IN RE: King Resources Company Securities Litigation

Case MDL No. 79 Document2 Filed 04/30/15 Page 1 of 28
BEFORE THE JUDICIAL PANEL +
MULTIDISTRICT LITIGATION ayREL = pur
fa
IN RE KING RESOURCES COMPANY ) Lo Fo oa
L SECURITIES LITIGATION ) DOCKET INO. 79
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
King Resources Company originally requested transfer
of nine actions’ in which it is named defendant to the
District of Colorado for coordinated or consolidated pretrial
proceedings pursuant to 28 U.S.C. §1407. Subsequently, another
common defendant in this litigation, Timothy G. Lowry, moved
® for the inclusion of an additional action, Joseph N. Morell
v. John M. King, N.D. Ohio, Civil Action No. C-71-805, in any
transfer. And, finally, Orders to Show Cause were entered in
three additional actions, William D. Neary v. Investors Over-
seas Service, Ltd., D. N.J., Civil Action No. 235-71, Securities
* Although Judges Murrah, Weinfeld and Robson were not pre-
sent at the second hearing on this matter, they have, with
the consent of all parties, participated in this decision.
1/ Since the filing of the motion and the hearings on this
matter, one of the actions originally included in the motion,
Harold Bottger v. King Resources Co., D. N.J., Civil Action
No. 83-71, fas been transferred to the District of Colorado
pursuant to 28 U.S.C. §1404(a). No further discussion of this
case is necessary.
®

Case MDL No. 79 Document 2 Filed 04/30/15 Page 2 of 28
. and Exchange Commission v. Crofters, Inc., S.D. Ohio, Civil
Action No. 70-351, and Dietrich Corporation v. King Resources
@ Co., D. Colo., Civil Action No. C=-3424.
Since the filing of its motion, King Resources has
been placed in Chapter X reorganization by its creditors and
that proceeding, commenced in the Northern District of Texas,
is now pending in the District of Colorado. The reorganiza-
tion trustee has adopted the motion for transfer and has indi-
cated that he believes only nine of the twelve actions now
before the Panel should be transferred to Colorado for pre-
trial proceedings. After extensive briefing by the parties
and two hearings on the question of transfer, we order four
actions brought by stock and debenture holders of King
Resources transferred to colorado, deny as unwarranted the
® transfer of two actions brought by the Securities and ExchangeCommission and two actions pending in the District of oregon, 4/
2/ The trustee asks for the transfer of all actions except
Stoddard H. Pyle v. K. R. Funds, Inc., D. Ore.,, Civil Action
No. 71-299; Robert E. Staley v. Wolf Corp., D. Ore., Civil
Action No. 70-695; Securities & Exchange Commission v. Crofters,
Inc., S.D. Ohio, Civil Action No. ogo
3/ Dietrich Corp. v. King Resources Co., D. Colo., Civil Action
No. C- ; Leonard Gross v. Bly & Co., D. Ore., Civil Action
No. 70-751; Joseph N. Morell v. John M. King, N.D. Ohio, Civil
Action No. c=71-805; Donald J. Licker v. King Resources Co.,
N.D. Calif., Civil Action No. C-71-8B2-RHS.
4/ Stoddard H. Pyle v. RK. R. Funds, Inc., D. Ore., Civil Action
No. 71-299; Robert E. Staley v. The Wolf Corp., D. Ore., Civil
Action No. 70-605; Securities & Exchange commission v. Crofters,
Inc., S.D. Ohio, Civil Action No. 76-381 and Securities & Exchange
Commission v. King Resources Co., D. Colo., Civil Action No.
C=2858.

