<DOC> [109 Senate Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:29548.wais] 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 _____ U.S. GOVERNMENT PRINTING OFFICE 29-548 PDF WASHINGTON : 2006 _________________________________________________________________ For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 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.] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] <all>