District Actions"). In all of those cases, plaintiffs seek to
represent identical or overlapping classes consisting of all
purchasers of the common stock or options of defendant
ContiFinancial between January 29, 1998 and July 21, 1999. All of
those actions allege, often in verbatim language, violations of
Sections 10(b) and 20 of the Securities Exchange Act of 1934,
based on the same alleged misstatements and omissions in
ContiFinancial's press releases, SEC filings, and statements made
to analysts during the purported class period.
All parties agree that the seven actions should be consolidated
in a single district. The question before the Court is which of
the two districts where these actions have been filed is the more
appropriate venue under the circumstances. For the reasons set
forth below, this Court finds that it is the Southern District of
New York, and grants defendants' motion to transfer.
On or about October 21, 1999, a purported class action entitled
Dea O'Hopp, Individually And On Behalf Of All Others Similarly
Situated v. ContiFinancial Corporation, et al., No. 99-CV-6794
("O'Hopp"), was filed against defendants in this Court. Eight
days later, on or about October 29, 1999, a virtually identical
complaint was filed against the same defendants in the United
States District Court for the Southern District of New York in an
action entitled I & M Associates, Individually And On Behalf Of
All Others Similarly Situated v. ContiFinancial Corporation, et
al., No. 99 Civ. 10941 ("I & M").
Both complaints name the same four defendants and are brought
on behalf of identical putative classes, consisting of all
purchasers of ContiFinancial's common stock between January 29,
1998 and July 21, 1999, who claim to have been damaged as a
result of the "dissemination of materially false and misleading
statements concerning, among other things, the Company's
deteriorating financial condition, and the effects these adverse
undisclosed conditions would ultimately have on the Company's
operations, liquidity, and stock price." O'Hopp Complaint, ¶ 2;
I & M Compl. ¶ 2. This, plaintiffs allege, gives rise to claims
under Sections 10(b) and 20(a) of the Act (15 U.S.C. § 78j(b)
and 78t(a)) and Rule 10b-5 promulgated thereunder.
On November 18, 1999, a third class action, entitled Elfriede
Glancy, individually and on behalf of all others similarly
situated v. ContiFinancial Corp., et al., 99 Civ. 11436
("Glancy"), was filed in the Southern District. The Glancy
complaint is strikingly similar to the I & M and O'Hopp
complaints, alleging the same claims on behalf of the same class
against the same defendants.
On December 6, 1999, counsel for the parties in I & M, Glancy
and O'Hopp entered into stipulations in each of those cases in
which they agreed, among other things, that (a) the claims
asserted in all of the actions were substantially identical, (b)
the actions should be consolidated in a single district and the
proper venue determined, either by stipulation or upon motion,
and (c) lead plaintiff and plaintiffs' lead counsel should be
appointed pursuant to the Private Securities Litigation Reform
Act ("PSLRA"), before any further proceedings took place,
following which (d) lead plaintiffs' counsel would have 60 days
within which to serve and file a consolidated amended class
action complaint, to which defendants would respond within 60
On or about December 9, 1999, two more class actions were filed
in this Court: Christopher G. Locallo, Individually And On
Behalf Of All Others Similarly Situated v. ContiFinancial Corp.,
et al., 99-CV-8065 and Scott Brenner, Individually And On
Behalf Of All Others Similarly Situated v. ContiFinancial Corp.,
et al., 99-CV-8074. Also on December 9, 1999, the third Southern
District putative class action, entitled William J. Black, et
al., Individually And On Behalf Of All Others Similarly Situated
v. ContiFinancial Corp., et al., 99 Civ. 11941 was filed. These
contain numerous paragraphs which are identical to each other,
and to the earlier-filed complaints. The fourth Eastern District
action, Yisroel Weingarten, Individually And On Behalf Of All
Others Similarly Situated v. ContiFinancial Corp., et al.,
99-CV-8209, was filed on December 15, 1999 and assigned to this
Court as a case related to O'Hopp.
On December 21, 1999, plaintiffs in the Southern District
Actions voluntarily dismissed their complaints pursuant to Fed.
R.Civ.P. 41(a)(1). Thereafter, all seven plaintiffs filed in this
Court a joint Lead Plaintiff motion under § 21D(a)(3)(B) of the
PSLRA. Defendants moved in the Southern District on January 18,
2000 to have the three voluntary Rule 41(a)(1)(i) dismissals
vacated, arguing that they were improper without court approval.
See Fed.R.Civ.P. 23(e). That motion is now before the Southern
I. General Principles under § 1404(a)
The change of venue statute, 28 U.S.C. § 1404(a), provides:
For the convenience of 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.
28 U.S.C. § 1404(a). It is well established that "motions for
transfer lie within the broad discretion of the district court
and are determined upon notions of convenience and fairness on a
case-by-case basis." In re Cuyahoga Equip. Corp., 980 F.2d 110,
117 (2d Cir. 1992) (citing Stewart Org., Inc. v. Ricoh Corp.,
487 U.S. 22, 29, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988)). The
burden of demonstrating that a case should be transferred is on
the moving party, see Factors Etc., Inc. v. Pro Arts, Inc.,
579 F.2d 215, 218 (2d Cir. 1978), cert. denied, 440 U.S. 908, 99
S.Ct. 1215, 59 L.Ed.2d 455 (1979), and a "clear-cut showing" must
be made that transfer is in the best interest of the litigation.
Connors v. Lexington Ins. Co., 666 F. Supp. 434, 454 (E.D.N Y
1987); Schieffelin & Co. v. Jack Co. of Boca, Inc., 725 F. Supp. 1314,
1321 (S.D.N.Y. 1989).
