[Congressional Record Volume 145, Number 142 (Tuesday, October 19, 1999)]
[Senate]
[Pages S12835-S12837]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH (for himself, Mr. Leahy, Mr. Grassley, Mr. Kohl, Mr. 
        Torricelli, and Mr. Schumer):
  S. 1748. A bill to amend chapter 87 of title 28, United States Code, 
to authorize a judge to whom a case is transferred to retain 
jurisdiction over certain multidistrict litigation cases for trial; to 
the Committee on the Judiciary.


                 multidistrict jurisdiction act of 1999

  Mr. HATCH. Mr. President, I am introducing today a bill entitled the 
``Multidistrict Jurisdiction Act of 1999.'' This bill would restore a 
30-year-old practice under which a single court, to which several 
actions with common issues of fact were transferred for pre-trial 
proceedings, could retain the multidistrict actions for trial.
  This bill is necessary to correct a statutory deficiency pointed out 
by the Supreme Court in Lexecon v. Milbert Weiss Bershad Hynes & 
Lerach, 523 U.S. 26 (1997). It is an important bill for judicial 
efficiency and for encouraging settlements of multidistrict cases. And 
I am pleased that the Judicial Conference and the Multidistrict 
Litigation Panel support this bill. Moreover, I am pleased that this is 
a bipartisan bill with Senators Leahy, Grassley, Torricelli, Kohl, and 
Schumer as cosponsors.
  Section 1407(a) of title 28, United States Code, authorizes the 
Multidistrict Litigation Panel to transfer civil actions with common 
questions of fact ``to any district for coordinated or consolidated 
pretrial proceedings.'' It also requires the Panel, on or before the 
conclusion of such pretrial proceedings, to remand any such actions to 
the district courts in which they were filed. However, for the 30 years 
prior to the Lexecon decision, federal courts followed the practice of 
allowing the single transferee court, upon the conclusion of pretrial 
proceedings, to transfer all of the actions to itself under the general 
venue provisions contained in 28 U.S.C. Sec. 1404. This had the 
practical advantage of allowing the single transferee court to retain 
for trial the multiple actions for which it had conducted pretrial 
proceedings. This greatly enhanced judicial efficiency and encouraged 
settlements.
  In Lexecon, however, the Supreme Court held that the literal terms of 
28 U.S.C. Sec. 1407 did not allow the single transferee court to retain 
the multidistrict actions after concluding pretrial proceedings. 
Instead, the Court held, the plain terms of Sec. 1407 required the 
Panel to remand the actions back to the multiple federal district 
courts in which the actions originated. The Court noted that to keep 
the practice of allowing the single transferee court to retain the 
actions after conducting the pretrial proceedings, Congress would have 
to change the statute.
  The bill would amend 28 U.S.C. Sec. 1407 to restore the traditional 
practice of allowing the single transferee court to retain the multiple 
actions for trial after conducting pretrial proceedings. The bill also 
includes a provision under which the single transferee court would 
transfer the multiple actions back to the federal district courts from 
which they came for a determination of compensatory damages if the 
interests of justice and the convenience of the parties so require.
  Mr. President, this bill is very similar to the first portion of a 
H.R. 2112 that passed the House of Representatives under the effective 
leadership of Congressman Sensenbrenner. H.R. 2112 includes both the 
``Lexecon fix'' and a provision to streamline catastrophe litigation. I 
believe that both provisions would make good law. However, the Lexecon 
matter constitutes an emergency for the Multidistrict Litigation Panel, 
which has a large number of these cases poised for remand if the 
retention practice is not restored. The catastrophe legislation would 
constitute an important improvement, but is not an emergency matter. 
Given this situation, I propose that we pass only the ``Lexecon fix'' 
during this session by unanimous consent and work to pass the 
catastrophe legislation during the second session.
  Senators Leahy, Grassley, Torricelli, Kohl, Schumer, and I look 
forward to passing the Multidistrict Jurisdiction Act of 1999 very 
quickly. The Judiciary awaits our prompt action.
  Mr. President, I ask unanimous consent that the text of this bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1748

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Multidistrict Jurisdiction 
     Act of 1999''.

