Watch Those Stats

So the battle right now in the Hanger Orthopedic securities class action is focused on where the battle will be. Plaintiffs say the Eastern District of New York, Defendants say the District of Maryland, and it’s up to Judge Frederic Block (E.D.N.Y.) to settle the score – and he has.

Of course, each side had its arguments about where witnesses were located and other things you no doubt couldn’t care less about. Blah, blah, blah, you say, right? But one interesting note is that Defendants, citing Administrative Office of the United States Courts, Federal Court Management Statistics (“FCMS”), “point out — and plaintiffs do not dispute — that the Eastern District of New York’s docket is significantly more congested than the District of Maryland’s: As of September 30, 2005, the number of pending cases (civil and criminal) per active judge in the Eastern District was 622; in the District of Maryland, it was only 377.” But according to Judge Block, “FCMS does not take into account the impact of senior judges on a court’s caseload.” Once that is factored in, “according to the Court’s calculations, senior judges reduced the caseload per judge to 444 in the Eastern District and to 314 in the District of Maryland.”

Looks like those senior judges in EDNY are taking on quite the case load, doesn’t it? Oh, and it should come as no surprise that Judge Block might be a tad sensitive about these statistics. After all, he himself took senior status on September 1, 2005.

Result? Defendants get their transfer to Maryland.

You can read In re Hanger Orthopedic, issued February 28, 2006, at 2006 U.S. Dist. LEXIS 7549.

Nugget: “The present action bears many hallmarks of a typical securities-fraud case: it is a putative class action brought against Hanger and its principal officers; it is based on alleged misrepresentations in, and omissions from, statements originating at Hanger’s Maryland headquarters; and most of the witnesses and documents relating to those statements are located in Maryland. As explained above, these factors all weigh in favor of transfer.”

You Can Run, But You Can’t Hide

Last week, Judge Joel A. Pisano (D. N.J.) called it like he saw it in the World Access securities class action, and that meant labeling Plaintiffs’ tactics as “the most blatant example of forum shopping seen by this Court.” You see, the original World Access cases were filed and consolidated in the Northern District of Georgia, where they were overseen by Judge Orinda D. Evans. Judge Evans slowly turned the case into nothing over several years, first denying class certification, and then tossing the two individual plaintiffs’ remaining claims on summary judgment.

So, even though “most, if not all, of the essential acts, transactions, and wrongful conduct at issue occurred in the Northern District of Georgia,” some new Plaintiffs filed the case again, this time in the District of New Jersey. Not surprisingly, Judge Pisano has decided to ship the new action back to Judge Evans in Georgia, as “considering her familiarity with this case, Judge Evans will be able to provide the parties with a more expeditious resolution of this long pending matter than the parties would achieve in this Court.”

Oh, it’s sure to be expeditious all right. Maybe painful too.

You can read Yang v. Odum, issued January 17, 2006, at 2006 U.S. Dist. LEXIS 1279.

Nugget: “With great respect to the Northern District of Georgia’s previous disposition of the various issues presented in this litigation, and being critical of Plaintiffs’ attempt to frustrate Judge Evans’s previous efforts, this Court orders this case transferred to the Northern District of Georgia.”

You Just Can’t Make Some Lead Plaintiffs Happy

Guess what, as lead counsel, we represented you for four long years and settled your case for $490 million, netting the third largest securities class action settlement ever. What’s that, you’re suing me? Sounds unbelievable, but that’s exactly what is happening right now in the Southern District of New York. No, make that the Eastern District of Missouri. You see, when Judge Marrero (S.D.N.Y.) got the former BankAmerica Lead Plaintiffs’ lawsuit on his docket, he shipped it to Missouri faster than you can say, “The Private Securities Litigation Refo….” Sorry, too slow. Of course, the Plaintiffs cried foul when they arrived, arguing that Judge Marrero was “manifestly unjust” in transferring their case to Missouri without anybody even asking him to do it (a/k/a sua sponte, but the Nugget shuns Latin-speak, as, well, it’s pretty silly unless you are the Solicitor General decked out in your morning coat).

