Chaos, Unfairness and Illegality in the US Stem Cell Case

Chaos, Unfairness and Illegality in the US Stem Cell Case

I have been following and writing about the US Stem case (and the FDA’s parallel California case) since the company received its warning letter and throughout the litigation. Last month, the judge issued the final injunction order. Here it is:

The order, among other things, mandates the destruction of all SVF product in the defendants’ possession, which destruction is to be supervised by the FDA. (page 9, paragraph 10)

That caught me by surprise. I might have missed something in the pleadings and motions in the case, but I did not know or appreciate that the company was storing or banking SVF for patients, or possibly even non patients who just wanted to bank their stem cells. I wonder whether the Judge knew that.

Caveat: I haven’t seen the US Stem Cells SVF banking agreement, but I have worked on some cord banking agreements. There is one thing I am fairly confident about, and that it that the product is owned by the patient/consumer and not by the banking facility, in this case, US Stem Cell or some affiliate.

Legally, the relationship between the US Stem Cell and the SVF donor is a bailment, not unlike, (but much more complicated obviously) when you check your coat with the coat check or when you park your car in a commercial garage. The difference of course is that the entity holding the property helped create it. But that does not change the ownership issue.

Federal civil procedure defines parties as either necessary or indispensable. My impression, (rather than my considered legal analysis) is that the owner of the property would be an indispensable party, unless the bailment agreement specifically conferred on the bailee (the party holding the property in trust for the owner/bailor) granted it the exclusive right to dispose of or defend the property or something like that, and I would doubt there is such a provision in the banking agreement.

Normally, failure to join an indispensable party would be brought up by the defendant in a federal case, but I don’t think it was. I would argue that the government lawyers had an obligation to bring it up, since it the government is not just an ordinary litigant. I think the issue could also be raised by the court itself, if the court becomes aware of the issue. (Just my impression based on past work on related issues, not a considered legal opinion). I seem to recall that failure to join an indispensable party is a fatal defect to a case, whenever it is raised, even on appeal.

After the injunction order was issued, US Stem Cells notified all of its banking customers of the injunction order requiring the destruction of their property and advised them to either write to the court or hire an attorney (alittle late in my book). I’ve heard that there is a Florida attorney who is trying to find enough customers/clients to collect an adequate retainer.

The case docket lists 200 or so letters from customers who have banked their stem cells/SVF.

Here they are



I think the stem cell institutional mafia should read some of these letters, and maybe it will restore some needed humility and compassion which is often lost when institutionalists concern themselves with the Public rather than actual people.

These letters from the SVF owners show the outrageous result of the Court’s order. I have to wonder whether the judge knew that the order would cause the destruction of property of people who were not parties to the lawsuit. These people’s property is being taken away from them without due process or just compensation. Last time I checked, that is illegal under the Fifth Amendment,and actionable under 42 U.S.C 1983, and could result in money damages as well as injunctive relief against the government. Who would you sue? The government and its lawyers for sure. Maybe the defendants also. But the Government is the party whose attention you need to get.

What would be the goal of the lawsuit? That’s pretty simple: Ask the judge to modify the order to allow the SVF owners to remove their property from US Stem Cell, and if necessary, have it shipped someplace else. There might be a procedural wrinkle or two to deal with first, but that’s where the case should end up.

Here’s hoping . . . .

Rick Jaffe,

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