MDL vs. Class Action: Place, Plaintiffs, and Procedure

Three-hundred-and-thirty-one million people. Tens of millions of lawsuits filed each year. How can the US court system handle such a burden? The answer: judicial economy and efficiency.

Multidistrict litigation (MDLs) and class action lawsuits are two devices courts use to promote efficiency by grouping plaintiffs with similar claims against the same defendant(s). But the similarities stop there. MDLs and class actions are used in vastly different situations, and the main differences boil down to the “three Ps”: place, plaintiffs, and procedure.

Place

In life, there is a time and a place for everything—the same holds true for MDLs and class actions. Although a class action lawsuit may be filed in either state or federal court, MDL cases exist only in federal court.

Congress enacted the MDL Statute in 1968, permitting the Judicial Panel on Multidistrict Litigation (JPML) to transfer cases from multiple federal district courts to a single district. However, the fact that MDLs exist only in federal court does not mean that MDLs exclusively involve claims based on federal law. In fact, many MDLs are based on state law claims and reach the federal courts through diverse jurisdiction.

Plaintiffs

The treatment of plaintiffs differs between MDLs and class action. In MDLs, plaintiffs maintain their status as “plaintiffs” throughout the litigation because suits are combined only for pretrial purposes and are transferred to their original court for trial.

In contrast, plaintiffs in a class action lose their individual identity as a plaintiff. One or more representative or lead plaintiffs file suit on behalf of a group of injured parties with common claims, known as class members. The lead plaintiff performs the traditional functions of a plaintiff, like filing suit, hiring counsel, and negotiating settlements. However, the lead plaintiff is bound by the dreaded class certification process governed by the Federal Rules of Civil Procedure (FRCP) 23, which acts as a gatekeeper to ensure that class members will be adequately represented and defendants are protected from frivolous or harassing suits.

Procedure

Based on the numerous differences between MDLs and class actions, it is unsurprising that each judicial tool has a mandated set of procedural rules that must be followed.

An MDL is formed when multiple district court cases sharing a common question of fact are transferred to one district for combined pretrial proceedings. The JPML ultimately decides whether to permit centralization, the location of the transferee court, and the presiding judge. Once the transferee court completes all pretrial proceedings, that is the end of the road for the MDL—the transferee court must remand any case not terminated before trial. In reality, very few cases are remanded. In 2020, fewer than 3 percent of cases were remanded, with 97 percent of cases resolved prior to trial.

In contrast to MDLs, a party files suit intending to create a class action. Plaintiffs bear the burden of meeting the requirements of FRCP 23(a) and must establish: numerosity, commonality, typicality, and adequacy of class representative and counsel.

In addition, a class action suit must also fall within a category enumerated in FRCP 23(b), a determination made by the judge. Among other things, class category determines whether members can opt out or whether they are bound by any judgment or settlement.

Once a class is certified, and class members are provided notice and opportunity to opt out (if applicable), the class action moves forward. Unlike MDLs, the court remains fully involved throughout the life cycle of a class action suit and must approve any proposed settlement agreement. If a settlement agreement is approved or judgment is entered in favor of the plaintiffs, each class member receives their portion of the award.

Although “class action” and “MDL” are often used synonymously, remember the “three Ps” to avoid confusion.