Eric Steinmann et al v. ZTE Corporation et al

Filing 21

ORDER DENYING TRANSFER re: pldg. (14 in CAC/5:11-cv-01578, 22 in MDL No. 2538, 14 in MOE/4:12-cv-01166, 14 in SC/3:12-cv-02616, 14 in TNW/1:11-cv-01169, 14 in TNW/1:12-cv-01172, 15 in WAE/ 2:12-cv-03110), ( 1 in MDL No. 2538) The motion to transfer, pursuant to 28 U.S.C. 1407, is DENIEDSigned by Judge John G. Heyburn II, Chairman, PANEL ON MULTIDISTRICT LITIGATION, on 6/6/2014. Associated Cases: MDL No. 2538, CAC/5:11-cv-01578, MOE/4:12-cv-01166, SC/3:12-cv-02616, TNW/1:11-cv-01169, TNW/1:12-cv-01172, WAE/2:12-cv-03110 (LH)

UNITED STATES JUDICIAL PANEL
on
MULTIDISTRICT LITIGATION

IN RE: CLEARTALK-ZTE
ARBITRATION LITIGATION

MDL No. 2538

ORDER DENYING TRANSFER

Before the Panel: Pursuant to 28 U.S.C. § 1407, defendant ZTE USA, Inc. (ZTE USA)
moves to centralize this litigation in the Middle District of Florida. The litigation consists of six
actions pending in the Central District of California, the Eastern District of Missouri, the District of
South Carolina, the Western District of Tennessee (two actions), and the Eastern District of
Washington, as listed on the attached Schedule A.1 Defendant ZTE Corp., ZTE USA’s Chinese
parent, supports the motion,2 but plaintiffs in all six actions submitted a collective response in
opposition.3
On the basis of the papers filed and the hearing session held, we are not persuaded that
Section 1407 centralization would serve the convenience of the parties and witnesses or promote the
just and efficient conduct of the litigation. Admittedly, the actions do share a factual backdrop
relating to alleged breaches by one or both ZTE defendants of certain agreements that they made to
supply telecommunications equipment and services to plaintiffs for use in building cellular telephone
networks in certain areas of five states – Florida, Tennessee, Missouri, Washington, and South
Carolina. Section 1407, however, authorizes us to centralize actions only for “pretrial proceedings.”
See 28 U.S.C. § 1407(a). Here, as ZTE USA expressly acknowledges, an arbitration – i.e., the trial

1

As filed, the Section 1407 motion included three other actions, two in the Middle District of
Florida, and one in the Eastern District of Missouri. In each of those actions, however, the subject
plaintiff subsequently filed a notice of voluntary dismissal. While ZTE USA questions whether the
dismissal of the earlier-filed of the two Florida actions (PTA-FLA, Inc. v. ZTE USA, Inc., C.A. No.
3:11-00510) was effective, we believe that matter is better raised to the Florida court.
2

Plaintiffs contend that ZTE USA is not authorized to seek centralization of the four actions
to which it is not a party. This contention is not well taken. Section 1407(c) provides that “a” party
in “any” action may move for transfer of “an” action – not just the action or actions in which the
movant is a party. Indeed, we frequently consider, for example, motions for centralization brought
by plaintiffs in a subset of the actions for which an MDL is sought. E.g., In re: Lipitor (Atorvastatin
Calcium) Mktg., Sales Practices & Prods. Liab. Litig., — F. Supp. 2d —, 2014 WL 6615989
(J.P.M.L. Feb. 18, 2014) (granting motion for centralization of 56 actions filed by plaintiff in just
one of those actions).
3

Plaintiffs are NTCH-WA, Inc., PTA-FLA, Inc., NTCH-West Tenn, Inc., Daredevil, Inc., Eric
Steinmann, and Dolores Franco.

