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United States District Court, S.D. New York

March 10, 2004.


The opinion of the court was delivered by: CHARLES HAIGHT, District Judge


This class action was filed by lead plaintiff John Bruhl and others similarly situated seeking damages arising from allegedly fraudulent acts related to the auditing and administration of Lancer Offshore, Inc. ("Lancer"), a hedge fund formed under the laws of the British Virgin Islands. In an order dated December 17, 2003 I designated Bruhl as lead plaintiff of the class of all persons who purchased securities of the Offshore/Omni Funds during the period September 2, 1998 through July 8, 2003, and the law firm of Goodkind Labaton Rudoff & Sucharow LLP as lead counsel for the class. Plaintiff now moves for an order pursuant to 28 U.S.C. § 1404(a) transferring the case to the Southern District of Florida, and specifically to Chief Judge Zloch of that Court. Defendant PricewaterhouseCoopers International Limited ("PwC-IL") opposes plaintiffs motion. For reasons set forth in this opinion, plaintiffs motion is granted. Page 2


  On September 3, 2003, Bruhl filed a class action complaint in this court arising out of alleged mismanagement of funds by Michael Lauer and the Lancer Management Group, LLC. Concurrent to the ongoing development of this case, the Securities and Exchange Commission filed a separate but related lawsuit in the Southern District of Florida before Chief Judge William J. Zloch entitled Securities and Exchange Commission v. Michael Lauer, Lancer Management Group, LLC and Lancer Management Group II, LLC, Defendants, and Lancer Offshore Inc., Lancer Partners, LP, Omnifund, Ltd., LSPV, Inc., and LSPV, LLC, Relief Defendants, Case No. 03-80612 (S.D. Fla.) (the "SEC Action").*fn1 In an effort to collect and preserve property subject to the diverse claims arising out of that and other related cases, Judge Zloch appointed Marty Steinberg, Esq., as a Receiver in the SEC Action.*fn2

  On January 8, 2004, Judge Zloch signed a Case Management Order (the "CMO") in the SEC Action requiring that all cases related to the SEC Action be transferred to his court in the Southern District of Florida. Article IX § A of the CMO provides in pertinent part:

  [T]he Court hereby enjoins any party (excluding the Receiver, the SEC, the NASD, any other regulatory body or law enforcement agency of the United States or its constituent states or any party with the express written consent of the Receiver or this Court) with notice of this Order from initiating, maintaining, or in any way prosecuting in any court any proceeding, suit or action that may diminish or usurp property of the Receiver or the Receivership Entities' estates, including, but not limited to, causes of action that the Receiver may have standing to bring or that may belong to the Receiver, any investors, any class or group of investors, and/or any member of the Steering Committee against the Receivership Entities' former principals, professionals or other third parties. Unless otherwise expressly authorized by the Receiver or the Court, such proceedings, suits, and actions must be brought in the form of a proceeding ancillary to this Proceeding pursuant to this Order. Page 3

  Transfers of cases pursuant to the CMO are already underway. One case in particular, Rotman v. Bendall. et. al, Case No. 03-23044 (S.D.Fla.), was filed on November 17, 2003, also in the Southern District of Florida. However, that case was filed in a different division from that of Judge Zloch's. Subsequent to the CMO, Rotman was transferred from its original division and is now before Judge Zloch. The Rotman case is particularly noteworthy with respect to the present motion since PwC-IL, the opposing defendant, is also a named defendant in that case.

  Plaintiffs counsel in the captioned case received a letter from counsel for Receiver Steinberg, dated January 22, 2004, stating that in the Receiver's view, the Bruhl action "threatens to diminish and/or usurp property of the Receiver and the Receivership Entities." Letter from Craig V. Rasile (counsel for Steinberg) to Joel H. Bernstein (counsel for Bruhl), at 2. Accordingly, the letter requested that plaintiff "immediately seek to transfer the above-referenced action [Bruhl] to the Receivership Court as a proceeding ancillary to the Receivership Case." Id. In an effort to be in compliance with Judge Zloch's CMO, plaintiff now seeks to transfer the case at bar to the Southern District of Florida.