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* and deny transfer of the remaining four actions without pre-
judice to later applications for transfer.’
I. The Stockholder Actions
In January of 1971, the SEC filed a complaint against
King Resources, John M. King, and two other officers and
directors of King Resources , 8’ alleging violations of the
Securities Act of 1933, 15 U.S.C. §§77ela), 77e(c) and 77qgq(a),
and the Securities Exchange Act of 1934, 15 U.S.C. §§78j(b),
78m and Rule 10b-5 thereunder, 17 C.F.R. §240.10b-5. Four
actions, which closely followed the allegations of the SEC
complaint, were then brought by holders of the stock and
debentures of King Resources. The central allegations
of both the SEC complaint and the private complaints are that
King Resources made false and misleading statements in 1970
® concerning its general operations, transactions entered into
with Investors Overseas Services, Ltd., and other transactions
5/ Financial Data Relations, Inc. v. The Colorado Corp.
C.D. Calif., Civil Action No. 71-1096-DWW; William D. Neary
v. IOS, Ltd., D. N.J., Civil Action No. 235-71; Delafield
Capital Corp. v. King Resources Co., D. Colo, Civil Action
No. C-2524; Mercantile Bank & Trust Co., Ltd. v. King
Resources Co., D. Colo., Civil Action No. C-2959,
6/ Securities & Exchange Commission v. King Resources Co.,
D. Colo., Civil Action No. C- 8.
7/ See actions cited note 2, supra. Although the Gross action
in Oregon was commenced before the SEC action, an amended com-
plaint containing common allegations was filed by plaintiff
several months after the S™C complaint was filed.
®

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. with trusts created for the benefit of the families of
certain of its officers and directors. 8’
@ The SEC action is now far advanced. A final judgment
of permanent injunction has been obtained against King
Resources, its officers, directors and employees and the
action is apparently continuing only against the individual
defendants. Substantial discovery has apparently been com-
pleted, as well as an investigation by special counsel
appointed to determine the existence of possible causes of
action on behalf of King Resources.
Three of the four stockholder complaints seek to repre-
sent classes of King Resources securities holders and although
there is great variety in the definitions of the proposed
classes, the conflict between them is obvious. The Gross
® action seeks to represent several different classes of stockand convertible debenture holders.’ The Morrell action
alleges a class of all King Resources stockholders similarly
situated, while Dietrich proposes two classes -- one composed
8/ In addition, the Gross complaint contains allegations of
the sale of unregistered stock and debentures similar to the
allegations in the SEC complaint. The Dietrich complaint	is
the broadest of the four private complaints and contains
allegations of misconduct not appearing in the SEC complaint
or in the other private complaints.
9/ In summary, Gross requests approval of the following
classes: (1) A class of all stockholders within the geographic
area of the United States Court of Appeals for the Ninth Cir-
cuit who purchased stock not registered under federal law or
sold in violation of Rule 10b-5; (2) A class of all stock-
holders who purchased in Oregon stock not registered under
Oregon law; (3) A class of all debenture holders within the
Ninth Circuit who purchased debentures sold in violation of
Rule 10b-5; (4) A class of all debenture holders who purchased
in Oregon debentures not registered under Oregon law.

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. of purchasers of King Resources common stock within a specified
period and the other of purchasers of King Resources debentures
@ during a different period. The Licker action, although brought
by a King Resources stockholder, contains no class allegations.
In should also be noted that two of these four actions
name as defendants the brokerage firms which secured the King
Resources stock and debentures for the plaintiffs. Plaintiff
Gross has named as defendants Blyth & Co. and several of its
individual executives and has alleged their oral statement
of untrue facts in connection with the sales. Similar
allegations are made by plaintiff Licker against San Francisco
Investment Corp. and its individual executives.
II. Other Actions
The remaining actions are brought by a variety of
@ plaintiffs and arise from a variety of different transactions
in which King Resources are involved. Two of the actions, 19/
brought by plaintiffs Pyle and Staley, involve limited partner-
ships for oil and mineral exploration which apparently were
not sold to the general public. The remaining three actions
included in the original motion seem to have little in common.
The complaint filed by Financial Data Relations in the Central
District of California asserts two claims, the major one
involving an alleged breach of contract between the plaintiff
10/ These twoactions, and three others not included in
the motion, have been consolidated by order of the Oregon
district court.
®

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. and King Resources to secure financing for the latter company.
The secondary claim involves alleged violations of the federal
® securities laws in connection with sales of King Resources
stock. One of the other two actions’ apparently involves
the question of ownership of certain shares of Investors
Overseas Services, Ltd. and the other is brought on a note
issued by King Resources to Delafield Capital corp. 22
Two additional actions in which King Resources was named
a defendant were included in this litigation by orders to
show cause. The first action, brought by the SEC in the
Southern District of Ohio, involved an alleged scheme to
defraud various agencies of the State of Ohio in connection
with the sale of promissory notes of a number of different
issuers. Among the many notes sold were two issued by King
® Resources. This action has been pending for more than ayear and a substantial amount of discovery has been completed.
Finally, an order to show cause was entered in the Neary
action, brought in the District of New Jersey by the trustee
for the trade creditors of King Resources. The trustee seeks
to recover, as assignee, on a note given to King Resources
by Investors Overseas Services, Ltd. and to foreclose on
the collateral given by Investors Overseas Services, Ltd.
for that note. The collateral holder and other parties
11/Mercantile Bank & Trust Co., Ltd. v. King Resources Co.,
D. Colo., Civil Action No. C-2959
12/7 Delafield Capital Corp. v. King Resources Co., D. Colo.,Civil Action No. C-2524.
®

