So they respected the Congressional prerogative, at 
least in this case.
    The ruling in Lexecon was a matter of statutory 
interpretation, not constitutional law. Thus, if Congress wants 
to change the result of the Lexecon decision, it can do so by 
amending the statute.
    In September 1998, the Judicial Conference asked Congress 
to do just that--to amend the MDL statute to permit the 
transferee judges to retain certain MDL cases for trial. The 
House of Representatives has passed legislation to address the 
Lexecon decision--the so-called ``Lexecon fix''--in the 106th, 
107th, and 108th Congresses. The Senate passed its own Lexecon 
fix in the 106th Congress as well. The legislation was 
sponsored by my colleague, Senator Hatch, and cosponsored by 
Senators Leahy, Grassley, Kohl, Torricelli, and Schumer. None 
of these bills has become law to date, however.
    The House again passed a Lexecon fix last year, H.R. 1038, 
and that legislation has been referred to the Senate Judiciary 
Committee. The last hearing on the Lexecon issue was held in 
the House of Representatives in 1999. So we wanted to now hold 
this hearing to learn about the Lexecon issue and to understand 
if the Lexecon fix is still needed.
    In addition, H.R. 1038 contains a similar self-transfer for 
trial provision for disaster litigation cases under the 
Multiparty, Multiforum Trial Jurisdiction Act of 2002. That 
addresses a slightly different issue and, thus, also justifies 
our consideration.
    MDL cases are some of the largest, most complex, most time-
consuming, most economically significant cases handled by the 
Federal judiciary. Thus, Congress must exercise its 
jurisdiction wisely and ``look before we leap,'' but also 
consider the history and success of the previous procedures by 
which those cases remain with the transferee jurisdiction.
    So those are my general comments. Our Ranking Member, 
Senator Schumer, is here on our Subcommittee and Senator Hatch 
is with us as well. I would be delighted, Senator Schumer, if 
you have any comments to make at this time.

 STATEMENT OF HON. CHARLES E. SCHUMER, A U.S. SENATOR FROM THE 
                       STATE OF NEW YORK

    Senator Schumer. Well, thank you, Mr. Chairman, for holding 
this hearing, and I want to welcome our witnesses, two very 
distinguished judges who know a great deal about this topic, 
certainly more than at least one member of this panel on this 
side of the podium.
    We are here today to discuss what is on its face a highly 
technical amendment to the Rules of Civil Procedure. To be 
sure, the subject of multidistrict is one that can make most 
people's eyes glaze over. But the Rules of Procedure, even if 
they are technical, have real impact on real people, their 
lives and their livelihoods. Seemingly technical rules like the 
one we are considering today can determine whether a citizen 
gets a fair shake or a bad deal. It can determine whether a 
citizen gets his or her day in court or is left behind by the 
legal system. So, in a nutshell, this is important stuff.
    As my colleague has already noted, we are here to address 
proposed legislation in the wake of the Supreme Court's 
decision in Lexecon. The U.S. Code currently allows the Panel 
of Multidistrict Litigation to consolidate pretrial proceedings 
of cases pending in more than one district for reasons of 
efficiency. Although courts once commonly retained cases after 
pretrial proceedings to conduct trial, the Supreme Court in 
Lexecon said the cases have to go back to the local court. So 
we are here to discuss whether to create a statutory fix and 
return us to the status quo before Lexecon.
    Congress has both the authority and the responsibility to 
set the ground rules for our legal system. In fulfilling that 
responsibility, Congress has to strike the right balance 
between efficiency and fairness. In doing so, we must think 
ahead, and we must ask the right questions. Today's hearing 
presents us with a number of critical questions. Most 
fundamentally, what does it mean to get your day in court? In 
other words, does that mean the court down the street? Or, for 
efficiency in huge tort cases, should it mean the court four 
States away?
    How important is it for a plaintiff to have a local jury 
assess pain and suffering damages rather than a judge in a 
different State? How big are the efficiency gains at stake? And 
how does all this affect the principles of federalism?
    So this issue is more important and fundamental than the 
dry text of the statute would suggest. The issue, as my 
colleague noted, has been kicking around the Congress for a 
number of years. As he also noted, I cosponsored an early 
version of the bill sponsored by Senator Hatch in 1999, and the 
House has passed versions of the Lexecon fix four times since.
    Today's hearing is an important step forward, and I want to 
thank our panel for appearing today.
    Chairman Sessions. Thank you, Senator Schumer, for your 
interest in this matter in the past.
    Senator Hatch, you have been a sponsor of legislation 
similar to this. We welcome your opening statement if you would 
like to make one now.

STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM THE STATE 
                            OF UTAH

    Senator Hatch. Well, thank you so much. I cannot stay for 
very long, and I just want to welcome these two great judges, 
and we appreciate having you here to counsel with us and help 
us understand these issues better.
    This is complex, a seemingly simple fix to the system, but, 
nevertheless, very complex if you look at it through the eyes 
of actuality. But I want to thank you, Senator Sessions, for 
scheduling this hearing today.
    I have to say to you judges, your dedication to the Federal 
court system, the cause of justice, and all who come before you 
I think is truly admirable, and I appreciate your willingness 
to show up and testify today.
    I will not go into--I think both of my colleagues have 
covered this pretty well, and, frankly, I want to pay tribute 
to both Senator Sessions and Senator Schumer. They are both 
active and good members of this Committee, and they do a 
terrific job on this Committee. This is not partisan 
legislation. It favors neither Democrats nor Republicans, 
neither plaintiffs nor defendants. What this legislation does, 
it restores the courts to the pre-Lexecon practice that worked 
well for 30 years. It gives judges the tools they need to do 
their work and promote just resolutions for all parties in a 
fair and efficient manner.
    So I just once again want to thank you, Mr. Chairman, for 
holding this hearing, and I will be very interested. I have 
read some of what your statements are, and I look forward to 
complete my reading of them, and I will pay pretty strict 
attention to what you are talking about here today.
    Thank you so much.
    Chairman Sessions. Thank you, Senator Hatch.
    We have two distinguished Federal judges on our panel 
today. Our first witness is Hon. William Terrell Hodges, Senior 
United States District Judge from the Middle District of 
Florida and, since 2000, Chairman of the seven- member Judicial 
Panel on Multidistrict Litigation. That is the panel, is it 
not, Judge Hodges, that makes the assignments?
    Judge Hodges. It is, Senator, yes.
    Chairman Sessions. Judge Hodges received his B.S. in 
business administration from the University of Florida and his 
law degree from the University of Florida School of Law, where 
he was Executive Editor of the Florida Law Review. After a 
distinguished career in private practice, Judge Hodges became a 
U.S. District Judge in the Middle District of Florida in 1971. 
From 1982 to 1989, he was Chief Judge in the Middle District of 
Florida. During his time on the bench, Judge Hodges served on 
the Circuit Council of the Eleventh Circuit, as President of 
the District Judges Association of the Fifth Circuit, as a 
member of the Judicial Conference of the United States, and 
from 1996 to 1999 as Chairman of the Executive Committee of the 
Judicial Conference, to name just a few of his many activities. 
As I said, since 2000, Judge Hodges has chaired the Judicial 
Panel on Multidistrict Litigation.
    He is a recipient of the 2003 William M. Hoeveler Judicial 
Professionalism Award from the Florida Bar Association and the 
2003 Edward J. Devitt Distinguished Service to Justice Award 
from the American Judicature Society.
    Thank you, Judge Hodges, for being with us today and 
sharing your expertise and insight.
    Our second witness is Hon. Thomas W. Thrash, Jr., a United 
States District Judge for the Northern District of Georgia. He 
happens to be from Alabama, which I am proud to note. He 
received his B.A. in American Government with high distinction 
in 1973 from the University of Virginia, and received his law 
degree cum laude from Harvard Law School in 1976, where he was 
president of the Learned Hand Club that is good--and director 
of the Lincoln's Inn Society. Both are very important.
    After a distinguished career as an assistant district 
attorney and in private practice in Atlanta, Judge Thrash 
became a U.S. District Judge for the Northern District of 
Georgia in 1997. Since 2000, Judge Thrash has served on the 
Committee on Rules of Practice and Procedure of the Judicial 
Conference of the United States. He is the author of numerous 
articles in law reviews and bar journals on topics as varied as 
campaign finance and medical malpractice issues. He has also 
been a frequent lecturer and presenter at various meetings and 
continuing legal education seminars.
    On January 11th, Judge Thrash made a presentation entitled 
``The Lexecon Dilemma'' to the Judicial Panel on Multidistrict 
Litigation Transferee Judges Conference.
    So we are delighted to have you here, Judge Thrash, and 
note that you have had personal experience as a transferee 
judge in two MDL proceedings yourself.
    Judge Hodges, we would be delighted to hear from you and 
then Judge Thrash.

