The County of Genesee v. McKinsey & Company, Inc.

CLERK

UNITED STATES DISTRICT COURT

5/28/2021 5:10 pm

EASTERN DISTRICT OF NEW YORK

-----------------------------------X U.S. DISTRICT COURT

THE COUNTY OF GENESEE et al., EASTERN DISTRICT OF NEW YORK

LONG ISLAND OFFICE

Plaintiffs,

MEMORANDUM & ORDER

-against- 21-CV-1039 (JS)(SIL)

MCKINSEY & COMPANY, INC.,

Defendant.

-----------------------------------X

APPEARANCES

For Plaintiffs: Salvatore C. Badala, Esq.

Joseph L. Ciaccio, Esq.

ShaynA E. Sacks, Esq.

Napoli Shkolnik PLLC

400 Broadhollow Road, Suite 305

Melville, New York 11747

Matthew Brown, Esq.

Brown Pelican PLLC

7007 Shook Avenue

Dallas, Texas 75214

For Defendant: James Lawrence Bernard, Esq.

David M. Cheifetz, Esq.

Stroock & Stroock & Lavan LLP

180 Maiden Lane

New York, New York 10038

SEYBERT, District Judge:

Before the Court is McKinsey & Company, Inc.’s

(“Defendant”) motion for a stay of proceedings pending the

resolution of its motion to transfer for consolidated pre-trial

proceedings currently before the Judicial Panel on Multidistrict

Litigation (“JPML”) (the “Stay Motion”). (Stay Mot., ECF No. 13;

Def. Br., ECF No. 14; Reply, ECF No. 22.) Plaintiffs1 oppose the

Stay Motion. (Pls. Opp., ECF No. 18.) For the following reasons,

Defendant’s Stay Motion is GRANTED.

This action is one of dozens filed against Defendant

regarding consulting work Defendant performed for Purdue Pharma

L.P. (“Purdue”), the manufacturer of OxyContin. On February 1,

2021, the Plaintiffs initiated this action in the Supreme Court of

the State of New York, Genesee County (Index No. E68903). On

February 25, 2021, Defendant timely removed this action to this

Court. Defendant has filed a motion requesting that the JPML

consolidate for pre-trial purposes all related actions against

Defendant, including this one, in a new multi-district litigation

(“MDL”) in the Southern District of New York; a panel heard

argument for the motion on May 27, 2021. (See Mot. Transfer, ECF

No. 10-1.) On March 24, 2021, Plaintiffs filed a motion to remand

to state court (the “Remand Motion”) (Mot. Remand, ECF No. 17),

which Defendant opposes (Opp., ECF No. 23).

1 Plaintiffs include the following political subdivisions of the

State of New York: the County of Genesee; the Town of Auburn; the

City of Buffalo; the County of Chautauqua; the County of Chemung;

the County of Chenango; the County of Clinton; the County of

Cortland; the County of Hamilton; the City of Ithaca; the City of

Kingston; the County of Livingston; the County of Madison; the

City of Mount Vernon; the County of Niagara; the County of Orleans;

the City of Poughkeepsie; the Town of Poughkeepsie; the County of

Rensselaer; the City of Saratoga Springs; and the County of

Steuben.

I. Consideration of Plaintiffs’ Pending Remand Motion

In their Remand Motion, Plaintiffs raise several

arguments as to why removal of the action was improper and remand

appropriate. First, Plaintiffs contend that removal was improper

under 28 U.S.C. § 1452(a), because they are “government unit[s]”

who intend in this action to enforce their police or regulatory

powers, placing them within the “police or regulatory power”

exception to removal under section 1452(a). (Mot. Remand at 5-

7.) Second, Plaintiffs contend this Court lacks subject matter

jurisdiction, because Defendant’s sole ground for jurisdiction --

that the action is “related to” Purdue’s Chapter 11 bankruptcy --

is without merit. (Id. at 8-18.) Last, Plaintiffs argue that

this Court should abstain from hearing the removed action under 28

U.S.C. § 1334(c)(2). (Id. at 19-25.)

“A court presented with both a remand motion and a motion

to stay a case pending the JPML’s resolution of a transfer motion

has discretion as to whether to resolve the remand motion.”

Ritchie Cap. Mgmt., LLC v. Gen. Elec. Cap. Corp., 87 F. Supp. 3d

463, 467 (S.D.N.Y. 2015) (citing Med. Soc’y of N.Y. v. Conn. Gen.

Corp., 187 F. Supp. 2d 89, 91-92 (S.D.N.Y. 2001)). As the Second

Circuit has clarified, where the remand motion is based on

jurisdictional issues common to other cases that are subject to

the pending transfer motion, the argument for deferring resolution

of that issue to the eventual transferee court is strong. Id. at

468 (citing Ivy v. Diamond Shamrock Chems. Co., 901 F.2d 7, 9 (2d

Cir. 1990) (holding consistency and judicial economy are served by

transferring and consolidating cases with pending remand motions

where “[t]he jurisdictional issue in question is easily capable of

arising in hundreds or even thousands of cases in district courts

throughout the nation”)); see also City of Amsterdam v. Purdue

Pharma L.P., No. 19-CV-0896, 2019 WL 5102564, at *3 (N.D.N.Y. Oct.

