The Scripps Research Institute v. Cempra Pharmaceuticals, Inc.
- Proceeding
- district
- Area
- civil
- Panel
- Allison H. Goddard (author)
Analysis
Defendants filed a suggestion of bankruptcy, triggering an automatic stay under 11 U.S.C. § 362(a) for four of the five named defendants. The court vacated the scheduled Early Neutral Evaluation Conference and Case Management Conference, noting it would reset them if the sole non-debtor defendant filed an answer.
| What the court decided | The model |
|---|---|
Vacated the Early Neutral Evaluation Conference and Case Management Conference“Thus, in light of the automatic stay, the Early Neutral Evaluation Conference (“ENE”) and Case Management Conference (“CMC”) currently scheduled for February 12, 2020 are hereby VACATED.” | agree with court The decision follows from the automatic stay provision of the Bankruptcy Code, which stays judicial proceedings against the debtor. Since the majority of defendants are debtors, proceeding with a conference involving them would violate the stay. |
The order itself: sound — The order correctly identifies the legal effect of the bankruptcy filings (automatic stay) and applies it to the scheduled conferences. It appropriately distinguishes the status of the non-debtor defendant and cites relevant authority to support the distinction, while reserving the right to reset the conferences if the non-debtor proceeds. The reasoning is complete and legally sound for a procedural order.
Opinion
1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 THE SCRIPPS RESEARCH Case No.: 3:19-cv-1866-W-AHG INSTITUTE, 12 ORDER VACATING EARLY Plaintiff, NEUTRAL EVALUATION 13 CONFERENCE AND CASE v. 14 MANAGEMENT CONFERENCE CEMPRA PHARMACEUTICALS, INC., 15 et al., 16 Defendants. 17 18 On December 27, 2019, Defendants Cempra Pharmaceuticals, Inc., Melinta 19 Therapeutics, Inc.,1 and Melinta Subsidiary Corp. filed a Suggestion of Bankruptcy on 20 the record, explaining that each of these Debtor entities has filed for bankruptcy in the 21 United States Bankruptcy Court for the District of Delaware. ECF No. 14. The 22 bankruptcy filings operate as an automatic stay of all judicial actions against those 23 Defendants pursuant to 11 U.S.C. § 362(a). Thus, in light of the automatic stay, the Early 24 Neutral Evaluation Conference (“ENE”) and Case Management Conference (“CMC”) 25 26 27 1 Defendant Melinta Therapeutics, Inc. was formerly known as Cempra, Inc., which is 28 1 currently scheduled for February 12, 2020 are hereby VACATED. 2 Notably, it appears the bankruptcy proceedings involve only four of the five named 3 || Defendants in this action. However, the sole non-debtor Defendant Castle Acquisition 4 ||Corp. (“Castle”) has not yet filed any responsive pleading in this case, and there is no 5 || proof of service on the record to indicate whether a responsive pleading is yet due from 6 || Castle. If non-debtor Defendant Castle files an Answer, the Court will reset the ENE and 7 |{CMC at that time so that Plaintiff and Castle may attempt settlement negotiations and, if 8 || negotiations fail, begin to engage in discovery. See, e.g., Dish Network, LLC. v. Jadoo 9 || TV, Inc., No. CV 18-9768-FMO (KSX), 2019 WL 4544423, at *4 (C.D. Cal. Aug. 14, 10 2019) (“It is well established that an automatic bankruptcy stay does not extend to non- 11 debtors”) (citing In re Chugach Forest Prods., Inc., 23 F.3d 241, 246 (9th Cir. 1994)); In 12 || re Miller, 262 B.R. 499, 505 (Bankr. App. P. 9th Cir. 2001) (“[S]ection 362(a) does not 13 || preclude generation of information regarding claims by or against a non-debtor party, 14 where that information could eventually adversely affect the Debtor[s].”’). 15 IT IS SO ORDERED. 16 17 ||Dated: December 30, 2019 ig _ Sion. Kyvolarde Honorable Allison H. Goddard 19 United States Magistrate Judge 20 21 22 23 24 25 26 27 28