Saturday, August 10, 2013

Litigating When You Don't Do Your Homework

Today's blog entry is courtesy of a recent report that a person in California sued New England Compounding Center/Pharmacy, alleging injuries from a contaminated product. That company is known across the USA as NECC.

Problems? Well, the first one is this - The lawyers for the Plaintiff in that case named a bankrupt company. Those same lawyers served the Complaint not on NECC's agent, but on a Plaintiff's law firm in Nashville that represents injured consumers in lawsuits against NECC.

Problem number two - The very same lawyers who served the wrong company then moved for Default.

Problem number three: NECC is bankrupt, and had there been even a basic search done, any person would have known that. In the Removal papers, there is this statement by counsel:

Even if Plaintiff had attempted to serve an appropriate agent for NECC, service of process could not be completed as a result of the bankruptcy stay, and therefore NECC believes that this Notice has been filed within the time period set forth in Federal Rules of Bankruptcy Procedure ("Bankruptcy Rules") 9027(a)(3). 

The State Court Action was purportedly commenced after the Bankruptcy  Proceeding, and no order for relief has been entered in the Bankruptcy Proceeding, nor has any order been entered terminating the automatic stay imposed under 11 U.S.C. § 362(a). 

The Plaintiffs' lawyers in that case are about to learn some potentially painful lessons. As noted in the Removal papers:  NECC reserves all rights including, but not limited to, any and all defenses available to it for violations of the automatic stay pursuant to 11 U.S.C. §362(a).

This is a cautionary tale about sloppiness and the failure to conduct due diligence on a national litigation before filing a case. Had counsel taken a few moments to review pleadings, they would have seen that there are multiple defendants in other cases, and those should have been named.

A related article is here:

Here are the removal papers:

Stay tuned.