A diagnostic imaging company has alleged that a Virginia law firm is attempting continue to involve a state court in litigation over mass torts involving a batch of tainted steroids, even though a federal judge has transferred the actions to federal court.
In an apparent case of first impression before the U.S. Circuit of Appeals for the First Circuit, U.S. District Judge Rya Zobel granted a bankruptcy trustee’s motion to transfer 29 cases involving 127 plaintiffs. She accepted trustee Paul Moore’s argument that the transfer of all state-court cases was necessary to prevent a state-court defendant from making a claim for contribution and indemnity, “upsetting the effort to make an equitable distribution to the victims and other creditors.”
The now-bankrupt New England Compounding Center produced an injectable steroid that became infected with fungus and led to a multistate breakout of fatal meningitis. Some plaintiffs also have sued the health care providers that administered the steroid as codefendants or as sole defendants.
Following Zobel’s ruling, Gentry Locke Rakes & Moore in Roanoke, Va., requested what the firm called ministerial orders from Virginia Circuit Court Judge Charles Dorsey in 18 of those cases, according to defendant Insight Health Corp. The plaintiffs moved after Zobel made her decision but before Moore issued a proposed order to effectuate the transfer.
Among other reasons, the plaintiffs objected to Moore’s proposed order for failing to allow for “pre-transfer ministerial acts necessary at the state court level to protect the interests of the plaintiffs.”
Under Federal Rule of Bankruptcy Procedure 9027, notice of any bankruptcy-related cases being removed to federal court must be filed within 30 days of service of the initial pleadings or receipt of the summonses, the plaintiffs argued. However, the deadlines under Rule 9027 have long passed, they said.
These 18 plaintiffs filed their state court cases after the bankruptcy petition was filed, their attorneys argued.
Insight Health insisted the move was not intended to protect the plaintiffs’ interests, but rather to undercut the federal court’s ruling.
“Gentry Locke plaintiffs are now attempting to rush to the Roanoke County Circuit Court to present various order to Judge Dorsey—orders that are anything but ‘ministerial’—in violation of this court’s decision,” Insight Health’s counsel from Skadden, Arps, Slate Meagher & Flom and McGuire Woods said. “Because it is well established that a decision to transfer cases vests this court—as the transferee court—with ‘exclusive jurisdiction’ over the transferred cases, Insight submits that an injunction in aid of this court’s jurisdiction is necessary and appropriate.”
When Gentry Locke sought reconsideration of Zobel’s decision and objected to Moore’s proposed order, the firm argued the trustee would violate “any number of rights and procedures (including due process under the Constitution) by purporting to enjoin the Roanoke plaintiffs and their counsel ‘to take any and all actions’ without any motion, hearing or proof of the need for such extraordinary relief,” the plaintiffs said.
Amaris Elliott-Engel contributes to law.com.