Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach

Brief Fact Summary.

Petitioner sued Respondent for malicious prosecution in Illinois. The case was transferred to Arizona under 28 U.S.C. § 1407(a). Petitioner moved to have the case remanded to Illinois and Respondent asked the Arizona court to transfer the case to itself.

Synopsis of Rule of Law.

A federal court, conducting pretrial proceedings of a case under 28 U.S.C. § 1407(a), does not have authority to transfer the case to itself for trial under 28 U.S.C. § 1404(a).

Facts.

Lexecon, Inc. (Petitioner) brought this lawsuit under diversity jurisdiction in Illinois against the law firms Milberg, Weiss, Bershad, Hynes & Lerach, and Cotchett, Illston & Pitre (Respondents) for malicious prosecution in a previous lawsuit. Respondents filed a motion to transfer the case under 28 U.S.C. § 1407(a) to Arizona, to be consolidated with the previous lawsuit. The Judicial Panel on Multidistrict Litigation granted the transfer. At the end of the pretrial proceedings, Petitioner moved to have the case remanded to Illinois. Respondents argued against remand and requested the Arizona court transfer the case for trial to itself under 28 U.S.C. § 1404(a).

Issue.

May a federal court, conducting pretrial proceedings of a case under 28 U.S.C § 1407(a), use 28 U.S.C. § 1404(a) to transfer the case to itself for trial?

Held.

No, the court cannot transfer the case to itself under 28 U.S.C. § 1404(a). The lower court’s decision is reversed and remanded.

Discussion.

The Court determined that, despite a history of courts transferring these trials to themselves under 28 U.S.C. § 1404(a), it was not supported by the language or legislative history of 28 U.S.C § 1407(a). The word “shall” in the statute created an obligation that the case be remanded to the original district court, and the legislative history indicated that Congress would have been explicit if it wanted cases consolidated for trial.