The Imitation Game: Structural Asymmetry in Multidistrict Litigation

Abstract

This Article examines some of the consequences of asymmetric transaction costs in multidistrict litigation, or MDL. Using principles from legal ethics, economics, and accounting, we show how the structure of MDL affects attorneys’ incentives to recruit plaintiffs and screen cases to form mass litigation. The low marginal costs required to file credible-seeming complaints and the need for global peace in many-on-one settlement create a perfect storm for mass-produced nuisance litigation. Separating quality claims from frivolous suits in complex litigation entails significant costs, rendering much of MDL practice an “imitation game” in which vast resources are spent screening cases that would not have been filed outside MDL. This gamesmanship tests ethical responsibilities of plaintiffs’ attorneys, impairs efficient financial reporting, and strains scarce judicial resources. Building on recent rulings by frustrated courts in drug and device litigation and the proposed allegations verification rules of the Fairness in Class Action Litigation Act of 2017, we show how changes in MDL management can put teeth into ethical rules, decreasing the challenges inherent in MDL while preserving the scale economies offered to litigants.