In re Seeburg-Commonwealth United Merger Litigation

• Decision Date: 03 August 1973
• Docket Number: No. 37.,37.
• Parties: In re SEEBURG-COMMONWEALTH UNITED MERGER LITIGATION. Berry Petroleum Company, et al., v. Adams & Peck, et al., Northern District of Texas, Civil Action No. CA-3-6579
• Court: Judicial Panel on Multidistrict Litigation

362 F. Supp. 568

In re SEEBURG-COMMONWEALTH UNITED MERGER LITIGATION.

Berry Petroleum Company, et al., v. Adams & Peck, et al., Northern District of Texas, Civil Action No. CA-3-6579

No. 37.

Judicial Panel on Multidistrict Litigation.

August 3, 1973.

Before ALFRED P. MURRAH, Chairman, and JOHN MINOR WISDOM, EDWARD WEINFELD, EDWIN A. ROBSON, WILLIAM H. BECKER, JOSEPH S. LORD, III, and STANLEY A. WEIGEL, Judges of the Panel.

OPINION AND ORDER

PER CURIAM.

The Panel initially transferred sixteen actions brought by stockholders of Commonwealth United Corporation and Seeburg Corporation to the Southern District of New York and assigned them to the Honorable Frank H. McFadden, sitting by designation, for coordinated or consolidated pretrial proceedings pursuant to 28 U.S.C. § 1407. In re Seeburg-Commonwealth United Merger Litigation, 312 F.Supp. 909 (Jud.Pan.Mult.Lit. 1970). Since that time, the Panel has transferred to that district additional actions which raised questions of fact common to those initially transferred. See, e.g., In re Seeburg-Commonwealth United Merger Litigation, 331 F.Supp. 552 (Jud.Pan.Mult.Lit.1971). The Panel ordered the parties in the above-captioned action to show cause why that action should not be transferred to the Southern District of New York and included in the coordinated or consolidated pretrial proceedings before Judge McFadden. Plaintiffs oppose and defendants favor transfer. We find that transfer of this action to the Southern District of New York for coordinated or consolidated pretrial proceedings with the actions previously transferred to that district will serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation.

A. The Present Berry Action

The above-captioned action arises from the acquisition of Berry Petroleum Company by Commonwealth United on October 31, 1968, whereby Commonwealth acquired the assets of Berry for Commonwealth stock which was then distributed to Berry's shareholders in dissolution. Plaintiffs include four former shareholders of Berry who purport to represent a class of all persons who owned Berry common stock as of October 16, 1968, and received common stock of Commonwealth in exchange. The defendants are various directors, officers and agents of Commonwealth, but Commonwealth itself is not named as a defendant.

Plaintiffs allege that defendants violated the federal securities laws in failing to state material facts or to correct misstatements of material facts in the Commonwealth prospectus issued on October 16, 1968, upon which Berry shareholders relied in approving the Berry-Commonwealth merger. It is also alleged that during the period commencing January 1, 1968, and ending December 31, 1969, defendants withheld material facts concerning Commonwealth's financial condition and disseminated financial information which was materially false and misleading.

B. The Prior Berry Action

Berry and three of the four shareholder plaintiffs in the above-captioned action previously sued Commonwealth in the Western District of Arkansas.¹ The Arkansas action also concerned the merger of Berry into Commonwealth and was brought solely against Commonwealth as a class action on behalf of Berry shareholders at the time of the merger. Plaintiffs alleged breach of contractual representations and warranties concerning Commonwealth's condition at the time of the merger and sought rescission of that transaction.

The Panel denied Commonwealth's motion to transfer the action to New York under Section 1407 because plaintiffs' allegations raised only limited questions of fact common to the acts of defendants alleged by plaintiffs in the transferee district and because plaintiffs had completed their discovery and were proceeding toward trial. Seeburg-Commonwealth United Merger Litigation, 333 F.Supp. 911 (Jud.Pan.Mult.Lit. 1971). That action has since been settled and dismissed.

C. Status of Pretrial Proceedings in New York

With the exception of two individual actions,² a consolidated complaint (the Land-Jennings action) was filed on behalf of all plaintiffs in the cases transferred to and pending in New York. In February 1972 Judge McFadden ordered the Land-Jennings action to proceed as a class action on behalf of all persons who at any time between October 16, 1968 and August 1, 1969 acquired securities issued by Commonwealth and who sustained losses thereon as a result of wrongful acts or omissions of defendants. Judge McFadden also enjoined further suits by members of that class without specific approval of the court. Notices pursuant to Rule 23, Fed.R.Civ. P., were mailed to all class members, including all former Berry shareholders who held shares at the time of the Berry acquisition by Commonwealth.

A settlement of all claims against defendants in the Land-Jennings action, except Arthur Young, was approved by the court in November 1972. A specific allocation from the settlement fund was made for the Berry shareholders in conjunction with the settlement of the claims asserted against Commonwealth in the Berry action filed in Arkansas. Although the claims by the Land-Jennings plaintiffs against Arthur Young are still pending, we are informed that an agreement in principle to settle those claims has been reached.

The two individual actions are also pending in the transferee court. Plaintiffs generally allege that during a period similar to that alleged in the present Berry action Commonwealth disseminated materially false and misleading information and withheld other material information concerning its financial condition...