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Erickson v. Corinthian Colleges, Inc.

United States District Court, Second Circuit

October 1, 2013

FRANK ERICKSON, Individually and On Behalf of All Others Similarly Situated, Plaintiff,
v.
CORINTHIAN COLLEGES, INC., JACK P. MASSIMINO, ROBERT C. OWEN, and KENNETH S. ORD, Defendants.

MEMORANDUM AND ORDER

P. KEVIN CASTEL, District Judge.

Defendant Corinthian Colleges, Inc. ("Corinthian") has moved, under 28 U.S.C. § 1404(a), to transfer venue in this case to the United States District Court for the Central District of California, where Corinthian is headquartered. Putative class plaintiff Frank Erickson, individually and behalf of all others similarly situated, opposes transfer. For the reasons set forth below, the motion to transfer venue is granted.

BACKGROUND

Plaintiff Erickson is an individual who purchased Corinthian securities during the class period of August 23, 2011 to June 10, 2013. (Compl. ¶¶ 1, 26.) Defendant Corinthian, a Delaware corporation, is a "publicly traded, for-profit education company headquartered in Santa Ana, CA, " which offers degree and diploma programs from 105 campuses in 25 states and through an online division. (Id. ¶¶ 2, 27.) Corinthian's shares are traded on NASDAQ. (Compl. ¶ 27.) Defendant Jack Massimino is Chairman and CEO of Corinthian.[1] (Id. ¶ 28.) Massimino resides in Kamas, Utah, and spends the majority of most work weeks at Corinthian's Santa Ana headquarters. (Declaration of Robert C. Owen ("Owen Decl.") ¶ 21.) Defendant Robert C. Owen was Executive Vice-President and Chief Accounting Officer of Corinthian from July 2011 to September 2011. (Compl. ¶ 29.) Since September 2011, he has served as Executive Vice President and Chief Financial Officer of Corinthian. (Id.) Owen resides in Orange County, CA. (Owen Decl. ¶ 22.) Defendant Kenneth S. Ord was Corinthian's Executive Vice President and Chief Financial Officer from the beginning of the class period until September 2011, when he became Corinthian's Executive Vice President and Chief Administrative Officer. (Owen Decl. ¶ 23.) Ord resides in Orange County, California. (Id.)

Erickson has brought this suit against Corinthian, Massimino, Owen, and Ord, alleging violations of sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that Defendants defrauded investors by falsely representing to the market that Corinthian complied with federal regulations, resulting in a decrease in the value of Corinthian securities.

DISCUSSION

Corinthian seeks to transfer the action to the Central District of California under 28 U.S.C. § 1404(a). Section 1404(a) provides that "[f]or 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 or to any district or division to which all parties have consented." 28 U.S.C. § 1404(a). Thus, "[d]eciding a § 1404(a) motion to transfer venue requires a two-part inquiry: first, whether the action to be transferred might have been brought in the transferee court; and second, whether considering the convenience of the patties and witnesses, and the interest of justice, a transfer is appropriate.'" AGCS Marine Ins. Co. v. Associated Gas & Oil Co., Ltd. , 775 F.Supp.2d 640, 645 (S.D.N.Y. 2011) (quoting Fuji Photo Film Co., Ltd. v. Lexar Media Inc. , 415 F.Supp.2d 370, 373 (S.D.N.Y. 2006)).

I. Propriety of the Transferee Forum

The Central District of California is a district where the action might have been brought. The Exchange Act provides for venue "in the district wherein the defendant is found or is an inhabitant or transacts business." 15 U.S.C. § 78aa. Defendant Corinthian is headquartered in Santa Ana, California, which is in the Central District of California, and all individual defendants transact business in the Central District of California. Erickson does not dispute that the action might have been brought in the Central District of California.

