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In re Montreal Maine & Atlantic Railway, Ltd.

United States District Court, D. Maine

February 22, 2016

IN RE: MONTREAL MAINE & ATLANTIC RAILWAY, LTD., DEBTOR.

ORDER ON MOTIONS TO TRANSFER

JON D. LEVY U.S. DISTRICT JUDGE

In July of 2013, a freight train operated by Montreal Maine & Atlantic Railway, Ltd. (“MMA”), including its 72 carloads of crude oil, derailed in the town of Lac-Mégantic, Québec, leading to a series of explosions that destroyed part of the downtown area. 1:15-mc-00356-JDL, ECF No. 1 at 2-3. Forty-seven people died. Id. at 3. The next month, MMA filed a chapter 11 bankruptcy proceeding in the District of Maine, and, simultaneously, sought similar protection in Canada. Id. The derailment also spawned civil proceedings in both Illinois and Texas state courts, which were removed to the Northern District of Illinois and the Northern District of Texas, respectively. Id. at 3-5. The question I must decide is whether the Illinois and Texas cases should be transferred for trial to the District of Maine pursuant to the authority granted by 28 U.S.C.A. § 157(b)(5) (2015). For the reasons explained below, I conclude that the cases should be transferred.

I. BACKGROUND

There are two motions before the court. First, in 1:15-mc-00355-JDL, 35 individual plaintiffs (the “Illinois Plaintiffs”) move pursuant to § 157(b)(5) to transfer to this Court the personal injury tort and wrongful death cases brought against Canadian Pacific Railway Co. (“Canadian Pacific”) currently pending in the United States District Court for the Northern District of Illinois.[1] 1:15-mc-00355-JDL, ECF No. 1 at 1-2. The 35 actions (hereinafter “the Illinois cases”) were originally filed in the Circuit Court of Cook County, Illinois, in June 2015, and were then removed to the U.S. District Court for the Northern District of Illinois by Canadian Pacific based upon federal “related to” jurisdiction under 28 U.S.C.A. § 1334(b) (2015). Id. at 6-7. Canadian Pacific has moved to dismiss the Illinois cases for lack of personal jurisdiction, insufficient service of process, and forum non conveniens. 1:15-mc-00355-JDL, ECF No. 5 at 5. The motions have not yet been briefed or heard. Id. at 6.

Second, in 1:15-mc-00356-JDL, Robert J. Keach, the chapter 11 bankruptcy trustee for the debtor MMA (the “Trustee”), moves pursuant to § 157(b)(5) to transfer to this Court two putative class actions currently pending in the United States District Court for the Northern District of Texas. 1:15-mc-00356-JDL, ECF No. 1 at 1. The two class actions (hereinafter “the Texas cases”) both pertain to the derailment in Lac-Mégantic, Québec, and were originally filed in the Texas District Court of Dallas County, Texas. Id. at 3-4. They were removed to the U.S. District Court for the Northern District of Texas by Canadian Pacific based upon diversity jurisdiction pursuant to 28 U.S.C.A. §§ 1332, 1441, 1446, and 1453. Id. Both involve claims for personal injury torts and wrongful death, and include a damages request for property damage. Id. at 3. Canadian Pacific has moved to dismiss the Texas cases on the basis of lack of personal jurisdiction, insufficiency of service of process, and forum non conveniens. 1:15-mc-00356-JDL, ECF No. 9 at 4. The motions have been briefed, but have not been heard or decided. Id. at 4-5.

The Illinois plaintiffs, the Trustee, and Canadian Pacific agree that this Court has subject-matter jurisdiction over the Illinois and Texas claims because they are “related to” the MMA bankruptcy which is subject to title 11 of the United States Code. See 28 U.S.C.A. § 1334(b) (“[T]he district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11.”).

II. LEGAL ANALYSIS

The transfer motions and Canadian Pacific’s opposition to them center on whether this Court may and should transfer the Illinois and Texas cases to the District of Maine under the authority of § 157(b)(5), which states:

The district court shall order that personal injury tort and wrongful death claims shall be tried in the district court in which the bankruptcy case is pending, or in the district court in the district in which the claim arose, as determined by the district court in which the bankruptcy case is pending.

28 U.S.C.A. § 157(b)(5).

The statute’s purpose is to “centralize the administration of the [bankruptcy] estate and to eliminate the ‘multiplicity of forums for the adjudication of parts of a bankruptcy case.’” A.H. Robins, Co., Inc. v. Piccinin, 788 F.2d 994, 1011 (4th Cir. 1986) (quoting House Conference Report on H.R. 5174, 130 Cong. Rec. H7492 (1984), as reprinted in 1984 U.S.C.C.A.N. 576, 579 (statement of Rep. Kastenmeier, Member, H. Comm. on the Judiciary)). This provision “empowers a court other than that in which the litigation is pending to decide where the trial is to take place.” 1-3 Collier on Bankruptcy P 3.06[3] (16th ed. 2010). “Courts confronted with motions to set venue under section 157(b)(5) have weighed the impact that claim centralization might have on the bankruptcy estate against the convenience to the parties and witnesses and the availability of evidence.” In re New England Compounding Pharm., Inc. Prods. Liab. Litig., 1:13-md-02419-RWZ, at 17 (D. Mass. Oct. 7, 2015) (citing A.H. Robins, 788 F.2d at 1014 (approving the district court’s order provisionally consolidating personal injury claims against a bankrupt manufacturer in the bankruptcy district)); In re Dow Corning Corp., 86 F.3d 482, 497 (6th Cir. 1996) (agreeing with the Fourth Circuit in A.H. Robins that § 157(b)(5) “should be read to allow a district court to fix venue for cases pending against nondebtor defendants which are ‘related to’ a debtor’s bankruptcy proceedings pursuant to section 1334(b)”).

To address whether transfer is appropriate in these cases, I address the effect that the centralization of the Illinois and Texas proceedings in this District will have on (A) the bankruptcy estate; and (B) the convenience to the parties and witnesses, and the availability of evidence; as well as (C) additional arguments raised by Canadian Pacific in opposition.

A. The Effect of Claim Centralization on the Bankruptcy Estate

The Order of the Bankruptcy Court confirming the Trustee’s plan of liquidation contains a “proportionate judgment reduction” provision under which Canadian Pacific’s liability for the Lac-Mégantic disaster, if any, may be reduced by the comparative fault of MMA, which operated the train. 1:15-mc-00356-JDL, ECF No. 1 at 7; ECF No. 15 at 5. It necessarily follows that although MMA is not a named party in the Illinois and Texas cases, the bankruptcy estate will be involved in the litigation of those cases. Accordingly, the estate will be diminished by the substantial costs that litigation of numerous cases in two forums-Illinois and Texas-would likely entail. Canadian Pacific has not disputed that the administration of the bankruptcy ...


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