The Judicial Panel on Multidistrict Litigation, a federal arm of the U.S. District Court system that has the right to approve or deny requested consolidation on similar-styled multiple lawsuits, ordered the transfer Oct. 19 to the Eastern District of Kentucky.
On Oct. 23, however, Senior Judge Joseph H. Hood, who has been assigned the role of presiding over the consolidated case, ordered a stay on any litigation against ClassicStar LLC, pending the outcome of a bankruptcy protection action filed by the company Sept. 14.
Seven federal suits in California, Florida Kentucky, Pennsylvania, and Utah were consolidated by the MDL panel, which heard oral arguments from all parties Sept. 27 in New York. Additional suits filed after the original MDL requests may be added as “tag-along” cases, such as two complaints recently opened in Kentucky and Utah, respectively.
Despite arguments against consolidation by plaintiffs and even some defendants, the transfer order said the similarities of the claims took precedence. Citing common reasons given for consolidation, John G. Heyburn II, a Kentucky federal judge who chairs the seven-member panel, wrote the transfer “will eliminate duplicative discovery, prevent inconsistent rulings on pretrial motions, and conserve the resources of the parties, their counsel and the judiciary.”
ClassicStar has been accused in various court filings of putting together fraudulent broodmare-lease deals that bilked multiple clients out of upwards to $600 million. The bankruptcy petition filed by ClassicStar lists nearly 500 creditors, many of them former lease clients, with claims approaching $70 million. Hood’s stay of action against ClassicStar LLC does not prevent litigation going forward against other defendants, which include the company’s managing partner, Tony Ferguson, and former executives S. David Plummer and Spencer Plummer, among others.