IN RE: Republic National-Realty Equities Securities Litigation

AN : :
| . . Case MDLNo. 174 Document 2 Filed 05/01/15 Page 1 of 5 :D IN RE REPUBLIC NATIONAL-REALTY EQUITIES SECURITIES LIT. 1403[TS Cite	ns 362 F.Supp.	1103 (074)
La : constituting an offense or offenses. } :
C } Such defendants may be charged in yn re REPUBLIC NATIONAU-REALTY	; ; one or moreTUMTPS Together or sepa- EQUITIES SECURITIES -: | rately and all of §he defendants need LITIGATION. :. not he charged in gach count.” ) : No. 174.
1,2] The fact shat defendants are judicial Panel on Multidistrict Litigation. -
. charged with similflr violations of the Aug. 22, 1974 :
; law is not a basis if) and of itself for a EET '
. joint trial. UnitedliStates v. Reynolds, C- y ]
: 489 F.2d 4 (6th pir. 1978); United The Judicial Panel on Multidistrict - :States v. Grasso, sure, 55 F.R.D. at p. Litigation transferred actions, brought . .
. 991. Joiuder is priper only when the py the Securities and Fxchange Commis.conduct upon which gach of the counts is gion and by private parlies against in-
: based, is part of : factually related surance company, corporation in which :
co E transaction or seriesgf acts in which all the company had substantial interest: of the defendants participated. United 4nd others, to the Southevn District	of
: States v. Leach, 4293F.2d 956 (8th Cir. “New York where actions involved com-
1970); Metheany v. {United States, 365 mon questiona of fact, several coraman
: : : F.2d 90 (9th Cir. 1986). The movant i5 parties, trausfer would sevve conveoo charged in Count VE with the unlawful pjence of the - parties and witnesses,
~ distrihution of herof in Conshohocken transfer would eliminate the possibility
ou July 18, 1974. The first four counts of conflicting class action ~detevmina-
: in the indictment aljere unlawful drug tions and other pretrial rulings, majori- k
: transactions occurring on different days ty of parties favored the Southern Dis-
Lom and involving varigig other defendants. tyict of New York, 13 of the 18 actions,
5) ’ There 18 no factual connection on the including the Securities and ExchavgeLo {ace of the indictmen} between Count VI Commission action were already proceed-ig = : and the other countfjof the indictment. jn. expeditiously in that district, and oo
® (See footnote 1.) The phrase “same se transfer would promote the just and ef-	) ries of acts or transgetions constituting ficient condnet of the litigation.
po. Co an offense or offefses” contemplates ) :oe CL © more than similar olations within a Order accordingly. :limited time period. ¥ “Weinfeld, Judge of the Panel, filed
| | [3] In addition dine lack of suffi- a separate opinion, dissenting in part.
; Co cL “cient factual connectign between the al- Murrah and Becker, Judges of thei - 7 leged violatious, the Court's conclusion Panel, did not partcipate. co : 3
le . a is based on the strong likelihood of con- .© fusion of evidence iy a joint trial of : i
: — “similar but unrelated crimes. Proof of | courts 622772 <n Rk :© I each violation will nec ssarily he differ- Securities and Bxchange Commis- --
ent and not so easily ompartmentalized sion enforcement actions, which were in-
1 oo by. the jury. The pres nce of a conspire stituted against insurance company, sev-
N acy count (in which the movant is nolo. of jta officials, its auditor, corpora-
© named) and the applicgbility of vules of ion in which the insurance company oo
| : : evidence unique to a ct rie of conspira- had substantial interest, its anditor and EScy will further comp jcate the JUrY’s geo other individuals and which alleged ootask of sepavating th evidence as t0 {pat defendants defrauded investors by ~
: cach defendant. I concealing fact that the corporation was
The Court concludes hat joinder of in dire financial condition, and 17 pri-
the defendants in a skrle indictment vate action, whirh were filed in three
. was improper and, acco@lingly, the mo- different districts and which involved .
Ty ‘tion for severance wilt be granted. game and additional defendants, involved	po . . ’ ’
- > vo.