Back to the Eastern District. Judge Nangle (E.D. Mo.) started out with the exceedingly neutral observation that “[I] am hesitant to proceed with useless acts that do nothing but take up time and cause unnecessary expense.” Sounds a little like Pat Robertson running for President again. Though of course, in “an abundance of caution,” the Court agreed to analyze the venue issue. Let’s see. The underlying BankAmerica litigation was in Missouri, where the MDL Panel centralized it years ago. A bunch of the Defendants, witnesses, and even Plaintiffs are located there. And the case is “essentially an outgrowth of the BankAmerica case, an action that has been ongoing in [Missouri] since 1999.” Maybe that’s why Judge Nangle found that “the facts are so clear and convincing and obvious, that it is easy to see” why the case got relocated from New York.

So it appears the parties will be duking this one out in the Show-Me State. It could be tough going for Plaintiffs though. After all, it appears they explained their problems to Judge Nangle at the fairness hearing way back in 2002, but got nowhere as he approved the settlement anyway. Their appeal to the Eighth Circuit didn’t work very well either. (See 350 F.3d. 747). It’s no wonder they went to New York. But alas, their escape attempt was futile, and now everyone will have to face the music in St. Louis, whatever that may hold.

You can read the decision at 2005 U.S. Dist. LEXIS 9691

Nugget: “Needless to say, this Court is hesitant to predict what an appellate court will do, but it does seem quite evident that this case will ultimately end up in the Eastern District of Missouri.”

Tempered Rigas Celebration Seems Likely

Former Adelphia tycoon John Rigas and his son Tim are no doubt in chipper spirits this evening after learning of their victory in one of the many securities fraud actions pending against them. Yes, just as the Rigas’ have been arguing for nearly a year, at least one case against them will remain in federal court instead of being shipped back to the Luzerne County, Pennsylvania Court of Common Pleas.

To understand what happened here, you’ll need to get a bit dizzy first. Ready? It all started back in January 2003 when a group of investors sued Deloitte & Touche in Luzerne County for securities fraud related to Adelphia stock they received in a merger. Deloitte of course wasted little time adding Rigas and Sons as third-party defendants. In the meantime, Adelphia filed for bankruptcy in the Southern District of New York. So, using the powers of 28 U.S.C. § 1452(a), which allows a party to remove state court actions related to bankruptcy cases, the Rigas’ removed their case to the Bankruptcy Court in the Middle District of Pennsylvania. In the meantime, the case was conditionally transferred to Senior Judge Lawrence M. McKenna’s courtroom in the Southern District of New York by the Judicial Panel on MultiDistrict Litigation. Plaintiffs asked the Panel to reconsider. Then the Pennsylvania Bankruptcy Court remanded the case back to Luzerne County. The Rigas’ appealed the remand order to Judge McKenna in the SDNY, and shortly thereafter, the MDL Panel (despite the remand order) fully transferred the case to Judge McKenna. Happens all the time, right?

After hearing all sides, Judge McKenna rejected Plaintiffs’ arguments that the Southern District of New York has no authority to hear the appeal of the remand order issued by the Pennsylvania Bankruptcy Court, finding that “review of any order of the district court in a transferred cause, made before transfer, is within the jurisdiction of the court of appeals of the circuit to which the cause has been transferred.” Judge McKenna also rejected Plaintiffs argument that the remand order divested the MDL Panel of jurisdiction based primarily on the fact that the Rigas’ had timely appealed that Order to the District Court in Pennsylvania, opining that “it seems unlikely, to say the least, that Congress intended that a transfer by the MDL Panel could eliminate Article III review of a bankruptcy judge’s decision.”

The Court ended the decision by denying Plaintiffs’ request to remand under either the abstention doctrine or equitable remand principles. In sum, Judge McKenna found that since the Rigas Defendants showed that the case against them is related to the Adelphia bankruptcy, it was therefore properly removed pursuant to § 1452(a).

So c’mon guys, what’s wrong? You won. It’s time to break out the bubbly and celebrate.

You can read the decisions, filed June 13, 2005 and May 2, 2005 at 2005 U.S. Dist. LEXIS 7909 and 2005 U.S. Dist. LEXIS 11685.

Nugget: “[A] transfer under section 1407 transfers the action lock, stock and barrel.”