Axe-Houghton Fund A, Inc. v. Atlantic Research Corp.

• Decision Date: 16 March 1964
• Citation: 227 F. Supp. 521
• Parties: AXE-HOUGHTON FUND A, INC., a corporation; Axe-Houghton Fund B, Inc., a corporation, Axe-Houghton Stock Fund, Inc., a corporation, Axe Science and Electronics Corporation, a corporation, Plaintiffs, v. ATLANTIC RESEARCH CORPORATION, a corporation, and Arch C. Scurlock, Arthur W. Sloan, Franklin C. Salisbury, and Gerald T. Halpin, Defendants.
• Court: U.S. District Court — Southern District of New York

227 F. Supp. 521

AXE-HOUGHTON FUND A, INC., a corporation; Axe-Houghton Fund B, Inc., a corporation, Axe-Houghton Stock Fund, Inc., a corporation, Axe Science and Electronics Corporation, a corporation, Plaintiffs, v. ATLANTIC RESEARCH CORPORATION, a corporation, and Arch C. Scurlock, Arthur W. Sloan, Franklin C. Salisbury, and Gerald T. Halpin, Defendants.

United States District Court S. D. New York.

March 16, 1964.

Debevoise, Plimpton, Lyons & Gates, New York City, for plaintiffs; Robert B. von Mehren, New York City, of counsel.

Paul, Weiss, Rifkind, Wharton & Garrison, New York City, for defendants; Charles S. Rhyne, Washington, D. C., of counsel.

DAWSON, District Judge:

This is a motion by defendants, pursuant to Section 1404(a) of Title 28 U.S. C., to transfer this action, in the interest of justice, to the United States District Court for the Eastern District of Virginia, Alexandria Division.

The action was commenced in this district. The action is one which was brought by several funds to recover from defendants damages alleged to have been suffered by the plaintiffs in the purchase of stock from defendant Atlantic Research Corporation, or, in the alternative, to rescind said purchases and recover the $2,000,000 purchase price paid for such stock. The complaint alleges that in connection with the sale of said stock defendant Atlantic Research Corporation made certain misrepresentations and concealments of material fact; that such misrepresentations and concealments were made by the use of communications in interstate commerce or by use of the mails; and that such misrepresentations and concealments constituted violations of the Securities Act of 1933 or the Securities Exchange Act of 1934. Venue and jurisdiction are grounded upon provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.

The motion to transfer is made pursuant to the provision of the Judicial Code which allows such transfer "for the convenience of the parties and witnesses, in the interest of justice."

It is of course well established that the forum selected by plaintiff as an appropriate forum for trial of the case may not lightly be disregarded. Ford Motor Co. v. Ryan, 182 F.2d 329, 330 (2d Cir. 1950), cert. denied, 340 U.S. 851, 71 S.Ct. 79, 95 L.Ed. 624 (1950).

The burden is upon the defendants, the moving parties, to establish a basis for transferring this action to another district. There is no dispute that the district to which they seek transfer is a district where the action might have been brought since all the defendants are found or are inhabitants of or transact business in such district.

The papers establish without any substantial controversy that this is a complex case which will require a protracted trial. The evidence to be presented will, to a substantial extent, consist of facts and records largely in defendants' possession. The principal place of business of defendant Atlantic Research Corporation is in Alexandria in the Eastern District of Virginia.

The convenience of witnesses is a factor which must be taken into account. Plaintiffs contend that they will require three witnesses from New York and one from Boston to prove their claim. Defendants list thirty-five witnesses, all of whom are in or near to Alexandria, Virginia. In the very nature of the action, however, a large part of the evidence will be documentary. A substantial part of it must necessarily come from the books, papers and records of Atlantic Research Corporation. Defendants allege that "if a trial of this action takes place in New York this would require many officers and employees of defendants to spend many days away from their duties which are almost exclusively on missile and rocket and security classified research for the Defense Department of the United States." Defendants also urge that the necessary records for its defense, which would include accounting records, legal files, minute books and financial data "are so massive they would have to be carried to New York in truck loads."

While the Court recognizes that some of these allegations may be exaggerated hyperbole, nevertheless, the nature of the action is such that the Court can well conclude that it would be disruptive to the business of this defense contractor to transport its records to New York for a long and protracted trial and to keep its officers...