IN RE: Pennsylvania Life Company Securities Litigation

. , Case MDL No. 183 Document 2 Filed 05/01/15 Page 1 of 13
DiC	AL PANEL OR
} WUTOI TRICT LTIOATI!
’ BEFORE THE JUDICIAL PANEL im ED
ON "
® MULTIDISTRICT LITIGATION FER 13 1973
ATRL Tn HOWARDIN RE PENNSYLVANIA LIFE COMPANY ) P PAE THE PANEL
SECURITIES LITIGATION ) DOERET NOT 183
OPINION AND ORDER
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
PER CURIAM
All actions in this litigation allege violations of various
federal securities laws involving the sale of Pennsylvania Life Co.
(PLC) securities. Except the Benyas action in the Eastern
1/
District of Michigan, each action appears to focus primarily
® upon the alleged failure of PLC's directors and officers todivulge material information to the investing public concerning
the nature and extent of various business dealings between PLC
and the Equity Funding Corporation of America (EFCA), including
their respective subsidiaries. These business transactions
are alleged to have had a substantially adverse effect upon
PLC's financial condition and, consequently, upon the value
of its securities.
Basically, the eleven actions that have been instituted
*
Although Judges Lord and Weigel were unable to attend
the Panel hearing, they have, with the consent of all
parties, participated in this decision.
L/ pavid Benyas, et al. v. Pennsylvania Life Company and
Penn General Agencies, E.D. Michigan, Civil Action
Q No. 4-71318.

. . Case MDL No. 183 Document2 Filed 05/01/15 Page	2 of 13
. . - 0 -
® in five districts can be categorized into two groups. One group
is comprised of five purported class actions on behalf of all
purchasers of PLC common stock securities during various periods
from 1969 through 1973. Plaintiffs allege that the investing public
was defrauded both by defendants' nondisclosure of material facts
and by their issuance of false and misleading financial statements,
which artificially inflated the price of PLC securities. The
other group contains six actions brought by individuals who allege
that they were defrauded into selling their insurance agencies
to PLC or one of its subsidiaries in exchange for PLC securities.
Plaintiff Krumholz moves the Panel for an order transferring
all actions to the Central District of California. While all of
the parties agree that some coordination of these actions for
® pretrial proceedings is necessary, they disagree both as to the
number of actions to be transferred and as to the most appropriate
transferee forum. With the exception of the Benyas action, we find
that all actions involve common questions of fact and that their
transfer to the Central District of California for coordinated
or consolidated pretrial proceedings pursuant to 28 U.S.C. §1407
will best serve the convenience of the parties and witnesses and
promote the just and efficient conduct of this litigation.
The first dispute amongst the parties concerns the appropri-
ate actions to transfer to a single district for coordinated or
consolidated pretrial proceedings. Some parties contend that
all actions should be transferred, while other parties would
9

. . Case MDL No. 183 Document2 Filed 05/01/15 Page	3 of 13
Co -3-
® exclude the Benyas action. A third group proposes the transfer ofall class actions, with the individual actions remaining in their
respective districts. Except for the Benyas action, which will be
discussed infra, we are convinced that transfer of all actions to
the same district for pretrial supervision by a single judge is the
sensible approach to eliminate duplication of discovery and to
prevent inconsistent pretrial decisions. Common factual questions
clearly pervade all of the actions and a majority of the documents
and witnesses relevant in the purported class actions will be
pertinent in the individual actions. As a result, we perceive no
justification for conducting separate pretrial proceedings of the
class and individual actions. A schedule of pretrial matters unique
to a particular action can, of course, be designated at the dis-
® cretion of the transferee judge.
The second controversy amongst the parties centers upon the
most appropriate transferee forum for this litigation. A
substantial minority of parties favor the transfer of some of these
actions to the Southern District of New York because two judges
in that district have been supervising five of the eleven actions
in this litigation for over a year. One party desires the transfer
of certain actions to the District of Delaware because there is
substantially less calendar congestion in that district than in
either the Central District of California or the Southern District
of New York. We are not persuaded by the arguments favoring
transfer to either of these districts. Instead, we agree with
the majority of the parties that the Central District of Cali-
4