 STATEMENT OF WM. TERRELL HODGES, SENIOR U.S. DISTRICT JUDGE, 
  U.S. DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA, AND 
 CHAIRMAN, JUDICIAL PANEL ON MULTIDISTRICT LITIGATION, OCALA, 
                            FLORIDA

    Judge Hodges. Thank you, Senator Sessions, Mr. Chairman, 
and Senator Schumer. I appreciate the opportunity to be here. I 
do come to represent the Judicial Conference of the United 
States and also the Judicial Panel on Multidistrict Litigation, 
which I presently chair, as you noted.
    Chairman Sessions. For the record, would you just describe 
briefly the Judicial Conference and the role that plays in the 
judiciary?
    Judge Hodges. Well, the Judicial Conference of the United 
States can best be described, I would say, as the board of 
directors of the Federal judiciary. It consists of 27 members--
a district judge and the chief circuit judge from each of the 
regional circuits, also the Court of Federal Claims along with 
the Federal Circuit, and the Chief Justice of the United 
States, who chairs the sessions of the Conference. And, by 
statute, the Judicial Conference establishes the policy of the 
Federal judiciary, which is then applied and enforced, if you 
will, by the several Judicial Councils of the circuits 
geographically around the country.
    So the Conference is the policymaking body of the Federal 
judiciary and speaks for the judiciary in matters such as this 
that come before Congress. So, in a sense, I am here 
representing all the Federal judges of the United States, 
speaking through the Judicial Conference.
    And I might say with respect to this particular subject, 
there may be one or two--there always are, but I am not aware 
of any judge anywhere who opposes this legislation.
    As far as an opening statement is concerned, I must say 
that your statement and that of Senator Schumer just covered 
the ground that I intended to cover by way of background. I 
might say the last time I had that experience as a lawyer, I 
lost the case.
    [Laughter.]
    Judge Hodges. And I hope I don't have that experience 
again. But I might take just a minute to embellish the remarks 
that you made so succinctly by pointing out what I have now 
observed over these last 6 years, at least, as the Chair of the 
Panel, what the Panel really accomplishes in the administration 
of justice in this country.
    By centralizing cases in a single district where multiple 
cases have been filed in various districts, there are obviously 
a number of desirable advantages. One is that it eliminates 
duplication of judicial effort of different judges in different 
districts considering the same controlling legal issues. It 
promotes, in other words, judicial economy, which is always a 
matter of interest to the courts. It reduces the costs of the 
litigation, the overall cost to the litigants involved. There 
may be some who would be able to argue that a centralization 
may increase their personal costs in a particular instance, 
but, clearly, the overall costs of the litigation and the 
demands that it makes on the system for the administration of 
justice are reduced by the procedure over which the Panel 
presides.
    It also avoids inconsistent results being reached in 
different courts by different judges because the issues 
presented by the litigation that comes before the Panel are 
complex matters and are reasonably susceptible of different 
views. And when two judges in two different districts or in two 
different circuits reach contrary conclusions, that obviously 
leads to confusion not only in the litigation but in the law 
itself. And by centralizing litigation of the kind we see in 
one district, it promotes consistency in the development of the 
law itself.
    And, finally, it protects--and I think the asbestosis cases 
are a good example of this--it protects to some extent the 
funds that are available to respond to the claims of those who 
feel that they have been injured; otherwise, you would have 
races to the courthouse trying to be the first to reach 
judgment in order to satisfy the claim, and more than likely 
producing a bankruptcy petition, which can only serve not in 
the best interests of the parties interested in the overall 
litigation.
    Now, all of that is to some extent threatened from time to 
time in cases in which the transferee judge is not permitted to 
transfer the litigation to himself or herself for the purpose 
of attempting, for example, to achieve a global settlement. 
Almost all the cases that we create and send to a transferee 
court sooner or later will settle if they can be properly 
managed by the able transferee judges that we try to select to 
manage the litigation, such as my brother and friend, Judge 
Thrash, who will tell you about his experience. And without the 
ability to transfer a case to oneself in some instances, then 
the ability to manage that case is reduced and the likelihood 
of settlement or ultimate termination in the transferee court 
is hampered. So it is a matter of importance.
