Scranton judge transfers $600M legal malpractice case against Montgomery McCracken

By Charmaine Little | Feb 5, 2019


SCRANTON - A massive legal malpractice lawsuit alleging class action plaintiffs were shorted by more than $600 million is headed out of Pennsylvania.

Judge Robert D. Mariani of the U.S. District Court for the Middle District of Pennsylvania issued an order to transfer the lawsuit against Montgomery, McCracken Walker & Rhoads to the U.S. District for the Southern District of New York on Jan. 7. His order adopted recommendations made by the magistrate judge working the case.

Stanley Waleski is suing Montgomery McCracken - which has offices in Philadelphia, as well as New Jersey, New York and Delaware - alleging malpractice after the law firm represented the plaintiffs in the bankruptcy proceeding of Kerr-McGee.

Powell Law Group had previously hired Montgomery McCracken for consultation when it filed a lawsuit versus Kerr-McGee on behalf of 4,400 plaintiffs – litigation later ended through the 2009 bankruptcy proceeding.

The 4,400 plaintiffs in question blamed their various medical maladies, ranging from cancer to cardiovascular and respiratory disease, on carcinogenic chemicals emitted from Kerr-McGee’s wood treatment plant in Avoca for 40 years, from 1956 to 1996.

It was later determined the plaintiffs were entitled to $949 million in damages, but in the end, only went on to receive $329.7 million.

While both sides could agree that the legal malpractice case didn't belong in the Middle District of Pennsylvania, they couldn’t agree where it should go from there. The plaintiffs said it should go back to the Court of Common Pleas of Luzerne County. 

But the court backed the defendants' notion that it should go to the federal court in the Southern District of New York.

Mariani said it was helpful that the federal court is the same one that was overseeing the bankruptcy case. 

“In such instances, courts presume that the bankruptcy court is generally the appropriate venue if the bankruptcy court expressly retained jurisdiction over the dispute,” the court said, noting that holding the lawsuit in the same court as the bankruptcy case helps avoid inconsistency or confusion. 

Shortly after the defendants requested the case be removed to the federal court, stating it had jurisdiction over the bankruptcy case so it was knowledgeable about the ongoing litigation, lawyers for the firm also accused Waleski of trying to relitigate the same matter.

"Most of the other remaining factors we are called upon to consider are generally neutral, and do not supply sufficient basis to override the presumption that this case should be transferred. The location of the parties and witnesses would not make the transfer of these proceedings to the Southern District of New York a particular hardship," Magistrate Judge Martin Carlson wrote in December.

"Moreover, and Waleski’s counsel is sophisticated and would appear to have the resources to litigate this matter in either venue. Further, nothing in the complaint suggests that potential witnesses would be unavailable if this case were transferred at most two hours from where it is currently venued, and Waleski has not persuasively argued that either of these factors militates in favor of this Court retaining jurisdiction."


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