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In re Global Cash Access Holdings

September 18, 2008


The opinion of the court was delivered by: Shirley Wohl Kram, U.S.D.J.


On June 10, 2008, lead plaintiff City of Richmond Retirement System ("Richmond") filed a class action complaint alleging that Global Cash Access Holdings, Inc. ("GCAH," or the "Company") and its operating subsidiary (collectively, the "GCAH Defendants"), several of its officers and directors, its co-lead underwriters (the "Lead Underwriter Defendants"), two institutional shareholders (the "Shareholder Defendants"), and its independent auditor committed various violations of the federal securities laws. Several defendants have petitioned the Court to transfer venue pursuant to 28 U.S.C. § 1404(a). For the reasons that follow, the Court grants the motion and transfers this case to the District of Nevada.


A. Procedural History

On April 11 and June 10, 2008, two class action complaints (the "Lowinger Complaint" and the "Richmond Complaint," respectively) were filed in this District, collectively alleging that the above-mentioned defendants committed securities-law violations. In an Opinion and Order dated June 26, 2008, the Court consolidated those two actions under the above caption, appointed Richmond as lead plaintiff, and named Grant & Eisenhofer P.A. as lead counsel. Lowinger v. Global Cash Access Holdings, Inc., 08 Cv. 3516 (SWK), 2008 WL 2566558, at *4 (S.D.N.Y. June 26, 2008).

Richmond is a government-sponsored retirement plan that resides in Virginia and manages the pension assets for the city's public workers. (Richmond Compl. ¶ 17.) On June 10, 2008, Richmond filed its complaint*fn1 on behalf of a putative nationwide class of individuals who purchased GCAH securities between September 22, 2005 and November 14, 2007 (the "Class Period"). (Richmond Compl. 1.)

The Richmond Complaint identifies various institutional and individual defendants. GCAH is a corporation and holding company incorporated in Delaware, whose principal asset is the 100% stock of its operating subsidiary, Global Cash Access, Inc. ("GCA") (Richmond Compl. ¶ 18.) Through its subsidiary, GCAH provides cash access and customer-relationship marketing technologies to the gambling industry. (Richmond Compl. ¶ 2.) At all relevant times, the GCAH Defendants maintained their principal executive offices in Las Vegas, Nevada. (Richmond Compl. ¶ 18.)

Individual defendant Kirk Sanford ("Sanford") is the former President and Chief Executive Officer of GCAH, and was a member of the Company's Board of Directors. (Richmond Compl. ¶ 19.) Sanford currently resides in Nevada. (Rains Decl. ¶ 20.) Harry C. Hagerty, III ("Hagerty") was the Company's Executive Vice President and Chief Financial Officer (Richmond Compl. ¶ 20) and currently resides in Nevada (Defs.' Reply, Supplemental Declaration of Darryl P. Rains ("Rains Supp. Decl.") ¶ 5). Karim Maskatiya ("Maskatiya") co-founded GCA, is the former Co-Chairman of the Board of Directors (Richmond Compl. ¶ 21), and currently resides in Florida (Rains Decl. ¶ 20). Robert Cucinotta co-founded GCA, served on the Board of Directors (Richmond Compl. ¶ 22), and currently resides in Florida (Rains Decl. ¶ 20).

The Lead Underwriter Defendants are Goldman Sachs & Co. and J.P. Morgan Securities, Inc., both of which maintain their principle places of business in New York (Richmond Compl. ¶¶ 26-27). The Shareholder Defendants are holding company M&C International ("M&C") and investment fund Summit Partners, L.P. ("Summit"), both of which are located in California. (Richmond Compl. ¶¶ 24-25). D&T served as GCAH's independent auditor from its offices in Las Vegas. (Defs.' Mot., Declaration of Darryl P. Rains ("Rains Decl.") ¶ 19.)

