• September 23, 2010

Twas not exactly the night before Christmas but pretty close, when a swarm of hedge funds set upon Georgia-based Compucredit in U.S. District Court for the District of Minnesota with claims, essentially, that the funds’ interests as bondholders were being subordinated to the interests of others whose interests should have been junior to their own.   Over the ensuing months, it is possible that no one enjoyed the Compucredit litigation more than Minnesota Litigator, monitoring the lawsuits’ (yes, plural) twists and turns, reversals of fortune, and several hard-fought skirmishes.

Now U.S. District Court Judge John R. Tunheim, in the thick of briefing on defendant hedge funds’ motion to dismiss and motion for sanctions, has called a time out and more or less queried, “Who are you? What are you doing here?” (to paraphrase Vice Admiral James Bond Stockdale in the 1992 Vice-Presidential Debates).  

That is to say, the U.S. District Court for the District of Minnesota, having already transferred “Hedge Funds vs. Compucredit” to Georgia still has the later-filed “Compucredit vs. Hedge Funds” before the Court.  Judge Tunheim has asked the lawyers to consider whether the Minnesota federal court still has jurisdiction or whether the “Colorado River abstention doctrine” or the law governing compulsory counterclaims result in the court’s not having subject matter jurisdiction.   The Judge has cancelled the upcoming 9/27 hearing on the pending motions and asked the parties to brief these issues by 10/6.

“Federal courts should avoid duplicitous litigation ongoing in other federal courts, particularly when potentially compulsory counterclaims are involved,” concluded toward the end of the Court’s four-page order.

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