IN RE: Texas Gulf Sulphur Securities Litigation

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Wty
; a - - Coded (IM
BEFORE THE JUDICIAL PANEL JUL 11 1
oN 1 1372
MULTIDISTRICT LITIGATION," ’READ rap“wh VN Lo hi CALL
IN RE TEXAS GULF SULPHUR )
SECURITIES LITIGATION ) DOCKET NO. 100
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
The complaint filed by plaintiff Fox in the
District of Utah is the latest action to be brought against
Q Texas Gulf Sulphur Company ("TGS") and its officers arising	== from the dissemination of news and information with respect
to that company's major mineral discovery in Canada in 1963
and 1964. At present 69 private damage actions against TGS
alleging violations of Section 10(b) of the Securities
Exchange Act and Rule 10b-5 promulgated thereunder are
per.ding in the Southern District of New York. Defendants
have moved the Panel to transfer the Fox action to the
Southern District of New York for coordinated or consoli-
dated pretrial proceedings with those cases, pursuant to
28 U.S.C. §1407. All responding parties, except plaintiff
Fox, favor transfer. We find that transfer of this action
® *¥ Although Judges Wisdom and Becker were not present at	- the hearing, they have, with the consent of all parties,
participated	in this decision.

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* .will prevent inconsistent class action determinations, avoid
duplicative discovery and in general promote the just and
efficient conduct of the litigation.
This litigation began in 1965 when the Securities
and Exchange Commission filed an action against TGS and its
officers in the Southern District of New York alleging viola-
tions of the federal securities laws. A wave of private
damage actions followed in various jurisdictions in both
state and federal courts, although the bulk of the litiga-
tion was commenced in the Southern District of New York.
Where possible, state cases were removed to federal courts
and cases pending in the federal courts were transferred to
Qo the Southern District of New York pursuant to 28 U.S.C.
§1404 (a). The Honorable Dudley B. Bonsal was appointed
to coordinate the proceedings in the SEC action and in all
of the private damage actions in that district. In addi-
tion, eighteen private damage actions arising from the
same facts are pending in New York state court and are
being coordinated, so far as pretrial proceedings are con-
cerned, with the cases in the Southern District of New
York. |
In 1966 an individual action (hereinafter Reynolds)
was commenced by plaintiff Reynolds in the District of
Utah against TGS and its officers. Defendants' motion
® to have that case transferred under 28 U.S.C. §1404 (a)

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Te ] ’ ito the Southern District of New York was denied by the
district court.’ Subsequent to this ruling three more
actions against TGS were filed in the District of Utah
and consolidated with the Reynolds action for trial.
Meanwhile, in the New York proceedings Judge Bonsal
established the so-called Cannon class, which consists
of all persons who sold TGS stock between April 12, 1964,
and 10:55 a.m. on April 16, 1964, at a price of $33 per
share or less, in alleged reliance on the press release
issued by TGS on April 12, 1964.2/ Subsequent to the
establishment of the Cannon class, Judge Willis W. Ritter
® announced his decision on the merits in favor of plain-	_ tiffs in the Reynolds case.’ counsel for Reynolds, now
representing Fox, filed a post-trial motion to have the
Reynolds case declared a class action on behalf of a class
that encompassed both the Cannon class and persons who sold
TGS stock after 10:55 a.m. on April 16, 1964. Judge Ritter
denied the motion and that decision was affirmed on appeal.
1l/ Defendants also petitioned the Court of Appeals for theTenth Circuit for a writ of mandamus requiring transfer under
Section 1404 (a) and were denied. Texas Gulf Sulphur Co. V.
Ritter, 371 F.2d 145 (10th Cir. 1967).
2/ Cannon v. Texas Gulf Sulphur Co., 47 F.R.D. 60 (S.D.N.Y.1969).
3/ Reynolds v. Texas Gulf Sulphur Co.., 309 F. Supp. 548 (D.Utah 1970).
4/ Reynolds v.Texas Gulf Sulphur Co., 309 F. Supp. 548 (D.Utah 1970), aff'd sub nom. Mitchell v. Texas Gulf Sulphur
Co., 446 F.2d 90 (10th Cir. 1971), cert. denied, 40 U.S.L.W.
3288 (Dec. 20, 1971), rchearing on petition denied, 40 J.S5.L.W,
i 3352 (Jan. 24, 1972), cert. denied, 40 U.S.L.W. 3299 (Feb. 22,
1972). TT