     SEC. 2. MULTIDISTRICT LITIGATION.

       Section 1407 of title 28, United States Code, is amended--
       (1) in the third sentence of subsection (a), by inserting 
     ``or ordered transferred to the transferee or other district 
     under subsection (i)'' after ``terminated''; and
       (2) by adding at the end the following new subsection:
       ``(i)(1) Subject to paragraph (2), any action transferred 
     under this section by the panel may be transferred, for trial 
     purposes, by the

[[Page S12836]]

     judge or judges of the transferee district to whom the action 
     was assigned to the transferee or other district in the 
     interest of justice and for the convenience of the parties 
     and witnesses.
       ``(2) Any action transferred for trial purposes under 
     paragraph (1) shall be remanded by the panel for the 
     determination of compensatory damages to the district court 
     from which it was transferred, unless the court to which the 
     action has been transferred for trial purposes 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.''.

     SEC. 3. EFFECTIVE DATE.

       The amendments made by this Act shall apply to any civil 
     action pending on or brought on or after the date of the 
     enactment of this Act.

  Mr. LEAHY. Mr. President, I am pleased to join the distinguished 
Chairman of the Senate Judiciary Committee, Senator Grassley, Senator 
Torricelli, Senator Kohl, and Senator Schumer in introducing the Multi-
District Jurisdiction Act of 1999. Our bipartisan legislation is needed 
by Federal judges across the country to restore their power to promote 
the fair and efficient administration of justice in multi-district 
litigation.
  Current law authorizes the Judicial Panel on Multi-District 
Litigation to transfer related cases, pending in multiple Federal 
judicial districts, to a single district for coordinated or 
consolidated pretrial proceedings. This makes good sense because 
transfers by the Judicial Panel on Multi-District Litigation are based 
on centralizing those cases to serve the convenience of the parties and 
witnesses and to promote efficient judicial management.
  For nearly 30 years, many transferee judges, following circuit and 
district court case law, retained these multi-district cases for trial 
because the transferee judge and the parties were already familiar with 
each other and the facts of the case through the pretrial proceedings. 
The Supreme Court in Lexecon Inc. v. Milberg Weiss Bershad Hynes & 
Lerach, 523 U.S. 26 (1998), however, found that this well-established 
practice was not authorized by the general venue provisions in the 
United States Code. Following the Lexecon ruling, the Judicial Panel on 
Multi-District Litigation must now remand each transferred case to its 
original district at the conclusion of the pretrial proceedings, unless 
the case is already settled or otherwise terminated. This new process 
is costly, inefficient and time consuming.
  The Multi-District Jurisdiction Act of 1999 seeks to restore the 
power of transferee judges to resolve multi-district cases as 
expeditiously and fairly as possible. Our bipartisan bill amends 
section 1407 of title 28 of the United States Code to allow a 
transferee judge to retain cases for trial or transfer those cases to 
another judicial district for trial in the interests of justice and for 
the convenience of parties and witnesses. The legislation provides 
transferee judges the flexibility they need to administer justice 
quickly and efficiently. Indeed, our legislation is supported by the 
Administrative Office of the U.S. Courts, the Judicial Conference of 
the United States and the Department of Justice.
  In addition, we have included a section in our bill to ensure 
fairness during the determination of compensatory damages by adding the 
presumption that the case will be remanded to the transferor court for 
this phase of the trial. Specifically, this provision provides that to 
the extent a case is tried outside of the transferor forum, it would be 
solely for the purpose of a consolidated trial on liability, and if 
appropriate, punitive damages, and that the case must be remanded to 
the transferor court for the purposes of trial on compensatory damages, 
unless the court to which the action has been transferred for trial 
purposes 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. This section is identical to 
a bipartisan amendment proposed by Representative Berman and accepted 
by the House Judiciary Committee during its consideration of similar 
legislation earlier this year.
