ClassicStar Lawsuits Transferred to Kentucky

Several lawsuits pending against ClassicStar have been consolidated into a single action to be heard in Kentucky federal court.

Several lawsuits pending against ClassicStar have been consolidated into a single action to be heard in Kentucky federal court, but the primary operating entity of the former broodmare-lease marketer will be temporarily exempt from litigation pending its bankruptcy action.

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.

But Senior Judge Joseph H. Hood, who has been assigned the role of presiding over the consolidated case, on Oct. 23 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.

“Regardless of any differences among the actions, all actions arise from the same factual milieu, raising common factual questions regarding the promotion and operation of the ClassicStar mare-lease program,” wrote chairman John G. Heyburn II, a Kentucky federal judge who chairs the seven-member panel.

Citing common reasons given for consolidation, Heyburn 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.

Ferguson and the Plummers, the father-son team that are credited with building the ClassicStar program, have laid blame on the company’s implosion on each other in separate claims and counter-claims.

A criminal investigation into the ClassicStar operation is also believed to be ongoing in the U.S. Attorney’s Office in Oregon, as is a separate investigation by the U.S. Securities and Exchange Commission.