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. claiming an interest in the note and collateral are named as
defendants and a series of cross-claims and counterclaims are
¢ asserted, as well as third-party claims against John M. King
and others. |
III. The Question of Transfer |
In its original motion, King Resources summarily asserted
that the central allegations of the SEC case pending in the
District of Colorado against the King defendants were common
to each of the other actions and that the depositions and other
discovery taken in that action would be of importance in all
cases. And it asserted that, in addition to the diseovery
already accomplished in Colorado, documents and witnesses
that King Resources wished to use were located in Colorado,
making it the appropriate transferee forum.
@ In further support of this position the trustee has
filed with the Panel the Initial Report and Opinion of Special
Counsel appointed by the Colorado court in the SEC proceeding
against King Resources. Special Counsel was appointed by the
court, prior to the commencement of the corporate reorganiza-
tion, to ascertain whether any causes of action existed on
behalf of King Resources against its officers and directors,
and his report is said to demonstrate the common questions
of fact present in the ten cases proposed for transfer.
That report suggests that the transactions covered by the
SEC complaint were part of a three-phase effort to take over
management and control of Investors Overseas Services, Ltd.,
®

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© apparently one of King's largest customers. Each of the
¢ ten actions is alleged to arise out of one or more phasesof this take-over effort, which proved unsuccessful.
We think transfer is appropriate, at this time, however,
only in the four stockholder and debenture holder actions.
Indeed, plaintiffs in the three actions seeking class repre-
sentation have agreed to the transfer of their cases to
Colorado for coordinated pretrial proceedings. We think
the existence of common questions of fact concerning the
alleged securities law violations of King Resources and
its individual officers and directors has been clearly
demonstrated by the manner in which the complaints track
the allegations éf the earlier SEC complaint concerning the
specific omissions and misrepresentations of the King
[ Resources defendants. Discovery in these actions will most
certainly proceed along the same lines of inquiry and
transfer of all cases to a single judge will be both for
the convenience of the parties and witnesses and for the
just and efficient conduct of the litigation. > The
District of Colorado, home of King Resources, John M. King
and many of the defendant individuals and entities is the
logical transferee district for these cases, especially
since the Chapter X Reorganization is now pending there.
I3/Although	the SEC action against King Resources is
already pending in Colorado, we do not deem it appropriate
for inclusion in the order of transfer since it seems to be
at such an advanced stage of preparation.
®

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Some concern is expressed by plaintiff Gross that his
cause of action against his broker, Blyth & Co., may become
® lost in the coordinated discovery proceedings and Gross
requests that the transferee court be allowed to remand to
Oregon any issues determined to be of a local nature. 2A
substantially similar argument is advanced by parties to
the Licker action. Section 1407 (a) gives the power to
remand transferred actions, claims, cross~claims and counter-
claims to the Panel only. We have in the past entertained
motions to remand, but our past experience with securities
law actions involving both claims against the issuer.of
securities and against the broker participating in their
sale to plaintiff indicates that it is generally preferable
to transfer all such actions to a single judge, who can then
® arrange a schedule for the expeditious completion of pre-
trial proceedings in common areas.1d/
The only other matters conclusively established by
the briefs and arguments are that the SEC action in the
Southern District of Ohio and the Staley and Pyle limited
partnership actions in the District of Oregon are inappro-
priate for transfer. Substantially all discovery has been
completed in the SEC action and it has been set for trial.
The parties to that action have also argued convincingly
I3/ In reFour Seasons Securities Litigation, 331 F. Supp.
559 (J.P.M.L. 1971).
o

