In re Depuy Orthopaedics, Inc.

• Decision Date: 31 August 2017
• Docket Number: No. 17-10812.,17-10812.
• Parties: IN RE: DEPUY ORTHOPAEDICS, INCORPORATED; Depuy Products, Incorporated ; Depuy Synthes, Incorporated; Johnson & Johnson International; Johnson & Johnson Services, Incorporated; Johnson & Johnson, Petitioners.
• Court: U.S. Court of Appeals — Fifth Circuit

870 F.3d 345

IN RE: DEPUY ORTHOPAEDICS, INCORPORATED; Depuy Products, Incorporated ; Depuy Synthes, Incorporated; Johnson & Johnson International; Johnson & Johnson Services, Incorporated; Johnson & Johnson, Petitioners.

No. 17-10812.

United States Court of Appeals, Fifth Circuit.

August 31, 2017

John H. Beisner, Skadden, Arps, Slate, Meagher & Flom, L.L.P., Washington, DC, Michael Vance Powell, Locke Lord, L.L.P., Dallas, TX, for Petitioners.

Richard J. Arsenault, Esq., Neblett, Beard & Arsenault, Alexandria, LA, W. Mark Lanier, Esq., Miriam Michelle Carreras, Kevin Philip Parker, Lanier Law Firm, P.C., Houston, TX, Jayne Conroy, Hanly, Conroy, Bierstein & Sheridan, L.L.P., New York, NY, Wayne Fisher, Justin Joseph Presnal, Esq., Fisher, Boyd, Johnson & Huguenard, L.L.P., Houston, TX, Kenneth Winston Starr, Waco, TX, for Respondents.

Before JONES, SMITH, and COSTA, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

This petition for writ of mandamus arises from a multidistrict litigation ("MDL") proceeding involving more than 9,300 plaintiffs.¹ Those plaintiffs have brought product-liability claims against petitioners for designing, manufacturing, and distributing an allegedly defective hip-implant

device, the Pinnacle Acetabular Cup System (the "Pinnacle Device").² The MDL court denied petitioners' motions to vacate an order and dismiss certain cases for lack of personal jurisdiction.³

We have reviewed the petition for writ of mandamus, the opposition thereto, petitioners' reply in support of the writ, the exhibits attached to those submissions, and the applicable law. We also have heard one hour of oral argument on the petition. Despite finding serious error, a majority of this panel denies the writ that petitioners seek to prohibit the district court from proceeding to trial on plaintiffs' cases.⁴ A different majority holds (1) that so-called Lexecon⁵ objections were not waived and that the district court abused its discretion in finding waiver; (2) that the petitioners have shown the required clear and indisputable right to a writ of mandamus; and (3) that the petitioners have established that a writ of mandamus is appropriate under the circumstances. But in regard to the ultimate result, a majority concludes that the petitioners have not shown that they have no other adequate means to attain the relief they seek. A majority requests the district court to vacate its ruling on waiver and to withdraw its order for a trial beginning September 5, 2017.

I.

The MDL proceeding began in 2011, when the Judicial Panel on Multi-district Litigation ordered the transfer of all actions involving the Pinnacle Device into the MDL court in the Northern District of Texas.⁶ Later, the MDL court issued an order allowing Pinnacle Device plaintiffs to file directly in that district.⁷

An MDL court can conduct pretrial proceedings but cannot try a case that it would not be able to try without its MDL status. Federal law limits an MDL court's jurisdiction over a transferred case to pretrial proceedings and provides that once those are completed, the MDL court must remand the transferred case to the district from which it was transferred.⁸ Cases that are directly filed in an MDL court are treated "as if they were transferred from a judicial district sitting in the state where the case originated."⁹ An MDL court can try a case where venue is improper if the parties waive their objections. Such waivers are known as " Lexecon waivers."

In August 2012, the MDL court entered Case Management Order 8 ("CMO 8") directing the parties to "submit ... a stipulated protocol for selection and conducting of bellwether trials in this MDL proceeding" and then "file their recommended selection of 4-6 cases to be included in an initial bellwether trial process."¹⁰ Bellwether trials are meant to

produce a sufficient number of representative verdicts and settlements to enable the parties and the court to determine the nature and strength of the claims, whether they can be fairly developed and litigated on a group basis, and what range of values the cases may have if resolution is attempted on a group basis.^{[11 ]}

The parties worked with the court and the special master to develop a protocol for bellwether trials.¹²

The special master produced a report that included a proposal, agreed to by the parties, to try four cases from a pool of eight.¹³ The report stated that "Defendants' Lead Counsel have already agreed that they will not raise a venue objection (i.e., a Lexecon objection) to any cases in the MDL proceeding being tried in the Northern District of Texas."¹⁴

