McGirr v. Rehme, 891 F.3d 603

Background

Plaintiffs obtained a $42 million Kentucky judgment against attorney Stanley Chesley for his role in defrauding class-action clients in the Guard (fen‑phen) settlement; Chesley was later disbarred.
After disbarment Chesley executed a 2013 “wind‑up agreement” transferring his WSBC ownership to partner Thomas Rehme and funneled tens of millions through the firm, leaving little in his personal name.
Plaintiffs sued in federal court alleging fraudulent conveyances under Ohio law and sought a preliminary injunction freezing WSBC/related assets to prevent further dissipation.
While the federal injunction motion was pending, Rehme transferred WSBC assets into a trust and then to Eric Goering to start an Ohio ABC (assignment‑for‑benefit‑of‑creditors) probate action; the district court enjoined asset transfers.
The Ohio Supreme Court later held the ABC action was an abuse of process and it was dismissed; nevertheless the district court’s preliminary injunction freezing assets remained in place.
The Sixth Circuit reviewed whether the district court abused its discretion in entering/maintaining the preliminary injunction and affirmed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Likelihood of success on merits (Ohio UFTA fraudulent transfer)	Wind‑up and subsequent transfers were made with actual intent to hinder creditors; transfers exhibit UFTA badges of fraud (to insider, retained control, concealed, made after threats/suit, lack of equivalent consideration).	Transfers were legitimate wind‑up / tax / creditor‑satisfaction measures, not fraudulent; ABC action and trust transfers insulated assets lawfully.	Court: plaintiffs showed sufficient evidence (including Ohio Supreme Court Winkler finding) and badges of fraud to establish likelihood of success.
Irreparable harm from asset dissipation	Chesley has a pattern of concealing/dissipating assets; without injunction assets will be moved out of reach and plaintiffs’ judgment will be meaningless.	Freezing assets injures third parties and interferes with state probate processes; ABC action provided judicially‑supervised creditor remedy.	Court: irreparable harm likely absent injunction; risk of further concealment persists despite ABC dismissal.
Harm to third parties (WSBC creditors, IRS)	Temporary delay to legitimate WSBC creditors is outweighed by protecting hundreds of judgment creditors from fraud.	Injunction prejudices legitimate creditors who would be paid in ABC proceeding.	Court: any third‑party harm does not outweigh risk to judgment creditors; ABC action later dismissed, lessening that concern.
Public interest / conservation of judicial resources	Public interest favors preventing abuse of process, preserving assets for judgment creditors, and avoiding continued multi‑forum gamesmanship.	Injunction interferes with state proceedings and a firm’s winding up.	Court: public interest supports injunction given long pattern of evasive conduct and judicial‑resource concerns.

Key Cases Cited

Hunter v. Hamilton Cty. Bd. of Elections, 635 F.3d 219 (6th Cir. 2011) (standard of review for preliminary injunction—abuse of discretion).
Certified Restoration Dry Cleaning Network, LLC v. Tenke Corp., 511 F.3d 535 (6th Cir. 2007) (framework for reviewing preliminary injunctions).
S. Glazer's Distribs. of Ohio, LLC v. Great Lakes Brewing Co., 860 F.3d 844 (6th Cir. 2017) (four‑factor injunction test discussed).
Williamson v. Recovery Ltd. P'ship, 731 F.3d 608 (6th Cir. 2013) (affirming asset‑freezing injunction where defendant engaged in suspicious transfers).
United Food & Commercial Workers Union, Local 1099 v. SW. Ohio Reg'l Transit Auth., 163 F.3d 341 (6th Cir. 1998) (appellate affirmance may be upheld on any record‑supported ground).
United States v. Cunningham, 679 F.3d 355 (6th Cir. 2012) (background criminal appeal relating to scheme; cited for factual context).