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° that non-common issues predominate. Four separate groups
of defendants are named in these, only one of which includas
4 King Resources. No common conspiracy between the groups
is alleged and the only reason all defendants have been
named in one complaint is apparently because they all
bbtained their financing from the State of Ohio through
common parties, the Crofters group of defendants.
None of the parties favor transfer of the Oregon
limited partnership actions for pretrial proceedings with
the other cases. And no showing has been made of any
factual issues raised in those cases common to the other
cases. Both actions apparently involve the private purchase
of partnership interests in two oil and mineral exploration
partnerships not involved in any other action. Since the
® purposes of Section 1407 would not be served by transfer ofthe SEC Ohio action and the two Oregon partnership actions,
the motion will be denied with prejudice as to these three
cases.
As to the remaining four actions, the movant has failed
to make the requisite showing under Section 1407. The initial
motion of King Resources stated the need for transfer in
summary terms, without specifying the common issues of fact.
The reorganization trustee's supplemental brief, including
the Initial Report and Opinion of Special Counsel in the
Colorado SEC case, provides little more substantiation of
®

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— 11 —
z the need for transfer. The Initial Report suggests that the
| acts and occurrences which gave rise to these actions may all
¢ have been part of a larger plan aimed at securing control of
Investors Overseas Services, Ltd. for King Resources. But
the fact of an overall plan on the part of King Resources
is not sufficient to tie together what appear to be a series
of unrelated factual situations giving rise to unrelated
causes of action. The other parties to these actions
strongly oppose transfer, arguing that their cases arise
out of individual facts and that the mere naming of a common
defendant is insufficient to support transfer. For these
reasons, we have concluded that the motion for transfer of
the remaining five actions should be denied at this time,
with leave to the parties to reapply should circumstances
® later warrant.IT IS THEREFORE ORDERED that the actions listed on the
attached Schedule A be, and hereby are, transferred to the
District of Colorado and, with the consent of that court,
are assigned to the Honorable Sherman G. Finesilver for
coordinated or consolidated pretrial proceedings;
IT IS FURTHER ORDERED that the motion to transfer the
actions listed on the attached Schedule B be, and hereby is,
DENIED with prejudice;
®

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, IT IS FURTHER ORDERED that the motion to transfer the
actions listed on the attached Schedule C be, and hereby
e is, DENIED without prejudice to the right. of any party to
apply for relief under 28 U.S.C. §1407, should circumstances
warrant.
®
o

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SCHEDULE A - 13 =- DOCKET NO. 79
E] DISTRICT OF OREGON
Leonard Gross, et ux v. Blyth Y Co., et al. Civil Action
¢ No. 70-751
DISTRICT OF COLORADO
Dietrich Corp. v. King Resources Co,, et al. Civil Action
No. C-3424
NORTHERN DISTRICT OF OHIO
Joseph N. Morrell, et ux v. John M. King., Civil Action
et al. No. C-71-805
NORTHERN DISTRICT OF CALIFORNIA
Donald J. Licker v. King Resources Co., et. al. Civil Action
No. C-71-882-RHS

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SCHEDULE B | - 14 - DOCKET NO. 79
5 SOUTHERN DISTRICT OF OHIO
Securities and Exchange Commission v. Civil Action
6 Crofters, Inc., et al. No. 70-351DISTRICT OF OREGON
Stoddard H. Pyle v. K. R. Funds, Inc., et al. Civil Action
No. 71-299
Robert E. Staley v. The Wolf Corp., et al. Civil Action
No. 70-695
DISTRICT OF COLORADO
Securities and Exchange Commission v. King Civil Action
Resources Co., et al. No. C-2858

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fal 1
SCHEDULE C - 15 - DOCKET NO. 79
3 CENTRAL DISTRICT OF CALIFORNIA
Financial Data Relations, Inc. v. The Civil Action
( Colorado Corp., et al. No. 71-1096-DWW
DISTRICT OF NEW JERSEY
William D. Neary, etc. v. IOS, Ltd., et al. Civil ActionNo. 235-71
DISTRICT OF COLORADO
Mercantile Bank and Trust Co., Ltd. v. King Civil Action
Resources Co. No. C-2959
Delafield Capital Corp. v. King Resources Civil Action
Co. No. C-2524
GSA DC 72-12301