The Consolidated Complaint retains the defendants named in the Richmond Complaint and adds several others. Walter G. Kortschak ("Kortschak"), Charles J. Fitzgerald ("Fitzgerald"), E. Miles Kilburn ("Kilburn"), and William H. Harris ("Harris") served on the Company's Board of Directors, and on the Board's Audit Committee, during the Class Period. (Consolidated Compl. ¶¶ 25-26, 28-29.) Kortschak and Fitzgerald are also partners in defendant Summit. (Consolidated Compl. ¶¶ 25-26.) There is no competent evidence on the record concerning the residence of these individuals.*fn2

The Consolidated Complaint also names additional entity defendants. JPMorgan Chase & Co. ("JPMorgan Chase")*fn3; Cowen & Co., LLC ("Cowen"); Deutsche Bank Securities, Inc. ("DBSI"); Banc of America Securities LLC ("BAS"); Citigroup Global Markets LLC ("CGM"); and Wachovia Capital Markets, LLC ("WCM") (collectively, the "Non-Lead Underwriter Defendants") served as non-lead underwriters for the Company's September 22, 2005 initial public offering ("IPO"), and for a Secondary Offering, which took place in May 2006. (Consolidated Compl. ¶¶ 35-40.) Cowen, DBSI, BAS, and CGM maintain their principal executive offices in New York (Consolidated Compl. ¶¶ 36-39), while WCM maintains its principal executive offices in North Carolina (Consolidated Compl. ¶ 40). The Court lacks competent evidence regarding JPMorgan Chase's residence.*fn4

The Richmond Complaint alleges multiple securities-laws violations stemming from the registration statement issued in connection with the IPO, a second registration statement, which was created for the Secondary Offering, and various other publications and filings allegedly made or controlled by the defendants. According to Richmond, the defendants made false and misleading statements and omissions regarding GCAH's payment of and accounting for commissions payable to its customers, causing the Company to misstate its costs of revenues, gross profit margins, and income, and causing artificial inflation of GCAH's stock during the Class Period. (Richmond Compl. ¶ 1.) The Richmond Complaint seeks relief for violations of Section 10(b) of the Securities Exchange Act of 1934 (the "1934 Act") and Rule 10b-5 promulgated thereunder, Section 20(a) of the 1934 Act, and Sections 11, 12(A)(2), and 15 of the Securities Act of 1933 (collectively, the "1933 Act Claims"). (Richmond Compl. ¶¶ 118-155.)

The allegations of the Consolidated Complaint derive solely from the registration statements associated with the IPO and Secondary Offering. (Consolidated Compl. ¶ 1.) Richmond has retained only the 1933 Act Claims (Consolidated Compl. ¶¶ 113-18) and "specifically disclaims any allegations of fraud" (Consolidated Compl. ¶ 2.)

After the filing of the first complaint in this consolidated litigation, the GCAH Defendants, Sanford, Hagerty, Maskatiya, Cucinotta, and Shareholder Defendants (collectively, the "Movant Defendants") filed the instant motion to transfer venue to the District of Nevada.*fn5 D&T supports the motion (Rains Supp. Decl. ¶ 7), and neither of the Underwriter Defendants opposes it (Rains Decl. ¶ 23). The Court has received no submissions regarding the transfer motion from the defendants named for the first time in the Consolidated Complaint.


A. Legal Standard

A district court may transfer a civil action to any other district where the action might have been brought, "[f]or the convenience of parties and witnesses, in the interest of justice." 28 U.S.C. ยง 1404(a). In determining the propriety of a motion to transfer venue, a district court must conduct a two-part inquiry. First, the district court must decide whether the action "might have been brought" in the transferee district. Id.; Fuji Photo Film Co. v. Lexar Media, Inc., 415 F. Supp. 2d 370, 373 (S.D.N.Y. 2006) (citation and internal quotation marks omitted). Second, the district court must analyze the extent to which the interest of justice and the convenience of the ...

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