    But I would close by emphasizing, I think, one very 
important point, particularly as it relates to the rights of 
individual plaintiffs in mass tort cases, which is one of the 
species of cases that we do see, and that is that this 
legislation does not mean that all cases that are transferred 
as a part of the multidistrict litigation process will be 
transferred to the transferee judge for trial. On the contrary, 
depending upon the type of case involved, I don't envision that 
there would be any change in the practice as it existed prior 
to Lexecon when that was not a problem, to my knowledge, but 
would only be used in some instances to identify cases, for 
example, as possible bellwether cases that the trial of which 
will settle some issues and ultimately promote a global 
settlement. And to take mass tort victims particularly, I would 
anticipate that in most of those cases, they would be remanded 
to the transferor court or the district from which they came 
for trial and the ultimate resolution of compensatory damages 
because there may, for example, be issues of individual 
causation, and no transferee judge wants to transfer to himself 
or herself 300 trials or 400 trials or 1,000 trials when you 
are dealing with litigation of that kind as distinguished from 
a finite group of plaintiffs, as in a patent infringement 
action. Those cases are going to back to the transferee courts 
as a matter of routine practice, if they are not settled, for 
trial. That is what has happened, for example, in the asbestos 
litigation that was managed for so long and so well by Judge 
Weiner in Philadelphia before his untimely death a little over 
a year ago. Those cases, if they were not resolved, were 
remanded by the thousands to the district courts from which 
they came for trial.
    So I can understand how that aspect of the bill might be a 
matter of concern, but I suggest that it is not really a threat 
to the rights of anyone. It is truly a bill that is neutral in 
terms of its effect on plaintiffs as a class or defendants as a 
class, as I see it.
    [The prepared statement of Judge Hodges appears as a 
submission for the record.]
    Chairman Sessions. Thank you, Judge Hodges.
    Judge Thrash?

 STATEMENT OF THOMAS W. THRASH, JR., U.S. DISTRICT JUDGE, U.S. 
 DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA, ATLANTA, 
                            GEORGIA

    Judge Thrash. Mr. Chairman, thank you for this opportunity 
to testify in my personal capacity before your Subcommittee in 
support of the Multidistrict Litigation Restoration Act.
    In my almost 9 years as a district judge, I have handled 
two MDL cases. My--
    Chairman Sessions. You were the transferee judge in the 
cases that were sent to you for pretrial handling.
    Judge Thrash. Yes, sir. My first MDL case got resolved by 
settlement without too much trouble and with very little effort 
on my part.
    My punishment for that was a case called In re Dippin' Dots 
Patent Litigation, which was my second MDL case. Nothing was 
resolved in that case without a great deal of trouble and 
effort on my part. A big source of trouble was the effect of 
the Supreme Court's Lexecon decision.
    The Dippin' Dots case involved a patent on a method for 
producing a flash-frozen novelty ice cream product. When former 
distributors began producing a similar product, Dippin' Dots 
Inc. filed patent infringement and trademark and trade dress 
infringement actions all over the country. The MDL Panel 
transferred all of the cases to me for consolidated pretrial 
proceedings.
    After 2 years of intense litigation, for the reasons set 
out at length in my written statement, because of Lexecon the 
main patent infringement case had to be sent back to the 
Northern District of Texas for trial. The Texas judge that had 
the case in the beginning had quit, was gone. At this point the 
file was about 20 feet long stacked end to end. Just in the MDL 
proceedings, there were 746 docket entries.
    I have described the Dippin' Dots case as a litigation 
tsunami headed for the Northern District of Texas. It was going 
to hit the docket of some poor Texas judge and obliterate 
everything in sight. If I could prevent that from happening, I 
thought that I had a duty to do so. I had made dozens of 
rulings that would impact the trial in large and small ways. 
And the trial needed to occur quickly before additional 
litigation between the parties erupted. Realistically, I 
thought that could only happen if I tried the case.
    One group of defendants, however, would not consent to 
trial of the case before me in Atlanta. So, reluctantly, I 
agreed to go to Dallas to try the case there. The process of 
getting an inter-circuit assignment such as this is described 
in my written statement.
    So myself, my courtroom deputy clerk, my court reporter, 
four Atlanta lawyers, two Kentucky lawyers, and a whole gaggle 
of paralegals occupied the Adolphus Hotel in Dallas for 2\1/2\ 
weeks in the fall of 2003 for the trial of the patent claims.
    By the time of the trial, none of the parties and no major 
witnesses were from Dallas. A second 2-week long trial in 
Dallas in 2004 was avoided only by last-minute settlement of 
the remaining non-patent claims.
    In my opinion, this litigation was unnecessarily prolonged 
and expensive to the courts and the parties because of Lexecon. 
It is a real not an imaginary problem. I hope that a 
legislative solution comes soon so that no other district judge 
has to do what I had to do in the Dippin' Dots case.
    Thank you, and I will be happy to respond to questions at 
the appropriate time.
    [The prepared statement of Judge Thrash appears as a 
submission for the record.]
    Chairman Sessions. Well, first, Senator Schumer and I would 
like to know about this ice cream.
    [Laughter.]