II. Factors Governing Transfer

The second inquiry is whether "the convenience of parties and witnesses" and "the interest of justice" justify a transfer. 28 U.S.C. § 1404(a). "Among the factors to be considered in determining whether to grant a motion to transfer venue are, inter alia: (1) the plaintiffs choice of forum, (2) the convenience of witnesses, (3) the location of relevant documents and relative ease of access to sources of proof, (4) the convenience of parties, (5) the locus of operative facts, (6) the availability of process to compel the attendance of unwilling witnesses, and (7) the relative means of the parties." New York Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc. , 599 F.3d 102, 112 (2d Cir. 2010) (citation and quotation marks omitted). Other factors considered by district courts include "the forum's familiarity with the governing law" and "trial efficiency and the interests of justice." Everlast World's Boxing Headquarters Corp. v. Ringside, Inc., 12 Civ. 5297 (PAE), 2013 WL 788054, at *6 (S.D.N.Y. Mar. 4, 2013). The burden of demonstrating the desirability of transfer lies with the moving party, who must "make a clear and convincing showing that the balance of convenience favors [its] choice" of forum. Hubbell Inc. v. Pass & Seymour, Inc. , 883 F.Supp. 955, 962 (S.D.N.Y. 1995); see New York Marine & Gen. Ins. Co. , 599 F.3d 102, 114 (2d Cir. 2010) (noting that it is "appropriate that the district courts in our Circuit have consistently applied the clear and convincing evidence standard in determining whether to exercise discretion to grant a transfer motion"). "District courts have broad discretion in making determinations of convenience under Section 1404(a) and notions of convenience and fairness are considered on a case-by-case basis." D.H. Blair & Co., Inc. v. Gottdiener , 462 F.3d 95, 106 (2d Cir. 2006).

a. Plaintiffs Choice of Forum

A plaintiffs choice of forum is usually accorded "great weight." D.H. Blair & Co. , 462 F.3d at 107. This Court has previously noted that the weight accorded to a plaintiff's choice of forum diminishes where the operative facts lack a meaningful connection to the chosen forum. E.g., Glaxosmithkline Biologicals, S.A. v. Hospira Worldwide, Inc., 13 Civ. 1395 (PKC), 2013 WL 2244315 at *3 (S.D.N.Y. May 21, 2013); Nat'l Union Fire Ins. Co. of Pittsburgh, PA v. St. Paul Fire & Marine Ins. Co., 12 Civ. 1250 (PKC) 2012 WL 1829589 at *5 (S.D.N.Y. May 11, 2012). There are minimal connections with the Southern District of New York in this case, as the alleged false statements and misrepresentations disseminated from Corinthian's Santa Ana, California headquarters. Additionally, the weight accorded to a plaintiff's choice of forum is "reduced... in a stockholder class action, where members of the class are dispersed throughout the nation." In re Global Cash Access Holdings, Inc. Sec. Litig. , 08 Civ. 3516 (SWK) 2008 WL 4344531 at *7 (S.D.N.Y. September 18, 2008) (citation omitted). See also, e.g., In re Warrick , 70 F.3d 736, 741 n.7 (2d Cir. 1995); In re Nematron Corp. Sec. Litig. , 30 F.Supp.2d 397, 405-06 (S.D.N.Y. 1998); Berman v. Informix Corp. , 30 F.Supp.2d 653, 659-60 (S.D.N.Y. 1998).

Furthermore, a plaintiff's choice of forum is accorded less weight when that choice is based on tactical, rather than legitimate reasons. See Glaxosmithkline Biologicals, 2013 WL 2244315 at *3. Erickson's choice of the Southern District of New York appears to be tactical. A district judge in the Central District of California previously dismissed a securities class action brought by Erickson's counsel (and other attorneys) against Corinthian for failure to state a claim. Karam v. Corinthian Colls., et al., 10 Civ. 6523 (GHK) 2012 WL 8499135 (C.D. Cal. August 20, 2012). Although the previous action sought relief for false and misleading statements during a different Class Period, the complaints make similar allegations against Corinthian. "[E]fforts to select one district to avoid or to obtain specific rulings of another district court should be ...


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