State of North Carolina v. The McGraw-Hill Companies, Inc, et al

Filing 26

ORDER denying 8 Motion to Stay Pending Consideration by the Judicial Panel on Multidistrict Litigation - Signed by District Judge Louise Wood Flanagan on 04/25/2013. (Baker, C.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:13-CV-00163-FL

STATE OF NORTH CAROLINA, ex
rei. ROY COOPER, Attorney General,
Plaintiff,

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THE MCGRAW-HILL COMPANIES,
INC., and STANDARD & POOR'S
FINANCIAL SERVICES LLC,
Defendants.

ORDER

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On February 5, 2013, plaintiff filed this action in Wake County Superior Court contending
defendants violated the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat.

§ 75-1.1. On March 6, 2013, defendants removed this action to this court. On March 8, 2013,
defendants filed a motion for consolidated proceedings for this and fifteen ( 15) other similar actions
to be heard before the United States Judicial Panel on Multidistrict Litigation ("JPML"), for a
determination as to whether all the cases could be consolidated pursuant to 28 U.S.C. § 1407, and
transferred to a single federal district court. This matter comes now before the court on defendants'
motion to stay the proceedings (DE 8), filed in the case March 11, 2013, pending consideration by
the JPML. This motion is ripe for adjudication. Plaintiffs motion to remand (DE 18), filed April
1, 2013, also is pending.

COURT'S DISCUSSION
This case, brought on behalf of the State ofNorth Carolina, is one of many variously filed
by a nationwide group of Attorneys General of various states and the District of Columbia, against
defendants, for alleged violations of respective state consumer protection and unfair trade practices
laws. The Attorneys General complain that defendant Standard & Poor's Financial Services, LLC
("the S&P"), yielded to pressure from issuers of securities to assign higher credit rating than it
otherwise would have, thereby rendering "false" various statements the S&P has made over the years
about the independence of its credit ratings process. The notice of removal notes that the ratings
process and the potential for conflicts of interest with respect to ratings are subject to extensive
federal regulation and that the ratings themselves are also protected speech within the First
Amendment. Defendants assert that plaintiffs action is designed to try to avoid the federal statutory
and constitutional law issues.
Defendants' motion requests that the court enter a stay of the proceedings while the JPML
makes a determination. A district court has broad discretionary authority to issue stays as a
mechanism for controlling its docket. See Clinton v. Jones, 520 U.S. 681,706 (1996). The court's
discretion is not, however, without bounds. See id. at 707 (explaining that the district court should
not defer trial without taking into account "the respondent's interest in bringing the case to trial").
The proponent of a stay must establish that stay is needed. Id. Defendants in this cased base
their motion to stay on the fact that the JPML will have a hearing and decide whether similar actions
pending in federal court can be consolidated. The court, in its discretion, does not find sufficient
need here for the sought-after stay, especially when considered against the threshold question of
subject matter jurisdiction raised by plaintiff in its motion to remand. The court's determination in

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this instance is not without precedence. See, e.g .. J.C. v. Pfizer. Inc., No. 3:12-cv-04103, 2012 U.S.
Dist. LEXIS 136791, at *11 (S.D. W.Va. Sept. 25, 2012) ("Although transferee courts can and do
consider remand motions in cases transferred to MDL, such a delay in resolution may also frustrate
the state court's ability to process and conclude claims in its courts. In this case, the Court denies the
motion to stay and will address the motions to remand."); South Carolina v. Boehringer Ingelheim
Roxane. Inc., No. 3:07-cv-00665, 2007 U.S. Dist. LEXIS 30983, at *6-7 (D. S.C. April26, 2007)
(denying motion to stay a resolution of the motion to remand before transferring to the JPML);
Walker v. DePuy Orthopaedics. Inc., No. 3:11-cv-02291, 2011 U.S. Dist. LEXIS 119182, at *4-7
(D. S.C. Oct. 12, 2011) (denying defendant's motion to stay pending transfer to JPML and granting
plaintiffs motion to remand). When ripe, the court will take up and decide plaintiffs motion to
remand the case to the state court.
CONCLUSION
For the foregoing reasons, defendants' motion to stay is DENIED.
SO ORDERED, this the 25th day of April, 2013.

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