transfer pursuant to 28 U.S.C. § 1404(a) on July 21, 1971.
Since the oral argument of this matter, counsel for all parties have continued a written argument by means of several letters to this Court, the most recent of which is dated November 21, 1971.
The plaintiffs assert derivative claims in behalf of the defendant corporations and class actions against the corporations and their respective officers and directors. The complaint is in five counts. Count I alleges derivative and class action claims arising out of the acquisition of Conductron by McDonnell Douglas and involving the preparation of an allegedly false and misleading proxy statement. Count II states a derivative claim on behalf of Conductron for breach of fiduciary duties. Count III alleges a class claim against the officers and directors of Conductron involving the preparation and mailing of misleading proxies and other documents. Count IV states derivative and class claims arising from facts and circumstances arising after the merger of Conductron and McDonnell Douglas in the setting of the exchange rate for Conductron shares in the statutory merger of Conductron and McDonnell. Count V asserts derivative and class claims for breach of fiduciary duties arising out of post merger conduct of the officers and directors of McDonnell and Conductron. The original complaint was filed on July 28, 1968. With the exception of the five defendants who have filed answers in the Eastern District of Pennsylvania, all other defendants on September 12, 1968 filed a motion to dismiss or in the alternative to transfer the action to Eastern District of Missouri. On May 28, 1971, the plaintiff filed an amended complaint which added Counts IV and V to the original claims.
The first requirement for a transfer under § 1404(a) is that the action can be transferred only to a district where the action might have been brought originally, that is, at the time the suit was originally commenced. Van Dusen v. Barrack, 376 U.S. 612, 84 S. Ct. 805, 11 L. Ed. 2d 945 (1964). In the instant case, jurisdiction and venue are based on § 27 of the Securities Exchange Act of 1934, 15 U.S.C. § 78aa. There is no question that both corporate defendants have their headquarters in the St. Louis area, at least seven of the individual defendants live in the St. Louis area,
most of the alleged illegal acts occurred in St. Louis, the allegedly illegal proxy statements were prepared in St. Louis, and this action could have been commenced in St. Louis under the broad special venue provisions of § 27 of the Securities Exchange Act of 1934 (15 U.S.C. § 78aa).
The second consideration under § 1404(a) is whether the proposed transfer would be for the convenience of the parties and witnesses and in the interest of justice. The plaintiff's choice of a proper forum is a paramount consideration and that choice is not to be lightly disturbed. Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3rd Cir. 1970). The burden is on the moving party to establish that "a balancing of proper interests weigh in favor of the transfer (citations omitted), and 'unless the balance of convenience of the parties is strongly in favor of defendant, the plaintiff's choice of forum should prevail.'" (Citations omitted.) Shutte v. Armco Steel Corp., 431 F.2d at 25. While both under § 1404(a) and under the predecessor doctrine of forum non conveniens, the plaintiff's choice of forum is to be given great weight. The weight accorded the plaintiff's choice is reduced where, as in the instant case, the cause of action states grounds for recovery of a class and derivative nature. Koster v. (American) Lumbermens Mutual Casualty Co., 330 U.S. 518, 67 S. Ct. 828, 91 L. Ed. 1067 (1947). In the Koster Case, the Supreme Court held that the weight to be accorded a plaintiff's choice of forum is reduced in a derivative action where "what forum is appropriate * * * may require consideration of its relation to the whole group of members and stockholders whom plaintiff volunteers to represent as well as to the nominal plaintiff himself." Koster v. (American) Lumbermens Mutual Casualty Co., supra, 330 U.S. at 526, 67 S. Ct. at 832. The Court went on to state that ". . . where there are hundreds of potential plaintiffs, all equally entitled voluntarily to invest themselves with the corporation's cause of action and all of whom could with equal show of right go into their many home courts, the claim of any one plaintiff that a forum is appropriate merely because it is his home forum is considerably weakened." Koster v. (American) Lumbermens Mutual Casualty Co., 330 U.S. at 524, 67 S. Ct. at 832 (1947). This rule that the plaintiff's choice of forum is accorded less weight has been extended to class actions. Schneider v. Sears, 265 F. Supp. 257, 266 (S.D.N.Y. 1967).
Thus, this court views the appropriate legal test as being that the party moving the transfer, here the defendant, must meet the strong burden imposed by the Shutte case, reduced to account for the fact that the showing need not be so great where, as here, the complaint states derivative and class claims.
In determining whether the defendant has met the requisite burden here, one must examine the factors which are relevant under § 1404(a), whether the transfer is "for the convenience of parties and witness" and whether the transfer is in the "interest of justice". The criteria for decision under § 1404(a) are set forth in United States v. General Motors Corp., 183 F. Supp. 858, 860 (S.D.N.Y. 1960) as the following:
"relative ease and access to sources of proof; availability of compulsory process for attendance of unwilling witnesses; cost of obtaining attendance of witnesses; possibility of a view, if appropriate; and all other practical problems that would make the trial of a case easy, expeditious and inexpensive . . . it is also appropriate to give some consideration to the relative state of trial calendar congestion."