LL Case MDL No. 79 Document 2 Filed 04/30/15 Page 16 of 28
SA JUDCIAL PANEL EN Lo
MULTIGISTRICT LITIGATION EET PEE :
BEFORE THE JUDICIAL PANEL-ZD Co
ON
MULTIDISTRICT LITIGATION ~2 [972 EE EE
PATRICIA 0. HOWARD |CLERK CF THE PANEL ' 77 Mr SER
IN RE KING RESOURCES COMPANY J
SECURITIES LITIGATION oy
Donald J. Licker, et al. v. King ).
Resources Co., et al., D..Colorado,) DOCKET NO. 79 :
Civil Action	No. €-3981 (N.D. cal.,) TA
C-71-882-RHS) ) Cre tT ee
OPINION AND ORDER RE
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
The above-captioned action was one of four actions : |
brought by stock and debenture holders of King Resources : :
Company which the Panel ordered transferred to the District :
of Colorado for coordinated ox consolidated pretrial proce-
edings. In re King Resources Company Securities Litigation,
342 F. Supp. 1179 (J.P.M.L. 1972). Plaintiffs in the Licker
action have moved the Panel for remand of the Third, Fourth, CL
Sixth and Eighth Claims set forth in their complaint (here- EE
inafter referred to as the "broker claims") to the Northern
District of California. No response to plaintiffs' motion
* Although Judges Weinfeld, Robson and Weigel were
unable to attend the Panel hearing, they have, with the
consent of all parties, participated in this decision.

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7 - 2 =
was filed and the plaintiffs requested that the matter be
&® submitted on the briefs. After examining plaintiffs’
complaint and reviewing their brief in support of their
motion, we find that plaintiffs' motion for remand of those
four claims should be granted.
Plaintiffs are eight Northern California investors who
allegedly suffered losses from their investments in King
Resources common stock. They joined in a lawsuit filed in the
Northern District of California alleging that their damages
resulted from conduct by defendants which violated federal and
California law. The complaint contains eight claims: Four
claims (the "issuer claims") are asserted against King
R2sources Company and two of its officers and directors;
e and the other four claims (the "broker claims") are asserted= against a local San Francisco securities firm which offered
and sold King Resources common stock to the plaintiffs. The
defendants in the broker claims are alleged to have acted in
concert with each other and independently of the defendants
in the issuer claims.
In our earlier opinion we concluded that the issuer
claims in the Licker action should be transferred to the
District of Colorado for coordinated or consolidated pre-
trial proceedings along with the other stockholder and
debenture holder actions concerning alleged securities law
violations by King Resources and its individual officers and
directors. Because our past experience with broker claims
C like those in Licker indicated that they should be coordinated

Case MDL No. 79 Document2 Filed 04/30/15 Page 18 of 28
> _ 3 _
with the common claims against the issuers of the securities
@ we transferred the entire Licker action to Colorado. In re
King Resources Securities Litigation, supra at 1183.
Plaintiffs in Licker have now advanced persuasive logic
for the remand of their broker claims. These claims relate
exclusively to the San Francisco brokerage firm and alleged
misrepresentations and nondisclosures made by representatives
of that firm. This brokerage firm and its representatives
are not a party to any other consolidated action and its sales
of King Resources securities were relatively small. For this
reason the discovery sought by plaintiffs on the broker claims
will not duplicate discovery conducted in the coordinated
proceedings and will not be of interest to the other parties
) to the litigation. It should be noted in this connectionthat none of the other parties have opposed this motion for
remand.
IT IS THEREFORE ‘ORDERED that plaintiffs' Third, Fourth
Sixth and Eighth Claims in the action Donald J. Licker, et al.
Vv. King Resources Co., et al. be, and the same hereby are,
remanded from the District of Colorado to the Northern District
of California for further proceedings.
®