    Chairman Sessions. Is that the ice cream that has got the 
little dots of ice cream, little round things?
    Judge Thrash. That is it.
    Chairman Sessions. I have had it at the baseball park.
    Judge Thrash. And there is more money involved in that than 
you would think, I promise.
    [Laughter.]
    Senator Schumer. I thought, Mr. Chairman, that it was a 
person named Mr. Dippin' Dots.
    [Laughter.]
    Senator Schumer. When Judge Thrash went on, I realized it 
was ice cream.
    Chairman Sessions. Let me ask this: In terms of judicial--
thank you, Senator Schumer, and thank you for your leadership 
on this particular issue and your willingness to help move some 
legislation forward.
    With regard to the lawyers and the parties, in your 
opinion, overall they were not disadvantaged by staying in 
Atlanta. It provided no real benefit to them to move to Texas. 
Is that correct overall?
    Judge Thrash. Two of the defense attorneys for one group of 
defendants had their offices in Dallas. For them there was some 
saving of litigation costs. For everybody else, including the 
other main group of defendants, the cost was much greater to go 
to Dallas than to have the trial in Atlanta. And I would 
mention that the plaintiffs were perfectly happy to try the 
case in Atlanta. They were from Kentucky, and they readily 
consented, because their lawyers were in Atlanta, to try the 
case in Atlanta. So it was--
    Chairman Sessions. Really, the problem was that even though 
in the interest of justice for numerous reasons it would have 
been wiser to have tried it in Atlanta, at least in your 
opinion, the statute gave any party the power to veto that and 
have it tried where they chose to have it tried. And I guess 
that is the question we are wrestling with today. Should a 
single party, one of maybe many parties be able to do that? 
And, also, what if in this pretrial process, what if it clearly 
was overwhelmingly best to try it in Atlanta, but you had been 
less than sympathetic with some of their arguments and had 
ruled against one party several times, presumably because they 
had made bogus arguments, but you ruled as you thought was 
correct, that party would normally hope that if it was sent to 
Texas, they would get a new judge. Is that correct? So there 
would be an incentive unrelated to the merits of the litigation 
for a party to object to a trial being completed in the 
transferee jurisdiction.
    Judge Thrash. That is exactly right, Senator. When I first 
raised the subject of the parties all consenting to a trial 
before me, after we had finished the pretrial proceedings, one 
of the things I said was, ``Don't think you are going to get 
rid of me just by refusing to consent. I will accept an inter-
circuit assignment and go to Dallas and try the case.''
    I really wasn't hoping that they would accept that offer, 
but they did. And they said, ``Well, Judge, we would love to 
have you come to Dallas and try the case.''
    But you are exactly right. The bill that is pending before 
the Committee restores the right of the judge, where there are 
important interests at stake, to control the location of the 
trial and prevents any one party in a case like mine, where 
there is only going to be one trial, from vetoing the judge's 
selection of the proper forum.
    Chairman Sessions. Judge Hodges, you chair the 
Multidistrict Litigation Committee. What factors do you use--do 
you look at a judge's caseload and their skill--before you give 
them a major case like this and send it to their district? How 
do you decide that?
    Judge Hodges. Yes, indeed we do, Senator, the judge's 
experience, the judge's caseload and capacity to take on the 
added burden, the capacity of the court as a whole. The statute 
requires the consent of the chief judge of the court before any 
individual judge on the court can accept an assignment. So 
there is that measure of protection of the court.
    We also consider whether the potential transferee judge 
already has similar litigation before him or her, which is 
usual but not always the case. And we consider the 
accessibility of the court to the lawyers who will be traveling 
in and out for hearings. Frequently, in a case of the kind that 
Judge Thrash had, we would select Atlanta or Dallas or San 
Francisco or someplace that is readily accessible by air, and 
any other individual factors in the case that might suggest a 
particular district over another.
    Chairman Sessions. But I guess from the point of view of 
the justice system as a whole, most of these MDL cases are 
large, complex cases, and you try to make sure that you find an 
excellent judge who is capable of handling that, whose caseload 
is not overloaded at that particular time, and who would be 
willing to undertake that challenge, instead of having this 
whole thing fall on somebody at random or half a dozen judges, 
some of whom may have very crowded dockets at the time it falls 
in their laps. Is that fair to say?
    Judge Hodges. Absolutely, Senator, and I think anyone who 
would study the record of our selection of transferee judges 
will quickly see that that is so.