: - Case MDL No. 183 Document2 Filed 05/01/15 Page	4 of 13
- 4 -
® fornia is the best location for the pretrial processing of this
litigation pursuant to Section 1407. Most of the corporate and
individual defendants can be found there, along with their records
and documents.
The Benyas Action
This action is a private contract dispute involving operative
facts distinct from the other actions. For example, the only
defendants in Benyas are PLC and Penn General Agencies, Inc. (PGA),
a PLC partially-owned subsidiary, and not auditors, directors or
officers named as defendants in the other ten actions. In addi-
tion, it appears that the documents relied upon by plaintiffs in
Benyas to prove their claims are different from those relied
® upon by the plaintiffs in the remainder of the litigation. More-
over, Benyas involves several alleged oral misrepresentations,
whereas the other actions focus on alleged written misrepresen-
tations. Finally, -3ng most importantly, since PGA entered into
long-term management contracts with plaintiff Benyas, whereby
Benyas was to operate the two insurance agencies that he sold to
PLC, the Benyas action has developed into a struggle for actual
control of the two agencies. This problem is unique to the action
and has necessitated substantial involvement by the Michigan court
in the daily business operations of the two agencies.
Because of the unique problem in Benyas and the fact that
it raises only limited questions of fact common to the other
actions, the Benyas action should remain in the Eastern District
?

Case MDL No. 183 Document2 Filed 05/01/15 Page	5 of 13
- 5 -
LJ Michigan. It would be improvident to saddle the transferee
court with the acute burden of supervising the daily business
vperations of the two insurance agencies over which plaintiff
Benyas and defendant PLC are struggling for control. And we
Ave confident that if there is any potential duplication of dis-
covery, counsel will cooperate and arrange to have that discovery
take place but once.
TT IS THEREFORE ORDERED that all actions listed on the
attached Schedule A pending in districts other than the Central
District of California be, and the same hereby are, transferred
to the Central District of California and, with the consent of
that court, assigned to the Honorable Manuel IL. Real for coordi-
@ or consolidated pretrial proceedings pursuant to 28 U.S.C.
§1407 with the actions listed on Schedule A and pending in
that district.
IT TIS FURTHER ORDERED that transfer of David Benyas, et al. :
v. Pennsylvania Life Company and Penn General Agencies, E.D. Mich.,
Civil Action No. 4-71318, pursuant to 28 U.S.C. §1407 be, and
the same hereby is, DENIED.
{
Q

. . Case MDL No. 183 Document 2 Filed 05/01/15 Page 6 of 13
) SCHEDULE A - DOCKET NO. 183
. SOUTHERN DISTRICT	OF NEW YORK
Irene Janeczko v. Pennsylvania Life Company, Civil Action
et al. No. 73 Civ. 2491
Maurice Paprin v. Pennsylvania Life Company, Civil Action
et al. No. 74 Civ. 2581
Bernard Krumholz v. Smith, Barney & Co., Civil Action
Inc., et al. No. 74 Civ. 2930
Leonard Kaufer v. Pennsylvania Life Company, Civil Action
et al. No. 74 Civ. 3051
Maurice Paprin v. Pennsylvania Life Company, Civil Action
et al. No. 74 Civ. 3178
CENTRAL DISTRICT OF CALIFORNIA
Michael CT. Fields, et al v. Pennsylvania Civil Action
Life Company, et al. No. CV-74-950-AAH
Meyer D. Rich v. Pennsylvania Life Company, = Civil Action
et al. No. CV-74-2212-R
[| Morris Stark, et ux. v. Pennsylvania Life Civil ActionCo., et al. No. CV-74~2623-RJK
DISTRICT OF NEW JERSEY
Pennsylvania Life Company v. International Civil Action
Equities Ltd., et al. No. 788-73
DISTRICT OF DELAWARE
Edward R. Lehman v. Pennsylvania Life Civil Action
Company, et al. No. 74-156

Case MDL No. 183 Document 2 Filed Q5/01/15	Page 7 of 13
DOCKET NO. 183 PLT IE
| BRL
BEFORE THE JUDICIAL PANEL ON MULTIDISTRICT RAF ISAToN -	. pp ~ 1877 .
IN RE PENNSYLVANIA LIFE COMPANY SECURITIES LITIGATION .
CLEStte Hla,
. . . LU TE VE
David J. Levitt, et al. v. Pennsylvania Life Co.; *"<i:
et al., E.D. Pennsylvania, Civil Action No.
717-142 g :
3/3/77	ORDER TO SHOW CAUSE
You and each of you are hereby ordered to show cause
why the above-captioned action should not be transferred
pursuant to 28 U.S.C. §1407 to the Central District of
California and assigned to the Honorable Manuel L. Real
for coordinated or consolidated pretrial proceedings with
the actions previously transferred. See, In re Pennsylvania
Life Company Securities Litigation, 389 F. Supp. 981.
Responses to this order shall conform with the requirements
of Rule 8 of the Rules of Procedure of the Judicial Panel
on Multidistrict Litigation, 65 F.R.D. 253 (1975).
You are futher notified that the issuing of this
order by the Panel does not affect or suspend orders and
discovery proceedings in the district courts in which said : So
multidistrict litigation is pending. RPJPML (Rule 16)
FOR THE PANEL:
<0 Wr Lo oo	ANE ETRE I SS hia
John Minor Wisdom
Chairman
i
|

