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

Background

The plaintiffs are political subdivisions of New York. They sued McKinsey & Company, Inc. over consulting work that McKinsey performed for Purdue Pharma L.P., the manufacturer of OxyContin. McKinsey removed the action from New York state court to the U.S. District Court for the Eastern District of New York.

McKinsey separately asked the Judicial Panel on Multidistrict Litigation to transfer and consolidate related actions for coordinated pretrial proceedings in a new multidistrict litigation proceeding in the Southern District of New York. The panel heard argument on that transfer request on May 27, 2021.

Plaintiffs’ Remand Motion

The plaintiffs asked the court to remand, or return, the case to state court. They argued that removal was improper under the exception for government units seeking to enforce police or regulatory powers; that the court lacked subject-matter jurisdiction because McKinsey’s asserted bankruptcy-related “related to” jurisdiction did not exist; and that the court should abstain under 28 U.S.C. § 1334(c)(2).

The court had discretion to decide whether to resolve the remand motion before the transfer panel acted. It declined to resolve the motion at that time. The court found that the jurisdictional issues were not unique to this case and had arisen, or could arise, in other related actions. It therefore concluded that the issues could be addressed consistently in coordinated proceedings if the transfer panel created the proposed multidistrict litigation.

Stay Motion and Ruling

The court considered five factors: the plaintiffs’ interest in proceeding quickly and any delay-related prejudice; McKinsey’s interests and litigation burden; the courts’ interests; the interests of nonparties; and the public interest.

The court found that any prejudice to the plaintiffs would be minimal because the transfer panel had recently heard argument. It also found that the burden on McKinsey from duplicative motion practice and discovery outweighed any prejudice to the plaintiffs. The court noted that the related actions appeared likely to involve overlapping facts, documents, witnesses, and legal theories, and that coordinated proceedings would conserve judicial resources.

The court granted McKinsey’s motion to stay the proceedings. It also granted McKinsey’s letter motion to extend its time to answer the complaint. The court declined to rule on the plaintiffs’ remand motion pending the transfer panel’s resolution of McKinsey’s transfer request. The opinion does not state how the transfer panel ultimately ruled.