This case comes before the court on the motion of defendants to transfer the matter to another district for the convenience of parties and witnesses and in the interest of justice. For the reasons expressed herein the motion will be granted.
Plaintiff's complaint alleges violations of the Securities Act of 1933, 15 U.S.C. § 77(a) et seq., and the Securities Exchange Act of 1934, 15 U.S.C. § 78(a) et seq., arising out of the proxy statement and prospectus for the acquisition of Median Mortgage Investors (Median) by First Mortgage Investors (FMI). Defendants have moved, pursuant to 28 U.S.C. § 1404(a),
to transfer this action to the United States District Court for the Southern District of Florida.
On a motion to transfer, a district court is vested with wide discretion, Plum Tree, Inc. v. Stockment, 488 F.2d 754, 756 (3d Cir. 1973); Keck v. Employees' Independent Association, 387 F. Supp. 241 (E.D. Pa. 1974), in weighing all relevant factors to determine if, on balance, the action more conveniently would proceed and the interests of justice would better be served in the transferee court, Keck v. Employees' Independent Association, supra; Fitzgerald v. Central Gulf Steamship Corp., 292 F. Supp. 847 (E.D. Pa. 1968). The burden rests upon the moving party to establish that a balancing of proper interests weighs strongly in favor of the transfer. Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970), cert. denied, 401 U.S. 910, 91 S. Ct. 871, 27 L. Ed. 2d 808 (1971).
Although a plaintiff's choice of forum normally is a paramount consideration in any determination of a request to transfer, Shutte v. Armco Steel Corp., supra; Mitchell v. Farrell Lines, Inc., 350 F. Supp. 1325, 1326 (E.D. Pa. 1972), far less weight is accorded that factor in a derivative suit or class action, Koster v. Lumbermens Mut-Casualty Co., 330 U.S. 518, 524, 67 S. Ct. 828, 833, 91 L. Ed. 1067; Polin v. Conductron Corp., 340 F. Supp. 602, 605 (E.D. Pa. 1972).
In applying the statutory criteria of convenience of parties, convenience of witnesses, and the interests of justice, courts have frequently adopted a "center of gravity" rationale. See, e.g., Firmani v. Clarke, 325 F. Supp. 689, 692 (D. Del. 1971); Levine v. Financial Programs, Inc., 318 F. Supp. 952 (S.D. N.Y. 1969). Among the criteria considered under this approach are: (1) the location of the corporate defendant's principal offices; (2) the residence of the individual defendants; (3) the residence of potential witnesses; (4) the location of pertinent documents and records; (5) the location where the challenged conduct was conceived, executed, and performed; and (6) where the suit is a class action, the residence of members of the alleged class. Application of these criteria to the case at bar leads to the ineluctable conclusion that transfer is required.
FMI is a Massachusetts
real estate investment trust with its principal place of business in Miami Beach, Florida. The situation with respect to Median prior to its acquisition by FMI was similar. Although defendants, Arthur Young & Company, and White, Weld & Co., Incorporated, maintain offices in Philadelphia, no personnel in these offices were involved in the transaction out of which the complaint arose. There are ten individual defendants; five are residents of Florida and none reside in this district.
The location of potential witnesses militates still further in favor of transfer. The gravamen of plaintiff's complaint concerns certain alleged misrepresentations in the proxy statement and prospectus with respect to the financial conditions of FMI and Median, and the nature of their businesses, loans, and other investments. The individuals possessing the most accurate knowledge about these matters are located almost exclusively in Miami Beach. All but one of FMI's employees are located there, as are, according to one estimate, 75 out of 96 employees of the investment advisor, First Mortgage Advisory Company (FMACo.) and its predecessors, who would be expected to testify regarding the loan portfolios of FMI and Median.
Moreover, of the 13 witnesses FMI and Median may call in this case, six have not been in Pennsylvania during the last two years, and the remainder have spent an average of less than one day per month in this Commonwealth.
Production of these witnesses in Philadelphia, as well as posing a major inconvenience to them, potentially could result in substantial disruptions of defendants' businesses. And in a case involving allegations of fraud, where the credibility and demeanor of witnesses may prove critical, defendants ought not be asked to settle for "trial by deposition" rather than to have a ready opportunity to produce live witnesses. See, e.g., Fogel v. Wolfgang, 48 F.R.D. 286, 291 (S.D. N.Y. 1969); Oil & Gas Ventures -- First 1958 Fund, Ltd. v. Kung, 250 F. Supp. 744, 756 (S.D. N.Y. 1966).
Of course, plaintiff's convenience would be served if transfer were denied. It has not been suggested, however, that plaintiff's testimony would in any event exceed recitation of the circumstances surrounding his receipt of the proxy statement and prospectus.