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WJUTICIAL PAREL OY I
JMULTIISTRICT LITIGATION ERT
BEFORE THE JUDICIAL PANEL HEE ey EUR NL
MULTIDISTRICT LITIGATION HOY	17 1972 oo Co
FR ATHCLA HOWARD SUE
IN RE KING RESOURCES COMPANY ) (CEERA LY THE FAkEL Ca
SECURITIES LITIGATION ) Co
)
State of Ohio v. Crofters, Inc., ) DOCKET NO. 79 :
et al., 5.D. Ohio, Civil Action )
No. 72-138 )
OPINION AND ORDER Co
BEFORE ALFRED P. MURRAH, CHAIRMAN, AND JOHN MINOR WISDOM, . : Co
EDWARD WEINFELD*, EDWIN A. ROBSON*, WILLIAM H. BECKER,
JOSEPH S. LORD, III, AND STANLEY A. WEIGEL*, JUDGES OF
THE PANEL ‘ -
PER CURIAM EE
In the initial opinion and order in this litigation, .
four actions brought by holders of King Resources common stock
and debentures against King Resources Company and others were
consolidated for coordinated pretrial proceedings in the
District of Colorado. In re King Resources Company Securities
Litigation, 342 F. Supp. 1179 (J.P.M.L. 1972). One of the ;
defendants in the above-captioned action pending in the Southern Ta?
District of Ohio has moved, pursuant to 28 U.S.C. §1407, for Co
an order transferring that action to the District of Colorado
for inclusion in the coordinated or consolidated pretrial
proceedings. Plaintiff State of Ohio is the only party :
* Although Judges Weinfeld, Robson and Weigel were unable
to attend the hearing, they have, with the consent of all
parties, participated in this decision.

Case MDL No. 79 Document2 Filed 04/30/15 Page 20 of 28
® a -
opposed to transfer. On the basis of the papers filed and
the hearing held, we find that transfer of the State of Ohio
action to Colorado will serve the convenience of the parties
and witnesses and promote the just and efficient conduct
of the litigation.
The State of Ohio alleges that, in connection with
its purchase of two notes of King Resources Company, having
a total value of eight million dollars, defendants violated
the federal securities laws by disseminating false and mis-
leading information and withholding material information regard-
ing the financial condition of King Resources. Similar secur-
ities laws violations are alleged against the same principal
@® defendants in the actions already transferred to Colorado.
Despite the fact that plaintiff State of Ohio and
the plaintiffs in the transferred actions purchased different
securities through different marketing channels, all plaintiffs
will most certainly proceed along similar lines of inquiry
concerning the financial condition of King Resources and its
general operations and transactions with others. This means,
of course, that depositions of common witnesses will be noticed
and that the documents and records of the common defendants
will be subjected to intensive inspection by each group of
plaintiffs. Transfer of the State of Ohio case to Colorado
for participation in the coordinated pretrial proceedings is,
therefore, necessary to avoid duplication in discovery,
o

Case MDL No. 79 Document2 Filed 04/30/15 Page 21 of 28
® a
unnecessary inconvenience to the parties and their witnesses,
and the possibility of inconsistent pretrial rulings.
Plaintiff contends that nine of the twelve claims
set forth in its complaint concern defendants not involved
in any of the transferred cases and should remain in the
Southern District of Ohio for further proceedings. We have not
been persuaded, however, that proof of those claims will not
involve discovery duplicating that being pursued in the
transferee district. We think the best course of action is
to transfer all claims to the District of Colorado where
the transferee judge can determine which claims, if any,
do not involve common discovery and are appropriate for remand.
( An expeditious procedure for remand of cases or claims by
the Panel is provided in the Panel's recently amended Rule 15. Y
IT IS THEREFORE ORDERED that State of Ohio v. Crofters,
Inc., et al., S.D. Ohio, Civil Action No. 72-138, be, and the
same hereby is, transferred to the District of Colorado and
assigned to the Honorable Sherman G. Finesilver for coordinated
or consolidated pretrial proceedings.
@ I/ see Rule 15 of the Rules of Procedure of the Judicial
Panel on Multidistrict Litigation, 55 F.R.D. XXX

Case MDL No. 79 Document 2 Filed 04/30/15 Page 22 of 28
JUDICIAL PANEL ON ee. HULTIDISTRICT LITIGATION
FILED | oo
BEFORE THE JUDICIAL PANEL SEP [3 178 go
ON PATRIA Mra Le a: 77 : : 3MULTIDISTRICT LITIGATION CLERK fr Tur pais Va ai SR
IN RE KING RESOURCES COMPANY SECURITIES )
LITIGATION )
)
State of Ohio v. Crofters, Inc., et al., ) DOCKET NO. 79
D. Colorado, C.A. No. C-4b628 ) Co
State of Ohio v. A. Rowland Boucher, ) Ce
D. Colorado, C.A. No. 75-F=573 ) BEE oo
OPINION AND ORDER
BEFORE JOHN MINOR WISDOM, CHAIRMAN, AND EDWARD WEINFELD, EDWIN
A. ROBSON, STANLEY A. WEIGEL, ANDREW A. CAFFREY*, AND ROY W.
HARPER, JUDGES OF THE PANEL
PER CURIAM Co :
The Panel previously centralized several actions in this
litigation in the District of Colorado and, with the consent
of that court, assigned them to the Honorable Sherman G. Finesilver :
for coordinated or consolidated pretrial proceedings pursuant :
to 28 U.S.C. §1407. In re King Resources Company Securities
Litigation, 2342 F. Supp. 1179, 352 F. Supp. 974, 352 F. Supp.
975 (J.P.i.L. 1972); 385 F. Supp. 588 (J.P.H.L. 1974). |
The above-captioned actions (Boucher and Crofters) involve oo
the State of Ohio's purchase of $8,000,000 in securities of King
Resources Company and Ohio's allegations that, in connection .
with these purchases, Ohio relied upon certain financial statements
* Judze Caffrey did not participate in the decision of this
matter.

