The opinion of the court was delivered by: Richard J. Holwell, District Judge:
The above-captioned cases each originated in the Southern District of Texas and were transferred to this Court by the Judicial Panel on Multidistrict Litigation (the "Panel") on June 16, 2008. Now before the Court are plaintiffs' motions to suggest to the Panel a remand of the respective actions to their transferor courts. For the reasons that follow, the Court GRANTS plaintiffs' motions and SUGGESTS that these cases be remanded to the Southern District of Texas.
The Memorial Hermann action began in Texas state court on November 5, 2007 and was removed to the United States District Court for Southern District of Texas on December 3, 2007 on diversity grounds. The Third Amended Complaint, which this Court granted leave to file on September 17, 2010, see Memorial Hermann Healthcare System v. State Street Bank & Trust Co., No. 08 Civ. 5440 (RJH), 2010 WL 3664490 (S.D.N.Y. Sept. 17, 2010), asserts several causes of action that stem from two Agreements of Trust (the "Trust Agreements") into which plaintiffs Memorial Hermann Healthcare System and The Health Professionals Insurance Company, Ltd. (collectively, "Memorial Hermann") entered with State Street Bank and Trust Company ("State Street"). Based on allegedly misleading statements State Street made when Memorial Hermann was searching for an investment option, Memorial Hermann alleges fraudulent inducement, negligent misrepresentation, and violations of the Texas Securities Act by State Street. (Memorial Hermann Third Am. Compl. ¶¶ 13-39.) Memorial Hermann also asserts that State Street breached its fiduciary duty under the Massachusetts law governing the Trust Agreements "by failing to invest and manage Memorial Hermann's . . . trust property accordance [sic] with the terms of the Trust Agreements, the Investment Objectives set forth in the Trust Agreements, and representations made by State Street in Fact Sheets and other presentations concerning the investment of property held in trust." (Memorial Hermann Third Am. Compl. ¶ 43.)
Currently outstanding in the Memorial Hermann action are Memorial Hermann's motion for partial summary judgment, State Street's motion for summary judgment, two motions about materials in the summary judgment motions, two motions to strike expert reports, and a motion to strike portions of the Fourth Amended Complaint as unauthorized. Memorial Hermann's motion for partial summary judgment calls for a construction of the Trust Agreements under Massachusetts law to find that State Street owed a fiduciary duty to Memorial Hermann. (See Memorial Hermann, ECF No. 64.) State Street's motion for summary judgment argues primarily that Memorial Hermann made an informed decision at the end of July 2007 not to redeem out of State Street's Limited Duration Bond Fund (the "LDBF") in which it had invested, and that this failure to mitigate damages on Memorial Hermann's part precludes recovery. (See Memorial Hermann, ECF No. 78.) It also argues that Memorial Hermann's complaint fails to state a claim for fraudulent inducement or negligent misrepresentation under Texas law. (Id.) State Street's motion to strike the expert report of Lawrence J. Weiner argues that Weiner's opinions would not aid the jury because they do not identify any standards against which to measure State Street's conduct; that the opinions usurp the jury's role by reconstructing the case as an argumentative narrative and opining on the ultimate issue in the case; and that they speculate as to the knowledge and intent of State Street. (See Memorial Hermann, ECF No. 69.) Its motion to strike the expert report of J. Philip Ferguson repeats similar arguments with respect to usurping the jury's role, and adds an argument that the report usurps the court's role by testifying as to the legal standards State Street must satisfy. (See Memorial Hermann, ECF No. 71.)
The Houston Police Officers action began on January 29, 2008, when Houston Police Officers' Pension System ("HPOPS") filed its complaint in the Southern District of Texas. The action arises out of HPOPS's investment in a commodities strategy managed and offered by State Street known as the Enhanced Dow Jones-AIG Commodities Strategy (the "Strategy"). State Street used the discretion granted to it by the parties' Investment Management Agreement (the "IMA") to invest the entire amount that HPOPS had invested into the Strategy in the LDBF.
The complaint lists several causes of action. First, it alleges that State Street and State Street Global Advisors, Inc. ("SSgA") breached their fiduciary duties under Texas law and the IMA. (HPOPS Compl. ¶¶ 71-81.) Second, it alleges that SSgA breached the IMA in several ways. (Id. ¶¶ 82-85.) Third, it alleges common-law fraud claims, including fraudulent inducement, fraudulent misrepresentation, and fraud by non-disclosure, and negligent misrepresentation claims against State Street and SSgA. (Id. ¶¶ 86-103.) Fourth, it alleges violations of the Texas Securities Act. (Id. ¶¶ 104-112.) Finally, the complaint alleges a conspiracy between SSgA and State Street to defraud HPOPS. (Id. ¶¶ 113-116.)
