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Wood v. Zapata Corp.

decided: June 29, 1973.

A. JARVIS WOOD, ON BEHALF OF HIMSELF AND ALL SIMILARLY SITUATED SHAREHOLDERS OF THE GRANBY MINING COMPANY LIMITED, AND ON BEHALF OF THE GRANBY MINING COMPANY LIMITED, 1111 WEST GEORGIA STREET, VANCOUVER, BRITISH COLUMBIA, CANADA, ON BEHALF OF ITSELF AND ALL SIMILARLY SITUATED SHAREHOLDERS OF GRANISLE COPPER LIMITED, PETITIONER,
v.
ZAPATA CORP., LEHMAN BROS., INCORPORATED, WILLIAM H. FLYNN, JAMES B. HARRISON, RONALD C. LASSITER, RESPONDENTS AND HONORABLE DANIEL H. HUYETT, 3RD UNITED STATES DISTRICT JUDGE, FOR THE EASTERN DISTRICT OF PENNSYLVANIA, NOMINAL RESPONDENT



Petition for Writ of Mandamus or Writ of Prohibition, or Both.

Biggs, Kalodner and Adams, Circuit Judges. Adams, Circuit Judge, concurring. Biggs, Circuit Judge, dissenting.

Author: Kalodner

Opinion OF THE COURT

KALODNER, Circuit Judge.

The petitioner seeks a writ of mandamus or prohibition directing the District Court to vacate its Order of July 13, 1972,*fn1 under 28 U.S.C.A. § 1404(a), which transferred plaintiff's action below to the United States District Court for the Southern District of Texas, Houston Division.

The July 13, 1972 Order reads as follows:

"AND NOW, this 13th day of July, 1972, upon consideration of the motion of defendants Zapata Corp., William H. Flynn, James B. Harrison and Ronald C. Lassiter, and an informal argument held in Chambers this date attended by counsel for all parties, it is ORDERED and DECREED that this action be and hereby is, pursuant to 28 U.S.C. § 1404(a), transferred to the United States District Court for the Southern District of Texas, Houston Division."

The instant petition is premised on two contentions: (1) the District Court abused permissible discretion in granting the transfer motion; and (2) petitioner was deprived of due process of law in that the District Court did not accord him "a reasonable and adequate opportunity to oppose the motion.

It must immediately be noted that the petitioner, in his brief and on oral argument here, has not adverted to the petition's contention that the District Court abused permissible discretion in granting the transfer motion. He urges only that he was denied due process in that (1) he "was deprived of an adequate opportunity to present his opposition to the transfer motion"; (2) "the transfer motion was decided prematurely"; and (3) "the reliance by the District Court on an untranscribed conference and the failure to promptly submit findings of fact and conclusions of law requires [sic] the vacating of the transfer order."

In light of the foregoing, the critical question presented is whether the petitioner was denied due process in the granting of the challenged transfer Order.

The instant proceeding had its genesis in a class action filed by the petitioner A. Jarvis Wood in the United States District Court for the Eastern District of Pennsylvania against the defendants Zapata Corp. ("Zapata"), Lehman Bros., Incorporated, William H. Flynn, James B. Harrison and Ronald C. Lassiter. Wood, in his Amended Complaint, alleged that the defendants violated the Securities and Exchange Act of 1934,*fn2 in the course of Zapata's acquisition, in August 1971, of a controlling interest in The Granby Mining Company Limited ("Granby") and Granisle Copper Limited ("Granisle"), and in continuing efforts to force the sale of the interests of minority stockholders of Granby and Granisle to a subsidiary of Zapata on grossly unfair terms, pursuant to a preexisting merger plan.

Petitioner is a citizen and resident of Brunswick, Georgia. Granby and Granisle are British Columbia, Canada, corporations, with their principal places of business in Vancouver, British Columbia.