Case MDL No. 79 Document 2 Filed 04/30/15 Page 23 of 28
. -2- } . .
of King Resources which deliberately and materially misstated a
| i King Resources' financial condition. Both actions are brought i -.
? | under the federal securities laws. In Boucher, Ohio alleges
that Boucher, as a director and the president of King Resources,
was authorized to and did act on behalf of the company in selling
: securities to Ohio. See In re King Resources Co., supra, 385 Co
F. Supp. at 589. In Crofters, Ohio alleges that a variety of So
defendants disseminated the misleading information. See In re REN
King Resources, Co., supra, 352 F. Supp. 975, 976. In late 1975,
Judge Finesilver denied Ohio's motion to consolidate Crofters
and Boucher. oo ES
In early 1978, Judge Finesilver afforded all parties in : . oo
these two actions the opportunity to show cause why these two
actions should not be remandad to the Southern District of Ohio.
Before Judge Finesilver, only plaintiff Ohio opposed remand.
In connection with the position it took before Judge Finesilver, |
Ohio moved, pursuant to 28 J.S.C. S1LOL (a), tc transfer Crofters |
and Zoucher from the 3outhern District of Ohio to tne District
of Colorado for all ourposas. Judge Finesilver nas denied Chio's oo
Section 1LO4(a) motion. In re King Resources Company Securities | oo
Litigation, MDL-79 (D. Colo., filed May 9, 1978). In addition,
Judge Finesilver has suggested to the Panel that Crofters and
Boucher are appropriate for remand, stating in part as follows: CL

Case MDL No. 79 Document2 Filed 04/30/15 Page 24 of 28
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@® Pretrial proceedings in State of Ohio v. Crofters havebeen completed. Pretrial procedures in State of Ohio Vv.
Boucher have not been completed. However, the Boucher case
is a simple action against a single defendant. Discovery
in Boucher has, for the most part, been completed in con-
Junction with State of Ohio v. Crofters. The advantages
which were contemplated in the transfer of State of Ohio
v. Boucher to this court under 28 U.S.C. $§1L07 no longer
exist and this judge sees his role as a transferee judge
at an end.
In re King Resources Company Securities Litigation, MDL-79, slip
op. at 2 (D. Colo., filed May 10, 1978).
In the transferee district, only Boucher and Crofters are
still pending before Judge Finesilver. With one exception,’
the other actions in this litigation have either been terminated
or remanded to the transferor district.
® On May 26, 1978, the Panel issued an order to show causewhy Crofters and Boucher should not be remanded, pursuant to
Section 1407, to the Southern District of Ohio. Ohio again opposes
remand of these two actions. Dun & Bradstreet, Inc. and Arthur
Andersen & Co. (Arthur Andersen), defendants in Crofters, favor
remand of Crorfters and take no position concerning remand of
Soucher.
We find that remand of Boucher and Crofters is appropriate
at this time and, accordingly, we order them remanded to the
Southern District of Ohio.
1/ This action, State of Ohio v. Peterson, Lowry, Rall, Barder
& Ross, et al., D. Colorado, C.A. No. 70-992, was dismissed by
C Judge Finesilver and that order of dismissal is now on appeal	in the Court of Appeals for the Tenth Circuit.

