Delaventura v. Columbia Acorn Trust, No. 05-10793, 2006 WL 235063 (Feb. 1, 2006).
One of U. S. Chief District Judge William G. Young’s New Year’s resolutions might have been to be more assertive in 2006. The Massachusetts Judge began his new year with a bang in his February 1st opinion in Delaventura v. Columbia Acorn Trust, a twenty-five page opinion which thoroughly discusses multi-district litigation, including references to scores of articles and publications on MDL, and expresses his disdain for the current state of MDL, including the Judicial Panel on Multi-District Litigation. In Chief Judge Young’s comprehensive review of MDL, he also covers the likely effects of the Class Action Fairness Act on MDL, and highlights a Congressional rebuke of the Judicial Panel on MDL in the text of CAFA.
The actual merits of the case were fairly simple: Delaventura, an apparent shareholder of Columbia Acorn Trust (Columbia), filed a class action in Massachusetts state court asserting a single cause of action for breach of contract. Columbia removed the matter to Massachusetts District Court, alleging that the complaint was preempted by the Securities Litigation Uniform Standards Act of 1998 (SLUSA). In an attempt to usher this case into an already filed “market timing” MDL group of twelve cases, Columbia filed a motion to stay the proceedings in the Massachusetts’ District Court while it petitioned the Judicial Panel to transfer this case to the District of Maryland, the home of the “market timing” MDL. Delaventura countered with the expected motion to remand, and both motions were heard at an expedited hearing on June 14, 2005. At the hearing, Chief Judge Young denied Columbia’s motion to stay the proceedings and stated on the record, “If the multi-district litigation panel orders the case transferred, they’ll do so over my opposition, which I now state for the record. I don’t agree that this case should be transferred.” (Chief Judge Young later denied Delaventura’s motion to remand.)
However, paying little, if any, heed to Judge Young’s wishes, the Judicial Panel on MDL transferred the case to the Northern Division of the District of Maryland August 10, 2005. However, Chief Judge Young made the best of the situation (and exercised his angst) by authoring this comprehensive opinion on MDL, in which he illuminates several intersections of MDL with CAFA.
Initially referring to MDL as an “excellent innovation in civil practice,” Judge Young described MDL and introduced the Judicial Panel on MDL as a “special judicial creature comprised of seven federal district court or appellate court judges.” He then recognized that “some commentators anticipate that the Class Action Fairness Act . . . may generate more federal class actions of national scope, resulting in more multi-district litigation.” The Judge then, painting a fair and balanced picture of MDL, referenced a number of works by respected authorities in the area, including nationally recognized plaintiffs’ class action attorney Elizabeth J. Cabraser and Texas Federal Judge Lee H. Rosenthal, a prominent figure in the CAFA world, who have written about potential drawbacks to MDL, including the inability to resolve state law claims, the potential for delay, and the unnecessary choice of law issues which arise in the MDL context. Judge Young then began to reveal his qualms with the current state of MDL, and attacked the system for primarily putting the risk of trial into the hands of the transferee judge – which effectively means that a litigant cannot journey back to its home court unless the transferee judge allows it. Chief Judge Young asserted, “Once trial is no longer a realistic alternative, bargaining shifts in ways that inevitably favor the defense.”
Chief Judge Young pointed to the text of CAFA as an illustration of the perceived pro-defense slant MDL has, in his estimation, earned, but then stated, “The Class Action Fairness Act of 2005 . . . itself thought to be legislation that favors business defendants . . . contains an unmistakable rebuke to the Panel on Multi-District Litigation in Section 4, which provides that no class action removed to federal court under its provisions shall thereafter be transferred to another district pursuant to Title 28, Section 1407(a) (the MDL statute) . . . without the request of a majority of plaintiffs.”
After recognizing several judges who are conducting MDL in a fashion that will help it “earn back the respect it has lost,” Chief Judge Young concluded his musings on the status of MDL with an offer to take the case back from the transferee court – charity may also have been on the Judge’s list of New Year’s resolutions.