Currently pending in Houston Police Officers is HPOPS's motion for partial summary judgment, State Street and SSgA's motion for summary judgment, and four motions to strike expert reports. State Street's motion for summary judgment argues primarily that HPOPS failed to mitigate its damages by not redeeming its interest in the LDBF in mid-August 2007. (See Houston Police Officers, ECF No. 42.) State Street also contends that the facts of the Houston Police Officers case do not support HPOPS's claims of fraud, and that HPOPS's conspiracy count fails as a matter of law because it alleges a conspiracy between State Street and itself. (See id.) The arguments in HPOPS's motion for partial summary judgment generally fall into two categories. First, HPOPS argues that the Court should construe the IMA to establish that State Street had full and discretionary power to manage and oversee the entire commodities strategy; it argues that this conclusion is mandated both by the plain language of the IMA and the Texas Government Code. (See Houston Police Officers, ECF No. 52.) Second, HPOPS argues that it is a Texas governmental entity, created by the Texas Legislature to provide benefits to police officers of the City of Houston and their families; as such, many of the affirmative defenses State Street asserts in its summary judgment motion are inapplicable as a matter of Texas law. (Id.) The motions to strike expert reports make various arguments, including ones asserting that the relevant expert's opinions fail to reference appropriate industry standards, that the expert is not qualified to render an expert opinion, that the expert usurps the court's role by opining on legal issues, and that the expert usurps the jury's role by reconstructing the facts of the case as an argumentative narrative. (See Houston Police Officers, ECF Nos. 47, 49, 51, 54.)
Both cases were transferred to this Court pursuant to 28 U.S.C. § 1407 on June 16, 2008, by the Panel, which found that "centralization will ensure streamlined resolution of this litigation to the overall benefit of the parties and the judiciary." (Transfer Order of the Panel on Multidistrict Litigation at 2.) Since these cases were transferred to this Court, they have undergone coordinated, consolidated fact and expert discovery, which is now complete in both cases. Other cases that were part of the multidistrict litigation have run their course; the class action suit alleging violations of the Employee Retirement Income Security Act of 1974 ("ERISA") has settled, and four other cases have been dismissed. Six cases now remain in the multidistrict litigation: the two above-captioned cases, three cases primarily involving claims arising under ERISA, and one case involving claims under the Securities Act of 1933.
Both Memorial Hermann and HPOPS have now filed motions to suggest remand to the Panel of their respective cases to their transferor courts in the Southern District of Texas. They argue that with the close of discovery, the benefit of coordinated proceedings has ended, and it serves the interests of judicial economy to remand these cases now to their trial courts. This opinion addresses the motions to remand in both of the above-captioned cases.
I.Standard for a Suggestion of Remand
The Panel shall remand an action transferred for multidistrict litigation "at or before the conclusion of such pretrial proceedings to the district from which it was transferred." 28 U.S.C. § 1407(a); see also Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 28 (1997) (recognizing the "duty" of the Panel to remand transferred actions before trial). In determining whether to issue a suggestion of remand to the Panel, the Court is "guided by the standards for remand employed by the Panel." In re Bridgestone/Firestone, Inc., 128 F. Supp. 2d 1196, 1197 (S.D. Ind. 2001). The ultimate authority for remanding an action lies with the Panel itself. See 28 U.S.C. § 1407(a). The Panel shall consider remand on the motion of any party, the suggestion of the transferee district court, or on its own initiative. R.P.J.P.M.L. 7.6(c). However, the Panel is "reluctant to order remand absent a suggestion of remand from the transferee district court." R.P.J.P.M.L. 7.6(d). "In considering the question of remand, the Panel has consistently given great weight to the transferee judge's determination that remand of a particular action at a particular time is appropriate because the transferee judge, after all, supervises the day-to-day pretrial proceedings." In re Baseball Bat Antitrust Litigation, 112 F. Supp. 2d 1175, 1177 (J.P.M.L. 2000) (quoting In re Holiday Magic Securities and Antitrust Litigation, 433 F. Supp. 1125, 1126 (J.P.M.L. 1977)); see also In re Brand-Name Prescription Drugs Antitrust Litigation, 264 F. Supp. 2d 1372, 1376 (J.P.M.L. 2003) ("A transferee judge's suggestion of remand to the Panel is an obvious indication that he has concluded that the game no longer is worth the candle (and, therefore, that he perceives his role under section 1407 to have ended).").
If "pretrial proceedings have run their course," the Panel is "obligate[d]" to remand any pending cases to their originating courts, an obligation that is "impervious to judicial discretion." Lexecon, 528 U.S. at 34-35. When "everything that remains to be done is case-specific," however, it does not necessarily mean that "consolidated proceedings have concluded" and therefore remand is not mandatory; nevertheless, "[c]learly, the Panel has the discretion to remand a case" at this point. In re Patenaude, 210 F.3d 135, 145 (3d Cir. 2000); see also In re Fedex Ground Package System, Inc. Employment Practices Litigation, Nos. 3:05-MD-527 RM, MDL-1700, 2010 WL 415285, at *2 (N.D. Ind. Jan. 22, 2010) ("The plain language of section 1407 accords the Panel discretion to remand cases before the conclusion of pretrial proceedings, and courts routinely have read the statute in that flexible fashion."). This is because "[i]t is not contemplated that a Section 1407 transferee judge will necessarily complete all pretrial proceedings in all actions transferred and assigned to him by the Panel, but rather that the transferee judge . . . will conduct the common pretrial proceedings . . . and any additional pretrial proceedings as he deems otherwise appropriate." In re Evergreen Valley Project Litigation, 435 F. Supp. 923, 924 (J.P.M.L. 1977). "The Court's discretion to suggest remand 'generally turns on the question of whether the case will benefit from further coordinated proceedings as part of the MDL.'" In re Merrill Lynch Auction Rate Securities Litigation, No. 09 MD 2030 (LAP), 2010 WL 2541227, at *2 (S.D.N.Y. June 11, 2010) (quoting In re Bridgestone/Firestone, Inc., 128 F. Supp. 2d at 1197). "The transferee court should consider when remand will best serve the expeditious disposition of the litigation." Manual for Complex Litigation, Fourth ...