In An Unusual Move, The Southern District of Florida Stays All Discovery In An Ongoing MDL Pending A Potentially Game-Changing Motion To Dismiss
In re Mednax Services, MDL No. 2994, is an MDL (multidistrict litigation) pending in the Southern District of Florida, currently in its early stages. 2021 U.S. Dist. LEXIS 195342, *8-9 (S.D. Fla. Oct. 9, 2021). In a striking move late last week, a federal court ordered a stay of the proceedings pending resolution of the Defendants’ motion to dismiss for lack of standing and failure to plead a cognizable claim. Is this the start of a new data privacy litigation trend or an aberration? Read on to learn more.
As a reminder, the MDL process permits centralization of related disputes in front of a single federal court. 28 U.S.C. Section 1407(a) provides that:
When civil actions involving one or more common questions of fact are pending in different districts, such actions may be transferred to any district for coordinated or consolidated pretrial proceedings. Such transfers shall be made by the judicial panel on multidistrict litigation authorized by this section upon its determination that transfers for such proceedings will be for the convenience of parties and witnesses and will promote the just and efficient conduct of such actions . . . .
28 U.S.C. §1407(a). Once an MDL is created by the Joint Panel on Multidistrict Litigation (“JPML”), all cases related to the MDL are transferred to a single court. That MDL court then administers the related cases until they reach a point that the efficiencies of the consolidated proceedings are exhausted. Like a class action, the individual cases are closely related enough that there are significant overlapping factual and legal issues. But unlike a class action, there are enough differences between the plaintiffs’ claims that the proceedings can’t be consolidated for all purposes. Hence, the MDL.
In this litigation, the Mednax Defendants are healthcare providers whose patient information—encompassing nearly 1.3 million patients—was accessed by a third party. The Mednax Plaintiffs sued on behalf of themselves and their minor children, claiming that this data event exposed them to various harms. Specifically, they asserted that Defendants failed to properly secure said personal health information. Further, they alleged that Defendants’ response to the healthcare data breach resulted in additional harm to Plaintiffs and their minor children. The operative complaint contains nine different state-law claims based on fourteen separate state statutes (for breach of implied covenant, violations of state and consumer laws, breach of implied contract, negligence, negligence per se, invasions of privacy, breach of fiduciary duty, and negligent training and supervision) on behalf of thirteen potential classes and subclasses of Plaintiffs.
Defendants globally moved to dismiss both on substantive grounds under Rule 12(b)(6) and lack of standing under Rule 12(b)(1). At the time Defendants moved to dismiss, discovery was ongoing. Defendants, however, tried a tactic that is deeply unusual in the MDL context: seeking a stay of discovery pending a ruling on their dispositive motion. Suffice to say, blanket stays of discovery in MDLs are highly unusual. This is for the simple reason that because MDL discovery is often focused on global issues, courts can readily justify continuing discovery even if the nature of the claims or the litigants might change. Here, however, Defendants’ challenge worked.
The operative Mednax complaint covered the entire MDL, consolidating all claims of all Plaintiffs into a single interrelated pleading. On review of the complaint and the pending motion to dismiss, the Court determined that discovery should be stayed because of the significant deficiencies in the Complaint. According to the Court, not only did the pending motion to dismiss have a strong chance of success on at least some arguments, if the Defendants obtained the relief they sought, many claims and many Plaintiffs would be gone from the litigation, which would “drastically alter the scope of discovery.” Likewise, the Court determined in line with Eleventh Circuit precedent that challenges to standing should be resolved before discovery commences to conserve resources in the litigation.
MDLs are expensive, time-consuming propositions in the best of circumstances, and are even more so where discovery progresses even while the parties are addressing flawed or deficient theories of liability and injury. Many MDL courts embrace the philosophy that the best way to bring a resolution to the disputes is to keep the proverbial ball rolling, always keeping discovery moving. The Mednax opinion is potentially a game changer, particularly in light of increasingly consolidated pleading practices in MDLs. Staying discovery to determine what discovery will actually be needed is a common-sense solution to the administrative challenges in MDLs, and we will keep an eye on this case and other MDLs to see if this process gains traction. Stay tuned.