PROCEDURE-MDLs

Home Depot USA, Inc. v. Lafarge N. Am., Inc., 2023 U.S. App. LEXIS 2644 (3d Cir. February 2, 2023) (Scirica, C.J.)  In this interlocutory appeal, we are asked to decide how the doctrines of law of the case and issue preclusion apply to a particular dispute in this multidistrict litigation proceeding. Our answer is that those doctrines generally apply to each case in this MDL in the same way as they apply to cases outside of it. Because the District Court’s decision was not consistent with that principle, we will vacate and remand. This case involves allegations of a conspiracy to fix prices in the drywall industry. The District Court relied on issue preclusion and law of the case to exclude substantial portions of the testimony of Plaintiff Home Depot’s expert, Dr. Robert Kneuper. As part of Home Depot’s case against Defendant Lafarge, Dr. Kneuper opined that the conduct of several firms in the drywall industry, including Lafarge, was consistent with illegal price fixing. The same conduct was at issue in a class action brought by direct purchasers of drywall as part of an MDL before the same court. Home Depot’s later-filed case was consolidated with this MDL over its objection. The Court found that large portions of Dr. Kneuper’s testimony were “fundamentally improper” because they were “contrary to fundamental events” that had occurred in the MDL before Home Depot filed its case. Home Depot U.S.A., Inc. v. Lafarge N. Am. Inc., No. 2:18-cv5305, 2021 U.S. Dist. LEXIS 158984, 2021 WL 3728912, at *15 (E.D. Pa. Aug. 20, 2021). Specifically, the Court faulted Dr. Kneuper for failing to conform his testimony to three such “events”: (1) the Court’s prior grant of summary judgment to one of the alleged conspirators, CertainTeed, (2) the fact that another supplier, Georgia-Pacific, had not previously been sued, and (3) the fact that alleged conspirator USG settled very early in the class action case. 2021 U.S. Dist. LEXIS 158984, *14. The District Court said that Home Depot was “bound by the[se] underlying events” under the doctrines of issue preclusion and law of the case. 2021 U.S. Dist. LEXIS 158984. At *15. We believe that was error. Issue preclusion applies only to matters which were actually litigated and decided between the parties or their privies. But Home Depot was not a party (or privy) to any of the relevant events, and two of the three events to which it was “bound” were not judicial decisions. Similarly, the law of the case doctrine applies only to prior decisions made in the same case. But Home Depot’s case is not the same as the one in which the decisions were made, and as noted two of the three events were not decisions. On the facts here, the application of these doctrines was improper. We will vacate the District Court’s decision and remand for reconsideration. The law of the case doctrine cannot be applied across distinct actions in this multidistrict proceeding. Cases centralized in an MDL “retain their separate identities” unless they choose to proceed on a consolidated “master” complaint. The Court appeared to believe that the MDL procedure created an exception to usual law of the case rules. It quoted approvingly from a district court’s opinion in Philadelphia Housing Authority v. American Radiator & Standard Sanitary Corp., 323 F. Supp. 381, 383 (E.D. Pa. 1970), where that court concluded without much analysis that the doctrine could be applied across different cases in the same multidistrict proceeding. The MDL process “does not merge the suits into a single cause, or change the rights of the parties, or make those who are parties in one suit parties in another.” In re TMI Litig., 193 F.3d 613, 724 (3d Cir. 1999) (quoting Johnson v. Manhattan R.R. Co., 289 U.S. 479, 496-97, 53 S. Ct. 721, 77 L. Ed. 1331 (1933)). And neither MDL centralization nor any other procedural device can “impose the heavy toll of a diminution of any party’s rights.” Bradgate Assocs., Inc. v. Fellows, Read & Assocs., 999 F.2d 745, 750 (3d Cir. 1993). The necessary effect of making important rulings (like those on summary judgment) before certification is that “the decision will bind only the named parties.” 7AA Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 1785, at 384 (3d ed. 2005); see also Katz v. Carte Blanche Corp., 496 F.2d 747, 758-62 (3d Cir. 1974). The district court has broad authority to structure and manage the MDL proceeding to promote efficiency and avoid unfairness. But it does “not have the authority to create special rules” to “bind plaintiffs by the finding of previous proceedings in which they were not parties, even by a proceeding as thorough as the multidistrict common issues trial.” TMI, 193 F.3d at 726 (quoting DeLuca v. Merrell Dow Pharms., Inc., 911 F.2d 941, 952 (3d Cir. 1990)). On the facts here, we disagree with the trial court’s use of the doctrines of law of the case and issue preclusion. But we understand that preserving the finality of past rulings is essential “to secure the peace and repose of society,” “for the aid of judicial tribunals would not be invoked for the vindication of rights” if “conclusiveness did not attend” their judgments. S. Pac. R.R. Co. v. United States, 168 U.S. 1, 49, 18 S. Ct. 18, 42 L. Ed. 355 (1897). And the District Court has called for appellate guidance on applying these principles in this MDL proceeding. See Home Depot, 2021 U.S. Dist. LEXIS 215254, 2021 WL 5177742, at *4-5. As such, we discuss two aspects of finality—judicial