In a two-hour hearing, lawyers battled over whether a federal judge should order the attachment of up to $461 million in assets belonging to New England Compounding Pharmacy Inc.—which is primarily linked to a fungal meningitis outbreak that caused 34 deaths—and other related companies and individuals.
Judge Dennis Saylor of the District of Massachusetts presided over the November 20 hearing in two purported class actions, Cole v. New England Compounding Pharmacy Inc. and Erkan v. New England Compounding Pharmacy Inc.
Plaintiffs Robert Cole and Michelle Erkan asked the court to order prejudgment attachment of up to $461 million in assets belonging to several defendants. The primary defendant is Framingham, Mass.-based New England Compounding Pharmacy, which does business as New England Compounding Center. The other corporate defendants are sister company Ameridose LLC, which closed last month during a government investigation and Medical Sales Management Inc.
The cases are two of a dozen filed in the district from Nov. 2 through Nov. 14. Ameridose’s lawyer, Matthew Moriarty, a Cleveland partner at Tucker Ellis, said there have been more than 100 cases filed nationwide.
Injectable steroids from three recalled lots of preservative-free methylprednisolone acetate from New England Compounding have been linked to a multistate outbreak of fungal meningitis and other infections. According to the Centers for Disease Control and Prevention, 490 cases have been reported, and a death toll of 34.
The complaints also name and describe six individual defendants. One is Barry Cadden, who was an owner, as well as president, head pharmacist, and director of pharmacy at New England Compounding until recently. The plaintiffs claim he oversaw the day-to-day operations at the company and personally compounded medications. The plaintiffs also claim he was a founder and manager of Ameridose. Another defendant is Lisa Conigliaro Cadden, whom plaintiffs describe as a board member, director, and pharmacist at New England Compounding. The plaintiffs say Gregory Conigliaro is a principal owner, treasurer, secretary, vice president, and director of New England Compounding. He is also described as a founder and manager of Ameridose and secretary and director of Medical Sales Management. The complaints also name Douglas Conigliaro as president and director of Medical Sales Management and involved in the daily operations of all three companies. Carla Conigliaro is described as a director at New England Compounding. The plaintiffs claim the final defendant, Glenn Chin, is a New England Compounding employee and leader.
Thomas Sobol, a partner in the Boston office of Seattle-based Hagens Berman Sobol Shapiro who represented the plaintiffs, said that “these rare circumstances cry out for this court to do something in the short term to protect the status quo.”
Saylor commented that class certification in personal injury cases is the exception not the rule.
Sobol responded that the case is likely to get class action status as a so-called “limited fund” case outlined in the 1999 Supreme Court case Ortiz v. Fibreboard Corp. In a limited- fund case, the courts allocate funds because there aren’t enough defendant assets to cover damages.
Saylor then asked about Lisa Cadden, who hasn’t worked at New England Compounding for seven years. “Due process requires that you establish at some threshold level that these individual people actually had some role,” he said.
Sobol said that Lisa Cadden was one of three people who represented New England Compounding during a U.S. Food and Drug Administration site inspection.
New England Compounding’s lawyer, Alan Winchester, a New York partner at Harris Beach of Rochester, N.Y., said the plaintiffs’ lawyers were engaged in a “pile on of speculation and aspirations.” He also noted that the complaints have not been served and that “money is typically not something that gets an injunction.”
Winchester argued that Erkan’s injection did not come from one of the recalled batches and that Cole hasn’t provided evidence to show that his did. “You’re being asked to read between, above, below and even outside the lines,” he said.
Winchester noted a defense motion for a stay pending a ruling on multidistrict litigation, but Saylor said he doesn’t expect to grant a stay. Saylor said he wants to make progress on the cases before the judicial panel on multidistrict litigation decides whether to consolidate all the cases into a multidistrict litigation. The motion states that there are 43 federal cases pending nationwide.
Ameridose’s lawyer, Moriarity, said his client is a separate business entity from New England Compounding. He also noted that it has a separate location and separate product lines. “There’s nothing to indicate that any Ameridose product is implicated in a single lawsuit,” Moriarity said. He also said that the company is still in business and still needs access to capital.
Gregory Conigliaro’s lawyer, Dan Rabinovitz of Boston-based Michaels, Ward & Rabinovitz, argued that the plaintiffs made irrelevant allegations about his client. “Yes, he’s the secretary and director of [Medical Sales Management]. The law says ‘So what?’ at this juncture,” Rabinovitz said. As for Medical Sales Management, they were the sales force and did advertising and marketing. “There’s no connection whatsoever to the alleged tortuous conduct,” Rabinovitz said.
The Caddens’ lawyer, Bruce Singal, a litigation partner at Donoghue Barrett & Singal, said there’s not enough of a link between his clients’ roles and the allegations. Lisa Cadden, for example, was last a pharmacist at New England Compounding seven years ago.
Barry Cadden is the chief pharmacist and in charge of operations at New England Compounding but “had no direct involvement of the compounding of the drug in question,” Singal said. “I do think that it is important to understand that these are not ordinary circumstances. They’re entitled to defend themselves…It is important for them to have the ability to defend themselves.”
Douglas and Carla Conigliaro’s lawyer, Heidi Nadel, a partner at Boston’s Todd & Weld, said that, at most, Carla Conigliaro was an outside director, and owner Douglas Conigliaro “has no position” there. She said that the plaintiffs claim that he was involved in the day-to-day operations comes from unknown sources “There’s no there there. There is an absence of a showing.”
State court actions against New England Compounding includes a November 19 case filed in Middlesex County, Mass., Superior Court, asking the court to appoint a receiver to take over New England Compounding’s legal and business affairs. Boston-based Brown Rudnick filed the case, Guzman v New England Compounding Pharmacy Inc. d/b/a New England Compounding Center.
“With the company shuttered and the number of victims rising, Brown Rudnick, together with co-counsel, are acting to protect the interests of all who have been harmed by these contaminated drugs” said partner David Molton, in a press release
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