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¢ .	During the course of this appeal, Reynolds and
Fox sought to intervene in the New York proceedings. Judge
Bonsal denied the application of Reynolds to intervene on
the ground that he had already recovered judgment in Utah
on the claim that he sought to make in New York. He also
denied both applications on the ground that Reynolds and
Fox were not members of the Cannon class as previously
defined. Reynolds and Fox then moved to expand the Cannon
class action definition to include a class 2s broad as the
one defined in the Fox complaint. This motion and similar
motions by New York plaintiffs were denied.>’
Following these setbacks, Fox filed his complaint
Q in the District of Utah. The action is brought as a class
- action alleged to consist of persons who sold TGS stock
after 10:55 a.m, on April 16, 1964, on April 17, 1964, and
persons who sold during an undetermined period thereafter.
The movants assert that the Fox action is the
only TGS securities action pending in a federal court
other than the Southern District of New York. A settlemc:t
agreement has been reached between plaintiffs and defendants
in 63 of the 69 private damage actions pending in the New
York federal court, and in thirteen of the eighteen cases
pending in the New York state court. But the parties
® 57	Cannon v. Texas Gulf Sulphur Co., 53 F.R.D. 216 (S.D.N.Y.T9711.

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¢ 8	favoring transfer point out that even if the proposed
settlement is approved’ there will remain before Judge
Bonsal cases in which pretrial proceedings will have to
be conducted. And it is asserted that absent transfer of
the Fox action there will certainly be overlapping and
duplicitous discovery. The major thrust of movants' argu-
ment, however, is that transfer is necessary to prevent
conflicting class action determinations.
Fox opposes transfer to the Southern District of
New York. He argues that all of the discovery that resulted
in the Reynolds judgment and that is pertinent to his
action is available to him in the District of Utah and
® that only factual questions of an individual nature remain- to be discovered. Fox also asserts that transfer will
effectively preclude him from establishing his class
action claims.
In order to promote the just and efficient conduct
of multidistrict litigation and to avoid duplication in
discovery, we have consistently transferred cases that
involve common questions of fact to a single district for
coordinated or consolidated pretrial proceedings. See,
e.g., In re Hotel Telephone Charge Antitrust Litigation,
____F. Supp. ____ (J.P.M.L. March 30, 1972). It is clear
® §/ At a hearing held on March 9, 1972, Judge Bonsal reservaddecision on the proposed settlement until he has time to
determine whether the settlement is fair, reasonable, adequate
and proper.

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¢ -	that even though Fox is not a member of the Cannon class
the facts that he would have to prove as an individual
litigant will involve much of the same discovery applicable
to the non-settling cases in the Southern District of New
York. Furthermore, we are not persuaded of the sincerity
of counsel's arguments opposing transfer especially since
he tried before, albeit unsuccessfully, to have his client
included in the proceedings in the Southern District of
New York.
From the papers filed and the arguments presented
at the hearing, it is obvious that the crux of the opposi-
tion to transfer centers on the ability of Fox, if trans-
9 ferred, to act as the representative of a class. The
New York court has already ruled that there is not sufficient
numerosity under Rule 23 to justify setting up the class
alleged by Fox. ./ We have frequently held that the possibi~
lity of inconsistent class action determinations is an
important factor favoring transfer. See, e.g., In re Career
Academy Antitrust Litigation, FF. Supp. __ (J.P.M.L.
April 28, 1972); In re Refrigerant Gas Antitrust Litigat-
tion, 334 F. Supp. 996 (J.P.M.L. 1971). And the prospect
of an unfavorable ruling by the transferee court or
the possibility that another district judge may be more
favorably disposed to a litigant's contentions are clearly
? 37 nen v. Texas Gulf Sulphur Co., 53 F.R.D. 216 (S.D.N.Y.	Fo Lo oui PiRs MY.