11, 2019).

Having reviewed Plaintiffs’ Remand Motion, as well as

motions to remand filed by plaintiffs in other cases subject to

the pending transfer motion, the Court declines to exercise its

jurisdiction to resolve the Remand Motion. The jurisdictional

issues Plaintiffs raise “are not unique to this case” and are

“easily capable of arising in,” and in fact have already arisen

in, other actions subject to the pending transfer order. Krieger

v. Merck & Co., Inc., 2005 WL 2921640, No. 05-CV-6338, at *2

(W.D.N.Y. Nov. 4, 2005); Ivy, 901 F.2d at 9. Many, if not all, of

the other actions subject to potential consolidation involve

plaintiffs that are political subdivisions, so Plaintiffs’

argument here that the “police or regulatory power” exception to

removal applies can be addressed on a consolidated basis in the

MDL, to the extent one is created. (See Schedule of Actions, Not.

Mot. Filing with JPML, Ex. C., ECF No. 10-3 (listing related

actions filed against Defendant as of March 8, 2021, including

many filed by political subdivisions).) In fact, Plaintiffs

remaining arguments in support of remand -- that “related to”

jurisdiction is absent and abstention is warranted -- have been

raised by plaintiffs in other actions subject to the pending

transfer order. See, e.g., St. Clair County v. McKinsey & Co.,

No. 21-CV-0251, Pls. Remand Br., ECF No. 21, at 10-30 (S.D. Ill.

Mar. 19, 2021); Citizen Potawatomie Nation v. McKinsey & Co., No.

21-CV-0170, Pls. Remand Br., ECF No. 13, at 9-23 (W.D. Okla. Mar.

24, 2021). Accordingly, the Court finds the logic of Ivy applies

and declines to resolve Plaintiffs’ Remand Motion at this juncture.

II. Defendant’s Stay Motion

Turning to Defendant’s Stay Motion, the Court finds,

having considered the following five factors used by courts in

this Circuit, that a stay is warranted:

(1) the private interests of the plaintiffs in

proceeding expeditiously with the civil

litigation as balanced against the prejudice to

the plaintiffs if delayed; (2) the private

interests of and burden on the defendants;

(3) the interests of the courts; (4) the

interests of persons not parties to the civil

litigation; and (5) the public interest.

Ritchie, 87 F. Supp. 3d at 471 (quoting Royal Park Invs. SA/NV v.

Bank of Am. Corp., 941 F. Supp. 2d 367, 370 (S.D.N.Y. 2013)).

Indeed, “[c]ourts within this Circuit frequently stay a case where

there is a motion to transfer to a multi district litigation court

pending before that court.” City of Amsterdam, 2019 WL 5102564,

at *2.

First, the Court finds that any prejudice to Plaintiffs

is minimal, because the JPML recently heard oral argument on

Defendant’s motion to transfer on May 27. See Ritchie, 87 F. Supp.

3d at 471 (concluding a short stay of sixteen days until the JPML

would hear argument on the defendant’s motion to transfer would

“not prejudice plaintiffs”) (collecting cases); see also City of

Amsterdam, 2019 WL 5102564, at *3. In any event, the hardship to

Defendant of engaging in duplicative motion practice and discovery

proceedings outweighs any prejudice to Plaintiffs. See Krieger,

2005 WL 2921640, at *2; see also Ritchie, 87 F. Supp. 3d at 471.

The actions against Defendant “appear likely to implicate

overlapping core facts, documents, witnesses, and legal theories,

and may involve extensive discovery,” further supporting a stay

until the JPML has ruled on whether consolidation is merited.

Ritchie, 87 F. Supp. 3d at 471. Last, as courts in this Circuit

have recognized, a stay furthers the court’s interest in conserving

judicial resources, one of the fundamental goals of multidistrict

litigation practice. Id. (citing Royal Park, 941 F. Supp. 2d at

373); see also Krieger, 2005 WL 2921640, at *2.

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CONCLUSION

Accordingly, for the reasons set forth above, IT IS

HEREBY ORDERED:

Defendant’s Stay Motion (ECF No. 13) is GRANTED;

In conjunction with granting the Stay Motion,

Defendant’s letter motion to extend its time to answer the

complaint (ECF No. 16) is also GRANTED; and

The Court declines to rule on Plaintiffs’ Remand Motion

(ECF No. 17) pending the JPML’s resolution of Defendant’s motion

to transfer.

SO ORDERED.

/s/ JOANNA SEYBERT

Joanna Seybert, U.S.D.J.

Dated: May _28_, 2021

Central Islip, New York