  Multi-district litigation generally involves some of the most complex 
fact-specific cases, which affect the lives of citizens across the 
nation. For example, multi-district litigation entails such national 
legal matters as asbestos, silicone gel breast implants, diet drugs 
like fen-phen, hemophiliac blood products, Norplant contraceptives and 
all major airplane crashes. In fact, as of February 1999, approximately 
140 transferee judges were supervising about 160 groups of multi-
district cases, with each group composed of hundreds, or even 
thousands, of cases in various stages of trial development.
  But the efficient case management of these multi-district cases is a 
risk after the Lexecon ruling. Judge John F. Nangle, Chairman of the 
Judicial Panel on Multi-District Litigation, recently testified before 
Congress that: ``Since Lexecon, significant problems have arisen that 
have hindered the sensible conduct of multi-district litigation. 
Transferee judges throughout the United States have voiced their 
concern to me about the urgent need to enact this legislation.''
  Mr. President, Congress should listen to the concerned voices of our 
Federal Judiciary and swiftly approve the Multi-District Jurisdiction 
Act of 1999 to improve judicial efficiency in our Federal courts.
  Mr. GRASSLEY. Mr. President, I am pleased to join my colleagues in 
introducing the Multidistrict Jurisdiction Act of 1999. This 
legislation would make a technical fix to section 1407 of Title 28, the 
multidistrict litigation statute, in response to the recent Supreme 
Court decision in Lexecon v. Milberg Weiss.
  Section 1407(a) of Title 28 authorizes the Judicial Panel on Multi-
District Litigation to transfer civil actions with common issues of 
fact to any district for coordinated or consolidated pretrial 
proceedings, but requires the Panel to remand any such action to the 
original district at or before the conclusion of such pretrial 
proceedings. Until the Lexecon decision, the federal courts followed 
the practice of allowing a transferee court to invoke the venue 
transfer provision and transfer a case to itself for trial purposes. 
However, the U.S. Supreme Court reversed this practice, holding that 
the literal terms of section 1407 do not give a district court 
conducting pretrial proceedings the authority to assign a transferred 
case to itself for trial.
  This legislation would amend section 1407 of Title 28 to permit a 
judge with a transferred case to retain jurisdiction over multidistrict 
litigation cases for trial. This change was approved by the Judicial 
Conference and is supported by the Judicial Panel on Multi-District 
Litigation. The legislation also includes a provision under which a 
transferee court would transfer actions back to the federal district 
courts from which they came for a determination of compensatory damages 
if the interests of justice and the convenience of the parties so 
require.
  The Multidistrict Jurisdiction Act of 1999 will promote the efficient 
administration of justice by allowing the federal courts to continue an 
effective practice they have been using for almost thirty years. It 
makes sense to allow the transferee judge who has conducted the 
pretrial proceedings and is familiar with the facts and parties of the 
transferred case to retain that case for trial. This significantly 
benefits the parties to a case, and reduces wasteful use of judicial 
and litigants' resources. I am glad to support this legislation, and I 
urge my colleagues to support it as well.
  Mr. KOHL. Mr. President, I am pleased to join Senators Hatch, Leahy, 
Grassley, Torricelli, and Schumer in introducing the Multidistrict 
Jurisdiction Act of 1999. Our bipartisan measure will help give back to 
Federal judges the authority they need to handle multiple, overlapping 
cases as efficiently and effectively as possible.
  This legislation essentially overturns the Supreme Court's decision 
in Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 
(1998). In that case, the Supreme Court rejected 30 years of practice 
during which trial courts overseeing related cases for consolidated 
pretrial proceedings had been permitted to retain jurisdiction of those 
cases for trial. That long-standing routine made plain common sense, 
because oversight by one court (instead of dozens of courts) is often 
the best use of resources, regardless of whether the parties are still 
in discovery or already at trial. Indeed, a consolidated trial may not 
only be more convenient for the parties and the witnesses, but it also 
promotes justice by keeping the case before a judge who is already 
familiar with the underlying facts.