  28 U.S.C. § 1404(a) states, "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."

  As a threshold matter, plaintiff has established that his action "might have been brought" in the proposed transferee district, since jurisdiction and venue would have been appropriate at the time the action was originally filed. See Hoffman v. Blaski, 363 U.S. 335, 343-44 (1960). Plaintiff asserts, and defendant does not deny, that with respect to plaintiffs federal claims, personal jurisdiction is established over defendant PwC-IL pursuant to Section 27 of the Page 4 Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. § 78aa. With respect to plaintiffs remaining state law claims, pendent and supplemental jurisdiction is established under 28 U.S.C. § 1367. With respect to subject matter jurisdiction, the federal courts have federal question jurisdiction over this matter pursuant to 28 U.S.C. § 1331. Finally, plaintiff asserts and defendant does not deny that venue for Bruhl as an ancillary action is proper in the Southern District of Florida pursuant to 15 U.S.C. § 78aa.*fn3

  There are additional factors I must consider in deciding this motion. PwC-IL contends that there are several reasons why transfer would not be proper at this time. PwC-IL notes that while PricewaterhouseCoopers (Netherlands Antilles) ("PwC-NA"), another named defendant in this case, served as the outside auditor for the Lancer Offshore hedge fund, PwC-IL itself provided no financial or professional services in relation to plaintiffs action. Accordingly, PwC-IL contends that plaintiff improperly relies on a "one-firm" theory of liability and improperly uses a group pleading convention to bring PwC-IL in as a defendant in this case.

  Defendant also informs me that it currently has a motion pending before Judge Zloch. Defendant's Motion for Clarification of the Injunction Contained in the Case Management Order in the Receivership Action requests that Judge Zloch clarify whether the CMO would allow PwC-IL to file, here in the Southern District of New York, a motion to dismiss based on the very grounds that plaintiff improperly relies upon a "one-firm" theory of liability. Defendant therefore requests that I wait for the resolution of that motion prior to deciding whether to transfer this case in its entirety to Judge Zloch in the Southern District of Florida.

  I need not wait for Judge Zloch's ruling on PwC-IL's Motion for Clarification before transferring this case to his tribunal. Even if Judge Zloch should hold that PwC-IL may file a Page 5 motion for summary judgment in this district, this would have no affect on my conclusion that the convenience of the parties and witnesses, and the interests of justice would best be served by having this case transferred to the Southern District of Florida.

  Transferring this case will allow related actions to be consolidated in a single forum. See Wyndham Assoc. v. Blintliff, 398 F.2d 614, 619 (2d Cir. 1968) ("There is a strong policy favoring the litigation of related claims in the same tribunal in order that pretrial discovery can be conducted more efficiently, duplicitous litigation can be avoided, thereby saving time and expense for both parties and witnesses, and inconsistent results can be avoided."). Indeed, one of the key purposes of Judge Zloch's CMO and his appointment of a Receiver was to consolidate all actions arising out of the Lancer hedge fund in a single forum, and distribute damage awards, if any, to multiple parties in a fair and judicious manner.

  Transfer is also appropriate since the cases stemming from the Lancer fund will involve closely related issues and parties. Transferring these actions to Judge Zloch's tribunal will conserve judicial resources and prevent inconsistent rulings.

  PwC-IL argues that it "should not be required to travel to Florida to extricate itself from cases filed in New York that never should have involved it in the first place." Def.'s Mem. in Opp. to Pl.'s Mot. At 5. Any inconvenience is more apparent than real. PwC-IL is already a litigant in the Rotman case which is before Judge Zloch. In fact, defendant itself notes that the complaint in the Rotman action is similar to the complaints in Bruhl, and that Rotman relies on the same "one-firm" theory of liability which PwC-IL argues is an improper group pleading convention. See id. at 2. PwC-IL can make the same contention in the Southern District of Florida that it seeks to make in this Court. Page 6

  Finally, I express no view with respect to PwC-EL's contention that plaintiff improperly relies on a "one-firm" theory of liability and improperly uses a group pleading convention to bring PwC-IL as a defendant. The resolution of that particular issue has no dispositive bearing on the transferability of this case as a whole to the Southern District of Florida, and I do not reach it.


  For the foregoing reasons, the motion of the plaintiff class for a transfer of venue is granted. The Clerk of the court is directed to effect the transfer of this action to the United States District Court for the Southern District of Florida.


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