In an opinion today, Judge Furman sent back to state court a multi-district litigation comprised of 19 cases in which various states accused Standard & Poor’s (and, in one instance, Moody’s) of falsely representing that their bond ratings were independent and objective. He found that, despite the efficiencies of a federally-managed MDL proceeding, there was no federal jurisdiction:

[T]he Court concludes that subject-matter jurisdiction is lacking with respect to the State Cases and that those cases must be remanded to the state courts from which they were removed. . . . The Court does not reach those conclusions lightly. Putting aside the natural “tempt[ation] to find federal jurisdiction every time a multi-billion dollar case with national implications arrives at the doorstep of a federal court,” Greenwich Fin. Servs. Distressed Mortg. v. Countrywide Fin. Corp., 654 F. Supp. 2d 192, 204 (S.D.N.Y. 2009), the federal courts undoubtedly have advantages over their state counterparts when it comes to managing a set of substantial cases filed in jurisdictions throughout the country. Through the MDL process, federal cases can be consolidated for pretrial purposes or more, promoting efficiency and minimizing the risks of inconsistent rulings and unnecessary duplication of efforts. Nevertheless, the state courts have devised creative means to coordinate among themselves when appropriate. See, e.g., Paula L. Hannaford-Agor, Comment: Federal MCL Fourth and Suggestions for State Court Management of Mass Litigation (National Center for State Courts 2006), available at (last visited June 3, 2014). And in any event, as any student of the Constitution knows, efficiency is not the only interest served by this country’s federalist system of state and federal courts. In the final analysis, this Court is not free to disregard or evade “[t]he limits upon federal jurisdiction, whether imposed by the Constitution or by Congress.” Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). That is, “[w]ith few exceptions, the doors to federal court do not swing open merely because a [party] has a national presence or is alleged to have committed wrongdoing that is national in scope,” McGraw-Hill Cos., 2013 WL 1759864, at *4-5, or merely because litigation in federal court might be more efficient. As discussed above, these cases do not trigger any of the relevant exceptions that would allow the Court to open its doors to federal jurisdiction. At bottom, the disputes in these cases are disputes arising under state law that belong in state courts.

Our prior post on the case is here.