SSC —————— ee Te SERRE Ree

Cte Case MDL No. 174 Document2 Filed 05/01/15 Page 2 of5
: | Boos FI :
PE ii] 382 FEDERAL SUPPLEMENT
; ! - |
® common questions of fact justifying OPINION AND ORDER }	yea fo ’ o diabyrie YQ .
Lragster toone district. 28 USCA Sperone ALFRED Pp. MURRANY,: Chairman, and JOON MINOR WIS
2. Federal Civil Procedure G0 DOM, EDWARD WEHINKFLD, ED- ]
i Judge, to whom several actions WIN A, ROBSON, WILLIAM HH.
: from different districts ave transforred BRECKER? JOSEPH 5S. LORD, ITI, and .
: . for consolidation, has the broad discre- STANLEY A. WEIGEL, Judges of the ;
So "tion to design a pretrial program which Panel. :
will allow discovery on any unique jssues
fo proceed concurrently with discovery PER CIMIAM
on the common issues. 28 USCA. § Background of Litieting B
+07. In March of 14974 the Sceurities and
3. Courds S27%.2 Exchange Commission fied an cnforee-
Where class of plaintiffs designated ment action in the Soithern District of
in one action falls within the boundaries New York against Republic National
: Co of class requests in other actions on the Life Insurance Company, seven of its of-
Co same factual issues, it is necessary to ficials, and its auditor, Peal, Marwick,
have all class action questions resolved Mitehell & Coo; Really Eeguities Corpo-
by a single judge in order to climinate vation of New York, two ef its officials,
the possibilit of conflicting class deter- and its auditor, Westheimer, Vine, Her-
minations and to achieve the most expe- gor & Co, and Give other individuals. } .
ditious methods of organizing the class The SEC alleges thal defendants vielai- ’
Co or classes and any necessary subclasses. ed the federal seenvities laws by partici-
; 28 U.S.C.A. § 1407; Fed.Bules Civ.Proe, paling in x massive scheme to defraud
a rade 23, 28 U.S.C.A. the fuvesting public Ly concealing the
Poon ‘ : } fact that Realty, in which Republic had
N : i. Courts 9277.2 a hige juvestment, was in dire financial i
® = Degree of coordination between ac- oondition. It is further alleged that, as| BE Lion hy Securities and xchange Come a result of this scheme, Republic was
es wission and private actions involving able to perpetuate the materialiy false
| fhe same and additional defendants, re- appearance thal its boldings in Really
| hating to the same factual dxsues, and oop, valuable assets and was also able toi which were transferred te the same "= peport as income millions of dollars in
«0 dicial distyiet, was a matter fo be deter’ gy 40 gat Republic had pumped into
Co pine by the transferee judge. 23 U.S Realty or Realty-controllad companies Nro C4. § 1407. . for the apecific purpese of enabling | -
5 Courts €9877.2 Besily, in turn, tn pay inferest on the Co :
Where	13 of 18 actions involved in ohs it owed Republic. oo
muitidiatrict litigation were already Defendants Realty and two of its offj-
pending in the Southern District of New cevs have recently entered into a consent,
York and were proceeding expuditionsly decree with the SEC, Really neither :
s ” and where an important defendant's op. admitied nor denied the allegations in To
. eraliong were conducted in that digtviet, the complaial and agreed 10 take envlain -
Hi Southern Ofateiet of Now York eos rows	es to aoa] Pebups seer ifies faa
Che pest appropriate Drpsfores foram dViekeBieens The sedlon dn eH pending
even though the maior corporate defend. againel the remaining defendants,
and bad ifs home office in the Northern ln addition Lo the SFC action, sevens
District of Texaa where several of the teen private aclions concerning the Ree
_ other actions were jnitiated. 28 U.S. public-Nealis financial relationship bave
A. § 1407; Fed Rules CiviProc. rule heen filed in three different disbricbs:
45(d) (27, 28 U.S.C.A. twelve in the Southern District of New
Pk *F Judes MITRAL and BECKER wore aalids part in the consideration op decision of {his
® . tos attend the hearing and, therefore, (ook no mater,	.