- 2substitute – has already taken place.4 According to ZTE USA, the arbitrator’s Final Award disposes
of all claims in the cases.5 Thus, by ZTE USA’s own admission, there are no “pretrial” activities
remaining.
ZTE USA’s purpose in seeking creation of an MDL is quite plainly to bring before one court
plaintiffs’ various efforts to vacate the Final Award and continue litigating against ZTE Corp., and
to have that court determine the preclusive effect of the Final Award with respect to ZTE Corp.6 As
we previously have stated, that purpose – the resolution of purely a legal issue or issues – is generally
insufficient to warrant centralization.7 Here, especially given ZTE USA’s express assertion that all
pretrial proceedings in these actions already have been concluded, we find no compelling reason to
depart from this general rule.

4

As described in the arbitrator’s Final Award, the arbitration, which took place in
Jacksonville, Florida, involved extensive discovery, including the exchange of close to 2000 exhibits
and numerous depositions. The hearing itself took place over ten days, after which the parties
submitted post-hearing briefs and presented a full day of final argument.
5

See ZTE USA’s Mem. in Supp. of § 1407 Mot., at 3 (ECF No. 1) (“The Final Award disposes
of all claims in the Related Cases.”).
6

See ZTE USA’s Reply Mem. in Further Supp. of Its § 1407 Mot., at 6 (ECF No. 23) (“This
Panel should not permit piecemeal attacks on the Final Award through motions to confirm or vacate
in different courts. Rather, all of the parties’ arguments relative to the Final Award and its potential
preclusive effect on the claims of the ClearTalk entities against ZTE Corp. should be considered by
a single court.”). We note that after the issuance of the Final Award and prior to the purported
dismissal of the Middle District of Florida action referenced in footnote 1, ZTE USA moved in that
action to join those plaintiffs who participated in the arbitration and to confirm the Final Award.
7

See, e.g., In re: Real Estate Transfer Tax Litig., 895 F. Supp. 2d 1350, 1351 (J.P.M.L. 2012)
(denying centralization of ten actions involving primarily a legal question, stating: “Although
movant seeks efficiencies through centralized treatment of this legal question, ‘[m]erely to avoid two
federal courts having to decide the same issue is, by itself, usually not sufficient to justify Section
1407 centralization.’”) (quoting In re: Medi-Cal Reimbursement Rate Reduction Litig., 652 F. Supp.
2d 1378, 1378 (J.P.M.L. 2009)); In re Aegon USA, Inc., Supplemental Cancer Ins. Litig., 571 F.
Supp. 2d 1369, 1370 (J.P.M.L. 2008) (denying centralization of seven actions, where the key issue
– the proper interpretation of the term “actual charges” in certain insurance policies – was “legal
rather than factual”).

- 3IT IS THEREFORE ORDERED that pursuant to 28 U.S.C. § 1407, the motion for
centralization of these actions is denied.

PANEL ON MULTIDISTRICT LITIGATION

John G. Heyburn II
Chairman
Marjorie O. Rendell
Lewis A. Kaplan
Ellen Segal Huvelle

Charles R. Breyer
Sarah S. Vance
R. David Proctor

IN RE: CLEARTALK-ZTE
ARBITRATION LITIGATION

MDL No. 2538

SCHEDULE A

Central District of California
ERIC STEINMANN, ET AL. v. ZTE CORPORATION, ET AL., C.A. No. 5:11-01578
Eastern District of Missouri
DAREDEVIL, INC. v. ZTE CORPORATION, C.A. No. 4:12-01166
District of South Carolina
PTA-FLA v. ZTE CORPORATION, C.A. No. 3:12-02616
Western District of Tennessee
NTCH-WEST TENN, INC. v. ZTE USA, INC., C.A. No. 1:11-01169
NTCH-WEST TENN, INC. v. ZTE CORPORATION, C.A. No. 1:12-01172
Eastern District of Washington
NTCH-WA, INC. v. ZTE CORPORATION, ET AL., C.A. No. 2:12-03110