Case MDL No. 183 Document 2 Filed 05/01/15 Page 8 of 13
: oo SUDICIAT Raye, of
DOCKET NO. 183 Fils
BEFORE THE JUDICIAL PANEL ON MULTIDISTRICT LITHEYERNg7; :
IN RE PENNSYLVANIA LIFE COMPANY SECURITIES LITT AT 3 EIRARD	Joseph F. Darpel, et al. v. Pennsylvania Li: hy As THR)
et al., E.D. Missouri, Civil Action No. 77-116C	(1) :
TRANSFER ORDER :
It appearing that all parties to the above-captioned ;
action either agree on the desirability of or do not oppose |
transfer of that action to the Central District of California .
for coordinated or consolidated pretrial proceedings with the |
actions in this litigation which were previously transferred |
to that districtl/ and, upon consideration of the papers i
filed and the hearing held, the Panel having found that the
above-captioned action involves common questions of fact
with the actions in this litigation previously transferred 5[5 17	to the Central District of California and assigned to the .
Honorable Manuel IL. Real and that transfer will serve the n
convenience of the parties and witnesses and promote the
just and efficient conduct of this litigation, 5
IT IS THEREFORE ORDERED that the above-captioned
action pending in the Eastern District of Missouri be, and
the same hereby is, transferred pursuant to 28 U.S.C.
§1407 to the Central District of California and, with the |	consent of that court, assigned to the Honorable Manuel IL.
Real for coordinated or consolidated pretrial proceedings :
with the actions in this litigation previously transferred
to that district and assigned to the Honorable Manuel I.
Real.
I
FOR THE PANEL: |
Sh hi bis |Om Tanm., Wisfigre, 3John Minor Wisdom
Chairman :
1/In re Pennsylvania Life Company Securities Litigation, 389 i
F. Supp. 981 (J.P.M.L. 1975). |:
|| :

: Case MDL No. 183 Document 2 Filed 05/01/15 Page 9 of 13
: BY IR iy pe
R . Sn I [oR ER j ie oar
de a :
BEFORE THE JUDICIAL PANEL Coren oo : :
ON RUG 2 Jog .	MULTIDISTRICT LITIGATION MRE NP
Frog
IN RE PENNSYLVANIA LIFE COMPANY JOLER GroenSECURITIES LITIGATION ) DOCKET NOL 183
)
David J. Levitt, et al. v. Pennsylvania ) .
Life Ins. Co., et al., E.D. Pennsylvania, )
Civil Action No. 77-142 )
OPINION AND ORDER
BEFORE JCHN MINOR WISDOM, CHAIRMAN, AND EDWARD WEINFELD,
EDWIN A. ROBSON, JOSEPH S. LORD, III*, STANLEY A. WEIGEL,
ANDREW A. CAFFREY, AND ROY W. HARPER*, JUDGES OF THE PANEL.
PER CURIAM .
The Panel, pursuant to 28 U.S.C. §1407, previously trans-
ferred several actions in this litigation to the Central
District of California and, with the consent of that court,
assigned them to the Honorable Manuel L. Real for coordinated co
or consolidated pretrial proceedings with related actions
already pending there. In re Pennsylvania Life Company SE
Securities Litigation, 389 F. Supp. 981 (J.P.M.L. 1975). The :
plaintiffs in the actions in the transferee district allege
violations of the federal securities laws, inter alia, in oo
— == 8 [31/5 a.	connection with the sale of Pennsylvania Life Company (PLC)
securities. The actions focus primarily on the alleged
failure of PLC's officers and directors to divulge information
to the investing public concerning various business dealings
of PLC and certain of its subsidiaries with Equity Funding
* Judges Lord and Harper took no part in the consideration or
decision of this matter.