By far the most convincing factor in favor of transfer is the location in Miami Beach of most if not all of the records and documents relevant in this suit. The business papers of FMI and its investment advisor are located there. Production of these documents in Philadelphia would be burdensome not only because of their volume, but also because many of them are needed for the day to day operations of FMI. The audit workpapers of defendant Arthur Young & Company likewise are located in Miami. These documents, like those belonging to FMI, are in continuous use in connection with ongoing work.
Such considerations, although not controlling, are appropriate in evaluating the desirability of a proposed transfer. See, e.g., Schreiber v. Northwestern Mutual Life Insurance Co., 361 F. Supp., 625, 626 (S.D. N.Y. 1973); Polin v. Conductron Corp., supra at 606.
Plaintiff contends that the inconvenience occasioned by the location of these documents in Miami may be ameliorated by his counsel's avowed willingness to travel to Florida for extensive depositions and discovery
and the liberal photographic reproduction of documents which will no doubt occur whether the action is maintained here or in Florida. These contentions fail to address the fundamental problem, however. In a complex matter where numerous objections may arise during the course of discovery, the ability of the trial judge, sitting within the district where the original documents are located, to dispose promptly of such questions will serve enormously to expedite the case.
Of the next criteria applied in ascertaining the "center of gravity" of this suit, the situs of the conception and execution of the challenged conduct, little need be said. The proxy statement and prospectus which are the subject of the complaint, as well as the operating statements and news releases issued in connection with the acquisition, were all prepared in Miami Beach. While not determinative in and of themselves, these facts do lend additional weight to movant's argument. See Firmani v. Clarke, supra at 692; Levine v. Financial Programs, Inc., supra at 954.
In accordance with the procedure laid down by the Court of Appeals for this Circuit in McDonnell Douglas Corp. v. Polin, 429 F.2d 30 (3d Cir. 1970), plaintiff's motion for class action determination
has been deferred pending resolution of defendants' motion to transfer. Nevertheless, since both parties have seen fit to discuss the residence of the members of the purported class, I shall also refer to it.
Plaintiff asserts that it is "highly significant" that 42% of the outstanding shares of Median were owned by residents of Pennsylvania, New Jersey and New York. Upon closer analysis, however, it appears that this rather impressive figure is reached largely by virtue of lumping the New York percentage, where large blocks of stock are held by brokerage houses in street name, with that of Pennsylvania. As previously stated, note 9 supra, Pennsylvania residents actually own less than 4% of Median's outstanding shares. In any event, an argument premised on the geographical distribution of shareholders who will not actively take part in the trial is make-weight, and is far outweighed by the needs of the active participants in this litigation. See Girsh v. Jepson, 355 F. Supp. 1104, 1106 (E.D. Pa. 1973).
Lastly, there are two additional factors which are relevant here: the pendency of a related action in the transferee district and the calendar condition of the transferee court. On November 20, 1974, an action styled Greenspan v. Boyd et al., Civil Action No. 74-1519, was commenced in the United States District Court for the Southern District of Florida. Although there are obvious dissimilarities between Greenspan and the case at bar,
the complaints overlap enough
that even should consolidation prove undesirable, there will at least be much duplication in discovery and proof. The presence of a related case in the transferee forum is a powerful reason to grant a change of venue. See, e.g., Blanning v. Tisch, 378 F. Supp. 1058, 1061 (E.D. Pa. 1974); Maxlow v. Leighton, 325 F. Supp. 913, 915-16 (E.D. Pa. 1971). Indeed, Judge Luongo recently held in Blanning that while if only the convenience of parties was at issue transfer would have been denied, the pendency of a related action in the transferee court compelled transfer.
Finally, it appears that the condition of the civil docket in the Southern District of Florida is such that this action can be readied for trial as soon, if not more promptly, than in this district.
Although not a factor to which great weight need be assigned, Materials Technology, Inc., v. Circuit Foil Corp., 49 F.R.D. 79, 81 (E.D. Pa. 1970), the relative conditions of the court calendars in the transferor and transferee districts nevertheless should be considered in ruling on a motion to transfer, Pontes v. Calmar S.S. Corp., 256 F. Supp. 495, 496 (E.D. Pa. 1966) (3-judge court). In the case at bar that factor is close to neutral, but probably inclines in favor of transfer.
For the foregoing reasons, defendants' motion to transfer will be granted. An order will issue accordingly.
AND NOW, this 21st day of March, 1975, defendant's motion pursuant to 28 U.S.C. § 1404(a) to transfer the above-captioned action to the United States District Court for the Southern District of Florida is hereby granted, and the Clerk of this Court is directed to transmit a certified copy of this Order and the Court's accompanying Opinion, the docket entries in this case, and the originals of all other papers on file herein to the United States District Court for the Southern District of Florida.
BY THE COURT J. W. Ditter / J.
AND NOW, this 21st day of March, 1975, because this matter has been transferred to the United States District Court for the Southern District of Florida, plaintiff's Motion for Class Action Determination is hereby dismissed as being premature.
BY THE COURT: J. William Ditter / J.