Sixth Circuit Holds That Cases Directly Filed in MDLs Are Governed By Law of Where Case Would Have Been Filed
On May 22, 2015, the United States Court of Appeals for the Sixth Circuit Court of Appeals addressed an important choice-of-law issue for parties involved in multidistrict litigation. When multidistrict litigation is centralized in one federal district court, the court often allows plaintiffs from around the country to file their cases directly in the MDL rather than having to file in their home district and then obtain a transfer to the MDL forum. An important issue in such direct-filed cases is which state’s law applies. Is it the law of the state where the MDL is located or the law of the plaintiff’s home state? The question is important because it determines whether plaintiffs can manipulate the applicable substantive law based on where they choose to file suit.
In Wahl v. General Electric Co., et al., a three-judge panel of the Sixth Circuit unanimously held that the law of the plaintiff’s home forum applies in direct-filed MDL cases. Applying Tennessee’s choice-of-law rules to a Tennessee plaintiff’s case filed directly in an MDL centered in Ohio, the Sixth Circuit held the plaintiff’s case was governed by the law of Tennessee, the plaintiff’s home state.
The MDL at issue centralized lawsuits over GE’s pharmaceutical Omniscan in the Northern District of Ohio. Plaintiff Wahl filed her products liability case against GE directly in the MDL although she lived in Tennessee. After pre-trial proceedings in the Northern District of Ohio concluded, the MDL court transferred Wahl’s case to the Middle District of Tennessee, determining that was the proper venue. GE moved for summary judgment on the basis of the Tennessee Products Liability Act’s statute of repose, which requires all suits to be filed within one year of the expiration date that appears on the product’s packaging. In this case, the Omniscan administered to Wahl expired no later than 2008, but she did not file her complaint until 2011. Applying Tennessee law, the district court granted summary judgment for GE. Wahl appealed.
The Sixth Circuit began by noting that “[n]o court of appeals and few district courts have ruled directly on the issue of choice of law following transfer of a direct-filed MDL case.” Outside the context of multidistrict litigation, when a diversity case is transferred from one federal court to another, substantive law of the transferor court controls. The Court of Appeals described this as “a strict and inflexible rule.” The rule does not apply, however, to directly filed and later-transferred MDL suits. “That must be so,” the Court reasoned, “or else every district court receiving a direct-filed MDL suit would be bound to apply the choice of law principles of the MDL forum. In effect, the accident of bureaucratic convenience would elevate the law of the MDL forum.” The Court recognized that “if plaintiffs could avail themselves of the law of the MDL-court forum, then plaintiffs would be able to choose the law of a state that is not an appropriate venue.”
In a direct-filed MDL case, the MDL court “cannot be said to have been a ‘transferor’ court.” Rather, while such “labels may reflect the chronological unfolding of filings and transfers,” to proceed in that manner would be to rely “on little more than filing terminology.” Based on the foregoing, the Court held that the Tennessee court—the court of proper venue—“should apply its own choice-of-law rules, not those of the MDL court.”
The Sixth Circuit’s decision brings clarity to an open issue in complex nationwide pharmaceutical and other products liability cases that result in MDL proceedings. If an MDL is established in one of the four states within the Sixth Circuit—Kentucky, Ohio, Michigan, or Tennessee—the law is now clear that the law of the plaintiff’s home forum will apply regardless of whether suit is filed there and later transferred to the MDL forum or directly filed in the MDL forum. This will prevent plaintiffs from manipulating the substantive law that should apply based on where they choose to file suit.