) fey Case MDL No. 174 Document 2 Filed 05/01/15 Page 3 of 5
C : TH RE REPUBLIC HATIOHAL-RLEALTY RQUITIES SECURITIES LIT. 1405 .Cite pe 22 FF Smpp. 1503 (1971
York, four in the Northern District of District of Tennessee, ia seeking veseis-
} Toxag and one in the Middle District of sion of the merger belween its wholly.
: Tennessee, Taken as a whole, they in- owned subsidiary Forrest Life Insurance
valve the same as well na additional de- Company and Republic or, in the alter-
fendanie, Plaintiffs in many of the ae- native, compensatory and punitive dam-
| tiony purport to represent similar elass- ages. h
: . es of Republic or Realty securities hold. The Garrett action is pending in the
! oem Northern District of Texas nod involves
{11 As a result of:a motion by Peat, the merger of Mercantile Security Life
Marwick, Mitchell & Co, a motion by TInsnrance Company inte Republic. Ap !
Republic and a show cause order fasned order has Leen entered in that action al-
hn the Panel, all actions, including the lowing it to proceed @s a class action on
SFC action, are now before the Panel hebalf of all persons who aegnired Re-
{or eonzideration pursuant to 28 U.S.C. public stock by virtue of baviog heen
§ 14070 Except for the SEC, plaintiffs Mercantile stockholders.
in the Synercen and Garrett actions and © Hoth the Syrcrcon and Gurrett plain-
defendants Standard & Poor's Corpora. tiffs concede thal their acliona shave
tion and A. M. Best Company, all parties questions of {act connmon to ail othor ac-
favor transfer to a single district for co- gjons ju thiz Hiigation. Nevertheless,
ovrdinated or consolidated pretrial pro- they argue that theie actions should not
“ceadings. The parties disagree. how- pe transforred becanse the discovery on -
nC ever, on whether the Southern District these common issues oan fae easily oh: .
: of New York or the Northern District tained from the vecards ol the SBC in-
; : of Texas is the most appropriate trans. cestigation. They alse avgne that their :
; He force forum. We find that these actions getiang involve discovery of many fac-
pi involve commen questions of fact and tun] jsdues unrelated to the other actions
“oo that transfer of all actions under Sec- and that that discovery would be delayed
~ tion 1407 to the Southern District. of he transfer. In addition, plaintiffs in
sm oo New York will best serve. the conve- Gerrelt contend hat progress in their
: nience of the partics and witnesses and getion would he unfairly delayed peod-
: rromote the just and efficient conduct ing discovery en the issne of class main-
| of the litigation.. . tainability in the other actions, :- CXL The Question of Transfer [2,3] We are not convinced that the oo
© Most of the parties recognize the need - records of the SEC investigation will CL
© for tranafer of all actions to a single provide the sole source of discovery on 3
© Qiatrict under Section 1407 in order to the common issues belween the Synercon So
! ‘avoid duplication of common discovery and Gurrelt actions and the vest of the
© Ts concerting numerous complex questions litigation and, aceerdingly, we find that
: © of fact underlying the Republic-Realty inclusion of these actions jv the coordi-
finaneinl relationship. Furthermore, nated or consolidated pretrial proceed- =
i tranafer will eliminate the possibility of ings will promote the just and efficient
conflicting Rule 23 class determinations conduct and expedite the termination of
and other pretrial rulings. The follow- the entive litigation. Nov do we accept oo
ing parties, however, have objected to the proposition that progress on the dis-
: any transfer: covery of the asserted nop-common ise
sues will he impeded by tranafer. Tho
: A. Plaintiffs in the Synercon and Gor transferee judge has the broad disere-
: rail Aelions tion to design a pretrial programy which
Syneveon Corporation, the sele plain will allow discovery on any unique issues
£161 in the action pending in the Middle to proceed concurrently with discovery
8 {. Repubdic’s motion before the Panel ix to § 1107, however, i= Hwdied to treterring
C7 . . tranmfer all actions to the Northern Bristriet artions for coordinated or consolidated pre- ’
® . of axna for protrinl and trial proceedings trial proceediopgas only. ’: The Panel's authority purnmant fo 28 TsC. : '
.
