IN RE: Sunshine Mining Company Securities Litigation

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BEFORE THE JOD CTAR PANEL 5070 07 oo |
MULTIDISTRICT LITIGATION N Loe Rul \ Co ooIN RE SUNSHINE MINING COMPANY SECURITIES ) DOCKET No.~321 ~~ + 7 |
LITIGATION )
OPINION AND ORDER
BEFORE JOHN MINOR WISDOM, CEAIRMAN, AND EDWARD WEINFELD, Ta : . LL
EDWIN A. ROBSON, JOSEPH S. LORD, III, STANLEY A. WEIGEL, Ca
ANDREW A. CAFFREY, AND ROY W. HARPER, JUDGES OF THE PANEL. 8
PER CURIAM | oo
This litigation consists of three actions pending in :
two districts: two in the Southern District of New York and Le ks
one in the Eastern District of Washington. Each of these SE
actions centers around the activities of the board of .
directors of Sunshine Mining Company (Sunshine) in con- oo
nection with attempts by Great Western United Corporation ERE
{Great Western) to acquire a2 sizeable amount of Sunshine EE
common stock. CRE
On March 18, 1977, Great Western notified the New York N So
Stock Exchange that Great Western had acquired a block of CL
Sunshine common stock and that Great Western intended to EET
make a tender offer for additional Sunshine stock. Shortly Ce
thereafter, representatives of Great Western apparently met
with Sunshine's board of directors to discuss the terms of . oo
a tender offer. On March 21, 1977, Great Western filed =z | BE |
report with the Securities and Exchange Ccmmission in which oo
Great Western announced that it intended to make a tender

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. offer for up to 2 million shares of Sunshine stock at
® $15.75 per share. Thereafter, on September 19, 1977,
Great Western commenced a tender offer for up to 1.25
million shares of Sunshine stock at $14.75 per share.
Finally in early October 1977, Great Western and Sunshine
reached an agreement providing for, inter alia, the purchase
by Great Western of not less than 1.25 million shares of
Sunshine stock at $15.00 per share net to shareholders.
In addition, three persons connected with Great Western
were elected to Sunshine's board of directors.
The complaints in the two New York actions name as
defendants Sunshine and the members of its board of directors
® as of varch 1977, and allege that Great Western would have
made a tender offer for Sunshine stock at $16.75 per share
in March 1977 but for the actions of Sunshine's directors.
These two complaints allege that the tender offer price
of $16.75 per share would have substantially exceeded the
fair market value of Sunshine's stock, and that Sunshine's
directors violated their fiduciary duties to Sunshine
or its shareholders when the directors declined to approve
and recommend Great Western's $16.75 tender offer at the
March 1977 meeting. Instead, these complaints allege, the
®

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directors opposed Great Western's tender offer activities
® for several months. As a result of the directors’ activities,
it is alleged, Great Western withdrew its offer of $16.75
per share and commenced a tender offer at a lower price
per share. In addition to breach of fiduciary duties,
plaintiff in one of the New York actions alleges that
defendants' conduct constituted a waste of assets, while
plaintiffs in the other action allege violations of the
federal securities laws, inter alia. One of the New
York actions is brought derivatively on behalf of Sunshine
and the other is brought as a purported class action on
behalf of all persons who have owned Sunshine common stock
| ® since Great Western first proposed a tender offer to the
management of Sunshine in March 1977.
The complaint in the Washington action involves most
- of the same factual allegations as those raised in the
New York actions concerning the directors' activities
in opposing Great Western's tender offer attempts. Like
the New York actions, the Washington action names Sunshine
and its directors as of March 1977 as defendants. This
action is brought under the federal securities laws, inter
alia, as a class action on behalf of all persons who owned
® Sunshine common stock at the time of the allegedly illegal
acts of defendants.