    Chairman Sessions. I know that Judge Sam Pointer in 
Birmingham handled a number of those cases. He was a brilliant, 
brilliant judge, had a tremendous work ethic, and I am sure 
Judge Thrash has those same characteristics. He is from 
Birmingham, too. But I think in many ways it gives the parties 
the best you have to offer in the court system to try their 
case.
    Judge Hodges. I would certainly agree, and I think that is 
why there really is not much opposition to trial before the 
transferee judges. The experience Judge Thrash had is not 
unique, but it is not unusual, I think.
    Chairman Sessions. Well, it has been a number of years 
since the Lexecon decision. The world has not come to an end 
since this self-transfer procedure ended. You have given us one 
example. Are there other examples that would indicate that 
Congress should act and restore the procedure as it existed 
before Lexecon?
    Judge Hodges. Yes, Senator. In my written statement, I 
think there are two other instances that are identified just as 
examples, one by Judge Feikens in Detroit and another by Judge 
Jones in the Southern District of New York. They tried to 
utilize the technique of remanding a case to the transferor 
judge so that the transferor judge could then transfer it back 
under Section 1404, which is one of the techniques that is 
being utilized now, to tell it like it is, to overcome the 
Lexecon hurdle. But that is a very cumbersome circumstance, and 
it caused both of those judges to delay trial of their own 
cases until it was determined whether the litigation would 
return to the court and could all be tried at once.
    I am not going to suggest to you that the Multidistrict 
Litigation Panel is going out of business if this amendment is 
not passed, because obviously we have functioned, we think, 
well the last 8 years. But this is an important piece of 
legislation to us and would avoid the experience that Judge 
Thrash had.
    Chairman Sessions. Now, what about the transferee judges? 
Are they frustrated like Judge Thrash--or either one of you can 
comment--by this requirement that it be sent back?
    Judge Hodges. They are, Senator, and--
    Chairman Sessions. For the most part, they have mastered 
the case. They are up on all the motions and pleadings and 
facts, and they have pretty much been ready to try, and it gets 
sent off to somebody who knows nothing about it.
    Judge Hodges. And attached to my written statement are 
comments by no less than 27 Federal district judges describing 
briefly their own experience and difficulties in cases that 
they handled because of Lexecon, as I say, the difficulties 
that Lexecon presented.
    Chairman Sessions. Judge Hodges, you indicated that you 
didn't think that there were any winners and losers, any 
plaintiff or defendant advantage here.
    Judge Thrash, what is your opinion about that? If we pass 
the House bill, will that favor one party or one group of 
plaintiffs or defendants over another?
    Judge Thrash. In my opinion, Senator Sessions, it will not. 
It is party neutral. It is a good-government piece of 
legislation that in some cases is going to benefit one side, if 
you want to call it a benefit, in that they get their choice of 
forum; in others, it is going to benefit others.
    For example, in my case, it was the plaintiffs that wanted 
me to keep the case and try the case in Atlanta. They had 
originally filed suit in Dallas because they were required to 
do so by the venue rules and the residence of the main 
defendant at that time. But as it turned out in my case, it was 
then the defendant that wanted the case sent back to Dallas. In 
others, it may be the plaintiff that wants the case sent back 
to the transferor district.
    Chairman Sessions. Tell me about the appellate process. 
There are some generalized provisions here, ``interest of 
justice, convenience of parties,'' I believe the language is. 
What kind of appellate review would somebody have available to 
them if they felt wronged under the consolidation of the 
transfer process?
    Judge Hodges. Well, the appellate process, Senator, would 
be exactly the same as it is now. Any litigant who was 
aggrieved by the entry of the judgment in the case can seek 
review of any claimed error involved in the multidistrict 
process, which, as I recall, was the way Lexecon itself reached 
the Supreme Court. The statute does provide that certain 
rulings are not reviewable by appeal, but application for 
extraordinary writ is common in those circumstances; so that 
there is appellate review available, if not by direct appeal, 
then by way of extraordinary writ.
    Chairman Sessions. Do you think that the convenience of the 
parties and the interest-of-justice standard is a real test? 
Does it have objective criteria behind it? Or is that just some 
vague term that will let judges do anything they want to do 
with the case?
    Judge Hodges. Well, that is certainly a fair and important 
question. The language is somewhat general. It commits itself 
to the discretion, the sound judicial discretion of the jurist 
who is making that judgment. But it is the same language that 
is used in the venue transfer provision of 1404(a) that has 
been there for years and years. It is the same language, 
essentially, that has been in 1407 itself from the inception. 
And I think given the wide variety of the kinds of cases that 
we see, it is the best language that you could conjure up to 
achieve justice in these cases.