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. not factors considered by the Panel in determining whether
transfer for coordinated or consolidated pretrial pro-
ceedings is appropriate. Cf. In re Plumbing Fixtures Litiga-
tion, _ FF. Supp. __ (J.P.M.L. May 5, 1972); In re Motic..
Picture "Standard Accessories" and "Pre-Vues" Antitrust
Litigation, ____F. Supp. _____ (J.P.M.L. March 20, 1972).
IT IS THEREFORE ORDERED that the action C. Irvin X
Fox v. Texas Gulf Sulphur Company, et al., D. Utah, Civil
Action No. 18-72, be, and the same hereby is, transferred
to the Southern District of New York, and, with the consent
of that court, assigned to the Honorable Dudley B. Bonsal
for coordinated or consolidated pretrial proceedings, pur-
Q suant to 28 U.S.C. §1407, with the actions listed onSchedule A.

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Q SCHEDULE A DOCKET NO. 100SOUTHERN DISTRICT OF NEW YORK
Betty B. Alexander, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 65 Civ. 1632
John Astor v. Texas Gulf Sulphur Co., Civil Action
et al. No. 65 Civ. 3078
Bank of Bermuda, Ltd., as Trustee, et al. Civil Action
v. Texas Gulf Sulphur, Inc., et al. No. 69 Civ. 453
Henry Berwind, et al. v. Texas Gulf Civil Action
Sulphur, Inc., et al. No. 71 Civ. 2395
Paul D. Bieber, et al. v. Texas Gulf ~ Civil Action
Sulphur, Co., et al. No. 65 Civ. 1237
Jerome Blum v. Texas Gulf Sulphur Co., Civil Action
et al. No. 65 Civ. 2644
Morris Borrack, et al. v. Charles F. Civil Action
Fogarty, et al. No. 65 Civ. 3699
$ Mrs. Katie Brown v. Texas Gulf Sulphur Civil Action® Co., et al. No. 67 Civ. 898
Victor M. Cannon, Jr., Donald M. Green, et al. Civil Action
v. Texas Gulf Sulphur Co., et al. No. 65 Civ. 3114
James Cloherty, et al. v. Francis G. Coates, Civil Action
et al. No. 65 Civ. 1581
Colonial Realty Corp. v. Francis G. Coates, Civil Action
et al. No. 65 Civ. 2106
Ben Comroe v. Texas Gulf Sulphur Co., et al. Civil Action
No. 69 Civ. 4531
William H. Darrough, Jr., et al. v. Francis G. Civil Action
Coates, et al. No. 65 Civ. 1421
Dick M. Dyer v. Texas Gulf Sulphur Co., Civil Action
et al. No. 69 Civ. 1510
Isodore Fink v. Francis G. Coates, et al. Civil Action
No. 65 Civ. 2105
Abraham Fischer v. Texas Gulf Sulphur Co., Civil Action
Inc., et al. No. 65 Civ. 3273

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| = 2 =SCHEDULE A. DOCKET NO. 100
SOUTHERN DISTRICT OF NEW YORK (Continued)
Morris Floyd, et al. v. Texas Gulf Sulphur Civil Action
Co., et al. No. 70 Civ. 1215
Harry H. Frackman, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 65 Civ. 2800
Lillian Frieman, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 65 Civ. 3115
Benjamin Frey, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. . No. 65 Civ. 2225
Samuel Glatstein, et al. v. Texas Gulf Civil Action
Sulphur Co., Inc., et al. No. 66 Civ. 719
Jack Greenapple, et al. v. Charles F. Civil Action
Fogarty,	et al. No. 65 Civ. 1826
George Greenberg v. Texans Gulf Sulphur Civil Action
Co., et al. No. 65 Civ. 1629
Seymour Greene v. Texas Gulf Sulphur Co., Civil Action
et al. No. 70 Civ. 1372
Clarence Vaughn Griffin, Sr. v. Texas Civil Action
Gulf Sulphur Co., et al. No. 65 Civ. 3665
Estelle E. Gross, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 65 Civ. 2636
James A. Hamill v. Texas Gulf Sulphur Civil Action
Co., et al. No. 67 Civ. 1395
Jeanne W. Harris, et al. v. Charles F. Civil Action
Fogarty, et al. No. 65 Civ. 1045
Hiram M. Helm v. Texas Gulf Sulphur Co., Civil Action
et al. No. 67 Civ. 222
Charles Jagerman, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 65 Civ. 2348
Sheldon Jahss, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 65 Civ. 3230
9 William C. Kinder, et al. v. Texas Gulf Civil Action
Sulphus Co. | No. 66 Ci. 1448

