Opinion
No. 03 MDL 1529 (LMM).
June 13, 2005
MEMORANDUM AND ORDER
1.
The Pagnotti Plaintiffs move for reconsideration of that portion of the Court's order of April 28, 2005 which denied their motion for mandatory abstention under 28 U.S.C. § 1334(c)(2). In re Adelphia Communications Corp. Sec. Deriv. Litig., Nos. 03 MDL 1529 04 Civ. 4967, 2005 WL 1026559, at *6 (S.D.N.Y. May 2, 2005) (the "April 28 Order").
"Pagnotti Plaintiffs," "Rigas Defendants," "Adelphia" and "Deloitte" have the same meanings as in the April 28 Order, familiarity with which is assumed.
The motion is premised on the decision of the Second Circuit inMt. McKinley Ins. Co. v. Corning, Inc., 399 F.3d 436 (2d Cir. 2005), resolving a division of opinion among the lower courts in this circuit as to whether or not 28 U.S.C. § 1334(c) (2) mandatory abstention applies to removed cases by holding that it does, 399 F.3d at 446-47, contrary to this Court's holding in the April 28 Order. The Rigas Defendants argue that the Pagnotti Plaintiffs' motion for mandatory abstention is untimely, and that, even if it is timely, the Pagnotti Plaintiffs have not shown that abstention should be ordered in this case.
Mt. McKinley was decided on February 16, 2005, after the parties' submissions but prior to the April 28 Order; neither side brought Mt. McKinley to the Court's attention before the April 28 Order.
2.
The Rigas Defendants correctly point out that the Pagnotti Plaintiffs did not argue for mandatory abstention in moving for remand in the United States Bankruptcy Court for the Western District of Pennsylvania. As far as this Court can determine, the Pagnotti Plaintiffs first requested mandatory abstention in the Response Brief of the Pagnotti Plaintiffs-Appellees, dated February 1, 2005, at 41-43. The Rigas Defendants urge that the Pagnotti Plaintiffs' motion for mandatory abstention is therefore untimely under 28 U.S.C. § 1447(c), requiring that "[a] motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a)." Id. If section 1447(c) applies here, the Pagnotti Plaintiffs' motion is not timely. However, the Court, in the absence of Second Circuit authority (which has not been brought to its attention) is persuaded by the reasoning of the Third Circuit in Foster v. Chesapeake Ins. Co., Ltd., 933 F.2d 1207, 1212-13 (3d Cir. 1991), that reasons for remand of a removed case other than defects in removal procedure may be raised after the 30 days have elapsed. See also Melahn v. Pennock Ins., Inc., 965 F.2d 1497, 1502-03 (8th Cir. 1992).
No doubt, if the facts so indicated, the Court might, in its discretion, deny the motion for mandatory abstention as "made at an unreasonably late stage of the federal litigation." Foster, 933 F.2d at 1213 n. 8 (citation omitted). The Court, as to this particular individual case, however, does not so find. The motion was made during the removal/remand phase of the litigation, and has not prolonged it to any meaningful extent.
The Court, then, concludes that the Pagnotti Plaintiffs' motion for mandatory abstention is not untimely.
3.
"A party seeking mandatory abstention must prove each of the following: (1) the motion to abstain was timely; (2) the action is based on a state law claim; (3) the action is `related to' but not `arising in' a bankruptcy case or `arising under' the Bankruptcy Code; (4) Section 1334 provides the sole basis for federal jurisdiction; (5) an action is commenced in state court; (6) that action can be `timely adjudicated' in state court." In re WorldCom, Inc. Sec. Litig., 293 B.R. 308, 331 (S.D.N.Y. 2003) (citations omitted). The Rigas Defendants urge that the first and the sixth requirements have not been met. (Def. Mem. at 4.) As set forth above, this Court concludes that the first has been met; the third through the fifth are very plainly met as well.
The Pagnotti Plaintiffs have not shown, however, that this action can be "timely adjudicated" in the Pennsylvania Court of Common Pleas from which it was removed within the meaning of 28 U.S.C. § 1334(c)(2). It must be kept in mind that the defendant in the case is Adelphia's former auditor and accountant, Deloitte, and that Deloitte has impleaded the Rigas Defendants. Deloitte and the four Rigases making up the Rigas Defendants are all very deeply involved in most of the cases constituting 03 MDL 1529, which in turn have major implications for the Adelphia bankruptcy proceedings, and motion practice and discovery in another case in another venue will tend to delay matters in both the Pennsylvania and Multidistrict litigation.
[Section] 1334(c)(2) is intended to require federal courts to defer to the state courts to handle lawsuits which, although "related to" a bankruptcy, can be promptly resolved in state court without interfering with the proceedings pending in the federal courts. That intention simply has no application to litigation of this sort, in which a case properly removed to federal court is intertwined both with complex bankruptcy proceedings and equally complex securities class actions pending in federal court. Far from promoting "timely adjudicat[ion]" of plaintiffs' claims, to remand here would simply complicate and slow down the resolution of those claims, as well as of the matters already pending before this Court.Beightol v. UBS Painewebber (In re Global Crossing, Ltd. Sec. Litig.), 311 B.R. 345, 349 (S.D.N.Y. 2003); see also WorldCom, 293 B.R. at 331. Comparisons between the case loads of different courts, and their respective average times-to-trial are too abstract to be useful in the present context. See Bondi v. Grant Thornton Int'l, 322 B.R. 44, 49 (S.D.N.Y. 2005).
The Pagnotti Plaintiffs have not shown that this action can be "timely adjudicated" in the state court within the meaning of 28 U.S.C. § 1334(c)(2); indeed the Rigas Defendants have shown the contrary.
4.
For the foregoing reasons, the Pagnotti. Plaintiffs' motion for reconsideration of the April 28 Order is granted and, upon reconsideration, the Court adheres to its original determination.
SO ORDERED.