In re Triton Ltd. Securities Litigation, 5:98CV256.

• Decision Date: 29 September 1999
• Docket Number: No. 5:98CV256.,5:98CV256.
• Citation: 70 F.Supp.2d 678
• Parties: In re TRITON LIMITED SECURITIES LITIGATION.
• Court: U.S. District Court — Eastern District of Texas

70 F.Supp.2d 678

In re TRITON LIMITED SECURITIES LITIGATION.

No. 5:98CV256.

United States District Court, E.D. Texas, Texarkana Division.

September 29, 1999.

COPYRIGHT MATERIAL OMITTED

U. Seth Ottensoser, Keith M. Fleischman, Steven G. Schulman, Milberg Weiss Bershad Hynes & Lerach, LLP, New York City, Damon Young, John Michael Pickett, Young & Pickett, Texarkana, TX, for D.H. Lee, Jr., Ken Bortner.

Roger F. Claxton, Kilgore & Kilgore, Dallas, TX, U. Seth Ottensoser, Keith M. Fleischman, Steven G. Schulman, Milberg

Weiss Bershad Hynes & Lerach, LLP, New York City, for North River Trading Co., L.L.C., Richard L. Zorn, Elizabeth Clofine.

James N. Haltom, George L. McWilliams, Richard Andrew Adams, Patton Haltom Roberts McWilliams & Greer, LLP, Texarkanna, TX, Nelson James Roach, Charles Cary Patterson, Jeffrey John Angelovich, Bradley Earl Beckworth, Jason Brandt Stephens, Daingerfield, TX, U. Seth Ottensoser, Keith M. Fleischman, Steven G. Schulman, Milberg Weiss Bershad Hynes & Lerach, LLP, New York City, for D.H. Lee, Jr.

U. Seth Ottensoser, Keith M. Fleischman, Steven G. Schulman, Milberg Weiss Bershad Hynes & Lerach, LLP, New York City, Lance Lee, Damon Young, Young & Pickett, Texarkana, TX, for Richard Strauss, Michael Nmn Brown.

MEMORANDUM OPINION AND ORDER

FOLSOM, District Judge.

Before the Court is the Defendants' Motion To Dismiss for Improper Venue or Transfer Case to the Northern District of Texas (Doc. #19).¹ On April 27, 1999, the Court held a hearing on the Defendants' motion. After considering the motion, the response, additional filings, and the arguments of counsel at the hearing, the Court finds the following.

I. BACKGROUND

This is a securities fraud case. Seeking class certification, the named Plaintiffs are persons who purchased common stock of Triton Energy, Ltd. ("Triton") and who seek to recover damages caused by Triton's alleged violations of federal and common law. Generally, the Plaintiffs allege that Triton is an industrial oil and gas exploration and production company. On March 30, 1998, Triton announced that it was putting itself up for sale. It was reported that interest in Triton was heavy, with over thirty potential bidders examining Triton's corporate books. Triton stated that it would accept sealed bids through June 30, 1998. Plaintiffs allege that Triton's stock increased twenty percent between March 30 and May 7 of 1998.

Between July 14, 1998, and July 16, 1998, Triton's stock began to drop sharply. On Friday, July 17, 1998, Triton announced that its bidding process had been unsuccessful, that it would not be selling the company, and that it had accepted a bid from Atlantic Richfield Co. to buy one-half of its interest in its Southeast Asia gas field. Triton's stock price lost approximately one-third of its value as result of the announcement.

Plaintiffs allege that Triton carried out a plan, scheme, and course of conduct which was intended to deceive the investing public, artificially inflate and maintain the market price of Triton securities, and cause the Plaintiffs and purported class members to purchase Triton securities at inflated prices. Plaintiffs allege that Triton employed devices, schemes, and artifices to defraud and made untrue statements of material fact and/or omitted material facts necessary to make the prior statements not misleading. Plaintiffs allege Triton performed these acts through interstate commerce and/or mail.

Plaintiffs allege this action arises under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") (15 U.S.C. §§ 78j(b) and 78t(a)), and the rules and regulations promulgated thereunder, including SEC Rule 10b-5 (17 C.F.R. § 240.10b-5). Plaintiffs assert venue is proper in this District pursuant to § 27 of the Exchange Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1391(a), (b), and (d). Plaintiffs allege that the acts giving rise to the violations complained of occurred or caused injury in this District, including SEC filings and other public statements disseminated regarding Triton during the class period.

Defendants move to dismiss these causes of action for improper venue and in the alternative to transfer venue to the Northern District of Texas. Defendants argue that pursuant to the applicable venue rules provided by the Exchange Act, venue is not proper in the Eastern District. As such, Defendants contend that pursuant to 28 U.S.C. § 1406(a) the cases should be dismissed or transferred to the Northern District of Texas. Alternatively, pursuant to 28 U.S.C. § 1404, the Defendants assert the Court should transfer this action to the Northern District of Texas for the convenience of the parties, witnesses, and in the interest of justice.