The process became contentious when plaintiffs proposed to consolidate multiple cases for each bellwether trial. Petitioners objected, claiming that they did "not agree to waive their Lexecon objections for a prejudicial, multi-plaintiff trial."¹⁵ A few days later, petitioners clarified that "we have waived the [ Lexecon ] restriction on ... these cases, consistent with the report that the special master gave to the court earlier."¹⁶

The first trial, involving a single case transferred from the District of Montana, was held in September and October 2014.¹⁷ The jury found for petitioners.¹⁸

After the first trial, the parties and the court proceeded to select a new set of bellwether cases.¹⁹ The special master noted again that "Defendants have agreed they will not raise a venue objection (i.e., a Lexecon objection) to any cases in the MDL being tried in the Northern District of Texas."²⁰

The court selected five cases, all directly filed by Texas plaintiffs, and ordered that they be tried together in a consolidated second bellwether trial.²¹ Defendants objected to the consolidation but not on grounds of venue or personal jurisdiction.²² The trial was held in early 2016.²³ The jury returned a $502 million verdict, which the court reduced.²⁴ Petitioners appealed.²⁵

Petitioners moved to stay future bellwether trials pending the appeal. In a footnote to their brief urging a stay, they claimed that "[a]lthough [they] previously waived Lexecon for purposes of selecting prior bellwether cases, they have never agreed to a blanket Lexecon waiver and do not waive their venue objections with respect to forthcoming trials."²⁶ The court denied a stay and stated that petitioners had already waived their venue objections to trying cases in the MDL court.²⁷

In June 2016, the MDL court selected six cases, all directly filed by California plaintiffs, for a third bellwether trial.²⁸ Petitioners unsuccessfully moved to dismiss for want of personal jurisdiction and reiterated their claim that they had waived their venue objections only with respect to the first two bellwether trials.²⁹ The trial was held in September and October 2016, and the jury returned a $1.04 billion verdict, which the court reduced.³⁰ Petitioners appealed.³¹

In November 2016, the MDL court issued an order selecting ten cases with New York plaintiffs for a fourth bellwether trial.³² Petitioners moved to vacate the order and dismiss the claims for lack of personal jurisdiction, reiterating their assertions about waiver.³³ In June 2017, the court denied both motions, finding that petitioners had "clearly and unequivocally represented to this Court on multiple occasions that they waived any objections based on venue to trying any of the cases in the MDL in the Northern District of Texas."³⁴ The MDL court intends to try some of the New York cases in a fourth bellwether trial scheduled to begin on September 5, 2017.³⁵ Petitioners naturally ask this court to rule before then.

II.

A writ of mandamus is "a drastic and extraordinary remedy reserved for really extraordinary causes."³⁶ It "is not a substitute for an appeal."³⁷ Only a showing of "exceptional circumstances amounting to a judicial usurpation of power" or "a clear abuse of discretion" will justify granting a mandamus petition.³⁸ Mandamus is appropriate where (1) the petitioner has shown a "clear and indisputable" right to the writ; (2) the court is "satisfied that the writ is appropriate under the circumstances"; and (3) the petitioner has "no other adequate means to attain the relief [it] desires.³⁹

A.

First, petitioners must show that they have a "clear and indisputable" right to mandamus relief.⁴⁰ That "require[s] more than showing that the court misinterpreted the law, misapplied it to the facts, or otherwise engaged in an abuse of discretion."⁴¹ Where a matter is committed to a district court's discretion, "we review only for clear abuses of discretion that produce patently erroneous results."⁴² Some courts have decided that waiver determinations are committed to a district court's discretion.⁴³

Section 1407 provides that transferred actions "shall be remanded ... at or before the conclusion of such pretrial proceedings."⁴⁴ This mandatory language creates a powerful presumption in favor of remand, one that cannot easily be overcome.⁴⁵ The result is a statutory right to remand following an MDL proceeding, analogous to the statutory right to removal under 28 U.S.C. § 1441. A party cannot waive its removal rights through a forum-selection clause unless the waiver is "clear and unambiguous."⁴⁶ Likewise, we hold that a Lexecon waiver must be "clear and unambiguous."⁴⁷

Petitioners' waivers all included, or referred to, limiting language. The MDL court's notion,⁴⁸ echoed by plaintiffs, that petitioners are trying to limit their waivers retroactively, is not borne out by the facts. We hold that petitioners limited their venue waivers to the first two bellwether trials and that the MDL court erred by declaring that they had globally and permanently waived their objections to venue and personal jurisdiction. That was grave error: At most, petitioners' waivers included ambiguous language that did not indicate a clear intent to waive all Lexecon objections to trials before the MDL court.

Plaintiffs highlight the broad language in the special master's first report, which states that petitioners' lead counsel...