. ~ So

IU BE Case MDL No. 174 Document 2 Filed 05/01/15 Page 4 of 5
i Ce 4 Lo J
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C 1406 382 FEDERAL SUPPLEMENTon the common issues. Morcover, the IIL. The Transferee District :
class of plaintiffs previously destmnated Certain parties favor the Northern	mothe Carrell action Tails witain Oe pfyiciyjet of Texas as the transferee fo--
poundaries of class remests i" some of rum on the ground that Republic	is the .1e other actions in this litigation and. 500 corporate defendant in this litiga-
therefore, it is (ecessavy vo ave all tion, that ils home office is located in	Class aciion questions resolved by a 8in- tha Northern District of Texas and that
gle judge in order to eliminate the possi- ng 4 podt, the key documents and wil.
bility of conflicting class determinations nesses are located there. They also
and achieve the most expeditious method point out that Republic has heen placed
of organizing the class or classes and | 40, the supervision of the Texas Com-
any necessary subclasses. missioner of Insurance and thal coordi-
nation between the Commissioner and
: B. SKC the transferee court will be necessary :
~ [41 Although the SEC actioh shaves - ao post easily Accomplished if the
common factual issues with the other ac- he on TIC ot op 13 designated	. . ere es N - ag the transferee district. .
tions in this litigation, the SEC main- as the transferee distric :
. tains that its action is entitled to sepa- [57 Although the arguments in favor
rate treatment from a public policy of the Texas forum have merit, on bal-
viewpoint? Since the SEC action is al- ance, we are persuaded that the South- :
ready pending in the transferce distvict, crn District of New York is the most
however, the degree of coordination be- appropriate transferee forum. Thirteen
tween that action and the private ac- of the eighteen actions involved in this
Ce tions is a matter to be determined by litigation, including the SEC action, are
SL the transferee judge. already pending before the Honorable }
} Mitton Pollack in the Southern District
C. Defendants Standard & Poor's of New York aud are proceeding expedi-
sme : and A. M. Best Lisusly under his supervision. While it
TT . . is true that Repnblic’s operations in .
: Standard & Poor's, a publisher of fi- a I ) p .
H IE . i Texas will be. a major source of discov-.
: nancial information, and A. M. Rest, a . . . : .
A . . . . ery, "the allegations of misconduct in
3 publisher of information for the insu- . A ,
‘ . . these aclions indicate that Realty’s oper- :	
: ance industry, are defendants in only . . . , :
: . . . . ations in New York will be an equaliy
; Count VII of the Herman action pending |, : .
. . o,. . important source of - discovery, The	“in the Southern District of New York. . . a
} , . transferee judge, of course, has consid- -
They are not named as defendants in yore . .
CT, cape la erable flexibility to tailor the pretrial :
any other action in this litigation and, . . .
: . proceedings to avoid unnecessary incon- :
. as a result, they request that, in the : . : .
i . venience to Republic and its witnesses.
event the Herman action is transferred, - a
) Sce, e. g., Manual for Complex Litiga-
. Count VII be separated from the rest of .	: veh tion, Part J, Section 2.50 (rev. ed.
the litigation pursuant to 28 U.S.C. § . ; ry	! — 1973); Fed.R.Civ.P. 45(d) (2). More-
1407(a) and remanded to New York for ~~ oo . fs .
. further tom _- In light of our over, we are confident that, if necessary,
. urther procee IES. noieht oe ; the transferee judge will he able to coor-selection of the Southern District of yin discovery efforts with the Texas
New York as the appropriate transferee jhqpeance Commissioner lo fhe advanc
forum for this litigation, the request of tage of all parties concerned,
defendants is ment. Whether these de- It is therefore ordered that al actions
fendants are entitled to separate treat- fisted on the attached Schedule A pend-
ment is now within the sole discretion of jug in districts other than the Southern
the transferee judge. District of New York be, and the same
- 2. For a discussion of the Panel's views con- yor In re National Student Marketing Fitiga- ’
: cerning transfer of civil netions brought hy tion, 368 W.Supp. 1811 (Jud.	Pan Mult Lit,
CJ : the Secearities and Exchange Conunission, 1973).

