62 F.R.D. 341 (S.D.N.Y. 1974), 71 Civ. 1996 (DNE), In re Penn Central Commercial Paper Litigation

Docket Nº:71 Civ. 1996 (DNE).
Citation:62 F.R.D. 341
Opinion Judge:EDELSTEIN, Chief Judge.
Party Name:In re PENN CENTRAL COMMERCIAL PAPER LITIGATION. v. GOLDMAN, SACHS & CO. et al., Defendants, Alex SHULMAN, Plaintiff, Seattle-First National Bank, Applicant. No. MDL 56A (DNE).
Attorney:Graubard, Moskovitz, McGoldrick, Dannett & Horowitz, New York City, for plaintiff. Sullivan & Cromwell, New York City, for defendants. Keane & Butler, New York City, for applicant.
Case Date:April 04, 1974
Court:United States District Courts, 2nd Circuit, Southern District of New York
 
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Page 341

62 F.R.D. 341 (S.D.N.Y. 1974)

In re PENN CENTRAL COMMERCIAL PAPER LITIGATION.

Alex SHULMAN, Plaintiff,

v.

GOLDMAN, SACHS & CO. et al., Defendants,

Seattle-First National Bank, Applicant.

No. MDL 56A (DNE).

No. 71 Civ. 1996 (DNE).

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

April 4, 1974

Page 342

Buyer's action against agent which purchased commercial paper note for buyer was transferred and consolidated for pretrial proceedings with buyer's action against seller and other cases. On agent's motion to intervene in action brought by buyer against seller or to consolidate the two actions the District Court, Edelstein, Chief Judge, held that court did not have power to order consolidation where buyer's action against agent would be before the court only for pretrial purposes while buyer's action against seller was before the court for all purposes; that action against agent, a national bank, could not be transferred, for all purposes, to district in which buyer's action against seller was brought; that agent's interest in buyer's action against seller was too contingent to permit intervention; and that benefits which might accrue to agent from intervention were not sufficient to outweigh delay which would be caused by intervention.

Motions denied.

Page 343

Graubard, Moskovitz, McGoldrick, Dannett & Horowitz, New York City, for plaintiff.

Sullivan & Cromwell, New York City, for defendants.

Keane & Butler, New York City, for applicant.

OPINION

EDELSTEIN, Chief Judge.

Seattle-First National Bank (‘ Seattle-First’ ) has moved the court for an order allowing it to intervene as a plaintiff, pursuant to Fed.R.Civ.P. Rule 24(a)(2) or 24(b)(2), in Alex Shulman v. Goldman, Sachs & Co. et al., 71 Civ. 1996 (‘ Shulman I ’ ) or alternatively for an order consolidating Alex Shulman v. Seattle-First National Bank (W.D. Washington Civ.No. 9760) 72 Civ. 616 (‘ Shulman II ’ ) with Shulman I pursuant to Fed.R.Civ.P. Rule 42(a). In order to understand the context in which this motion is made, it is necessary to detail the history of these cases.

In May, 1971 Alex Shulman commenced Shulman I in this court, seeking recovery of the face value of a commercial paper note of the Penn Central Transportation Company. He alleged that the note, which was never repaid, was purchased for him by his agent, Seattle-First, from Goldman, Sachs. In June, 1971 Shulman filed Shulman II in the Western District of Washington to recover the face value of the note from Seattle-First. Seattle-First asserted a claim over against Goldman, Sachs.

These two actions, along with forty-four other similar suits against Goldman, Sachs, were consolidated for coordinated pretrial proceedings before this court by the Judicial Panel on Multidistrict Litigation, pursuant to 28 U.S.C. § 1407 (1970). Coordinated pretrial proceedings were completed in November, 1973, and by letter dated November 28, 1973, this court suggested to the Judicial Panel on Multidistrict Litigation that it remand the consolidated cases to the transferor courts. On December 13, 1973 the Panel issued a conditional order remanding Shulman II to the Western District of Washington; Seattle-First opposed the remand and moved the panel to vacate its remand order. That motion had the effect of staying the remand pending further order of the Panel. See Rules of Procedure of the Judicial Panel on Multidistrict Litigation, 28 U.S.C. § 1407 (Supp. II. 1972) Rule 15(f). Accordingly, this court retains such jurisdiction over Shulman II as was granted it by the transfer pursuant to 28 U.S.C. § 1407.

The threshold question presented is whether this court has the power to order intervention or consolidation. It is undisputed that, as the court before which Shulman I is currently pending, this court may order intervention pursuant to Fed.R.Civ.P. Rules 24(a)(2) or 24(b)(2). The question of whether this court may order consolidation of Shulman II with Shulman I is more complex.

Seattle-First argues that the transfer of Shulman II to this court, pursuant to 28 U.S.C. § 1407 (1970), gives this court jurisdiction and powers, with respect to pretrial proceedings, which are coextensive with that of the transferor court. Accordingly, Seattle-First reasons, this court has the power to grant a motion to consolidate because the motion was made as part of the pretrial proceeding. Alex Shulman and Goldman, Sachs argue that because the proposed consolidation is for all purposes and because Shulman II is before this court only for pretrial purposes,

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in the absence of a transfer pursuant to 28 U.S.C. § 1404 (1970), the consolidation would be ineffective once the Panel remands the case to the transferor court. They further contend that this court cannot transfer Shulman II to itself pursuant to section 1404 because, in light of 12 U.S.C. § 94 (1970), that action could not have been brought originally in this district. In response Seattle-First contends that because Shulman II is already before this court, a section 1404 transfer is not a prerequisite to consolidation.

The court is convinced that it does not have the power to order consolidation of Shulman II with Shulman I . Fed.R.Civ.P. 42(a)1 provides for consolidation ‘ [w]hen actions . . . are pending before the...

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