MDL Strikes Back

Mass-tort defendants have begun to see bankruptcy as an escape hatch from multidistrict litigation (MDL) that is not going their way. Even highly solvent companies have turned to bankruptcy to try to resolve their mass-tort liability and have been harshly critical of the MDL process in their filings. But MDL judges have been striking back. This essay surveys the procedural tools that MDL judges can use to protect their jurisdiction, ranging from withdrawing the bankruptcy reference for an in-district filing to anti-suit injunctions attempting to shut down a competing out-of-district bankruptcy. Of course, the bankruptcy court may return fire with stays or injunctions of its own, leading to impasse. But we see a more productive solution than mutually assured destruction. We argue that the Judicial Panel on Multidistrict Litigation (JPML)--the congressionally-designated institution for deciding where mass tort litigation should proceed--can, and should, step in to get the bankruptcy and MDL into the same judicial district. The JPML can do that by transferring the bankruptcy (or pieces of it) to the MDL district or by retransferring the MDL (along with the MDL judge who may sit by designation) to the bankruptcy district. Either option would empower the MDL judge to reassert control over the litigation by withdrawing the bankruptcy reference, if necessary, thus delineating clear lines of authority, reducing friction, and facilitating cooperation between the bankruptcy and MDL systems.