BE Case MDL No. 183 Document 2 Filed 05/01/15 Page 10 of 13 |
Corporation of America and certain of its subsidiaries.
® These business transactions are alleged to have had a sub- ’
stantial adverse effect upon PLC's financial condition and,
consequently, upon the value of its securities.
The actions in the transferee district are of two basic
types. One group of actions (open market purchaser actions)
were brought by purchasers of PLC common stock on the open :
market. Judge Real certified a class in those actions
which consisted of various persons who purchased PLC common
stock on the open market during the period from April 8,
1970, through October 20, 1973. On March 22, 1977, Judge Real
approved a settlement regarding the open market purchaser
class and ordered the dismissal of the claims on behalf of
® all members of the open market purchaser class, with the
exception of twenty individuals who had opted out of that
class. Some open market purchaser actions in the transferee
district which were brought by persons who opted out of the
class are still pending.
Another group of actions in the transferee district
(broker actions) were brought by individuals who allege that
they were defrauded into selling their insurance agencies to
PLC or one of its subsidiaries in exchange	for which they :
received PLC securities at an inflated price.
The above-captioned action, Levitt, was recently brought
under the federal securities laws and principles of common law
fraud by five of the individual purchasers of PLC common stock
®

. Case MDL No. 183 Document 2 Filed 05/01/15 Page 11 of 13
who had opted out of the class that was determined in the oo
® transferee district. Defendants are PLC and PLC's accountants.
Plaintiffs in Levitt allege that the defendants, by concealing
the true financial condition of PLC, wrongfully induced plain-
tiffs to purchase 15,000 shares of PLC stock at an artificially
inflated price. |
Since Levitt appeared to involve questions of fact
common to those in the actions previously transferred, the
Panel oxdered the parties to show cause why. this action should
not also be transferred to the Central District of California
for inclusion in the Section 1407 pretrial proceedings in
that district. See Rule 10(b), R.P.J.P.M.L., 65 F.R.D.
253, 260 (1975). Defendants favor transfer while the
plaintiffs in Levitt oppose transfer.
® We find that Levitt involves common questions of fact
with the previously transferred actions, and that its transfer |
to the Central District of california under Section 1407 will
best serve the convenience of the parties and witnesses and
promote the just and efficient conduct of the litigation. |
Plaintiffs in Levitt contend that the open market
purchaser phase of this litigation has, for all practical
purposes, been concluded by the court—-approved settlement
between defendants and the class of open market purchasers.
As a result of that settlement, plaintiffs in Levitt maintain,
only the broker actions, which are unrelated to Levitt, are
active in the transferee district. Therefore, these plaintiffs
® |

. Case MDL No. 183 Document2 Filed 05/01/15 Page 12 of 13
. a. 4 -
® assert, transfer of Levitt is inappropriate at this stage oo
of the proceedings in the transferee district.
We find these arguments unpersuasive. Levitt and all
the previously transferred actions in this litigation,
whether open market purchaser actions or broker actions,
involve common questions of fact concerning the business
dealings between PLC and Equity Funding, and the alleged
failure of PLC's officers and directors to divulge infor-
mation concerning those business dealings. ‘See In re
Pennsylvania Life Company Securities Litigation, supra,
389 F. Supp. at 982-83. Levitt of course shares factual
questions with the other actions still pending in the
transferee district that have been brought by individuals
o who opted out of the class of open market purchasers.
Thus, transfer of Levitt for inclusion in the Section 1407
proceedings is necessary in order to prevent duplicative
discovery, eliminate any possibility of conflicting pre-
trial rulings and conserve time and effort for the parties,
the witnesses and the judiciary. See In re Sta-Power
Industries, Inc. Securities and Antitrust Litigation, 404
F. Supp. 476, 477 (J.P.M.L. 1975); In re Four Seasons
Securities Laws Litigation, 352 F. Supp. 964, 965-66
(J.P.M.L. 1973). The transferee judge, because of his
familiarity with the issues involved in this litigation, is
surely in the best position to integrate discovery proceedings
1/Defendants state that other individuals who opted out of the
® class in the transferee district may file additional actions.

Case MDL No. 183 Document 2 Filed 05/01/15 Page 13 of 13 |
to . - 5 -
in Levitt with proceedings in the previously transferred ,
® actions. Moreover, any relevant discovery heretofore oo
completed in the transferee district may be made appli~-
cable to Levitt by utilizing the procedures recommended in
the Manual for Complex Litigation, Parts I and II, §§3.11
(rev. ed. 1973).
IT IS THEREFORE ORDERED that, pursuant to 28 U.S.C.
§1407, the action entitled David J. Levitt, et al. v. Pennsylvania
Life Co., et al., E.D. Pennsylvania, Civil Action No. 77-142,
be, and the same hereby is, transferred to the Central District
of California and, with the consent of that court, assigned to
the Honorable Manuel L. Real for coordinated or consolidated
pretrial proceedings with the actions previously transferred
® to that district.
®