Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach

118 S. Ct. 956, 11 Fla. L. Weekly Fed. S 361, 140 L. Ed. 2d 62, 523 U.S. 26, 66 U.S.L.W. 4158, 1998 Colo. J. C.A.R. 940, 1998 U.S. LEXIS 1598, 98 Cal. Daily Op. Serv. 1482, 98 Daily Journal DAR 2041
CourtSupreme Court of the United States
DecidedMarch 3, 1998
Docket96-1482
StatusPublished
Cited by662 cases

This text of 118 S. Ct. 956 (Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 118 S. Ct. 956, 11 Fla. L. Weekly Fed. S 361, 140 L. Ed. 2d 62, 523 U.S. 26, 66 U.S.L.W. 4158, 1998 Colo. J. C.A.R. 940, 1998 U.S. LEXIS 1598, 98 Cal. Daily Op. Serv. 1482, 98 Daily Journal DAR 2041 (U.S. 1998).

Opinion

Justice Souter

delivered the opinion of the Court.

Title 28 U. S. C. § 1407(a) authorizes the Judicial Panel on Multidistrict Litigation to transfer civil actions with common issues of fact “to any district for coordinated or consolidated pretrial proceedings,” but imposes a duty on the Panel to remand any such action to the original district “at or before the conclusion of such pretrial proceedings.” Ibid. The issue here is whether a district court conducting such “pretrial proceedings” may invoke § 1404(a) to assign a transferred case to itself for trial. We hold it has no such authority.

I

In 1992, petitioners, Lexecon Inc., a law and economics consulting firm, and one of its principals (collectively, Lexe-con), brought this diversity action in the Northern District of *29 Illinois against respondents, the law firms of Milberg Weiss Bershad Hynes & Leraeh (Milberg) and Cotehett, Illston & Pitre (Cotehett), claiming malicious prosecution, abuse of process, tortious interference, commercial disparagement, and defamation. The suit arose out of the firms’ conduct as counsel in a prior class action brought against Charles Keat-ing and the American Continental Corporation for violations of the securities and racketeering laws. Lexecon also was a defendant, charged with giving federal and state banking regulators inaccurate and misleading reports about the financial condition of the American Continental Corporation and its subsidiary Lincoln Savings and Loan. Along with other actions arising out of the failure of Lincoln Savings, the ease against Lexecon was transferred under § 1407(a) for pretrial proceedings before Judge Bilby in the District of Arizona, where the matters so consolidated were known as the Lincoln Savings litigation. Before those proceedings were over, the class-action plaintiffs and Lexecon reached what they termed a “resolution,” under which the claims against Lexecon were dismissed in August 1992.

Lexecon then filed this ease in the Northern District of Illinois charging that the prior class action terminated in its favor when the respondent law firms’ clients voluntarily dismissed their claims against Lexecon as meritless, amounting to nothing more, according to Lexecon, than a vendetta. When these allegations came to the attention of Judge Bilby, he issued an order stating his understanding of the terms of the resolution agreement between Lexecon and the class-action plaintiffs. 102 F. 3d 1524, 1529, and n. 2 (CA9 1996). Judge Bilby’s characterization of the agreement being markedly at odds with the allegations in the instant action, Lexe-eon appealed his order to the Ninth Circuit.

Milberg, joined by Cotehett, then filed a motion under § 1407(a) with the Judicial Panel on Multidistrict Litigation seeking transfer of this ease to Judge Bilby for consolidation with the Lincoln Savings litigation. Although the judge en *30 tered a recusal because of the order he had taken it upon himself to issue, the law firms nonetheless renewed their motion for a § 1407(a) transfer.

The Panel ordered a transfer in early June 1993 and assigned the case to Judge Roll, noting that Lexecon’s claims “share questions of fact with an as yet unapproved settlement involving Touche Ross, Lexecon, Inc. and the investor plaintiffs in the Lincoln Savings investor class actions in MDL-834.” App. 18. The Panel observed that “i) a massive document depository is located in the District of Arizona and ii) the Ninth Circuit has before it an appeal of an order [describing the terms of Lexecon’s dismissal from the Lincoln Savings litigation] in MDL-834 which may be relevant to the Lexecon claims.” Ibid. Prior to any dispositive action on Lexecon’s instant claims in the District of Arizona, the Ninth Circuit appeal mentioned by the Panel was dismissed, and the document depository was closed down.

In November 1993, Judge Roll dismissed Lexeeon’s state-law malicious prosecution and abuse of process claims, applying a “heightened pleading standard,” 845 F. Supp. 1377, 1383 (Ariz. 1993). Although the law firms then moved for summary judgment on the claims remaining, the judge deferred action pending completion of discovery, during which time the remaining parties to the Lincoln Savings litigation reached a final settlement, on which judgment was entered in March 1994.

In August 1994, Lexecon moved that the District Court refer the ease back to the Panel for remand to the Northern District of Illinois, thus heeding the point of Multidistrict Litigation Rule 14(d), which provides that “[t]he Panel is reluctant to order remand absent a suggestion of remand from the transferee district court.” The law firms opposed a remand because discovery was still incomplete and filed a coun-termotion under § 1404(a) requesting the District of Arizona to “transfer” the case to itself for trial. Judge Roll deferred decision on these motions as well.

*31 In November 1994, Lexecon again asked the District Court to request the Panel to remand the ease to the Northern District of Illinois. Again the law firms objected and requested a § 1404 transfer, and Judge Roll deferred ruling once more. On April 24, 1995, however, he granted summary judgment in favor of the law firms on all remaining claims except one in defamation brought against Milberg, and at the same time he dismissed Milberg’s counterclaims. 884 P. Supp. 1388, 1397 (Ariz. 1995). Cotchett then made a request for judgment under Federal Rule of Civil Procedure 54(b). Lexecon objected to the exercise of Rule 54(b) discretion, but did not contest the authority of the District Court in Arizona to enter a final judgment in Cotehett’s favor. On June 7, 1995, the court granted respondent Cotehett’s Rule 54(b) request.

In the meantime, the Arizona court had granted the law firms’ § 1404(a) motions to assign the case to itself for trial, and simultaneously had denied Lexecon’s motions to request the Panel to remand under § 1407(a). Lexecon sought immediate review of these last two rulings by filing a petition for mandamus in the Ninth Circuit. After argument, a majority of the Circuit panel, over the dissent of Judge Kozinski, denied Lexeeon’s requests to vacate the self-assignment order and require remand to the Northern District of Illinois. The Circuit so ruled even though the majority was “not prepared to say that [Lexecon’s] contentions lack merit” and went so far as to note the conflict between “what appears to be a clear statutory mandate [of § 1407 and § 1404]” and Multidistriet Litigation Rule 14(b), which explicitly authorizes a transferee court to assign an action to itself for trial. Lexecon v. Milberg Weiss, No. 95-70380 (CA9, July 21,1995), p. 4. The majority simply left that issue for another day, relying on its assumption that Lexecon would have an opportunity to obtain relief from the transfer order on direct appeal: “[tjhe transfer order can be appealed immediately along *32

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118 S. Ct. 956, 11 Fla. L. Weekly Fed. S 361, 140 L. Ed. 2d 62, 523 U.S. 26, 66 U.S.L.W. 4158, 1998 Colo. J. C.A.R. 940, 1998 U.S. LEXIS 1598, 98 Cal. Daily Op. Serv. 1482, 98 Daily Journal DAR 2041, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lexecon-inc-v-milberg-weiss-bershad-hynes-lerach-scotus-1998.