Case MDL No. 79 Document2 Filed 04/30/15 Page 25 of 28
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In opposing remand of Boucher, Ohio emphasizes that errinn@
proceedings in that action have not been completed. A motion
to dismiss based upon an alleged lack of jurisdiction remains
vending in the transferee court, defendant Boucher has not yet
answered the complaint, and further discovery in Boucher is re-
quired, Ohio states. While additional discovery need not be
extensive or protracted, this discovery and other pretrial pro-
ceedings in Boucher, including the preparation of a final pretrial
order, can most efficiently be conducted in the District of
Colorado, Ohio maintains, because Judge Finesilver, through his
supervision of pretrial proceedings in the actions in this liti-
gation and preparation of a final pretrial order in Crofters, has
developed a detailed familiarity with the legal and factual issued)
involved in Boucher.
In support of its argument that remand of Crofters 1s inappro-
priate at this time, Ohio states that Arthur Andersen recently
filed a petition for a writ of certiorari in the United States
Supreme Court seeking review of a judgment of the Court of Appeals
for the Tenth Circuit affirming an order by Judge Finesilver
in Crofters that imposed sanctions against Arthur Andersen for
disobedience of certain discovery orders. State of Ohio v.
Crofters Inc., et al., 75 F.R.D. 12 (D. Colo. 1977), aff'd sub
nom. State of Ohio v. Arthur Andersen Co., 570 F.2d 137C (10th
Cir. 1978). Ohio argues that if the writ 1s issued, trial in
®

Case MDL No. 79 Document2 Filed 04/30/15 Page 26 of 28
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®Crofters would be delayed pending the Supreme Court's review,
and, in the event of remand by the Court for reconsideration
or further findings regarding the matters Arthur Andersen raises
in its petition, Crofters would have to be retransferred to the
District of Colorado. Accordingly, Ohio urges that remand of
Crofters and Boucher should await, at the least, a ruling by
the Supreme Court on Arthur Andersen's petition. Ohio stresses
that this delay would not be detrimental since in the interim
the remaining pretrial proceedings could be completed in Boucher,
thus enabling both actions to be ready for trial upon their remand
to the Southern District of Ohio.
C In considering the question of remand, the Panel has consis-tently given great weight to the transferee judge's determination
that remand of an action is appropriate. See, €.g.. in re Ever
green Valley Project Litigation, 435 F. Supp. 923, 924 (J.P.M.L.
1977). The transferee judge has a special vantage point with
respect to the conduct of coordinated or consolidated pretrial
proceedings under Section 1407, and his suggestion of remand
to the Panel demonstrates that he perceives his role under Section
14,07 to have ended. See id.; In re IBM Peripheral EDP Devices
Antitrust Litigation, 407 F. Supp. 254, 256 (J.P.M.L. 1976).
In adopting Judge Finesilver's recommendation, we stress that
all parties were afforded an opportunity fully to present their
views on this matter in the transferee district and Judge Finesilver
®

Case MDL No. 79 Document2 Filed 04/30/15 Page 27 of 28
_ 6 -
nas given this matter detailed consideration. We note that ..@
Finesilver expressly rejected Ohio's argument that he is uniquely
qualified to preside over the completion of pretrial proceedings
in Boucher. In his May 9, 1978 order denying Ohio's motion pursuant
to Section 1l404(a) to transfer Crofters and Boucher to the District
of Colorado, supra, Judge Finesilver stated as follows (slip
op. at 5):
Neither is it of importance that this court has some
familiarity with State of Ohio v. Crofters. The Southern
District [of Ohio] and the Sixth Circuit Court of Appeals
have encountered the King Resources Company situation in
other related litigation and are not unfamiliar with the
general factual scheme or the particular aspects of securities
fraud alleged here.
We do not agree with Ohio's argument that the Panel should |
defer its decision concerning remand of Crofters because of ween)
Andersen's petition for a writ of certiorari. Should the Supreme
Court deny this petition, deferral of remand pursuant to Section
1407 would have needlessly delayed final resolution of Crofters.
On the other hand, should the Court grant the petition and render
a decision on the issues presented in the petition, we are con-
fident that, if necessary, communication and cooperation among
the appropriate courts, coupled with the cooperation of the parties
in Crofters, would be sufficient to carry out the Court's decision.
®

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- 7 =
® IT IS THEREFORE ORDERED that the actions captioned State
of Ohio v. Crofters, D. Colorado, C. A. No. C-4628, and State	of
Ohio v. A. Rowland Boucher, D. Colorado, C.A. No. 75-F-573, be,
and the same hereby are, remanded to the Southern District of
Ohio.