IN RE: Harmony Loan Company, Inc., Securities Litigation

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BEFORE THE JUDICIAL PANEL JUDICIALp
ON MULTIISTRIC [ieitionMULTIDISTRICT LITIGATION FILED
IN RE HARMONY LOAN COMPANY, ) APR-1 1974
INC. SECURITIES LITIGATION ) DOCKET NO. 154
CRIA D. HOWARDK OF THE PANEL
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
This litigation consists of three actions pending
in two districts involving the affairs of Harmony Loan Company,
Inc., of Covington, Kentucky, which did business in the Greater
Cincinnati area. All three actions contain allegations of
federal securities laws violations by Harmony Loan Company,
its officers, directors, principal shareholders and others.
One of the actions was filed in the Southern District of Ohio
by the SEC, which requests injunctive relief to prevent further
alleged securities laws violations. The other action pending
in that district is a protracted dispute between investors in
Harmony Loan, which contains class allegations on behalf of all
investors in the company. The third action, initiated in the
Eastern District of Kentucky by the trustee in Harmony Loan's
pending Chapter X bankruptcy proceeding, contains a broadened
version of the SEC complaint and includes many more defendants.
Several common defendants move the Panel for an order transfer-
ring the Kentucky action to the Southern District of Ohio
* Although Judge Murrah was not present at the hearing, he
has, with the consent of all parties, participated in
this decision.

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for coordinated or consolidated pretrial proceedings pursuant
to 28 U.S.C. §1407. The SEC, certain plaintiffs in the Ohio
investors action and the bankruptcy trustee oppose transfer.
On the basis of the briefs filed and the hearing held we find
that transfer of these actions to a single district for coordi-
nated or consolidated pretrial proceedings will neither serve
the convenience of the parties and witnesses nor promote the
just and efficient conduct of the litigation.
Movants and other parties assert that the actions
have many common parties and share common questions of fact and
law concerning numerous Harmony Loan transactions. And they
argue that transfer of the actions to a single district is
necessary to prevent duplicative discovery.
We recognize that these actions contain limited
common questions of fact. Nevertheless, these actions each seek
to protect markedly different interests, request different relief,
and are at different stages of development. For example, the
trustee's action in Kentucky contains several issues not common
to the Ohio investors action, including the issues of sovereign
immunity, bank liability, and the propriety of an equitable
accounting. Furthermore, the minimal discovery involved in the SEC
action is completed and that action appears ripe for decision on the
requested injunctive relief. Moreover, there is no danger in
this litigation of conflicting class determinations since only
the Ohio investors action contains Rule 23 class allegations.
And attorneys in the private actions are presently making efforts

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at accommodation in order to prevent any duplicative discovery.
Therefore, in light of the factual disparity between
the actions and the procedural posture of the SEC action, trans-
fer of the trustee's action to the Southern District of Ohio or
inclusion of the SEC action in Section 1407 proceedings could
needlessly complicate and delay final disposition of all the actions.
We are aware that the Harmony Loan bankruptcy proceed-
ings and the trustee's securities fraud action are pending
before the same judge in the Eastern District of Kentucky.
The Panel, however, has often taken the position that there is
a potential conflict of duties inherent in the roles of the judges
presiding over these types of actions. See In re Penn Central
Securities Litigation, 322 F. Supp. 1021, 1023 (J.P.M.L. 1971)
and In re Four Seasons Securities Laws Litigation, 328 F. Supp.
221, 223 (J.P.M.L. 1971). Even though we have denied transfer
of the actions in this litigation, we are confident that local
and federal rules for assignment of actions provide ample means
for avoiding or correcting any potential conflict of duties.
IT IS THEREFORE ORDERED that the motion to transfer
the actions on Schedule A pursuant to 28 U.S.C. §1407 be, and
the same hereby is, DENIED.

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SCHEDULE A DOCKET NO. 154
SOUTHERN DISTRICT OF OHIO
James J. Mathews, et al. v. Harold Fisher, Civil Action
et al. No. 8482
Securities & Exchange Commission v. Civil Action
Harold L. Fisher, et al. No. 8876
EASTERN DISTRICT OF KENTUCKY
Edward S. Monohan, Trustee v. Harold Civil Action
Fisher, et al. No. 1733