[[Page S12837]]

  Let me just point out that I do not mean to criticize the Supreme 
Court's decision as a matter of law. It may well be that the original 
Multidistrict Litigation statute was too narrowly drafted, and 
ultimately it is the responsibility of Congress to write--or, in this 
case, rewrite--the law to make sure it says what Congress intends.
  While this measure is an important step forward, we must recognize 
that it is just that--a step. There is much more we can do to promote 
efficiency and fairness in litigation for both victims and defendants. 
In fact, the proposal to overturn Lexecon was first raised publicly at 
a hearing on class action reform in the House early last year, as just 
one of several proposals that would help ensure the fair administration 
of justice. Ironically, while this measure appears to be on the fast 
track, we continue to delay consideration of the other more pressing 
class action measures that were the focus of that hearing. And, while 
consolidation could be particularly valuable in the class action 
context, without class action reforms this bill actually won't affect 
most class actions. The reason is simple: while this bill only applies 
to cases filed in Federal court, most class actions--even ones that are 
nationwide in scope and shape nationwide policies--end up in State 
court.
  Indeed, increased consolidation would help eliminate one of the most 
significant class action abuses--that is, the dangerous ``race to 
settlement'' among competing cases. Currently, overlapping class 
actions involving the same parties and the same claims put rival class 
lawyers in competition to get the first--and only--settlement 
available. The result is all too common: one lawyer lines his pockets 
with huge fees by taking a quickie settlement, while the class gets the 
short end of the stick. For example, in one instance involving 
overlapping Federal and State actions, the class lawyers who brought 
the State case negotiated a small settlement precluding all other 
suits, and even agreed to settle federal claims that were not at issue 
in State court. Meanwhile, the Federal court was outraged, finding that 
the Federal claims could have been worth more than $1 billion, while 
accusing the State class lawyers of ``hostile representation'' that 
``surpassed inadequacy and sank to the level of subversion'' and of 
having ``more in line with the interests of [defendants] than those of 
their clients.''

  This danger was recently underscored by the Judicial Conference's 
Advisory Committee on Civil Rules Report on Mass Tort Litigation, which 
found that ``[T]he risk is considerable that speedy justice may be 
converted into speedy injustice . . . if two or more courts enter a 
race to be first to achieve a disposition binding on all courts.'' The 
report added that, ``This risk is aggravated by the `reverse auction' 
scenario . . . , in which a defendant may play would-be class 
representatives off against each other, bidding down the terms of 
settlement to the lowest level that can win approval by the most 
complaisant available court.'' This race to settlement, or ``reverse 
auction,'' shortchanges legitimate victims, while allowing blameworthy 
defendants to get off easy.
  Mr. President, we can prevent abuses like this--and encourage 
efficiency--simply by permitting more overlapping nationwide class 
actions to be brought into Federal court, the only place where the 
consolidation procedure is available. Once the cases are consolidated, 
lead counsel will be appointed, making it impossible to shop around 
low-priced settlements and to pit competing class lawyers against each 
other. However, as long as these class actions can be kept in various 
State courts, this bill won't succeed in bringing consolidation to the 
complex cases that need it most.
  That's one of the principal reasons why Senator Grassley and I 
introduced the Class Action Fairness Act of 1999 (S. 353) earlier this 
year. Our proposal, which among other provisions allows more nationwide 
class actions to be removed to Federal court, would--in conjunction 
with the bill we are introducing today--help eliminate the race to 
settlement in most class actions, save court resources and promote 
efficiency by placing related class actions before one court. A similar 
measure has already passed the House, and we look forward to moving 
this measure ahead in the Senate.
  Mr. President, I am proud to join my colleagues today in offering our 
proposal to return to Federal courts the authority they need to 
consider multiple, overlapping cases in a fair, expeditious and just 
manner. This is a necessary step in the direction of real reform, and I 
hope it will build momentum for more comprehensive reform, like the 
Grassley/Kohl Class Action Fairness Act.
                                 ______