Article/Intelligence
NJ Bankruptcy Court Says SDTX Should Decide Venue of Red River Talc Case; ‘Good Luck in Texas’
At a status conference this morning, New Jersey Bankruptcy Judge Michael Kaplan told parties in the Red River Talc case that the Southern District of Texas Bankruptcy Court should decide the proper venue of the case. Although Red River – the latest bankruptcy vehicle created by parent Johnson & Johnson with the aim of resolving the company’s talc liabilities – filed for chapter 11 in Texas, the U.S. Trustee and the Coalition of Counsel for Justice for Talc Claimants argue the case should be transferred to New Jersey.
Over the weekend, on the heels of the Red River filing, the UST filed a motion with the New Jersey bankruptcy court asking Judge Kaplan to take the case, as well as a related motion to stay the Texas bankruptcy proceedings. The UST argued Judge Kaplan should take the case because he was the judge in LTL Management I and II, J&J’s previous talc “Texas two-step” bankruptcies, and the second LTL case still remains “pending,” according to the UST. Similarly, the Coalition filed a motion to transfer venue to New Jersey – but it did so in the Red River case.
Today, Judge Kaplan said he would deny both of the UST’s motions without prejudice because there was “questionable authority” for him to determine the venue of the case. He said it was a “dilemma” that two different jurisdictions were facing different transfer motions that would “rely on the application of the same law, the same facts, the same standard in two different jurisdictions.”
“In candor, I think it would be arrogant for this court to assume that it can decide the motions differently or better or more expeditiously than Judge Lopez, who’s well equipped to hear the matters pending before him,” Judge Kaplan remarked.
Judge Kaplan explained that the UST argues Bankruptcy Rule 1014(b) gives him the authority to decide venue as the judge in the “first-filed” case. But there are questions about whether the second LTL Management case is still “pending” because it was dismissed, Judge Kaplan continued, and it would be better for Judge Lopez in Texas to decide the venue issue.
Judge Kaplan said “probably the most convincing factor” for “deferring to Judge Lopez” is the seeming “consensus” that the debtor, the ad hoc group that supports Red River’s prepackaged plan and the Coalition are “prepared and eager to litigate the venue issue in front of Judge Lopez.”
“Good luck in Texas,” Judge Kaplan told the parties.
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