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MDL Class Action Defense Cases-In re Internal Revenue Service: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion To Centralize Class Action Litigation In The District Of Nevada

Judicial Panel Grants Plaintiff’s Request, Over Defense and Other Plaintiff Objection, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Transfers Class Action to District of Nevada

Two class actions were filed in California and Nevada against various defendants because individuals who sought to engage in a § 1031 exchange using defendants Southwest Exchange (SWX) and/or Qualified Exchange Services as the facilitator suffered losses due to the alleged misconduct of various defendants. In re Internal Revenue Service § 1031 Tax Deferred Exch. Litig., 528 F.Supp.2d 1343, 2007 WL 3119287, *1 (Jud.Pan.Mult.Lit. 2007). Plaintiff’s lawyer in the Nevada class action filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the District of Nevada. Defense attorneys for UBS Financial Services and counsel for the California plaintiffs opposed pretrial coordination. Id. The Judicial Panel granted the motion to centralize the class actions because transfer “(1) allows discovery with respect to any non-common issues to proceed concurrently with discovery on common issues…; and (2) ensures that pretrial proceedings will be conducted in a streamlined manner leading to the just and expeditious resolution of both actions to the overall benefit of the parties and the judiciary.” Id. The Panel also agreed that the District of Nevada was the appropriate transferee court because SWX is based there, several defendants live there, and the challenged conduct largely occurred there. Id. Accordingly, the Judicial Panel transferred the California class action to Nevada, id., at *2.

Download PDF file of In re Internal Revenue Service Transfer Order