Among the factors the court should consider in making this
decision are: (1) the weight accorded the plaintiff's choice of
forum; (2) the place where the operative facts took place; (3)
the convenience of the parties; (4) the convenience of the
witnesses; (5) the availability of process to compel unwilling
witnesses; (6) the location of relevant documents and the
relative case of sources of proof; and (7) trial efficiency and
the interests of justice. Balaban v. Pettigrew Auction Co.,
Inc., 1997 WL 470373 *2 (E.D.N.Y. 1997) (citing Bernal v.
DuPont De Nemours E.I. and Corp., 1993 WL 378790 (S.D.N Y
1993); Designs by Glory, Ltd. v. Manhattan Creative Jewelers,
Inc., 657 F. Supp. 1257, 1258-59 (S.D.N.Y. 1987)); see also Orb
Factory, Ltd. v. Design Science Toys, Ltd., 6 F. Supp.2d 203
(S.D.N.Y. 1998) (citing Wilshire Credit Corp. v. Barrett Capital
Management Corp., 976 F. Supp. 174, 181 (W.D.N.Y. 1997)).
II. Application of § 1404(a) to the Present Case
1. Plaintiff's Forum Choice
When considering a § 1404(a) motion, the general rule is that
"plaintiff's forum choice should not be disturbed unless the
balance of the factors tips heavily in favor of a transfer."
S-Fer Int'l, Inc. v. Paladion Partners, Ltd., 906 F. Supp. 211,
213 (S.D.N.Y. 1995); see also Seagoing Uniform Corp. v. Texaco,
Inc., 705 F. Supp. 918, 936 (S.D.N.Y. 1989) (citing Gulf Oil
Corp. v. Gilbert, 330 U.S. 501, 508, 67 S.Ct. 839, 843, 91 L.Ed.
When related lawsuits are filed in different judicial
districts, courts generally follow what is known as the
"first-filed" rule, which favors the forum where the first action
was brought. "[A]s a principle of sound judicial administration,
the first suit should have priority, `absent the showing of
balance of convenience in favor of the second action.'" Capitol
v. Optical Recording Corp., 810 F. Supp. 1350, 1353 (S.D.N Y
1992) (quoting Remington Prods. Corp. v. American Aerovap,
Inc., 192 F.2d 872, 873 (2d Cir. 1951)). The first-filed
doctrine "does not supersede the inquiry into the balance of
convenience required under § 1404(a)." River Road Int'l, L.P. v.
Josephthal Lyon & Ross Inc., 871 F. Supp. 210, 214-15 (S.D.N Y
1995) (citing Rolls-Royce Motors, Inc. v. Charles Schmitt &
Co., 657 F. Supp. 1040, 1061 (S.D.N.Y. 1987)). It creates a
"presumption" that may be rebutted by proof of the desirability
of proceeding in the forum of the second-filed action. See
Columbia Pictures Industries, Inc. v. Schneider, 435 F. Supp. 742,
747, 751 (S.D.N.Y. 1977) ("an even or inconclusively tilted
`balance of convenience' would ordinarily support application of
the first-filed rule"), aff'd mem., 573 F.2d 1288 (2d Cir.
1978). The first-filed rule "is not to be applied in a mechanical
way regardless of other considerations." National Patent
Development Corp. v. American Hospital Supply Corp., 616 F. Supp. 114,
118 (S.D.N.Y. 1984) (quoting Hammett v. Warner Brothers
Pictures, 176 F.2d 145, 150 (2d Cir. 1949)).
"The party asserting that the first-filed rule should not apply
has the burden to show that special circumstances exist
justifying departure from the rule." Hanson PLC v.
Metro-Goldwyn-Mayer, Inc., 932 F. Supp. 104, 106 (S.D.N.Y. 1996)
(citing 800-Flowers, Inc. v. Intercontinental Florist, Inc.,
860 F. Supp. 128, 132 (S.D.N.Y. 1994)).
(a) Forum shopping
Courts have identified several special circumstances that
warrant an exception to the first-filed rule of priority. See
Columbia Pictures, 435 F. Supp. at 747; William Gluckin & Co. v.
International Playtex Corp., 407 F.2d 177, 178 (2d Cir. 1969).
One such circumstance "is where forum shopping alone motivated
the choice of the situs for the first suit." Kellen Co., Inc. v.
Calphalon Corp., 54 F. Supp.2d 218, 223 (S.D.N.Y. 1999) (quoting
William Gluckin, 407 F.2d at 178); see also Motion Picture
Laboratory Technicians Local 780, I.A.T.S.E. v. McGregor &
Werner, Inc., 804 F.2d 16, 19 (2d Cir. 1986) ("[T]he chief
`special circumstance' we have noted is our interest in
discouraging forum shopping.").
As will be discussed in the next section, this case has little
connection to the Eastern District, and has a far stronger
relationship to the Southern District. Plaintiffs' decisions (1)
to file the O'Hopp action in this district, then (2) with full
knowledge of that action to file three strikingly similar actions
in the Southern District, (3) to file three more related actions
in this district, and now (4) to oppose transfer of the actions
from this Court to the Southern District, may reasonably be
inferred to have been motivated by forum shopping. Plaintiffs
have been unable to offer any other explanation. In such
circumstances, the presumption created by the first-filed rule
does not apply. See Richardson v. City of New York, No. 87 CV
214(RR), 1988 WL 156324, at *6 (E.D.N.Y. Oct.14, 1988) which
to the extent that plaintiff's argument betrays that
her opposition to the transfer arises from some
expectation of more favorable treatment in the
Eastern District Courthouse, such motivation will not
justify a choice of forum. . . . [E]fforts to select
one district to avoid or obtain specific rulings of
another district court should be disfavored and
(b) Securities Class Action Claims