IN RE GEN. TIRE & RUBBER CO. SECURITIES LITIGATION

• Decision Date: 18 April 1977
• Docket Number: No. 265.,265.
• Citation: 429 F. Supp. 1032
• Parties: In re GENERAL TIRE AND RUBBER COMPANY SECURITIES LITIGATION.
• Court: Judicial Panel on Multidistrict Litigation

429 F. Supp. 1032

In re GENERAL TIRE AND RUBBER COMPANY SECURITIES LITIGATION.

No. 265.

Judicial Panel on Multidistrict Litigation.

April 18, 1977.

Before JOHN MINOR WISDOM, Chairman, and EDWARD WEINFELD, EDWIN A. ROBSON, WILLIAM H. BECKER^*, JOSEPH S. LORD, III, STANLEY A. WEIGEL, and ANDREW A. CAFFREY^*, Judges of the Panel.

OPINION AND ORDER

PER CURIAM.

This litigation consists of three actions each pending in a different federal district: the Eastern District of Pennsylvania, the District of New Jersey, and the Southern District of Ohio.

These three actions (the private actions) were filed shortly after a related action was filed by the Securities and Exchange Commission (SEC) in the District of the District of Columbia on May 10, 1976. The SEC action was brought against General Tire and Rubber Company (General Tire) and its president, Michael G. O'Neil. The SEC alleged that officers and directors of General Tire and officers and directors of certain of its subsidiaries participated in a scheme of illegal corporate contributions to domestic political candidates and of illegal corporate payments to foreign officials. Several specific instances of foreign payments are set forth in considerable detail in the SEC complaint. The SEC further alleged that the contributions and payments were concealed in violation of the federal securities laws by the issuance of false and misleading statements to stockholders and the SEC and by the falsification of corporate ledgers. A consent decree was entered in the SEC action through which General Tire and Michael O'Neil agreed to a permanent injunction prohibiting any future false or misleading statements by General Tire or future use of corporate funds for illegal purposes. The consent decree also required the Board of Directors of General Tire to establish a Special Review Committee and retain a Special Counsel to conduct an investigation into the matters of which the SEC complained. That committee was required to report its findings to the Board of Directors within 180 days, and a copy of the report was to be filed with the SEC and the court.

The three private actions are derivative actions each brought by a single named plaintiff on behalf of General Tire. The Southern District of Ohio action is also brought as a class action on behalf of all shareholders of General Tire. The private actions share five common defendants — General Tire and four of its officers and directors. Also named in one or more of these actions are nine other present or former officers and directors of General Tire; two other corporations which are wholly or partly owned subsidiaries of General Tire; four officers of those subsidiaries; Price, Waterhouse and Co., certified public accountants for General Tire during the events in question; and various unnamed recipients and disbursers of funds.

The complaints in all the private actions are brought under the federal securities laws, inter alia, and, in essence, the allegations in those complaints track the allegations in the SEC complaint. Like the complaint in the SEC action, the complaint in the District of New Jersey action sets forth specific instances of foreign payments in considerable detail. The complaints in the other two actions are less specific.

General Tire and all other defendants have moved the Panel pursuant to 28 U.S.C. § 1407 to transfer the three private actions to the Northern District of Ohio for coordinated or consolidated pretrial proceedings. Plaintiff in the Eastern District of Pennsylvania action opposes transfer, or in the alternative suggests the Eastern District of Pennsylvania as the transferee district. Plaintiff in the Southern District of Ohio action also opposes transfer.

We find that the three private actions involve common questions of fact and that their transfer to the Northern District of Ohio for coordinated or consolidated pretrial proceedings under Section 1407 will best serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation.¹

Plaintiff in the Eastern District of Pennsylvania action admits that his action shares common questions of fact with the other two private actions. He contends, however, that this litigation involves only a minimal number of actions which do not share unusually complex facts, and that therefore transfer is inappropriate. He suggests, as an alternative to transfer, that voluntary cooperation among the parties can avoid any duplicative discovery efforts. Plaintiff in the ...