The opinion of the court was delivered by: MOTLEY
Memorandum Decision and Order on Motions to Transfer and Class Action
These are motions under 28 U.S.C. § 1404 (a) seeking a transfer to the United States District Court, Central District of California, of 12 separate actions commenced in this District and one removed here from Supreme Court, State of New York, County of New York.
An identical motion to transfer was made by defendants in all 13 cases. The hearing on these motions was consolidated. Rule 42 (a), Fed. R. Civ. P.
These actions are brought pursuant to applicable provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, the Rules and Regulations issued thereunder, and the common law. Plaintiffs, purchasers of Douglas Aircraft Company, Inc. (Douglas) securities (or those who converted Douglas debentures into common stock) allege that defendants,
during the first half of 1966, grossly exaggerated Douglas' earnings and earnings prospects, and the plaintiffs, in reliance thereon, were damaged.
All defendants move to transfer. None of the plaintiffs favors transfer. Virtually all of the present plaintiffs live in New York. This court, finding that defendants have failed to make a compelling case for transfer, denies the motions.
The principal reasons urged by defendants for transfer are: 1) most of the witnesses live in California, 2) defendant Douglas' business would be needlessly disrupted by a trial in New York, 3) most of Douglas' records are in California, and 4) there is less calendar congestion in California than in New York.
The law to be applied in this type of situation is clear. Movants have the burden of establishing that the inconvenience to them outweighs the inconvenience to plaintiffs and that the interests of justice would be better served by trial in the transferee district. Ruskay v. Reed, 225 F. Supp. 581 (S.D.N.Y. 1963); See Schneider v. Sears, 265 F. Supp. 257, 263 (S.D.N.Y. 1967). Plaintiffs' choice of forum is a relevant consideration, Peyser v. General Motors Corp., 158 F. Supp. 526, 529 (S.D.N.Y. 1958), "entitled to great weight". Franklin v. Blaylock, 218 F. Supp. 261, 262 (S.D.N.Y. 1963) mandamus denied sub nom. Blaylock v. McLean, 319 F.2d 533 (2d Cir. 1963).
Defendants argue that many witnesses live in California and it would be inconvenient for them to attend depositions and/or trial in New York. Of course, this argument cuts both ways. Many plaintiffs (the number as yet undetermined) live in New York and it would be just as time-consuming and inconvenient for them to attend in California.
Where a transfer would merely shift the inconvenience from one party to the other . . . or where after balancing all the factors, the equities lean but slightly in favor of the movant, . . . the plaintiffs choice of forum should not be disturbed. De Luxe Game Corp. v. Wonder Prod. Co., Inc., 166 F. Supp. 56, 61 (S.D.N.Y. 1958).
The choice of venue provided by Section 27 of the 1934 Act, 15 U.S.C. § 78 aa, and Section 22 of the 1933 Act, 15 U.S.C. § 77 v, would indeed be a meaningless one if the mere fact of out-of-state witnesses was sufficient to justify transfer.
Defendants next argue that it would be burdensome and expensive to ship files, estimated at 16,000,000 pages for Douglas alone, to New York, and that such a transfer would disrupt the company's business. This court cannot now ascertain the correctness of the figures provided by defendants, or the materiality of the documents, but if defendants' figures are accurate, and 16,000,000 documents are material, it is certainly a greater hardship for plaintiffs to be forced to spend the time in California necessary to sift this evidence. As to disrupting Douglas' business by transferring the files to New York, there has been no showing that these files are necessary to current operations. This court has no doubt that the originals of material documents can and will remain in California, and duplicates will be provided to each party via the modern miracle of photographic reproduction. The burden to defendants, if any, in this situation is created by the alleged vast number of documents, not their location or the venue of the trial.
Defendants finally argue that the parties could save nearly two and one-half years by having trial in California. This is a factor to be accorded some but not decisive weight. S.E.C. v. Golconda Mining Co., 246 F. Supp. 54, 60 (S.D.N.Y. 1965), mandamus denied sub nom. Golconda Mining Co. v. Herlands, 365 F.2d 856 (2d Cir. 1966). Here defendants have not shown any substantial prejudice to them from such delay. Delay from calendar congestion is equally prejudicial to plaintiffs who have chosen this forum. This court finds that delay alone is not sufficient to justify transfer. Were this criterion, itself, sufficient, cases could always be transferred from this District on this ground.
"[The] relative ability of the litigants to bear the expenses of trial in any particular forum must be considered in weighing what the interests of justice require." Keller-Dorian Colorfilm Corp. v. Eastman Kodak Co., 88 F. Supp. 863, 866 (S.D.N.Y. 1949); Leopard Roofing Co. v. Asphalt Roofing Industry Bureau, 190 F. Supp. 726, 729 (E.D. Tenn. 1960). Certainly, there is no proof here that it is financially easier for plaintiffs, who are individuals largely resident in New York City, to litigate in California than it is for Douglas, Merrill Lynch, and Ernst and Ernst to litigate in New York.
This case is not unlike S.E.C. v. Golconda Mining Co., supra. In both cases many investor-witnesses lived in New York and the alleged fraud perpetrated here where suit was commenced. In each case defendants' business and records were in another distant district. The contacts with New York in most instances were similar in each case. Whether the trials are conducted here or in California, there is going to be inconvenience and expense to both the parties and the witnesses. This court has evaluated and compared each and every factor in terms of relative hardship, inconvenience, expense, fairness, and the interests of justice. On the record, the court concludes that defendants have failed to demonstrate such a ...