    Chairman Sessions. But that is, as I am somewhat familiar, 
the language that is already in existence for venue questions, 
and it does have appellate history, and a judge can make 
objective evaluations under those statutes. Would you agree, 
Judge Thrash?
    Judge Thrash. Yes, sir, I do. It is the standard that every 
district judge is familiar with under the general venue 
transfer provisions, and certainly in the Eleventh Circuit, 
where Judge Hodges and I sit, there is a well- developed body 
of case law that sets forth the factors that are to be 
considered in making a decision applying that standard, one of 
which is that ordinarily the plaintiff's choice of forum is to 
receive some deference. That is just one example of the types 
of factors that the established body of appellate court law 
says is to be considered.
    Chairman Sessions. And I think that is important. That is a 
historical principle we have adhered to. But I would have to 
say that we have become a far more mobile society, and cases 
can often be filed in hundreds of different districts. That is 
a pretty extraordinary privilege to give to a plaintiff who 
could file it in 100 districts and he can pick the single best 
one out of that 100 to file his lawsuit. And, yes, you can 
challenge it, but I am not sure--I think the existing standards 
in favor of the plaintiff's choice of forum are strong enough. 
I am not sure we need to make them any stronger.
    Do you think that we would have a different ratio of self-
transfers to remand based on a statutory change than we have 
today? And what kind of change do you think we might have? A 
different ratio of self-transfers, to the transferee judge, to 
remands back to the different judges than we have today, and 
how big a change would there be?
    Judge Hodges. With the statute?
    Chairman Sessions. With the statute.
    Judge Hodges. I don't think there would be a great change, 
Senator, precisely because, as I said before, take Judge 
Thrash's case, it only involved two groups of parties 
essentially involved in one piece of litigation, as 
distinguished from the victims of a mass tort; or in the 
pharmaceutical cases, for example, we have Vioxx going on now, 
being managed very well by Judge Fallon in New Orleans as the 
transferee judge. I don't think as a practical matter, whatever 
the law is, that there is any way that Judge Fallon perceives 
himself trying all of those cases. If they don't settle, they 
are going back to the transferor courts from which they came, 
obviously.
    So it depends on the kind of litigation you are talking 
about. If it is a mass tort situation, that is one thing. If it 
patent litigation or antitrust litigation, possibly even ERISA 
claims, that sort of thing, it would be another. There is more 
likelihood in those latter kinds of cases that there would be a 
self-transfer than in a mass tort case involving injured 
individuals.
    Chairman Sessions. Section (i)(2), subsection (i)(2) in 
Section 2 requires the determination of compensatory damages to 
be remanded unless the transferee court ``also finds, for the 
convenience of the parties and witnesses and in the interests 
of justice, that the action should be retained for the 
determination of compensatory damages.''
    Is it correct that this will create a distinction between 
compensatory damages on the one hand and the determination of 
liability and punitive damages, Judge Thrash? Would it create a 
presumption in favor of remand for compensatory damages that is 
not present for issues of liability and punitive damages?
    Judge Thrash. No, sir, I don't think it is going to create 
a presumption. What I think it does is it requires the 
transferee judge to take a second look at the issue remanding 
compensatory damages, and if the convenience of the parties, 
the interest of justice require a remand for compensatory 
damages, Section 2 says that it should ordinarily be done. But 
I don't think that I would describe it as a presumption, and 
certainly not a presumption with respect to compensatory 
damages that would distinguish them from punitive damages.
    Chairman Sessions. Now, I guess each one of these cases, we 
have in our minds a fact situation, but they could be quite 
different fact situations, entirely different issues being 
presented. But under the facts I just raised, it deals with 
liability and punitive damages. So the transferee judge who 
has--those cases are consolidated before that judge--would have 
the authority to determine whether or not the defendant, would 
a drug case--a bad drug, maybe, that had compensation--had 
caused injuries be an example? So there would be a 
determination that the company was or was not liable for 
putting a dangerous product on the market. And then that 
transferee judge could decide the question of whether punitive 
damages are appropriate.
    But if it then turned that liability was found and a 
punitive damages question is settled, each individual party 
would then go to their own district, presumably, to prove how 
badly they had been physically damaged and so they could ask 
for compensation individually based on their own particular 
damages that they suffered? Is that the way the system would 
work practically?
    Judge Thrash. Yes, sir, and I have been both a transferee 
judge and a transferor judge, and the process that you have 
described is very similar to what has happened in the asbestos 
litigation. For example, in the asbestos litigation, Judge 
Weiner severed the issue of punitive damages, retained that, 
and remanded cases in which there was a need for a trial to the 
district judges for a trial on the issue of compensatory 
damages only. And I have tried an asbestos case following that 
sort of remand. So, yes, sir, that--
    Chairman Sessions. How did Judge Weiner handle the punitive 
damages? Did he provide some sort of forum, or did he find no 
punitive damages?
