Written by Troy F. Tatting, Principal, Robins Kaplan
Corporate actions (or inactions) can have wide ranging impact on hundreds, thousands, or even millions of Americans. In September 2017, Equifax disclosed a cyber-hack impacting 143 million customers with data stolen. In November 2017, a federal court approved a $741 million settlement involving more than 20 million class members alleging dangerously defective Taketa Corporation air bags. In August 2017, Johnson & Johnson was slapped with a $417 million jury verdict in a case alleging ovarian cancer from talcum powder use (overturned in post-trial motions). Back in 2013, Johnson & Johnson agreed to pay $2.5 billion to settle thousands of cases involving allegedly defective ASR metal-on-metal hip implants. In 2014 and 2015, Stryker Corporation reportedly followed suit, settling for over $1 billion on more than 4,000 plus personal injury suits alleging pain, swelling, and other complications from its metal-on-metal hip implants. All of these massive lawsuits involve either class actions, multi-district litigations (MDLs), or both. Class actions and MDLs are the norm in the world of high-stakes litigation over defective medical devices, pharma side effects, antitrust, shareholder suits, consumer protection, fraud, and data breaches. Attorneys who master the procedural hurdles related to these forms of litigation become well known as “go-to” complex litigators sought after by multinational fortune 500 companies and individual plaintiffs alike. This post gives a quick overview of some of the differences between class action and MDL litigation.
Class Actions: Representatives on Behalf of Others
With class actions, plaintiffs are similarly situated in terms of the manner of each plaintiff’s injury and outcome. The litigation is prosecuted by class representatives on behalf of themselves and others. After initial discovery related to whether a group of individuals is sufficiently similar, a court will either approve (certify) a well-defined class of individuals or reject the proposed representatives’ ability to bring claims on behalf of others. If a class is certified, those in the class are subject to the court’s rulings and the ultimate verdict in the case. If a jury awards a class of 100 people $100 million, each class member receives his or her fair share minus attorneys’ fees, costs, and any incentive award to the class representatives who prosecuted the case on behalf of others. If a class is not certified, the case proceeds but each individual proposed representative must now litigate only on behalf of herself.
In cases where thousands allege harm but for low damage amounts individually, a court’s decision to deny certification of a class could effectively end the litigation. For example, in wage-and-hour class and collective actions, a handful of production workers often claim their employer underpaid them, and thousands of their co-workers, a few hours pay each week. Given the workers’ low hourly pay, each individual may have only been shorted a few thousand dollars annually. Yet if the court certifies the case as a class or collective action, millions of dollars are at stake. Imagine a massive credit card company improperly charging its customers an extra $0.10 per month. In such a scenario, a class action could involve millions of dollars. Yet, without a class action, it is not economically feasible for an attorney to represent an individual who was shorted $1.20 a year.
MDLs: Similar Cases, Coalition Litigation
MDLs differ slightly by concept from a class action, but have wide-ranging differences in practice. Like a class action, an MDL often involves a large group of people or companies making similar allegations against a corporate defendant. A common example is a mass tort pharma MDL where a number of cases allege that medication X caused undisclosed side effect Y. These cases should normally be grouped together because a great deal of discovery related to medication X will relate to most all of the filed cases. The cases are not typically certified as class actions because the personal injuries in each case, although of a similar type, may have manifested in different degrees or severity from one person to another, or may have been complicated by different concomitant medications or alternative agents from one person to another.
Also, in an MDL, there are no absent plaintiffs—that is, each case stands on its own. Unlike a class action, each plaintiff has brought suit on behalf of himself in an MDL. The practical effect is that MDLs involve dozens if not hundreds of attorneys representing hundreds or thousands of plaintiffs. Each case is filed individually but grouped together by the Judicial Panel on Multidistrict Litigation before a single federal court. Once grouped together, plaintiffs’ attorneys create a slate of select attorneys to conduct different aspects of the litigation that benefit all of the consolidated cases. Slates often include a lead counsel, discovery committee, briefing committee, science committee, and lead settlement counsel. Judges frequently request applications for appointment to a lead position. With increasing frequency judges are approving slates consisting of well-experienced plaintiffs’ attorneys, diverse attorneys, and even a few novice MDL attorneys who demonstrate a willingness to provide substantial support to the litigation.
The Attorneys Prosecuting MDL Cases vs. Class Actions
As a plaintiffs’ attorney, litigation of an MDL means you are either part of the leadership team litigating on behalf of all MDL cases or relying on those in leadership to adequately represent your clients’ interests leading up to trial. In practice, developing strong and trusted relationships amongst colleagues in the plaintiffs’ bar is essential for long-term success in the MDL world. Your colleagues are also your competitors and leadership positions can be hard fought. An attorney’s reputation is key to persuade both colleagues and the court that a leadership position is well-deserved.