The evidence provided to the Court establishes the following. Triton is a Cayman Islands corporation. The Defendants maintain no offices in this District. Triton's United States offices are headquartered in Dallas, which is in the Northern District of Texas. Triton's officers are located in Dallas. All press releases, announcements, and other media statements applicable to this case were issued from Dallas. Plaintiff D.H. Lee, Jr., purchased 1,000 shares of Triton stock at a price of $29 1/16 per share on July 16, 1998, while in Texarkana, which is in the Eastern District of Texas. On July 14 and 15, 1998, Robert Hillier purchased a total of 900 shares of Triton stock from his home in Smith County, Texas, which is within the Eastern District. Robert Hillier is not a named plaintiff.

Although Robert Hillier is not a named plaintiff, the evidence reveals that the March 30, 1998, press release from Triton was accessed and read by him within the Eastern District of Texas via the Internet. The March 30, 1998, press release lies at the heart of the majority of Plaintiffs' claims of fraud against the Defendants. In that press release, Triton announced that "strategic alternatives under consideration may include the sale or farmout of a portion or all of the Company's interest in Block A-18 of the Malaysia-Thailand Joint Development Area in the Gulf of Thailand, the sale of a portion or all of the Company's interest in the Cusiana and Cupiagua oil fields in Colombia, or both." Further, the press release contains quotes directly from Defendant Thomas G. Finck. Specifically, Mr. Finck states, "We have a substantial, valuable resources base that is only partially developed and amounts to about one billion barrels of equivalent oil, or 27.3 barrels per share.... We believe the stock market has not yet fully recognized the value of these assets."

In addition to the March 1998 press release, Plaintiffs have provided the Court with a Reuters news article dated the twelfth of May. In that article Mr. Finck states that his "plans to sell key assets or the entire company has drawn `strong' interest from industry giants." In addition, Mr. Finck indicated that due to high industry interest in this sale, Triton opened more data rooms in London. However, he stated the data rooms would be closed by the end of May with bids due in by late June and the company's management would make a decision in July.

Plaintiffs have also produced other press releases from Triton. All of the press releases from Triton contain an Internet website address: www.tritonengergy.com. However, as to these press releases, there is no evidence that they were received in the Eastern District of Texas.

II. DISCUSSION

A. 15 U.S.C. § 78aa

The Securities Exchange Act provides liberal venue rules to allow plaintiffs who are "subject to nationwide securities fraud schemes to vindicate their rights without having to resort to fragmented litigation." In Re Towner Petroleum Company Securities Litigation, MDL 607, 1986 WL 290, at *12 (E.D.Pa. June 30, 1986). However, Defendants assert that Plaintiffs cannot establish facts sufficient to demonstrate that this Court has venue over this action. Defendants argue that no Triton office, officer, or business was present in or conducted within the Eastern District. Defendants argue that Plaintiffs' claims establish that venue is proper in the Northern District. Further, Defendants argue that no act of material importance to the consummation of the alleged scheme occurred within the Eastern District as required by 15 U.S.C. § 78aa.

Plaintiffs assert that because Triton is an alien defendant and can be sued in any district, venue in the Eastern District is proper for all defendants. Triton is a Cayman Islands corporation and as such is subject to the provision of the general federal venue statute which states that an alien may be sued in any district. 28 U.S.C. § 1391(d). As with any alien defendant, § 1391(d) applies "wholly outside the operation of all the federal venue laws, general and special." Brunette Machine Works, Ltd. v. Kockum Industries, Inc., 406 U.S. 706, 714, 92 S.Ct. 1936, 32 L.Ed.2d 428 (1972). However, Defendants Thomas G. Finck and Peter Rugg are not aliens. When an alien and a non-alien are joined as defendants, "venue for the entire action is proper in any district where it is correct as to the non-alien defendant." Japan Gas Lighter Assoc. v. Ronson Corp., 257 F.Supp. 219, 225 (D.N.J.1966); see also Square D. Co. v. Niagara Frontier Tariff Bureau, Inc., 1984 WL 2929, at *3 (D.D.C. Jan.24, 1984). Accordingly, § 1391(d) does not establish venue in this district.

The Court next turns to § 27 of the Securities Exchange Act of 1934, 15 U.S.C. § 78aa. Section 78aa states in pertinent part:

Any criminal proceeding may be brought in the district wherein any act or transaction constituting the violation occurred. Any suit or action to enforce any liability or duty created by this chapter or rules and regulations thereunder, or to enjoin any violation of such chapter or rules and regulations, may be brought in any such district or in the district wherein the defendant is found or is an inhabitant or transacts business, and process in such cases may be served in any other...