    Judge Thrash. Well, I would defer to Judge Hodges on this, 
but my understanding is that he severed punitive damages 
because if the companies were subject to punitive damages, they 
would all just go bankrupt, and whoever got the first judgment 
would get it all. So the punitive damages claims have just been 
held in abeyance so to speak so that the compensatory claims 
could be tried without forcing the companies into bankruptcy.
    Chairman Sessions. A practical solution.
    Judge Thrash. Yes, sir.
    Chairman Sessions. I have wondered that. The first time I 
have understood that after we have wrestled with these asbestos 
cases for a long time.
    Judge Hodges, just briefly, has the Judicial Conference 
given any thought to maybe rethinking or looking creatively at 
the whole panoply of issues raised by the multidistrict tort 
cases that could be consolidated? Are there any things that we 
really need to do--asbestos is such a monumental thing, just 
incredible in size. I don't know whether that would be a mode 
or not. But there are a number of cases that--are you satisfied 
that this procedure is sufficient, or should we--when you have 
a single product by a primary defendant that has infected 
thousands of people, do we need a new system of being able to 
try that, and do we need statutory authority to do so?
    Judge Hodges. Senator, I will have to, frankly, be very 
careful about that because I am not entirely sure that the 
Conference has taken any general position with respect to mass 
torts in the area such as the asbestos cases, and I think 
perhaps the Conference policy has been to defer to Congress 
about that.
    I do know that the Congress has endorsed the Multidistrict 
Restoration Act that I am here testifying about today. I think 
that is the best answer I can give you.
    Chairman Sessions. Well, I think about the breast implant 
cases. I know some of those have been consolidated, and other 
cases of that nature. And my question fundamentally is: Is our 
current law sufficient and could we do better with regard to 
asbestos? We have uniform testimony, and Senator Durbin sort of 
made a counterpoint, but he was consistent with the testimony 
we had, which is, as much money is spent on defense lawyers by 
the defendant companies as is spent on plaintiff lawyers in 
those cases. That may well be true. But the testimony is about 
58 percent of the money actually paid out by the defendant 
asbestos companies goes to lawyers; only 40 percent gets to the 
victims.
    So when you have something that massive, I think it is up 
to Congress to try to figure out a way to get people who are 
sick compensated promptly without having to go through all this 
once we have concluded there is liability here.
    So that is what we have been trying to wrestle with here. I 
would assume asbestos is so huge it is probably not a good 
model, but if the Conference does have ideas about how to deal 
with large, nationwide--virtually nationwide--cases that could 
benefit from consolidation and you need more authority, we 
would be glad to hear from it.
    Judge Hodges. Well, thank you, Senator. I am sure the 
Conference will respond to that, and I am sure, as you know, it 
is complicated also by the jurisdiction of the State courts in 
claims of that kind.
    Chairman Sessions. Well, that is true. Very true.
    Do either one of you have any further comments you would 
like to make for the record? We will make your full remarks a 
part of the record, if you would like. Anything else that you 
would like to add?
    Judge Hodges. None, except my thanks to you again for 
hearing us today.
    Chairman Sessions. We will make these materials a part of 
the record. We have letters from the Judicial Conference in 
support of H.R. 1038, received April 18, 2005; a letter from 
the Judicial Panel on Multidistrict Litigation in support of 
H.R. 1038, April 20, 2005; text of an e-mail from Richard 
Jaffe, the Administrative Office of Courts, to Greg Waring of 
the Congressional Budget Office regarding CBO's cost estimate 
of H.R. 1038; a statement from the Judicial Panel in favor of 
enacting H.R. 1038 as is, dated July 6, 2005; a letter from the 
Chamber of Commerce of the United States in support of H.R. 
1038, April 19, 2005; a letter from General Counsel for Johnson 
& Johnson raising potential areas of concern regarding H.R. 
1038.
    We have sought out those individuals who may wish to submit 
remarks. Really, we have not seen a lot of interest in speaking 
in opposition to this, but our record will be kept open for 7 
days, and we look forward to reviewing any materials that may 
be offered within the next 7 days for the record.
    If there is nothing else to come before us, we will be 
adjourned.
    [Whereupon, at 3:27 p.m., the Subcommittee was adjourned.]
    [Questions and answers and submissions for the record 
follow.]

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