Conversely, in class actions, an attorney bringing a case has much more control and autonomy over the prosecution of the litigation. A class action case is filed by one attorney or a few firms who are already working together on behalf of hundreds or thousands of individuals. The lawyers are initially retained by a few class representatives. The court eventually decides whether the lawyers for the class representatives should be appointed as “class counsel” to represent the interests of the many absent class members.
Settlement & Trial in Class Actions vs. MDL Cases
A court overseeing a class action must approve any settlement, including attorneys’ fees and costs. A chief rationale for requiring court approval is to prevent potential abuses whereby the class representatives and their attorneys might unfairly craft a settlement that disproportionately benefits themselves at the expense of absent class members. Absent class members are provided notice of a proposed settlement and given an opportunity to appear in court to object or opt out of the settlement entirely.
A global settlement of an MDL does not necessarily require court approval. In practice, however, MDL courts regularly approve settlement structure and the percentage of settlement dollars that should be provided to those in leadership of the MDL. The leadership slate in an MDL does “common benefit” work and pays expenses. Common benefit work includes the discovery that benefits most all cases in the MDL (depositions, written requests, documents reviews, expert preparations, etc.). Common benefit expenses include the costs of taking such discovery (expert fees, deposition costs, document repository fees, flights, and so on). As such, if an MDL involving 2,000 cases settles for $500 million, a percentage of the settlement amount (usually 4-15% as approved by the court) is provided to the leadership attorneys for their hard expenses and common benefit time. Then, the remainder of the global settlement is distributed to each plaintiff according to her individual circumstances, often through an agreed-to point system. The point system is normally set in advance giving each plaintiff the opportunity to estimate his potential recovery and make an informed decision about whether to enter into the global settlement or opt out to continue litigating on his own. Defendants typically include a clause allowing themselves to rescind the settlement if not a high enough percentage of plaintiffs opt-in to the global settlement by a certain date.
As for trials, in class actions, the class representatives typically “go to trial” on behalf of others similarly situated. In MDLs, the courts regularly select a few “bellwether” cases for test trials. A bellwether is derived from the ancient practice of placing a bell on a wether (a male sheep). The wether with the bell leads the flock. The wether selected to wear the bell is ideally the sheep least likely to lead the flock astray. In the MDL/mass tort bellwether context, the court or parties typically select a handful of MDL cases to go to trial with the idea that the trying of a few well-selected cases hopefully provides the parties with insight on the settlement value of the entire group of MDL cases. If bellwether trials do not result in a global settlement, the court overseeing the MDL can disband the MDL, sending each case back to its home forum for a trial.
Learn More Now, Be Rewarded Later
Attorneys of all stripes are smart to familiarize themselves with class action and MDL procedures and practices. When a single event case is just the tip of an iceberg, a knowledgeable plaintiff or defense attorney serves her client well by understanding its potential class action and MDL implications. For litigators, a standard car accident case might uncover a widespread sudden acceleration defect. For in-house counsel, investigation of a consumer complaint about bank accounts being opened without her permission might reveal a nationwide scandal involving fake accounts. A transactional attorney is wise to issue spot potential contract terms that might lead to or avoid class action or MDL litigation. Indeed, plaintiffs’ attorneys who can identify class action and MDL issues can bring justice to the masses. Likewise, success and accolades await defense counsel and corporate lawyers who can identify and manage risks in advance that might embroil companies in costly and time-consuming class action or MDL litigation.
 Mark Taylor, UK Lawmakers Turn Screw On Equifax Over Breach Hotline, LAW 360 (Nov. 2, 2017), https://www.law360.com/articles/981153/uk-lawmakers-turn-screw-on-equifax-over-breach-hotline.
 Nathan Hale, Final OK Granted For $741M In Takata MDL Settlements, LAW 360 (Nov. 1, 2017), https://www.law360.com/articles/980667/final-ok-granted-for-741m-in-takata-mdl-settlements.
 Emily Field, J&J Talc Litigation Roundup, LAW 360 (Nov. 6, 2017), https://www.law360.com/articles/981601/j-j-talc-litigation-roundup.
 Greg Ryan, J&J To Pay $2.5B To Settle Hip Implant Litigation, LAW 360 (Nov. 19, 2013), https://www.law360.com/articles/489819/j-j-to-pay-2-5b-to-settle-hip-implant-litigation.
 David Voreacos and Jef Feeley, Stryker to pay more than $1 billion for recalled hip devices, DAILY HERALD (Nov. 5, 2014), http://www.dailyherald.com/article/20141105/business/141109220/.
 See generally Fed. R. Civ. P. 23.
 See Federal Judicial Center, Manual for Complex Litigation § 21 (4th ed. 2004).
 28 U.S.C. § 1407(a) (2012) (“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.”).
 See Federal Judicial Center, supra note 7, § 10.22.
 Fed. R. Civ. P. 23(e), (h).
 See Federal Judicial Center, supra note 7, § 14.12.
 In re Chevron U.S.A., Inc., 109 F.3d 1016, 1019 (5th Cir. 1997).
 See Federal Judicial Center, supra note 7, § 22.315.