IN RE: Boise Cascade Securities Litigation

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MUL Tira PANEL |
o J IRICT | 17m
BEFORE THE JUDICIAL PANEL TILER
MULTIDISTRICT LITIGATION wi ~~7 1973
: pPATRIA [5] -
IN RE BOISE CASCADE ) CRERICOR 71,10 ARD
SECURITIES LITIGATION ) DOCKET NO. 128 -" HlEpiue
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
Three actions arising out of the 1969 merger of West
Tacoma Newsprint Company into the Boise Cascade Corporation
have been brought in the Western District of Washington and
consolidated pursuant to an order of that court. Plaintiffs are
former stockholders of West Tacoma Newsprint. They allege that
Boise Cascade, Arthur Andersen & Company and individual officers
and directors of Boise Cascade violated the federal securities
laws in connection with the merger by furnishing false and mis-
leading information concerning the financial condition of Boise
Cascade. Pursuant to a separate and distinct merger agreement
in 1969, Boise Cascade also acquired United Lumber Company,
Wiles-Chapman Lumber Company and United Lumber and Hardware Company
(hereinafter collectively referred to as United Lumber). Share-
holders in the acquired corporations have brought an action in
the Eastern District of Missouri against Boise Cascade, Arthur
*
Although Judge Weinfeld was unable to attend the Panel hearing,
he has, with the consent of all parties, participated in
this decision.

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Andersen and certain individual defendants alleging violations
of the federal securities laws similar to those alleged in the
Washington litigation. With the exception of four individual
defendants, all of the defendants named in the action pending in
Missouri are also defendants in the consolidated action in Washington.
Plaintiffs in the Missouri action move the Panel for an order
transferring that action to the Western District of Washington
under 28 U.S.C. §1407 for coordinated or consolidated pretrial
proceedings. The Washington plaintiffs support the motion, but
defendants oppose any transfer under Section 1407. We find that
these actions involve common questions of fact and that transfer
of the Missouri action to the Western District of Washington will
serve the convenience of the parties and witnesses and promote
the just and efficient conduct of the litigation.
Plaintiffs assert that, notwithstanding the fact that
different merger transactions are involved, each lawsuit raises
common questions of fact concerning the truthfulness of facts con-
tained in Boise Cascade's 1968 Annual Report and other financial
statements prepared and certified by Arthur Andersen. And they
point out that these documents were furnished to shareholders of
both United Lumber and West Tacoma Newsprint in connection with
the mergers. Plaintiffs argue that transfer will enable them
to coordinate their discovery of defendants' documents and
witnesses and will insure against the possibility of inconsistent
pretrial rulings.
Defendants concede that certain common questions of fact

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are raised by the lawsuits but argue that coordinated or consoli-
dated pretrial proceedings pursuant to Section 1407 are not
necessary. They point out that the mergers in question involve
completely different companies and were consummated after negotia-
tions between different groups of people. Defendants contend that,
as a result, separate and distinct factual questions are involved
with respect to the issues of misrepresentation and reliance raised
by the different groups of shareholder-plaintiffs. Defendants
suggest that voluntary coordination of the limited common discovery
can be worked out and is a more suitable approach to the handling
of this litigation than transfer under Section 1407.
Defendants' arguments are not persuasive. Plaintiffs’
allegations 6f fraud and misrepresentation arise out of virtually
the same documents used by Boise Cascade to induce plaintiffs to enter
into the mergers. And in order to establish a violation of the fed-
eral securities laws, both groups of plaintiffs will be seeking the
same documentary evidence and deposing many of the same witnesses.
Furthermore, it appears that attempts to voluntarily coordinate the
discovery have failed. Thus, only by placing both actions under the
supervision of a single judge can we be assured that duplication of
discovery and unnecessary expenditure of judicial time and energy will
be avoided. In addition, transfer will eliminate the possibility
of conflicting rulings regarding the confidentiality of trade secrets
of Boise Cascade and auditing techniques of Arthur Andersen.

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The Western District of Washington is clearly the most
appropriate transferee forum for this litigation. Pretrial pro-
ceedings in the actions consolidated in that district are further
advanced than those in the Missouri action. And the parties
favoring transfer under Section 1407 agree that that district is
more convenient for the majority of the parties and witnesses.
In the action pending in Missouri, Boise Cascade has
filed a counterclaim against certain individual plaintiffs alleging
violations of Rule 10(b)-5 in connection with the merger of United
Lumber into Boise Cascade. All parties agree that the counterclaim
does not involve questions of fact common to either the Missouri
or Washington plaintiffs' claims against defendants. We find,
therefore, that the counterclaim should be separated from the
Missouri plaintiffs' complaint and remanded pursuant to Section
1407 (a) to the Eastern District of Missouri for further proceedings.
IT IS THEREFORE ORDERED that the action listed on the
attached Schedule A, pending in the Eastern District of Missouri,
be, and the same hereby is, transferred to the Western District
of Washington and, with the consent of that court, assigned to
the Honorable Morell E. Sharp for coordinated or consolidated
pretrial proceedings pursuant to 28 U.S.C. §1407 with the actions
pending there and listed on Schedule A.
IT IS FURTHER ORDERED that defendant's counterclaim
in the action on the attached Schedule A pending in the Eastern
District of Missouri be, and the same hereby is, separated and
remanded under Section 1407 (a) to the Eastern District of Missouri
for further proceedings.

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SCHEDULE A " DOCKET NO. 128
EASTERN DISTRICT OF MISSOURI
Joyce G. Lewin, et al. v. Boise Cascade, Civil Action
Corp., et al. No. 72C686	(4)
" WESTERN DISTRICT OF WASHINGTON -
The Tribune Publishing Co., etc. v. Civil Action
Boise Cascade Corp., et al. No. 402-72C2
The Chronicle Publishing Co., etc. Ve Civil Action
Boise Cascade Corp. No. 705-72C2
McClatchy Newspapers, etc. v. Boise Civil Action
Cascade Corp., et al. No. 704-72C2