Shulof v. Westinghouse Electric Corporation, 75 Civ. 4371.

• Decision Date: 13 November 1975
• Docket Number: No. 75 Civ. 4371.,75 Civ. 4371.
• Citation: 402 F. Supp. 1262
• Parties: George SHULOF, suing on behalf of himself and of all other persons similarly situated, Plaintiff, v. WESTINGHOUSE ELECTRIC CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of New York

402 F. Supp. 1262

George SHULOF, suing on behalf of himself and of all other persons similarly situated, Plaintiff, v. WESTINGHOUSE ELECTRIC CORPORATION, Defendant.

No. 75 Civ. 4371.

United States District Court, S. D. New York.

November 13, 1975.

Edward Nathan, New York City, for plaintiff; Berthold H. Hoeniger, New York City, of counsel.

Rogers, Hoge & Hills, New York City, for defendant; John W. Douglas, Cyril V. Smith, Jr., Covington & Burling, Washington, D. C., of counsel.

LASKER, District Judge.

George Shulof brought this class action claiming that Westinghouse Electric Corporation perpetrated a fraud on the market, in violation of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) and in breach of common law fiduciary duty owed by Westinghouse to its stockholders. In particular, Shulof alleges that from August 5, 1974 through December 27, 1974 Westinghouse represented to its stockholders and the investing public that it intended to retain its Major Appliance Division (MAD) — a division which was suffering serious losses at the time — when in fact it was actively negotiating to sell MAD to White Consolidated Industries, as Westinghouse did by the end of the period. The thrust of the complaint is that Westinghouse's misstatements and incomplete statements as to its true plans artificially depressed the market of its common stock to the damage of the proposed class who sold their stock during the period such statements were made.

Westinghouse moves to transfer the case to the Western District of Pennsylvania pursuant to 28 U.S.C. § 1404(a). Shulof moves for a class action determination pursuant to Rule 23, Federal Rules of Civil Procedure.

§ 1404 provides that civil actions may be transferred "For the convenience of parties and witnesses, in the interest of justice, . . . to any other district . . . where it might have been brought." There is no dispute that this action might have been brought in the Western District of Pennsylvania.

For the reasons stated below we conclude that the case should be transferred to the Western District of Pennsylvania for the convenience of the witnesses and in the interests of justice.

The appropriateness of transfer depends on:

". . . (1) the convenience to parties; (2) the convenience of witnesses; (3) the relative ease of access to sources of proof; (4) the availability of process to compel attendance of unwilling witnesses; (5) the cost of obtaining willing witnesses; (6) the practical problems indicating where the case can be tried more expeditiously and inexpensively; and (7) the interests of justice, a term broad enough to cover the particular circumstances of each case, which in sum indicate that the administration of justice will be advanced by a transfer." Schneider v. Sears, 265 F.Supp. 257, 263 (S.D.N.Y.1967) (footnotes omitted).

In this case, the convenience of the parties is a trade off, and in any event is of little moment in the disposition of the motion. While it is axiomatic that a plaintiff's choice of forum is entitled to great consideration, the adage has little weight in stockholder class actions because, as the Supreme Court has noted:

". . . Where there are hundreds of potential plaintiffs . . . all of whom could with equal show of right go into their many home courts, the claim of any one plaintiff that a forum is approriate merely because it is his home forum is considerably weakened." Koster v. Lumberman's Mutual Co., 330 U.S. 518, 524, 67 S.Ct. 828, 832, 91 L.Ed. 1067 (1947). See also Silverman v. Wellington Management Co., 298 F.Supp. 877, 879 (S.D.N.Y. 1969, Mansfield, J.)

Indeed, in the case at hand Shulof does not claim that this district is an appropriate forum "merely because it is his home forum," but rather for other reasons discussed below. It is also worthy to note that the complaint alleges (Par. 7(a)) that there are 24,000 stockholders of Westinghouse and that two other stockholder class actions making basically the same claims have been instituted in the Western District of Pennsylvania and the Northern District of Illinois.

A more difficult and significant question is whether transfer is justified for the convenience of witnesses. The record indicates (see affidavits of F. Neal Sever, sworn October 10 and October 30, 1975) that the three members of the Westinghouse "team" which negotiated the sale of MAD to White have their offices at Westinghouse headquarters in Pittsburgh and reside in the Pittsburgh area; that of 5 other potential witnesses, including the Chairman of the Board of Westinghouse and its Vice President for Business Planning, as well as the President of White-Westinghouse Corporation, 4 live in the Pittsburgh area, and 1 in Minneapolis and that "presumably" potential witnesses employed by White reside in or near Cleveland, Ohio, since Cleveland is the White headquarters. Shulof properly criticizes Westinghouse for not naming the witnesses whom it intends to call, and in some cases such a deficiency might well be fatal. However, it is also true that it may be more difficult for a defendant than a plaintiff to specify which...