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® All defendants except one director-defendant move
the Panel for an order pursuant to 28 U.S.C. §1407 trans-
ferring the Washington action to the Southern District of
New York for coordinated or consolidated pretrial proceedings
with the two actions pending there. Plaintiffs in both
New York actions favor transfer of the Washington action
to the Southern District of New York. Plaintiff in the
1l/
Washington action and one director-defendant oppose transfer.
We find that these three actions share factual questions
concerning defendants' conduct in connection with Great
Western's tender offer activities and that transfer of the
® Washington action to the Southern District of New York under
Section 1407 for coordinated or consolidated pretrial
proceedings with the two actions pending there will best
serve the convenience of the parties and witnesses and
promote the just and efficient conduct of the litigation.
The Washington plaintiff argues that the common factual
questions involved in this litigation are not sufficiently
complex to warrant Section 1407 proceedings. This plaintiff
contends that there will be a limited number of witnesses
and that discovery will be neither complex nor extensive.
9 1l/ This defendant has not offered any arguments in supportof his opposition to transfer.

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The Washington plaintiff also maintains that transfer to
® New York would not serve the convenience of many of the
parties and potential witnesses in this litigation because
few of them reside in the New York area. Finally, plaintiff
argues that transfer to New York and participation in
coordinated or consolidated pretrial proceedings there
would impose serious financial burdens upon him.
We do not find these arguments convincing. On the
basis of the record before us, even though only three actions
are involved in this litigation, we believe that the common
factual questions are complex enough to justify transfer
under Section 1407, particularly since all three actions
@® involve the same seven defendants. See In re Ascot Oils,
Inc. Securities Litigation, 433 F. Supp. 1118, 1120 (J.P.M.L.
1977). Section 1407 proceedings will prevent duplicative
discovery, eliminate the possibility of inconsistent pretrial
rulings and otherwise streamline pretrial efforts. In
particular, transfer will avoid conflicting class determinations
inasmuch as the Washington action and one of the New York
actions have been brought on behalf of overlapping classes.
The Washington plaintiff's concern that transfer of
his action to New York might be financially burdensome and
®

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might not serve the convenience of the parties and
® witnesses is unwarranted. As we stated in In re Nissan
Motor Corporation Antitrust Litigation, 385 F. Supp. 1233,
1255 (J.P.M.L. 1974):
Since a Section 1407 transfer is for pretrial
proceedings only, there is usually no need for the
parties and witnesses to travel to the transferee
district for depositions or otherwise. See, e.g.,
Ped. R. Civ. P. 45(d) (2). Furthermore, the judi-
cious use of liaison counsel, lead counsel and
steering committees will eliminate the need for
most counsel ever to travel to the transferee
district. See Manual for Complex Litigation,
Part I, Sections 1.90-1.93 (rev. ed. [1977]). And
it is most logical to assume that prudent counsel
will combine their forces and apportion the work-
load. In short, one of the purposes of coordinated
or consolidated pretrial proceedings is to stream-
line the efforts of the parties and witnesses, their
counsel and the judiciary in order to effectuate an
overall savings of costs and a minimum of inconvenience
) to all concerned.
The Southern District of New York is clearly the most
appropriate transferse district. Sunshine's executive offices
are located in New York, and therefore most of the relevant
documents and many of the key witnesses are located there.
In addition, all parties except the Washington plaintiff
and one director-defendant prefer the Southern District of
New York over any other district. See In re Ascot Oils, Inc.
Securities Litigation, supra, 433 F. Supp. at 1120.

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® IT IS THEREFORE ORDERED that the action listed on thefollowing Schedule A and pending in the Eastern District of
Washington be, and the same hereby is, transferred pursuant |
to 28 U.S.C. §1407 to the Southern District of New York
and, with the consent of that court, assigned to the
Honorable Whitman Knapp for coordinated or consolidated
pretrial proceedings with the actions pending in that
district and listed on Schedule A.
®
®

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C SCHEDULE A DOCKET NO. 321
SOUTHERN DISTRICT OF NEW YORK CIVIL ACTION NO.
Nicholas Maris & Dorothy Maris v. 77Civ.4020
Sunshine Mining Co., et al.
Ethel Berenson v. Irwin P. Underweiser, 77Civ.4386
et al.
EASTERN DISTRICT OF WASHINGTON CIVIL ACTION NO.
Charles Stolz v. Sunshine Mining Co., Cc=-77-267
et al.