A judicial panel on multidistrict litigation involving a company linked to a fungal meningitis outbreak is sending the cases to the District of Massachusetts. On February 12, the panel transferred the litigation, captioned In Re New England Compounding Pharmacy Inc. Products Liability Litigation, to that district, over the objections of some plaintiffs’ lawyers who wanted the docket of 134 cases moved to the District of Minnesota. Judge F. Dennis Saylor IV, who has been handling pretrial matters for a consolidated docket of Massachusetts federal cases, will run the MDL. In December, Saylor issued a broad preservation order and ruled that plaintiffs’ experts could inspect the company’s premises. “Centralization will eliminate duplicative discovery; prevent inconsistent pretrial rulings, especially with respect to class certification and discovery issues; and conserve the resources of the parties, their counsel and the judiciary,” wrote MDL panel chairman John Heyburn II, a federal judge in the Western District of Kentucky, in the order. So far, the Centers for Disease Control and Prevention has tied 704 cases and 46 deaths to the infectious outbreak of fungal meningitis linked to New England Compounding. It has been traced to injectable steroids from three recalled lots of the company’s preservative-free methylprednisolone acetate. The company also has a pending bankruptcy case, which was filed in December 2012. On February 11, Bankruptcy Judge Henry Boroff of the District of Massachusetts converted a temporary restraining order he issued in January into an order against the four New England Compounding owners. That order bars them from transferring or dissipating assets, other than living expenses, through trial and judgment. The order also bars sister company Ameridose LLC from paying any funds to the owners. Borroff also issued an order in January attaching up to $21.1 million in the owners’ assets. Alyson Oliver of the Oliver Law Group in Rochester, Minn., who argued at a January 31 panel hearing for plaintiffs’ attorneys who wanted the MDL moved to Minnesota, was not surprised by the ruling. “Under the circumstances, with the bankruptcy having been filed in Massachusetts, the decision of the [judicial panel] makes sense, especially when we’re looking at a limited fund recovery under the bankruptcy,” Oliver said. Elizabeth Cabraser, a San Francisco partner at Lieff, Cabraser, Heimann & Bernstein, was one of two lawyers who argued for plaintiffs who wanted the MDL to move to Massachusetts. “We are pleased that the Panel has set the stage for the most efficient and economical marshaling and distribution of NECC assets and insurance to the victims, by enabling the Boston district and bankruptcy proceedings to closely coordinate,” said Cabraser, in an emailed response. Anne Andrews of Andrews & Thornton in Irvine, Calif., also argued for plaintiffs who wanted the case moved to Massachusetts. The District of Massachusetts “was the most appropriate place for coordination and handling. It was the only logical choice,” said Rick Fern, a partner at Harris Beach in New York, who argued for the individual defendants at the MDL hearing. Richard Dean, a partner at Cleveland’s Tucker Ellis, argued for Ameridose. The official committee of unsecured creditors in New England Compounding’s bankruptcy is pleased about the transfer, said Bill Baldiga, a partner at Boston’s Brown Rudnick and committee co-lead counsel: “[It] will very much facilitate an effective process for building a bankruptcy estate for fair distribution among creditors, with good coordination between the district court and bankruptcy court.” David Molton, a Brown Rudnick New York partner, argued for the creditors’ committee at the MDL hearing. Sheri Qualters can be contacted at firstname.lastname@example.org.
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