economy and fairness to litigants—and identify proper methods of vindicating these values. A judge may formalize this process through the use of case management orders. This practice is regularly employed in MDLs—a judge may enter an order with respect to one party and then provide that it will be automatically extended to other parties if they do not come forward and show cause why it should not be applicable. See, e.g., Order of Jan. 24, 2018, In re Terrorist Attacks on Sept. 11, 2001, No. 03-MD-1570, at 2 (S.D.N.Y. Jan. 24, 2018) (“Any order entered into, or decision rendered, in this MDL that relates to all actions shall apply to all Tag-Along Actions without the need for separate motions and orders, unless counsel in a TagAlong Action show good cause why the order should not apply to that Tag-Along Action.”); Order to Show Cause as to the B3 Claims Against the Clean-Up Responder Defendants, In re Oil Spill by the Oil Rig Deepwater Horizon, No. 10-MD-2179 (E.D. La. Jan. 7, 2016) (similar); Order No. 50, In re Gen. Motors LLC Ignition Switch Litig., No. 14-MD-02543, at 8 (S.D.N.Y. Apr. 24, 2015) (implementing a show-cause procedure for applying rulings made on the basis of consolidated pleadings to nonconsolidated actions). This is a technique that we have approved. See In re Asbestos Prods. Liab. Litig. (No. VI), 718 F.3d 236, 240- 41, 247-49 (3d Cir. 2013) (affirming dismissal of claims for failing to produce diagnostic information as required by a case management order). A transferee judge may also make use of consolidated complaints to simplify the litigation. See In re Fosamax (Alendronate Sodium) Prods. Liab. Litig., 852 F.3d 268, 302 n.171 (3d Cir. 2017). The Manual for Complex Litigation provides an order that a court may easily use to direct the plaintiffs to file such a complaint. Manual for Complex Litigation (Fourth), § 40.21, at 737 (“To pursue class action treatment, plaintiffs must file by [date], a single, consolidated, special master amended complaint.”); see also In re Nat’l Football League Players Concussion Injury Litig., 821 F.3d 410, 421 (3d Cir. 2016) (“The Court also ordered plaintiffs to submit a Master Administrative Long-Form Complaint . . . to supersede the numerous then-pending complaints.”). Rulings made in connection with a consolidated complaint are law of the case for all parties named in that complaint. See Bell v. Publix Super Markets, Inc., 982 F.3d 468, 489 (7th Cir. 2020) (citing In re Refrigerant Compressors Antitrust Litig., 731 F.3d 586, 588 (6th Cir. 2013)).  The second value at stake is fairness to litigants.  A court may avoid unfairness through the use of appropriate discovery management orders. We do not prescribe any “single, undifferentiated approach,” but endorse wide “latitude” for “judicial oversight . . . to manage the availability of discovery obtained in one case for use in another. . . .” Am. L. Inst., Principles of the Law of Aggregate Litigation § 2.07, cmt. g (2010); see also In re Bridgestone/Firestone, Inc., Tires Prods. Liab. Litig., 659 F. Supp. 2d 1371, 1372-73 (J.P.M.L. 2009) (“We see no reason why the parties in subsequent actions, subject to the same conditions as those imposed on parties to the MDL, should not be able to avail themselves of the documents and depositions accumulated [in the MDL].”). The judge might also deal with monetary aspects of the problem by assessing common benefit fees. In multidistrict cases, “it is standard practice for courts to compensate attorneys who work for the common benefit of all plaintiffs by setting aside a fixed percentage of settlement proceeds.” In re Zyprexa Prods. Liab. Litig., 467 F. Supp. 2d 256, 265 (E.D.N.Y. 2006); In re Zyprexa Prods. Liab. Litig., 594 F.3d 113, 128-30 (2d Cir. 2010) (Kaplan, J., concurring) (approving this order). We have upheld the use of such fees in situations where an attorney “confer[s] a substantial benefit to members of an ascertainable class.” In re Diet Drugs, 582 F.3d 524, 546 (3d Cir. 2009). The American Law Institute endorses the use of common benefit fees to compensate lawyers for work they do on behalf of others. See Principles of the Law of Aggregate Litigation § 2.07, cmt. G (recommending that the use of discovery obtained by class counsel be compensated by “order of the class-action court to sequester a portion of any recovery obtained by the exiting claimant to account for the benefit obtained from the class discovery”); In re Linerboard Antitrust Litig., 292 F. Supp. 2d 644, 653-54, 661-62 (E.D. Pa. 2003) (making such an order). No particular approach will be suitable in every case. We describe these options as examples of alternatives that may be available. A district court charged with the responsibility of achieving this goal across “the multiplicity of actions in an MDL proceeding must have discretion to manage them that is commensurate with the task.” In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 460 F.3d 1217, 1231 (9th Cir. 2006). Following remand, the District Court should reconsider the admissibility of Dr. Kneuper’s testimony without reference to issue preclusion and law of the case. It should allow Home Depot to make new arguments based on new or preexisting evidence, and it should consider Home Depot’s arguments that rulings in other cases in this MDL should not be followed, as more fully described in Part III of our opinion. We VACATE the judgment of the District Court and REMAND for further proceedings consistent with this opinion.