The opinion of the court was delivered by: Schwartz, District Judge.
This action arises out of a merger between Premiere
Technologies, Inc. ("Premiere") and Xpedite Systems, Inc.
("Xpedite"). Pursuant to a merger agreement, Premiere purchased
all of the outstanding stock of Xpedite, and Xpedite shareholders
received newly-issued Premiere stock in return. Plaintiffs, major
shareholders in Xpedite at the time of the Premiere/Xpedite
merger, initiated the present action against defendants after the
Premiere stock that they had received drastically decreased in
value. Plaintiffs allege violations of federal securities laws,
negligent misrepresentation, and breach of contract.
Defendants move the Court to transfer this action to the
Northern District of Georgia pursuant to 28 U.S.C. § 1404(a) or,
in the alternative, to dismiss the action pursuant to Federal
Rule of Civil Procedure 12(b)(6). For the reasons stated herein,
Defendants' motion to transfer the action is GRANTED. The Court
declines to rule on Defendants' motion to dismiss.
Xpedite, prior to its merger with Premiere, was based in New
Jersey and was a "leading provider of enhanced fax services . . .
and discounted international fax services." (Plaintiffs'
Memorandum of Law in Opposition to Motion to Transfer ("Pl.
Mem.") at 2.) Premiere was a provider of integrated
communications services. Id. Premiere became interested in a
merger with Xpedite in 1997 and eventually offered to purchase
Xpedite with newly-issued Premiere stock that would be, based on
Premiere's value at that time, valued at $34 per share of Xpedite
stock. Id. Prior to the execution of a merger agreement between
Xpedite, Premiere, and Premiere's acquisition subsidiary (the
"Merger Agreement"),*fn1 Defendants insisted that Plaintiffs
sign certain stockholder agreements (the "Stockholder
Agreements").*fn2 Plaintiffs signed the Stockholder Agreements
on November 13, 1997, and the Merger Agreement was executed on
the same date. (Pl.Mem. at 2.)
Section 10.14 of the Merger Agreement provides that the parties
to the Agreement consent to jurisdiction in the Southern District
of New York, and will not attempt to defeat or deny that
jurisdiction by motion or otherwise. Merger Agreement § 10.14.
The Stockholder Agreements contain a venue provision requiring
the parties to submit to the jurisdiction of the Court of
Chancery in the State of Delaware. (Stockholder Agreements §
6.11(b).) Neither party contends that this action should have
proceeded in Delaware, and in the instant motion plaintiffs rely
exclusively upon the venue provision of the Merger Agreement.
(Pl.Mem. at 4.)
On or about January 28, 1998, Premiere filed a Form S-4
Registration Statement and Prospectus (the "January Prospectus")
with the Securities and Exchange Commission for the issuance of
Premiere Common stock to Xpedite shareholders pursuant to the
terms of the Merger Agreement. The January Prospectus did not
make any projections or predictions with respect to future
financial performance. (Defendants' Memorandum of Law in Support
of Motion to Dismiss ("Def.Mot.Dis.Mem.") at 5.) Xpedite's
shareholders approved the Premiere merger on February 27, 1998.
(Complaint ¶ 64.)
On June 10, 1998, Premiere announced that it was experiencing
various difficulties with its business and was expecting to
report an after-tax loss for the quarter ending June 30, 1998.
(Complaint ¶ 69.) On that date, and in response to this
announcement, Premiere's stock fell twenty-eight percent, from
$14.4375 per share to $10.375 per share. (Complaint ¶ 71.) Within
four months after the approval of the Merger Agreement, the total
value of Premiere stock exchanged for plaintiffs' 30% of Xpedite
decreased in value from $87 million to $27 million. (Plaintiff's
Memorandum of Law in Opposition to Motion to Dismiss
(Pl.Mot.Dis.Mem.) at 9.)
Plaintiffs subsequently filed the instant action, alleging
that, in connection with their conduct during the negotiation,
execution, and approval of the Merger Agreement, Defendants are
liable to them for (1) violations of §§ 11, 12(2), and 15 of the
Securities Act, codified as 15 U.S.C. § 77k, 77l(a)(2), and
77o; (2) negligent misrepresentation; and (3) breach of
Twenty-two related actions have been filed against Defendants
in the Northern District of Georgia. (Defendants' Motion to
Transfer, Exhibits 1, 2.) These actions were filed five months
before the current action (the "New York Action") and have been
consolidated before the Honorable Judge Owen Forrester.*fn3
Id. A proposed sub-class in the Consolidated Atlanta Action
expressly includes former shareholders of Xpedite. Id.
Additionally, a former Xpedite shareholder is a proposed class
representative. Id. Plaintiffs in the Consolidated Atlanta
Action allege non-disclosure and misrepresentation with respect
to many of the same facts complained of by plaintiffs in this
action. The first Amended Consolidated Class Action Complaint
attached plaintiffs' complaint (the "New York Complaint") as an
exhibit and stated that several of its allegations were derived
from it. (Defendants' Motion to Transfer, Exhibit 3, at 45). The
Second Amended Consolidated Class Action Complaint (the "Atlanta
Complaint"),*fn4 filed in the Consolidated Atlanta Action on
February 5, 1999, continues to reference the New York Complaint.
(Atlanta Complaint ¶ 105 n. 1).
28 U.S.C. § 1404(a) ("§ 1404(a)") provides that "[f]or the
convenience of the parties and witnesses, in the interest of
justice, a district court may transfer any civil action to any
other district or division where it might have been brought." The
purpose of § 1404(a) is to avoid "waste of time, energy and money
and to protect litigants, witnesses and the public against
unnecessary inconvenience and expense." Van Dusen v. Barrack,
376 U.S. 612, 616, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964) (internal
citations omitted). A district court maintains broad discretion
in deciding whether to transfer a case "in the interest of
justice." See Filmline (Cross-Country) Productions, Inc. v.
United Artists Corp., 865 F.2d 513 (2d Cir. 1989). The moving
party, however, bears the "burden of making out a strong case for
transfer." Id. at 521 (internal citations omitted).
Factors that are relevant to a determination of whether a §
1404(a) transfer motion should be granted are: "(1) the place
where the operative facts occurred; (2) the convenience to
parties; (3) the convenience of witnesses; (4) the relative ease
of access to sources of proof; (5) the availability of process to
compel attendance of unwilling witnesses; (6) the plaintiff's
choice of forum; (7) the forum's familiarity with the governing
law; and (8) trial efficiency and the interests of justice."
Brown v. Dow Corning Corp., No. 93 Civ. 5510(AGS), 1996 WL
257614, *2 (S.D.N.Y. May 15, 1996) (citing Viacom Int'l, Inc.
Melvin Simon Prods., Inc., 774 F. Supp. 858, 867-68 (S.D.N Y
1991) (citations omitted)). Other key considerations are the
existence of a forum selection clause, see Stewart Org., Inc. v.
Ricoh Corp., 487 U.S. 22, 29, 108 S.Ct. 2239, 101 L.Ed.2d 22
(1988), and the pendency of related actions in the transferee
district, see, e.g., Durham Prods., Inc. v. Sterling Film
Portfolio, Ltd., 537 F. Supp. 1241, 1243 (S.D.N.Y. 1982).*fn5
The overriding consideration in this case is the existence of
twenty-two previously-filed and now consolidated actions in the
Northern District of Georgia. Although a forum selection clause
existed in the Merger Agreement between Premiere and Xpedite, the
Court concludes that either this clause is not binding or ...