Zapata is a Delaware corporation with its principal place of business in Houston, Texas.*fn3 Lehman Bros. is a Maryland corporation, with its principal place of business in New York, and offices in Houston, Texas.*fn4

The individual defendants, Flynn, Harrison and Lassiter, are citizens and residents of Houston, Texas. Flynn is chairman of the Board of Directors of Zapata and its chief executive officer; Harrison and Lassiter are respectively president and executive vice-president of Zapata.

Petitioner filed his action in the District Court on March 27, 1972. He filed an Amended Complaint on April 4, 1972. By Stipulation of the parties, filed April 26, 1972, the time for filing an Answer to the Amended Complaint was extended to May 16, 1972.

On May 16, 1972, Zapata and the individual defendants filed two motions -- one for a change of venue and the other for a stay of proceedings.

The change of venue motion moved "for an order, pursuant to 28 U.S.C. § 1404(a), transferring this action to the United States District Court for the Southern District of Texas, Houston Division, on the ground that such transfer would be for the convenience of the parties and witnesses and in the interest of justice." Two affidavits and a Memorandum were filed in support of the change of venue motion.

The stay motion moved "for an order staying all proceedings in this action pending shareholder action on the proposed amalgamation of Zapata Canada Limited, The Granby Mining Company Limited and Granisle Cooper Limited, and the conclusion of proceedings relating to said proposed amalgamation before the Supreme Court of British Columbia, Canada . . . ."

On May 30, 1972, Lehman Bros. filed a motion for stay of proceedings similar in content to the Zapata stay motion.

On June 1, 1972, Zapata and the individual defendants filed a motion for an order "barring all parties and their counsel from communicating with members of the proposed class in the above action" without prior approval of the Court.

Petitioner filed a Memorandum in opposition to the June 1, 1972 motion to bar communications with members of the proposed class.

He did not, however, file of record any opposition or notice of opposition to the Zapata change of venue and stay motions of May 16, 1972,*fn5 albeit he advised District Judge Huyett by letter dated May 18, 1972 that "plaintiffs oppose the granting of either of these motions" and "therefore request the opportunity to fully brief and argue these motions." The letter further stated that "certain pretrial discovery information which is material to the issues being raised by these motions should be supplied by the defendants before the briefing and arguing of these motions," and that "we are now in the process of preparing such discovery material addressed to the various defendants which we propose to submit to the Court within a few days, together with a motion for stay of hearing of these defense motions pending defendants' completion of this requested discovery." (emphasis supplied).

It must immediately be noted that petitioner never submitted to the Court any "discovery material" relating to the change of venue and stay motions, nor did he ever file a motion to stay the hearing of the two motions, prior to their disposition by Judge Huyett on July 13, 1972.

On May 25, 1972, petitioner wrote a letter to Judge Huyett suggesting he schedule a conference with counsel "to resolve the certain procedural questions which have already arisen, and to set a general timetable and framework within which this case may be litigated." Among the "procedural questions" outlined in the letter were that the defendants had not filed answers to the Amended Complaint and that "defendants totally disregarded Local Rule 36" in filing the change of venue and stay motions.

On May 26, 1972, Zapata's counsel wrote to Judge Huyett indicating willingness to attend the conference suggested by petitioner. The letter took occasion to dispute the "procedural questions" outlined by petitioner in his May 25, 1972 letter to Judge Huyett.

On June 1, 1972, Zapata's counsel wrote to petitioner's counsel stating: "We believe there is no reason why, if plaintiffs intend to oppose either or both of our motions plaintiffs cannot promptly file memoranda in opposition thereto," and "in short, we wish to move toward a hearing on our motions at the earliest possible moment."

On June 7, 1972, petitioner again wrote to Judge Huyett renewing his request for a conference.

On June 14, 1972, Judge Huyett wrote a letter to all counsel for the parties in which he said in critical part:

"A conference will be held in Chambers on Thursday, July 13, 1972 at 11:30 A.M. and all pending matters will be ...


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