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TQ = 3 =SCHEDULE A. DOCKET NO. 100
SOUTHERN DISTRICT OF NEW YORK (Continued)
Edward King v. Texas Gulf Sulphur Co., Civil Action
et al. No. 67 Civ. 4747
Margaret F. Kuck v. Claude 0. Stephens, Civil Action
et al. No. 65 Civ. 2810
Benjamin H. Lehman v. Texas Gulf Sulphur Civil Action
Co., et al. - No. 66 Civ. 3254
Harriet L. MaclIver v. Texas Gulf Sulphur Civil Action
Co. No. 65 Civ. 2992
Harriet L. MacIver v. Charles Fogarty, et al. Civil Action
No. 70 Civ. 1403
Oscar Manchik, et al. v. Texas Gulf Sulphur Civil Action
Co., et al. No. 65 Civ. 1565
Michael Marchesano, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 65 Civ. 1876
Harry H, Marmon, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 65 Civ. 1371
George D. Meisner v. Texas Gulf Sulphur Civil Action
Co., et al. No. 67 Civ. 1644
Winston K. Moore, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 66 Civ. 268
Lillian Moran, et al. v. Francis G. Civil Action
Coates, et al. No. 65 Civ. 2666
Jessie C. Nicholson v. Francis G. Coates, Civil Action
et al. No. 65 Civ. 2866
Isobel T. O'Brien v. Charles F. Fogarty, Civil Action
et al. No. 65 Civ. 1692
Arthur 8. Padgett, et al. v. Texas Gulf Civil Action
Sulphur Co. No. 65 Civ. 3232
. Mollie Powrgrantz, et al. v. Texas Gulf Civil Action
Sulvhur Coo, et al. No. 66 Civ. 4

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TQ - 4 -SCHEDULE A DOCKET NO. 100
SOUTHERN DISTRICT OF NEW YORK (Continued)
Provident National Bank as Trustee, et al. Civil Action
v. Texas Gulf Sulphur Co., et al. No. 70 Civ. 3704
Sam Houston Life Insurance Co., et al. v. Civil Action
Texas Gulf Julphur Co. No. 66 Civ. 2810
Milton Shapiro, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 65 Civ. 2765
Jacob Siegel, et al. v. Francis G. Coates, Civil Action
et al. ~ No. 65 Civ. 3263
George Simon, et al. v. Texas Gulf Sulphur Civil Action
Co., et al. No. 65 Civ. 3656
Lillian B. Smith, et al. v. Edward M. Civil Action
Lamont, et al. No. 70 Civ. 1429
James R. Spradlin, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 67 Civ. 212
John W. Vogel, et al. v. Claude O. Civil Action
Stephens, et al. No. 65 Civ. 2092
William R. Weill v. Texas Gulf Sulphur Civil Action
Co., et al. No. 66 Civ. 1037
William B. Weinberger, et al. v. Texas Civil Action
Gulf Sulphur Co. No. 65 Civ. 1583
Jadwiga A. Wellisz v. Francis G. Coates, Civil Action
et al. No. 65 Civ. 3305
George C. Wells, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 65 Civ. 2424
Fred C. White v. Texas Gulf Sulphur Civil Action
Co., et al. No. 65 Civ. 2701
Clayton Winters, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 65 Civ. 3375
Leon J. Wise, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 65 Civ. 1186
: Ernest C. Woolley, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 68 Civ. 4335

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| -5 -SCHEDULE A DOCKET NO. 100
SOUTHERN DISTRICT OF NEW YORK (Continued)
Pat J. Zack, et al. v. Texas Gulf Sulf Civil Action
Sulphur Co., et al. No. 66 Civ. 1095
Bruce J. Zweben, et al. v. Texas Gulf Civil Action
Sulphur Co. No. 66 Civ. 692
A. W. Jones Associates v. Texas Gulf Civil Action
Sulphur Co., et al. No. 65 Civ. 3219
Alex Brynin, et al. v. Texas Gulf Civil Action
Sulphur Co., et al. No. 65 Civ. 1718
Edward Milberg, et al. v. Leslie Civil Action
M. Cassidy, et al. No. 65 Civ. 2904
Edward Milberg v. Edward Lamont, et al. Civil ActionNo. 70 Civ. 1508
|) DISTRICT OF UTAHCc. Irvin Fox, etc. v. Texas Gulf Sulphur Civil Action
Co., et al. No. 18-72