yt Case MDL No. 174 Document 2 Filed 05/01/15 Page 5 of 5
i
§ . IN RE REPUBLIC NATIONAIL-REALTY EQUITIES SECURITIES LIT. 1407Cite ax 292 1 Rupp. 103 (1974)
hereby are, transferred to the Southern Southern District of New York
District of New York and, with the con- Samuel Tisser v. Morris Karp, ‘et Civil Action }
sent of that court, assigned to the Hon- 2: oo 74 Civ. 1622 :
orable Milton Pollack for coordinated or 5 1p
consolidated pretrial proceedings pursu- pernard Chesner v. Morris Karp, i wen 1846 Hant S.C. i 2 actions
nt to 28 U 3.0 § 1407 with the actic NS ton Gottlieb v. Realty Equities Civil Action
already pending in that district and list- Corp. of New York N No. 74 Civ. 1875 .
ed on Schedule A. Harry Asarian v. Morris Karp, Civil Action
et al. . No. 74 Civ. 1932 ..
C . I
SCHEDULE A Middle District of Tennessee .
Southern District of New York Synercon Corp. v. Republic Na- ~ Chvil Action
: Seeurities& Exchange Commission Civil Action tonal Life ins. Co, et at. oy 74-189-NA~v. Republic National Life Insur-- Mo. 74 Civ. 1097 :ance Co, ef al, MP) :
: k Northern District of Texas .
© Norman Mitler v. Republic Na- Civil Action .
} tonal Life Insurance Co. et al. Mo. 74 Civ. 1115 Joseph L. Massie, etc. v. Repub- Civil Action
(MP) lic National Life Insurance Co, Ho. CA3-74-116~ ’
’ t al. oC [] :	George Katz v. Realty Equities Civil Action ea
Corporation of Néw York, et al. No. 74 Civ. 1137 Norman P. Miller v. Republic Ma- Civil Action
: (MP) tional Life Insurance Co., et al. No. CA3-74-207- }
. 8 |
Sy €. Sussman, et ano. v. Repub- Civil Action k : .
fic Hationat Life Insurance Co., No. 74 Civ. 1225 Wiliiam C. Garrett, etc. v. Repub- Civil Action . .
ot al. 5 (MP) lic National Life Insurance Co, Ho. CA3-74-206~
R . 1. . * Bd
tenneth I. Herman, ete. v. Re- Civil Action et a . } ¢ i :
: public National Life Insurance Co., No. 74 Civ. 1248 Lola Flamm v, Theodore P. Beas- Civil Action
! et al, (MP) fey ‘ ) to. CA3-74-357-
re - i, , . oC
i o Stanley Ferber v. Theodore .P. Civil Action }
ced Beasley, et al. No. 74 Civ. 1294
Sa . (MP) WEINFELD, Judge (dissenting in
Marwel! T. Cohen, et al. v. Realty Civil Action . part) :
Equities Corporation of New York, No. 74 Civ. 1192 . . .
: .. ot al (MP) I would not coovdinate or consolidate :
== © Kermeth Rubenstein v. Republic Civil Action the SEC action with the other actions :
i - Mational Life Insurance Co. et al. No. 74 Civ. 1255 for the reasons set forth in my dissent :
mp) © in.In re National Studeut Marketing
itdead Pooman 2 Pobert Pros. ivi ener wes Litigation, 368 F.Supp. 1311, 1319-20	! an v. Republic Mational Life Ins. 0. . . .
Co, etal (Tud.Pan Mult. Lit. 1973).H ’ © ) . . ed
. o£ ev sume sysun : )
- hy . . }
_. 0f . .
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